Ladies and gentlemen, thank you for standing by. Welcome to the WMS Industries’ fourth quarter 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, August, 5 2008. I would now like to turn the conference over to Bill Pfund, Vice President, Investor Relations with WMS Industries. Please go ahead, sir.

Thank you, operator. Good afternoon and welcome to WMS Industries’ conference call to discuss our record fiscal 2008 fourth quarter and full year results, our guidance for fiscal 2009, and the operating trends and competitive strength that support our outlook for fiscal 2009. With me today are Brian Gamache, Chairman and Chief Executive Officer, Orrin Edidin, President, 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 ending June 30, 2007 and in our more recent reports filed 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, August 5, 2008. Now, let me turn the call over to Brian.

Good afternoon everyone. Today, WMS reported record results for the June quarter that put a strong exclamation mark on our fiscal 2008, our best year ever and the fifth consecutive year we achieved strong double-digit growth in both revenue and profit. Fiscal 2008 diluted earnings per share increased 34% to $1.15 on annual revenue growth of 20%, which clearly demonstrates our ability to generate both ongoing revenue traction and consistent progress in operating execution even against the challenging headwinds of a difficult replacement cycle and a weak economy. WMS has now met or exceeded its revenue guidance in each of the last nine consecutive quarters, during one of the toughest market environments in industry history. And overall, WMS has met or beat revenue guidance in 14 out of the last 16 quarters with the two exceptions resulting from the impact from Hurricane Katrina and the closing of the Russian market. We achieved this track record thanks to the imagination and innovation of all the WMS team who create, produce, deliver, and service some of the highest earning products in casino floors. Our annual operating margin increased 240 basis points to 16% and eclipsed 18% in the fourth quarter. Our operating execution also led to cash flow from operating activities increasing 57% over last year to a record $186 million. The significant cash flow we are now generating provides a solid foundation for funding a substantial array of future growth opportunities and enables us to simultaneously reinvest in WMS through accelerated R&D initiatives and through opportunistic share repurchases, as evidenced in the June quarter by our aggressive $25 million buyback. Throughout fiscal 2008, we continued to implement our lean sigma initiatives and maintain a disciplined focus on executing our strategies for near, mid-, and long-term. This discipline resulted in our ongoing…

Thanks, Brian, and good afternoon everyone. As you all know, the current operating environment is characterizing North America by a challenging replacement cycle and a weak economy. These have been two defining characteristics throughout the last year and even longer as it relate to slow replacement cycle. These factors have caused casino operators to place increased emphasis on the earnings and return capabilities for the new products they continue to place on the slot floor. And in response, WMS must place increased emphasis on innovation that drives further ship share gains along with increased focus on production efficiencies, customer satisfaction and margin improvements. Fortunately, this plays directly to the strengths of our systematic approach to product development and our successful business strategy. It remains as true today as ever the players respond to exciting, imaginative, and differentiated games. Players, and especially frequent players who form the backbone of the industry through their repeat visits, are looking for value for their entertainment dollar along with the opportunity to win. Players today are increasingly sophisticated in their use of technology and their choices of how they spend their entertainment dollars. And our casino customers demand products that produce high returns and that will attract a broader player audience to their slot floor, which even in slow economy remains the core profitability and provides the highest return on investment for most casino operators. This environment places focus squarely on WMS’ competitive advantage, creating great content. Through our dual development focus of pursuing the advancement of innovative technologies and creating imaginative, new gaming experiences, we are consistently developing differentiated at exciting products that address the entertainment value needs of players and consistently meet and often exceed the financial return needs of our casino customers as evidenced by our revenue growth in this trough of…

Good afternoon everyone. We achieved a significant number of record financial and operating highlights, both in the June quarter and for full fiscal year. Once again, we exceeded our revenue targets due to the continued strong demand for our high earning products. For the year, we exceeded the high end of our original annual revenue guidance of $615 million by $35 million, or 6%. And we achieved the high end of our operating margin guidance of 16% even with significantly increased R&D spending and other higher expenses throughout the year. For the June 2008 quarter total revenues were a quarterly record, $186 million, up 17%, and annual revenues were $650 million, up 20% over the last year. For fiscal 2009, we expect to achieve total revenues of $712 million to $728 million or a growth of 10% to 12% over fiscal 2008. This range reflects what we realistically expect to achieve through organic growth trends, but we doubt that this guidance also fully considers our outlook for the impact of a continued weak economy and the continued softness of the North American replacement cycle. New unit product shipments increased 8% in the June 2008 quarter to a record 8180 gaming machines, and grew 9% for the full year to 27,931 units while the average selling price increased to a record $13,147 in the quarter. We expect to drive new unit product sales revenue growth in fiscal 2009 by increasing global unit shipments up 5% to 7% along with achieving a higher average realized selling price, up 5% to 11% due to both anticipated list price increases and the benefit from adding our higher price Bluebird2 gaming machine to the sales mix, which should benefit the March and June 2009 quarters after the full commercial launch in the December 2008 quarter.…

Thank you, Scott. I think it is abundantly clear that WMS is differently situated than our competitors and well positioned for the future. The record performance we achieved in fiscal 2008 in the phase of a challenge environment is solid evidence that WMS clearly understands our market, has the ability to execute, and knows how to effectively operate in good times and in bad. Expanding revenue opportunities and managing expenses is nothing new for WMS. In fact, it’s a core competency. As we enter fiscal 2009, I believe we have excellent visibility to our path of continued progress. Before opening the call for your questions let me summarize the unique competitive strengths WMS has in support of optimism for fiscal 2009. First, the continuing appeal of our products with players. Our culture of innovation and focus on developing differentiated gaming experiences is backed by technology advancements. Coupling that focus with an understanding of what defines entertainment value for our players is our special software product development. That combination drives our expansion of popular products that generate high earnings for the operators and has moved our products into the must-have category. Second, WMS is well positioned to benefit from opportunities ahead of the full adoption of network gaming. As I have said many times, while we love for network gaming to arrive tomorrow, we also have a clear strategy (inaudible) our transition path that generates continued growth and profitable success bank-by-bank, quarter-by-quarter. Having a clearly defined vision of the benefits made possible and the service supported in network gaming environment we have continued to commercialize unique products and system applications that allow players exciting new gaming experiences that they value and provide customers with continued high returns that they seek. We will be locked and loaded when server based gaming arrives…

Thank you. (Operator instructions) Our first question comes from the line of Joe Greff with JPMorgan. Please proceed.

Hey guys, good results.

Thanks Joe.

Thanks Joe.

Question for you I was hoping that you can just give us a big picture of you in terms of the operating environment particularly on the participation side of things you are obviously – your guidance suggests that you are continuing to grow that, but within the different types of participation games what are your customers dealing in terms of what they are removing, what they are going with, and as they are trying to reduce expenses. And then a second easier question, Scott, maybe you can sort of talk about what are your fiscal ’09 outlook and guidance in terms of what you are forecasting in terms of additions to the gaming operations equipment CapEx and just CapEx overall.

Joe, I will take the first part if I may. Regarding participation business, we are not seeing what our competitors are seeing. The strongest indicator of our strength is the daily yield. The June win per day numbers were the highest in our history and continue to trend upward for July and the first week in August. So, that’s really the strongest determining factor if our games are going to hold up or not. We have a 2000 unit backlog, as Orrin mentioned, and the current products in the field Wizard of Oz, Bigger Bang Big Event, MONOPLOY Up, Up and Away, and Happy Days are the key drivers to the backlog. And then going forward, when you look at the various products we have coming down, we have our Q1 debut of our Adaptive Gaming platform with STAR TREK and DIRTY HARRY 2 on our Sensory Immersion platform. Q2 we have our Transmissive Wizard of Oz, which has scored very well in our benchmark testing. Q2 we have the POWERBALL Powerseat [ph] which is Community Gaming non-WAP product. And then Q3 we have Reel 'em In Compete to Win, our Community Gaming WAP, which was very popular last year’s G2E. So, when you look at the four platforms, Adaptive, Community, Sensory Immersion, Transmissive, we are not just brining out game things anymore. We are really focusing on those platforms to drive unique enablement to the games and the success we are having is just incredible. And so I think our participation business albeit is somewhat challenged in this environment we are seeing that our win per day and our footprint continue to grow and it’s at the strength of the content.

And then Joe on your question about CapEx this last year between gaming ops and property, plant, and equipment, we have spent just under $100 million, and that was down about $10 million from the prior year. I would expect that the level of spending for fiscal ’09 will be within that range of dollars.

Okay. Great. Thank you very much.

And our next question comes from the line of Celeste Brown with Morgan Stanley. Please proceed.

Hi gentlemen, good evening.

Good evening, Celeste.

Just – I know you guys like to take a conservative approach to guidance and I think Orrin mentioned one aspect in which you are being conservative. I think Orrin you said that your guidance doesn’t forecast continued increases in win per day. First of all, is that right? And then where else do you think – where else are you guiding sort of against the trend that you are seeing today for the sake of what’s going on in the economy?

I think in the eight years I have been putting these budgets together for our Company, Celeste, this has certainly been the most difficult budget to prepare for our Board and the shareholders. But we are going to still have incremental market share growth in ’09, continue success in gaming ops international. We have obviously the Bluebird2 platform and Transmissive Reels will create some new demand. Our average selling price we are forecasting up. And our continued growth in our margin improvement plan. So, we are hitting on all cylinders now but unfortunately we are not prepared to stick our heads out there any further because of the uncertainty. As time goes on and if things do get better and if our products do continue to yield the kind of winds that they are yielding, we will update this guidance, as we have in the past. If you will recall, last year, I believe we update our guidance twice during the year and that served us well. And again we are very proud of our visibility that we have here today as a business. I mentioned the track record of making our earnings and revenue guidance that we are giving and we want to continue to hit those milestones.

Okay. And then I notice you put the open orders and the backlog back in the press release, haven’t put them in over years. Wondering why the change there/

Well we thought we needed to provide a path for the investors to understand how we are as confident about fiscal ’09 as we are relative to the guidance that we’ve provided of 712 to 728.

And it’s just one more data point, Celeste, as to why we are different than the others.

Okay. And then finally in terms of share repurchases, you increased your authorization. Is there sort of a target amount that you would like to buy back in fiscal ’09 or is it just sort of as the market allows you?

No, I think it’s really going to be – it’s going to be on the opportunistic visibility that we see and we will look at the market from time-to-time to determine what’s the best use of our funds, but the Board has great confidence in our future. And again, we bought back I think 12% of the outstanding shares over the last five or six years and we’ve got a good track record of buying the stock opportunistically and that would bode well for the future.

Okay. And then just finally one last question for Scott. The $0.04 write-down because of the licensing, can you give more detail on that?

Sure, we had a technology license that served us – served a certain purpose but at this point in time the realizable value from that license was not what we had it on the books for and so we took a write-down of $3.7 million in this quarter to take it down to what we believe it’s realizable value will actually be.

Okay. Thank you.

And our next question comes from the line of David Katz with Oppenheimer. Please proceed.

Hi, afternoon.

Hi David.

Can we just talk about – I know that we on Wall Street are sort of privy to the publicly traded customers of yours and what they are saying and what they are reporting. Can you give us a little bit of a – some geography or lesson on where some of your stuff is coming from and then if I could add onto that within the guidance that you have for next year, if you could talk about how many of how much is coming from international markets versus domestic.

Well the mix of business in our fiscal ’09 budget is about the same as it is now, it’s about a third of our box sales. So that’s really not changing a whole lot. As far as – I think Orrin mentioned it, we only do about 10% of our box sales in the state of Nevada, less than 10%, actually. We have 440 customers that we serve in North America. So we – and not one of our customers represents more than 4%. So, I believe in this economic environment and probably justifiably so a lot of the focus gets on the Nevada-centric gaming companies. We actually do a greater amount of our business in the Midwest and then California and some of the east coast states. So we are not reliant on any one jurisdiction, and I just came back from a call it a 20-casino tour over the last four to five weeks and a lot of the casinos are seeing a little bit of a degradation from a year ago, call it the 5% to 6% range, but all of them, with the exception of a couple, are still going to buy slot machines, are still going to replace their floor, and they believe that that’s the engine that keeps their train moving. So, we don’t expect other than some of the customers that are financially strapped that this is going to be any different than Orrin said in the last few years. This is not a new trend. We have been seeing this – this trough in replacement cycle now for the last two to three years and because of our content, because of our innovation, we are still able to garner more than our fair share of market share and we are going to continue to see that in ’09 based on the pipeline of games that we have coming out.

Okay. Thanks. Two more quick ones if I may. Your guidance I assume on the installed base in participation excludes daily fee games, and as I look sort of year-over-year at the growth in those, is that fair assumption to use as a growth rate for ’09?

If by daily fee games you mean games that we sell to the casino, we call them casino on daily fee games—

Yeah.

Yes. Those – our guidance excludes that. And the makeup of that will just be dependent upon customer preferences for the different pricing models that we have for our games.

Okay. And then lastly on your share repurchase, could you just talk about your strategy for that? Are you making capital decisions? Are you picking – are you trying to make calls on your stock and when the right moment is to dive in? If you could just walk us through your thinking there it would help.

Well I think that we have opportunistically been in the market when we feel that the share repurchase is low and obviously starting in June of this year the share price started getting down to levels that we found particularly attractive and so we were in the market heavier than we had been prior to that. And this the practice that we’ve used throughout the $92 million of stock that we’ve bought back since 2002 and I believe that that will be the same strategy that we use moving forward.

Okay. Perfect. Thanks very much.

Okay, David.

And our next question comes from the line of Grant Goverson with Deutsche Bank. Please proceed.

Hey guys this is Bill, how are you doing?

Hey Bill.

Hey Bill.

A couple of questions, one, just to go back to revenue guidance for a second, I don’t know whether Brian or Scott wants to take that. In trying to frame your sort of initial revenue guidance for fiscal ’09 of 10% to 12%, when I go back and look at a year ago when you guided to fiscal ’08, you guided to revenue growth from 10% to 14% and then ended up delivering 20% revenue growth after revising upward a couple of times during the year as you kind of implied Brian could potentially happen here. What change in fiscal ’08 from your original guidance to in being able to deliver what you did today, which is almost 2X that original guidance from extreme to extreme – that we can may be apply to fiscal ’09 and then I have a follow-up.

I think new gaming expansion, Bill, occurred during the year. We had the California effect when they signed the compacts in January, I believe, and that positively affected our third quarter of this year. We also had great demand for participation products and the yield certainly on the Wizard of Oz and other – Top Gun and other games has certainly exceeded our expectations and at the end of the day a lot of things happened to break our way this year. Not to say that they won't next year, but again we are overly concerned about all the macro effect. We are not concerned about our ability to execute internally. We are focused on a lot the noise that’s out there on the economy and the overall oil prices and unemployment and so forth that are out of our control. So call me conservative, call me silly, call me whatever you want, but we want to make sure that we give a forecast and have a cost structure in our business model that allows us to operate this Company that’s good to the shareholders.

Okay.

And I think over the last couple of year, we have – at the start of the initial guidance we have stated what we have specifically excluded from the guidance like I did in the prepared remarks earlier. We have done the same thing for fiscal ’08 and it just so happened during fiscal ’08 a couple of the items that we had included the hurdles were lifted and we were able to sell into those markets. And so that’s what helped drive the incremental growth and if the same thing occurs in fiscal ’09 we would modify our guidance accordingly.

We would love nothing more, Bill, to modify that guidance, upwards.

Okay. Just one clarification and then the follow-up. I got a couple of emails during this conference call people saying, Scott, during your prepared remarks that they thought you said your revenue guidance does not take into account a tough economy. It didn’t make sense to me.

No, it’s does take into account.

Yeah, obviously takes into – it contemplates the current environment, obviously. Okay, and then the follow-up is, you have got this 11,700 unit backlog for sale and conversion – games and conversion kits and I think 2000 units for participation, gross participation placements I guess is what it is, and that’s great. There is a lot skeptics in general out there especially for the gaming suppliers these days. Can you talk for a second, I don’t whether this is Orrin or whomever, about backlog conversion? I mean it’s great as a number, but as conversion in that backlog over time been 90% so we can feel even better about the guidance you are giving guys?

Yeah, it’s – I think we have pretty well proven track record of converting that backlog into the field and we are continuing to manage and build it consistently throughout the year.

And by the way nothing is on that backlog until it’s a signed a deal. I mean we don’t put speculation on that.

Yeah, these are deals in the pipe. So, we feel very good about converting the pipeline, particularly on the gaming ops side when you look at the success that we are having with these products. The customers are clamoring to get these products on their floor. It’s WMS that’s being more selective in its placement. So that is – that demand continues to build as we execute on the strategy of selective placements and deployment of capital on the gaming ops side.

And to that point, Bill, this is the best visibility we have had in the eight years I have been here. So I think that – the guidance we have given you today we feel very comfortable given all the parameters that we are dealing with.

Okay, thanks guys.

And our next question comes from the line of Steve Wieczynski with Stifel Nicolaus. Please proceed.

Hey, good afternoon. Guys.

Hey Steve.

Hi just one question for you. It’s a bigger picture type question in terms of server based gaming, but maybe, first of all, Brian, can you kind of touch on a few on your 20-casino tour, what you heard out in the field. And then for Orrin, you touched on it in terms of the (inaudible) going right now on the strip. What has been the feedback so far? What did they like? What did they think needs improvement?

I think the operators in general, Steve, are a little bit skeptical because they really don’t understand quite frankly ho to model the business in the server based world. We are going to go out of our way at G2E this year as a Company to walk them down that path. They understand all the negatives, the investment and capital and so forth. They don’t really understand the upside very well. And that’s our strategy to bring these products out bank-by-bank, quarter-by-quarter to give them a comfort level so that when this business does get turned on we will be at the front of the bus with games and experience out there that the players are embracing. And again, it’s all going to be determined by the success of server based gaming on how the players adapt to that new product and we believe our strategy is focused on that player and his experience and her experience at the end of the line. Orrin, you want to touch the rest of it?

Sure. And I want to make sure that we are clear, Steve. Two major underpinnings of our network gaming strategy are both network enabled games products such as the ones we are currently commercializing like Adaptive Gaming, which is network enabled, and then the enterprise wide applications such as we are field trialing both on the strip and in the native American casino. And those versions are performing a basic functionality of remote configuration and download because we are taking this incremental steps in terms of getting these cleared with our – with regulators. The initial reception has been very, very positive particularly in terms of the ease in which the operators have been able to fire these up and get them going almost practically immediately with very little help from our techs. In fact, to tell one quick story, when we sent our techs out to help with a particular setup and before our techs arrived the operators and their own in-house techs had the system up and running and configured on the floor. So they were very, very pleases, may be based on their prior experience comparatively with the ease with which they were able to utilize our first system implementation there.

Okay, great. Thanks guys.

Our next question comes from the line of Ralph Schackart with William Blair. Please proceed.

Hey good afternoon. Nice set of results, guys.

Thanks Ralph.

Hi Ralph.

Just curious, I know it’s early innings [ph] but what’s driving the stronger than expected demand on the Bluebird2 rollout? Was it just conservatism on your part and if we can sort of take this one step further is there an opportunity even with the tough economic end market and environment to test further pricing increases on the product?

Well, again, we have (inaudible) of pricing and we believe that our products call for premium pricing. That being said, as Orrin said, we have 1100 backlog on the new cabinet and we really haven’t even been aggressively selling it. This is customers coming to us saying can you deliver to us by the end of this calendar year? So we are very optimistic. Again, we have a number baked into our fiscal ’09 number that was somewhat conservative based on the environment we are in and we are pleased to see we are getting this kind of reaction from the customers who come in here to Chicago to preview our G2E products, in particular. So, yes, we are getting a very positive reception. We think that’s going to bode well for new incremental revenue opportunities in fiscal ’09.

Great. Thank you.

(Operator instructions) Our next question comes from the line of Kent Green with Boston American Asset Management. Please proceed.

Good quarter fellow.

Thank you.

My question pertains to the international markets. Could you give us a little more details where there was subscribers [ph] or not did you still continue to do well particularly in Asia?

I think that our international strength continues to come from Europe, Asia, and South America, in particular, and each quarter it kind of rotates around between the three different areas, but we continue to see tremendous reception to our products. As we said previously, Kent, that the ability for us to launch our themes globally simultaneously has proven to be a big help. And also the expansion of our distribution team throughout the world has been a big help as well. So we continue to think that international growth is coming – continue to be a very profitable growth driver for the Company for the years to come.

And just a quick follow-up on (inaudible) gaming. It seems to keep growing particularly on conversion to regular machines from the more (inaudible) machines. How is that affecting your operations? Was there significant orders in the quarter or did you see that continuing into the next year?

Well, yes, this is Orrin, particularly out of places like Florida where Class II markets are converting to Class III markets and that’s not the first time we have seen that. That tends to be sort of the pattern. But native American gaming continues to grow. We have had a substantial portion of our business from the native American markets and we are seeing that type of conversion from Class II to Class III.

Thank you.

And our next question comes from the line of Steve Altebrando with Sidoti and Company. Please proceed.

Hi guys.

Hey Steve.

Hi Steve.

What’s really the main driver of the ASP rise – the guidance that you provided?

It’s really a mix of business, Steve. We have an annual price increase that we have had in place all along and then the additional Bluebird2 cabinets to the inventory are going to – and Transmissive are going to be at a higher sales price, so it’s really a mix of business more than it is anything dramatic in our price increases.

Okay. And did you give a domestic unit sale breakdown for the quarter?

Yes.

Yes. That was in the press release. Let me get it for you. We did 5721 in North America and 2459 internationally.

Okay. And then last one, you addressed it somewhat earlier but I guess if you are seeing any change in pattern in your customers in term of shifting towards participation or shifting away from participation into unit sales. Is there any meaningful shift there?

We have not seen that, Steve, may be some of the other competitors of ours have, but we have not seen that yet. That – some of those casinos I walked in some of the customers want more of our product and we selectively tried to manage that. But for the most part we see the same mix of business. Our revenue mix is pretty similar in that 60:40 range and we don’t see that – that’s going to continue to remain similar in fiscal 2009.

Okay. Thanks guys.

And our next question is a follow-up question from the line of Joe Greff with JPMorgan. Please proceed.

Good morning guys or good afternoon guys again. Long day with a lot of earnings. The EBITDA results that you have at the end of the press release, does that add back in the $3.7 million write-down or is that – does that adjust for that?

I don’t believe that we did.

Okay. So it would have been north of $70 million for the quarter?

Yeah.

And my sense is you are probably not going to answer this directly because another competitor of yours has yet to report earnings, but you do mention in your fiscal ’09 outlook that you continue – or you anticipate to see continued shipped share gains. I was hoping you quantify that. What you are expecting in fiscal ’09 and maybe broadly answer where you think fiscal ’08 ended up.

Again, we don’t have the information – two of our competitors haven’t released yet, Joe. But again, we believe because the benchmarking of market research on our new products and then Innovations series that we are going to be launching at G2E this year, we believe that our ability to gain market share will continue. When you look at our success in the mechanical reels that was 25% of our sales I believe in Q4. And two years ago we didn’t serve that market. So I think that you are going to continue to see our market share growth and particularly in the Innovation series.

And I would add that we expect to see that both on the international side of the business as well as the domestic side of the business in terms of shipped share increases.

Thank you.

And we have no further questions at this time. I will now turn the call back to you.

Thank you, operator. And thank you for joining us this afternoon. We look forward to reporting on our additional progress on our next call when we will discuss our September quarter results. Have a nice afternoon.

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.