<PAGE> 1
\
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1998
------------------------------------------------
Commission file number 1-8300
------
WMS INDUSTRIES INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-2814522
- -------------------------------------------------------------------------------
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
3401 North California Ave., Chicago, IL 60618
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (773) 961-1111
---------------------------
N/A
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by |X| whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES [X] NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 28,036,750 shares of common
stock, $.50 par value, were outstanding at October 26, 1998 after deducting
52,312 shares held as treasury shares.
<PAGE> 2
WMS INDUSTRIES INC.
------------
INDEX
<TABLE>
<CAPTION>
PAGE NO
-------
<S> <C> <C>
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Condensed Consolidated Statements of Income -
Three months ended September 30, 1998 and 1997........ 2
Condensed Consolidated Balance Sheets -
September 30, 1998 and June 30, 1998.................. 3-4
Condensed Consolidated Statements of Cash Flows -
Three months ended September 30, 1998 and 1997........ 5
Notes to Condensed Consolidated Financial Statements.. 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......... 7-9
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings..................................... 10
ITEM 6. Exhibits and Reports on Form 8-K..................... 10
SIGNATURE ...................................................... 11
</TABLE>
<PAGE> 3
WMS INDUSTRIES INC.
-------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
September 30,
----------------------
1998 1997
-------- --------
<S> <C> <C>
REVENUES................................... $ 26,799 $ 20,035
COSTS AND EXPENSES
Cost of
sales.................................. 20,585 14,685
Research and
development............................ 2,980 3,145
Selling and
administrative......................... 6,807 7,174
-------- --------
Total costs and
expenses................................... 30,372 25,004
-------- --------
Operating
loss....................................... (3,573) (4,969)
Interest and other income and expense,
net........................................ 922 589
Interest
expense.................................... - (441)
-------- --------
Loss from continuing operations
before income tax credit............... (2,651) (4,821)
Credit for income taxes.................... 1,007 1,832
-------- --------
Loss from continuing operations............ (1,644) (2,989)
Income from discontinued operations -
video games segment, net............... - 6,277
======== ========
Net income (loss).......................... $ (1,644) $ 3,288
======== ========
Earnings per share of common stock - basic and diluted:
Loss from continuing operations........ (0.06) (0.12)
======== ========
Net income............................. $ (0.06) $ 0.13
======== ========
Weighted average shares outstanding........ 27,988 25,549
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 4
WMS INDUSTRIES INC.
-------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
------------ --------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash $ 4,952 $ 36,943
equivalents....................................
Short-term investments......................... 55,400 26,000
--------- ----------
60,352 62,943
Receivables, net of allowances of $2,557 and
$2,397......................................... 31,847 30,432
Income tax
receivable..................................... 9,179 10,114
Inventories, at lower of cost (Fifo) or market:
Raw materials and work in
progress.................................... 21,106 17,523
Finished
goods....................................... 17,366 22,097
--------- ----------
38,472 39,620
Deferred income
taxes.......................................... 18,215 18,155
Other current
assets......................................... 660 769
--------- ----------
Total current
assets...................................... 158,725 162,033
Property, plant and equipment...................... 59,944 57,327
Less: accumulated depreciation...................... (25,393) (24,720)
--------- ----------
34,551 32,607
Other assets........................................ 13,750 12,882
========= ==========
$ 207,026 $ 207,522
========= ==========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
WMS INDUSTRIES INC.
-------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable ............................... $ 9,537 $ 7,818
Accrued compensation and related benefits...... 2,279 3,020
Accrued liability related to WMS Gaming Inc.
patent litigation............................ 35,226 35,372
Other accrued liabilities....................... 3,806 3,757
--------- ---------
Total current
liabilities.................................. 50,848 49,967
Deferred income
taxes................................................ 869 869
Other noncurrent
liabilities.......................................... 1,395 1,395
STOCKHOLDERS' EQUITY:
Preferred stock (5,000,000 shares authorized,
none issued)................................. - -
Common stock (28,089,062 and 28,032,766 shares
issued)......................................... 14,044 14,016
Additional paid-in capital...................... 170,657 170,418
Retained earnings
(deficit)....................................... (30,639) (28,995)
--------- ---------
154,062 155,439
Treasury stock, at cost (52,312 shares)......... (148) (148)
--------- ---------
Total stockholders' equity................... 153,914 155,291
--------- ---------
$ 207,026 $ 207,522
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 6
WMS INDUSTRIES INC.
-------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
September 30,
-------------------------
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).................................. $ (1,644) $ 3,288
Adjustments to reconcile net income (loss)
to net cash provided (used) by
operating activities:
Income from discontinued operations -
video games segment....................... - (6,277)
Depreciation and amortization............... 1,061 1,452
Receivables provision....................... 160 171
Deferred income taxes....................... (60) (4)
Tax benefit from exercise of common stock
options................................... 75 102
Increase resulting from changes in operating
assets and liabilities.................... 242 5,793
--------- ---------
Net cash provided (used) by operating activities... (166) 4,525
INVESTING ACTIVITIES:
Purchase of property, plant and equipment.......... (2,617) (1,032)
Net change in short-term investments............... (29,400) 30,000
--------- ---------
Net cash provided (used) by investing activities... (32,017) 28,968
FINANCING ACTIVITIES:
Cash received on exercise of common stock options.. 192 654
Redemption of long-term debt....................... - (160)
--------- --------
Net cash provided by financing activities.......... 192 494
--------- --------
Increase (decrease) in cash and cash equivalents... (31,991) 33,987
Cash and cash equivalents at beginning of period... 36,943 1,853
---------- ---------
Cash and cash equivalents at end of period......... $ 4,952 $ 35,840
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 7
WMS INDUSTRIES INC.
-------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
--------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Due to the seasonality of the Company's businesses, operating
results for the quarter ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the fiscal year
ending June 30, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1998.
2. DISCONTINUED OPERATIONS
-----------------------
On August 11, 1997 the Company announced a planned spin-off of its
86.8% interest in Midway Games Inc. Midway Games Inc.'s operations
entirely comprised the video game business segment. That spin-off was
completed on April 6, 1998. Accordingly, the results of operations for
the quarter ended September 30, 1997 of the video game segment has been
reflected as discontinued operations in the condensed consolidated
statements of income and cash flows.
3. LITIGATION
----------
See item 1 of Part II for the status of International Game Technology
litigation.
6
<PAGE> 8
WMS INDUSTRIES INC.
---------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains certain forward looking statements
concerning future business conditions and the outlook for the Company based on
currently available information that involve risks and uncertainties. The
Company's actual results could differ materially from those anticipated in the
forward looking statements as a result of certain risks and uncertainties,
including, without limitation, the Company's loss from continuing operations,
financial strength of the gaming and pinball industries, the expansion of
legalized gaming into new markets, the development, introduction and success of
new games and new technologies and the ability to maintain the scheduling of
such introductions, the ability of the Company to qualify for and maintain
gaming licenses and approvals, the outcome of certain legal proceedings to which
the Company is a party and other risks more fully described under "Item 1.
Business--Factors Affecting Future Performance" in the Company's Annual Report
on Form 10-K.
FINANCIAL CONDITION
- -------------------
Cash flows from operating, investing and financing activities during the quarter
ended September 30, 1998 resulted in a net cash decrease of $31,991,000 as
compared with net cash provided of $33,987,000 during the quarter ended
September 30, 1997. The majority of the cash decrease in 1998 was for the
purchase of short-term investments and the majority of the cash provided in 1997
was from the sale of short-term investments. See condensed consolidated
statements of cash flows on page 5.
Cash used by operating activities before changes in operating assets and
liabilities was $408,000 for the quarter ended September 30, 1998 as compared
with $1,268,000 for the quarter ended September 30, 1997.
The changes in operating assets and liabilities, as shown in the consolidated
statements of cash flows, resulted in $242,000 of cash inflow during the quarter
ended September 30, 1998 compared with a cash inflow of $5,793,000 during the
quarter ended September 30, 1997. Cash inflow in the quarter ended September 30,
1997 was primarily due to a reduction in receivables from their comparable
balances at June 30, 1997.
Cash used by investing activities was $32,017,000 for the quarter ended
September 30, 1998 compared with cash provided of $28,968,000 for the quarter
ended September 30, 1997. Cash used for the purchase of property, plant and
equipment during the quarter ended September 30, 1998 was $2,617,000 compared
with $1,032,000 for the quarter ended September 30, 1997. Net cash of
$29,400,000 was used for the purchase of short term investments during the
quarter ended September 30, 1998, compared with an increase to cash of
$30,000,000 from the sale of short-term investments in the prior year's quarter.
Management believes that cash and cash equivalents and short-term investments
will be adequate to fund the anticipated level of inventories and receivables
required in the operation of the business as well as cash required to fund
future operating losses, if any, and the Company's other presently anticipated
needs. See Note 3 to the financial statements regarding patent litigation.
7
<PAGE> 9
RESULTS OF OPERATIONS
- ---------------------
The following summarizes the Condensed Consolidated Statements of Income for the
periods shown in the format presented as segment information in the notes to the
year-end consolidated financial statements (thousands of dollars):
<TABLE>
<CAPTION>
Three months ended
September 30,
-------------
1998 1997
---- ----
<S> <C> <C>
REVENUES
Gaming............................................ $ 18,844 $ 8,234
Pinball, novelty and cabinets..................... 5,031 11,801
Contract manufacturing............................ 2,924 -
-------- --------
Total revenues.................................. $ 26,799 $ 20,035
======== ========
GROSS PROFIT
Gaming............................................ $ 5,817 $ 2,390
Pinball, novelty and cabinets..................... (68) 2,960
Contract manufacturing............................ 465 -
-------- --------
Total gross profit............................ $ 6,214 $ 5,350
======== ========
OPERATING INCOME (LOSS)
Gaming............................................ $ (665) $ (4,219)
Pinball, novelty and cabinets..................... (2,565) (385)
Contract manufacturing............................ 235 -
Unallocated general corporate expenses............ (578) (365)
-------- --------
Total operating (loss)........................ (3,573) (4,969)
Interest and other income and expense - net......... 922 589
Interest expense.................................... - (441)
-------- --------
(Loss) from continuing operations before income
tax credit....... $ (2,651) $ (4,821)
======== ========
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH
THREE MONTHS ENDED SEPTEMBER 30, 1997
Consolidated revenues increased to $26,799,000 in the quarter ended September
30, 1998 from $20,035,000 in the quarter ended September 30, 1997. Gaming
revenues increased $10,610,000 from the prior year. The majority of the
September 30, 1998 quarter gaming revenues of $18,844,000 were from the sale of
video gaming devices and recently introduced models of reel type slot machines
while the majority of the prior year quarter revenues of $8,234,000 were from
the sale of video lottery terminals. Pinball and novelty revenues decreased by
$6,770,000 primarily due to decreased industry wide demand for the current
generation of pinball games.
After the April 6, 1998 spin-off of Midway Games Inc., the Company continues to
manufacture under a contract the coin-operated video games designed and sold by
Midway Games Inc. The September 30, 1998 quarter includes the new business
segment, contract manufacturing, which generated revenues of $2,924,000, gross
profit of $465,000 and segment operating income of $235,000. Previously the
Company recorded these operations as a cost allocation between a parent and
consolidated subsidiary.
Consolidated gross profit increased to $6,214,000 in the quarter ended September
30, 1998 from $5,350,000 in the quarter ended September 30, 1997 due primarily
to increased gaming revenues offset by lower pinball revenues.
Consolidated operating loss decreased to $3,573,000 in the September 30, 1998
quarter from $4,969,000 in the prior year quarter. Gaming segment operating loss
decreased by $3,554,000 because of the higher revenue. Pinball and novelty
segment operating loss increased by $2,180,000 because of lower revenues.
The increase in interest and other income and expense - net was primarily due to
the inclusion in the September 30, 1997 quarter of certain costs related to the
convertible debentures redemption. Interest expense in the
8
<PAGE> 10
September 30, 1997 quarter was from the convertible debentures outstanding at
that date that were subsequently converted by the holders in fiscal 1998.
Loss from continuing operations decreased to $1,644,000, $0.06 per share, in the
September 30, 1998 quarter from $2,989,000, $0.12 per share, in the prior year
quarter.
Net income (loss), which includes both continuing operations and discontinued
operations, was a net loss of $1,644,000, $.06 per share, for the quarter ended
September 30, 1998 compared to net income of $3,288,000, $.13 per share for the
prior year fiscal quarter. Loss from continuing operations and net loss for the
September 30, 1998 quarter were increased by $500,000, $.02 per share, due to
costs from the ongoing strike at the Company's cabinet manufacturing facility,
and were decreased by $790,000, $.03 per share, from a net recovery relating to
purchased parts overcharges primarily from certain pinball games suppliers in
prior years.
YEAR 2000 UPDATE
The term y2k is used to refer to a worldwide computer-related problem where
software programs and embedded programs in microprocessors will not work
properly when processing a date greater than December 31, 1999. This problem
results from using two digits to denote the third and fourth digit of a
four-digit year and a program assuming 19 to be the first two digits. Many
existing programs will continue to assume a 19 as the first and second digit
while a 20 or greater is required. A method of fixing the problem is for all
years to be denoted in a four-digit field and the program to recognize all four
digits as the year. This y2k problem has resulted in significant worldwide
concern about the future operations of businesses and other institutions.
The Company began addressing this problem in 1996. Management believes that most
of the systems utilized for the internal operations of the Company have been
made y2k compliant at an estimated cost of $1,000,000. The remainder, which is
primarily the upgrading of network servers, is to be y2k compliant soon at a
cost estimated to be $500,000. Management also believes that there are no y2k
issues with respect to the functionality of any products sold in the past or to
be sold in the future.
Management also believes that the assembly of products should not be affected by
malfunctioning tools or equipment using embedded microprocessors as the assembly
process is not heavily reliant on such tools or equipment.
The only known area of y2k related exposure is with the suppliers of components
for gaming devices and pinball games. Management has implemented a program of
formal contact with its suppliers so as to assess the existence of problems.
Management cannot make a determination as to the suppliers' level of y2k
compliance at this time. If needed, management will adjust the shipping dates
for products accordingly and at worst the Company would expect a short-term
delay in shipments. If such delay should occur it is not expected to have a
material effect on operating results for any reportable period.
9
<PAGE> 11
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- -------------------------
The information concerning the patent litigation between WMS Gaming Inc. ("WGI")
and International Game Technology ("IGT") as set forth in "Item 3. Legal
Proceedings" in Registrant's Report on Form 10-K for the year ended June 30,
1998 ("1998 10-K") is incorporated herein by this reference. Capitalized terms
used and not otherwise defined herein shall have the same meanings as ascribed
to such terms in the 1998 10-K.
On February 28, 1997, the Federal District Court for the Northern District of
Illinois ("Trial Court") entered judgment in favor of IGT and against WGI in the
amount of $32,845,189 in the Model 400 slot machine action. The Trial Court
disposed of a post-judgment motion on October 1, 1997. WGI filed a notice of
appeal on October 20, 1997. A bond having been previously filed by WGI,
enforcement of the money judgment has been stayed pending the disposition of the
appeal. The appeal is now pending before the United States Court of Appeals for
the Federal Circuit.
On November 26, 1996, IGT commenced an action against WGI in the Trial Court
seeking a judgment declaring that WGI's Model 401 slot machine also infringes
the Telnaes patent (the "Model 401 Action"). The complaint seeks a preliminary
and permanent injunction and treble damages. On December 18, 1996, the Trial
Court granted IGT's motion for a preliminary injunction and enjoined WGI from
manufacture, use and sale of the Model 401 slot machine. On April 10, 1997, WGI
filed with the Trial Court a motion to vacate the preliminary injunction based
upon newly discovered evidence. On May 5, 1998, the Trial Court denied the
motion to vacate the preliminary injunction. WGI filed a notice of appeal on May
7, 1998. The appeal of the preliminary injunction order is now pending before
the United States Court of Appeals for the Federal Circuit.
10
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------
(a) Exhibits
10.1 Employment Offer and Severance Benefits Letter from Registrant to Kevin
L. Verner
27 Financial Data Schedule
(b) Reports on Form 8-K.
None
11
<PAGE> 13
WMS INDUSTRIES INC.
---------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WMS INDUSTRIES INC.
----------------------------
(Registrant)
Dated: November 10, 1998 By: /S/ Harold H. Bach, Jr.
----------------------------
Harold H. Bach, Jr.
Vice President-Finance
Principal Financial and
Chief Accounting Officer
12
<PAGE> 14
Index to Exhibits
Exhibit Description
- ------- -----------
10.1 Employment Offer and Severance Benefits Letter from Registrant to Kevin
L. Verner
27 Financial Data Schedule
13
<PAGE> 1
EXHIBIT 10.1
January 17, 1997
VIA FEDERAL EXPRESS
Mr. Kevin L. Verner
2516 Innisfail Lane
Clemmons, North Carolina 27012
Dear Kevin:
We are pleased to extend an offer to you to join WMS Gaming Inc., a
wholly-owned subsidiary of WMS Industries Inc., as Executive Vice President and
General Manager. This offer of employment is subject to acceptable results of
background criminal and financial investigations we propose to conduct and your
election as an officer is further subject to our providing all appropriate
governmental notice.
Your principal place of business will be the Chicago, Illinois facilities
of WMS Gaming Inc. (the "Company.") Your base annual salary will be Two Hundred
and Fifty Thousand Dollars ($250,000) and you will be eligible to receive a
fiscal year-end bonus provided Company-specified goals are achieved (the
"Goal-Based Bonus.") The maximum of any such Goal-Based Bonus to become payable
will be fifty percent (50%) of your base annual salary. In addition, you will
also be eligible to receive an annual incentive bonus which shall be based upon
the Company's pre-tax profits ("Incentive Bonus.") The maximum of any such
Incentive Bonus to become payable will be two hundred percent (200%) of your
base annual salary. It is anticipated that the Goal-Based Bonus will be phased
out during the course of your employment with the Company and the Incentive
Bonus proportionately increased during the phase-out such that, upon complete
phase out of the Goal-Based Bonus, the maximum of any such Incentive Bonus to
become payable to you will be two hundred and fifty percent (250%) of your base
annual salary.
The Company will also pay you the amount of "Performance Units" which would
have been payable to you by your present employer were you not to leave its
employ. Provided you remain continuously employed with the Company through the
date of payment, the Company will pay you Fifty Thousand One Hundred Dollars
($50,100) during the second week of February, 1998 and Seventy-Two Thousand
Dollars ($72,000) during the second week of February, 1999.
Upon the commencement of your employment, management of the Company will
recommend that the WMS Stock Option Committee grant you options to purchase one
hundred thousand (100,000) shares of WMS Common Stock which may be exercised as
follows: up to ten percent (10%) of the total number of shares granted to you
("Total Grant") shall be exercisable commencing on the first anniversary of the
date of grant; up to thirty percent (30%) of the Total Grant shall be
exercisable commencing on the second anniversary of the date of grant; up to
sixty percent (60%) of the Total Grant shall be exercisable commencing on the
third anniversary of the date of grant; and up to one hundred percent (100%) of
the Total Grant shall be exercisable commencing on the fourth anniversary of the
date of grant.
<PAGE> 2
Mr. Kevin L. Verner
January 17, 1997
Page 2
You will also be entitled to participate in the Exec-U-Care medical plan
and the 401(k) savings plan as maintained by WMS Industries Inc. in accordance
with the provisions of such plans. Copies of our standard stock option
agreement, Registration Statement No. 333-06021 on Form S-8 as filed with the
Securities and Exchange Commission on June 14, 1996 containing a copy of the
1994 Stock Option Plan, the Form 10-K Report for fiscal year ended June 30, 1996
and the Form 10-Q Report for fiscal quarter ended December 31, 1996, Exec-U-Care
plan and 401(k) plan are enclosed. As your review of the Exec-U-Care plan will
indicate, Exec-U-Care provides a life insurance benefit equal to twice base
annual salary, up to a maximum of $200,000. This benefit is in addition to the
Company's general life insurance coverage which also provides a benefit equal to
twice base annual salary, up to a maximum of $200,000.
The Company will reimburse you for all reasonable duly-documented moving
expenses. Should you desire, the Company shall also engage a third-party company
on your behalf to sell and, if required, purchase your home in order to
facilitate your move to the Chicago area.
Your employment will be considered "employment at will," however, in the
event your employment is terminated by the Company other than for cause during
your first two (2) years of employment, the Company will pay you severance
payments for two (2) years following your termination. The annual severance
amount shall be equivalent to your highest base annual salary during the
one-year period prior to the date of termination and shall be paid to you in
equal amounts no less frequently than every other week.
Due to the legal regulation of the gaming industry, we have enclosed a
Pre-Employment Questionnaire and Personal Information Questionnaire which we ask
that you complete and return. We have also enclosed the form of our standard
Inventions, Intellectual Material and Confidentiality Agreement which we will
require you to sign upon the commencement of your employment.
We look forward to having you join the Company and are hopeful that you
will favorably consider our offer of employment.
Very truly yours,
WMS INDUSTRIES INC.
/s/ Neil D. Nicastro
Neil D. Nicastro
President & Chief Executive Officer
Enclosures
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 4,952
<SECURITIES> 55,400
<RECEIVABLES> 34,404
<ALLOWANCES> (2,557)
<INVENTORY> 38,472
<CURRENT-ASSETS> 158,725
<PP&E> 59,944
<DEPRECIATION> (25,393)
<TOTAL-ASSETS> 207,026
<CURRENT-LIABILITIES> 50,848
<BONDS> 0
0
0
<COMMON> 14,044
<OTHER-SE> 139,870
<TOTAL-LIABILITY-AND-EQUITY> 207,026
<SALES> 26,799
<TOTAL-REVENUES> 26,799
<CGS> 20,585
<TOTAL-COSTS> 20,585
<OTHER-EXPENSES> 2,980
<LOSS-PROVISION> 160
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,651)
<INCOME-TAX> (1,007)
<INCOME-CONTINUING> (1,644)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,644)
<EPS-PRIMARY> (0)
<EPS-DILUTED> (0)
</TABLE>
