WMS Industries Second Quarter EPS Rise 47% Exclusive of Unusual Items On 30% Revenue Gain

Jan. 29, 2001

Installed Base of Participation Games Increases 50% Since December 31, 1999

    WMS Industries Inc. (NYSE:WMS) announced today that, exclusive of
unusual items, income from continuing operations for the second fiscal
quarter ended December 31, 2000 increased to $11.0 million, or $0.34
per diluted share, compared to $7.3 million, or $0.23 per diluted
share, in the comparable prior year quarter. 
    Revenues from continuing operations increased $15.6 million or 30%
to $67.4 million for the December 2000 quarter compared with $51.8
million in the prior year period.

    Net income for the quarter ended December 31, 2000 was also $0.34
per diluted share, or $11.0 million, which reflected two offsetting,
unusual items. First, the Company recorded $2.5 million of pre-tax
charges related to the previously announced relocation of the
Company's manufacturing, distribution, warehousing and corporate
offices to Waukegan, Illinois which amounted to $0.05 per diluted
share, of which $0.04 per share were non-cash write-downs of
facilities and equipment. Consistent with its previous announcement,
the Company anticipates total relocation charges for fiscal 2001 of
$0.07 to $0.09 per diluted share. Second, during the December 2000
quarter, the Company recorded $0.05 of earnings per diluted share from
the reversal of excess accruals recorded in the September 1999 quarter
for discontinuing the pinball and cabinet operations. For the quarter
ended December 31, 1999, net income was $15.6 million, or $0.50 per
diluted share, which included the pre-tax recovery of $13.2 million,
or $0.26 per diluted share, related to the reversal of an excess
accrual due to a litigation settlement.

    Earnings before interest, taxes, depreciation and amortization
(EBITDA), prior to the unusual items in both periods, were $20.9
million in the December 2000 quarter, up $6.1 million or 41% from
$14.8 million in the December 1999 quarter. EBITDA increased primarily
due to the increase in revenues and gross margin partially offset by
increased research and development costs related to new products and
technology and higher selling and administrative expenses to support
the 30% growth in revenues. Operating income, prior to the unusual
items in both periods, was $16.5 million in the December 2000 quarter,
up a significant 50% compared to $11.0 million in the prior year
quarter. The increase in operating income resulted from continued
growth in EBITDA despite higher non-cash depreciation and amortization
charges related to the 50% increase in the installed base of
participation games from December 31, 1999.

    The fiscal 2001 second quarter revenue growth was attributable to
a 16% increase in the sale of gaming devices to 5,004 units in the
December 2000 quarter versus 4,301 units sold in the December 1999
quarter, as well as a 9% increase in the average selling price of
games sold to $8,332. Revenue growth was also fueled by an increase in
the installed base of MONOPOLY(R) and JUMBLE(R) brand participation
games that provide the Company with recurring revenues and cash flow.
Revenue from participation and leases increased $4.8 million or 28% to
$21.8 million in the December 2000 quarter compared to $17.0 million
in the prior year period. The average installed base of participation
gaming devices increased by 42% to 4,784 units in the December 2000
quarter from 3,371 units in the December 1999 quarter due to the
continued growth in MONOPOLY brand games and the aggressive rollout of
the JUMBLE brand game. The actual installed base of participation
games rose 19% since September 30, 2000 despite the Company delaying
the introduction of the newest version of MONOPOLY, Money Grab(TM), in
order to accommodate the launch of JUMBLE. At December 31, 2000 the
Company had a total of 5,268 MONOPOLY and JUMBLE brand participation
gaming devices installed, a 50% gain over the December 31, 1999
installed base.

    The average daily revenue per participation device was $42.98 in
the December 2000 quarter compared to $45.76 in the December 1999
quarter. This decrease results primarily from the impact of first
introducing JUMBLE in the state of Nevada, which accounted for a
majority of the JUMBLE revenues in the quarter, and which, in the
Company's experience, has the lowest average daily revenue rate of any
domestic gaming jurisdiction. WMS currently has a backlog of customer
requests for over 500 additional participation gaming machines.
    Total gross profit increased 34% to $38.2 million for the December
2000 quarter, up from $28.5 million in the December 1999 quarter.
Fiscal 2001 second quarter gross profit margin on sales of gaming
machines increased to 42% from 38% in the prior year quarter primarily
due to the increase in average sales prices. Gross profit margin on
participation and lease revenues decreased slightly in the quarter
ended December 31, 2000 to 87% due to lower average net win per day as
well as a government mandated decrease in the net win percentage
earned by gaming equipment suppliers from gaming machines placed in
Delaware and Rhode Island.

    "The 50% expansion of our participation game installed base since
December 31, 1999 contributed to our 47% gain in earnings per share,
and bodes well for continued earnings growth in future periods,"
stated Brian Gamache, President and Chief Operating Officer. "Our
participation revenues grew 28% over the December 1999 quarter and 11%
sequentially over the September 2000 quarter providing $18.9 million
of gross margin, up 24% from the December 1999 quarter. Our latest
MONOPOLY game, Money Grab, is now approved in Nevada and will be
launched next week. We expect Money Grab to help fuel expansion of our
overall installed base of participation games."

    "With the success of our MONOPOLY and JUMBLE brand participation
games, WMS is capturing and retaining significant marketshare in the
participation game business," continued Gamache. "In the last six
months alone we have increased the installed base of our participation
games by 1,312 units or 33%. With our recently announced licenses for
the rights to PAC-MAN® and HOLLYWOOD SQUARES®, we intend to be a
dominant player in this important, growing and profitable segment of
the recurring revenue market. We have also taken steps to increase the
number of branded game themes that we will introduce for direct sale
over the next eighteen months.

    "During the December quarter we successfully relocated our
manufacturing, distribution and warehousing operations and our
corporate administrative staff to our Waukegan facility without any
impact on production or shipping. Our Waukegan facility provides
tremendous flexibility and room for growth and manufacturing
efficiency. As we implement our new manufacturing methodology over the
next six months, we expect to reduce the lead-time for games. We
believe improved `time-to-market' will be a significant competitive
advantage. In addition, we are implementing other strategies with an
intent to reduce our cost of sales and further increase our profit
margin on game sales.

    "We have taken great strides to continue our growth and
profitability while continuing to improve the infrastructure necessary
to grow our business in the future," concluded Gamache. "With growing
base game sales and participation game placements, new licensed
brands, a focus on manufacturing quality and efficiency in our
Waukegan facility and an `investment grade' balance sheet supporting
our growth and expansion plans, we are well positioned to continue
enhancing the value of our stock."

    WMS Industries Inc. is hosting a conference call and webcast at
4:30 p.m. EST today, Monday, January 29, 2001. The conference call
number is 212/896-6113 or 415/904-7326. To access the live call on the
Internet, log on to http://wmsgaming.com (select "Co. Info," then
"Investor Relations"). Following its completion, a replay of the call
can be accessed for sixty days on the Internet via http://wmsgaming.com.

    MONOPOLY® is a trademark of Hasbro, Inc.®&(c) 2000 Hasbro,
Inc. All rights reserved. Used with permission. 

    JUMBLE® is a trademark of Tribune Media Services.(c)2000 Tribune
Media Services. All rights reserved. Used with permission PACMAN® is
a trademark of Namco Limited.

    PAC-MAN(c)1980 Namco Limited. All rights reserved.

    HOLLYWOOD SQUARES® is a registered trademark of King World
Productions, Inc. Money Grab(TM)is a trademark of WMS Gaming
Inc.(c)2000 WMS Gaming Inc. All rights reserved.

    This press release 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
financial strength of the gaming industry, the expansion of legalized
gaming into new markets and legislative and regulatory changes in
existing gaming 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, and other
risks more fully described under "Part I - Item 1. Business - Risk
Factors" in the Company's Annual Report on Form 10-K.

    WMS Industries Inc. is engaged in the design, manufacture and sale
and lease of gaming machines and video lottery terminals.

    CONTACT: WMS Industries Inc., Waukegan 
             Scott D. Schweinfurth, Chief Financial Officer, 
             Jaffoni & Collins Incorporated, New York 
             Joseph N. Jaffoni, Richard Land, 212/835-8500