Profile: WMS Industries Inc (WMS.N)
22 May 2013
WMS Industries Inc. (WMS), incorporated on November 20, 1974, serves the gaming industry by designing, manufacturing and distributing games, video and mechanical reel-spinning gaming machines and video lottery terminals (VLTs) to authorized customers in legal gaming venues worldwide. The Company’s products include video gaming machines, mechanical reel gaming machines and VLTs. WMS’s gaming products feature graphics, digital sound and engaging games, and most games incorporate secondary bonus rounds. Certain games are based on licensed brands, such as MONOPOLY, BATTLESHIP, THE WIZARD OF OZ and THE LORD OF THE RINGS, and all of its gaming machines utilize technologies licensed from third parties. In September 2010, WMS closed its Orion Gaming manufacturing facility, and in June 2011, it sold this facility and winded down the support of its Orion Gaming product lines. In July 2011, the Company sold Systems in Progress GmbH subsidiary (SiP). In May 2012, the Company acquired Jadestone Group AB.
The Company’s primary manufacturing facility is located in the United States, with development or distribution offices in the United States, Argentina, Australia, Canada, China, India, Mexico, South Africa, Spain and the United Kingdom. The Company conducts its business through its subsidiaries, including WMS Gaming Inc. (WMS Gaming) and Orion Financement Company B.V. (Orion Gaming), which market its products under the WMS, WMS Gaming and Orion Gaming brand names. WMS utilizes its Player Driven Innovation approach in the development of new games and technologies.
Video gaming machines
The Company’s video gaming machines contain games where casino patrons wager multiple coins on multiple pay-lines, in its WMS Bluebird, Bluebird2, Bluebird xD-branded gaming cabinets, that combine graphics, digital music and sound effects and secondary bonus games. In many of its video products, the primary game features a video screen that simulates traditional mechanical reel spinning action. In addition, it has developed games that have variations on the movement and play action of the symbols on the video screen, such as its Cascading Reels and Rotating Wild effects. In the bonus round, the video screen can display a range of interactive-themed content. The Company introduced 45 new video games for sale during the fiscal year ended June 30, 2011 (fiscal 2011).
Mechanical reel gaming machines
The Company’s product line of mechanical reel gaming machines in its Bluebird, Bluebird2 and Bluebird xD cabinets include five-reel and three-reel, multi-line, multi-coin games that are powered by the same CPU-NXT and CPU-NXT2 operating systems as its video gaming machines. In fiscal 2011, the Company introduced 35 new mechanical reel games.
Parts sales, conversion kits and used games
The Company sells replacement parts and game conversion kits for its Bluebird, Bluebird2 and Bluebird xD gaming machines. It also sells CPU-NXT2 hardware and operating system conversion kits, which enable casinos to upgrade Bluebird gaming machines to obtain all the features and functionality of the CPU-NXT2 operating system and the networked gaming functionality. An active market exists mostly outside of North America for used gaming machines. When we receive a gaming machine on trade-in, we estimate a carrying value for the gaming machine based on the condition of the gaming machine, as well as our experience in selling used gaming machines and such estimates could change due to changes in demand in general for used gaming machines. The Company sells these trade-ins as-is or refurbish the used gaming machines before resale. It also sells participation gaming machines, after refurbishment, as used gaming machines when it no longer needs them in the Company’s gaming operations business.
Wide-Area Progressive participation games
WMS creates Wide-Area Progressive (WAP) games using its brands and licensed brands, such as MONOPOLY, including MONOPOLY Grand Hotel, MONOPOLY Big Event, MONOPOLY Around the Globe, THE WIZARD OF OZ, THE PRICE IS RIGHT, TIME MACHINE, and Reel ‘em In Compete To Win. The Company operates WAP systems in Arizona, Colorado, Mississippi, Missouri, Nevada and New Jersey and in Native American casinos.
Local-Area Progressive participation games
The Company’ Local-Area Progressive (LAP) gaming machines feature games using its brands, Jackpot Party Progressive, Life of Luxury Progressive, Hot Hot Super Jackpot Progressive, Goldfish Race for the Gold and Money to Burn Multiplying Progressive It also features licensed brands, such as HAPPY DAYS. In fiscal 2011, the Company introduced THE GODFATHER game, another new brand for WMS.
Stand-alone participation games
The Company leases certain participation games on a non-linked basis, which it calls stand-alone games. Its stand-alone games feature titles, among others, under the MONOPOLY and PRESS YOUR LUCK brands and, in those jurisdictions where it does not operate a WAP system, THE WIZARD OF OZ, TOP GUN and TIME MACHINE-based games.
Casino-owned daily fee games
This category consists of gaming machines for which the casino purchases the base gaming machine and leases the top-box and game from the Company at a lower fixed daily lease payment than if they were to lease the entire gaming machine. Casino-owned daily fee games feature a second liquid crystal display (LCD) screen in the top-box. In the case of products offered as casino-owned daily fee games, WMS also gives casinos the option to either lease the complete gaming machine, top box and game (in which case the unit is classified as a stand-alone participation game), or to purchase outright the base gaming machine, top box and game at a premium price (in which case the revenue is classified as product sales revenue).
Video lottery terminal leases
The Company’s VLTs include both video and mechanical reel gaming machines. They feature graphics, digital sound effects and music and incorporate many of the same features from its other gaming machines. The Company offers a range of multi-game and single-themed VLTs. Its VLTs may be operated as stand-alone units or may interface with central monitoring systems operated by government agencies.
Leased for-sale games
Some customers prefer to lease the Company’s gaming machines under an operating lease arrangement rather than to purchase them. In these cases, the Company enters into an operating lease for the gaming machine, either for a fixed daily fee or a percentage of the net win of the gaming machine. Often, the customer is given the option to purchase the leased gaming machine at the end of the lease term. It does not include gaming machines leased under operating lease agreements in the Company’s installed base of participation games.
WMS derives revenue from licensing its games to third parties. Methods for determining the license or royalty revenue vary, but generally are based on a fixed amount for each licensed game purchased, placed or shipped in a period, or a fixed daily royalty amount for each game.
Class II and centrally determined systems
The Company offers video and mechanical reel gaming machines and VLT’s for Class II and certain VLT markets, where the game outcome is determined on a central server system, which the Company provides through an agreement with Bluberi Gaming Technologies Inc. (Bluberi), a Canadian-based technology firm. In fiscal 2011, WMS purchased a copy of the central system software from Bluberi, and operated the system. These Class II systems primarily operate in Native American casinos in Washington, Florida and Oklahoma. In certain of these jurisdictions, its customers rent the gaming machine through an operating lease arrangement, in which case the lease payments are shown as gaming operations revenues and in other jurisdictions customers purchase the gaming machines in which case the revenues will be shown as product sales revenues.
In fiscal 2011, the Company launched its WAGE-NET networked gaming (NG) system and its portal application family, Ultra Hit Progressive (UHP). In Fiscal 2011, it also launched its UHP application, Jackpot Explosion.
In December 2010, WMS launched a business-to-consumer (B2C), online casino Website for residents in the United Kingdom. The Company’s Jackpotparty.com online casino offers a range of slot games and certain card and table games.
The Company competes with Aristocrat, Bally, IGT, Konami, Atronic Casino Technology, Speilo Manufacturing Inc., Multimedia Games, Inc., Novomatic Group of Companies, Aruze Corp., Bally, Franco Gaming Ltd., Multimedia Games, Inc., Unidesa Gaming and Systems and Scientific Games Corp.
WMS Industries Inc
800 South Northpoint Blvd.
WAUKEGAN IL 60085