WMS EXITS PINBALL BUSINESS (posted on Monday, October 25, 1999 -- 4PM) [Editor’s note: The following are lengthy excerpts from a press release issued by WMS Industries today. The company says it will no longer produce pinball machines after many years as the market leader, apparently leaving Stern Pinball Inc. as the sole pinball maker remaining in the coin-op industry. Stay tuned to Instant RePlay for more details as they become available.] WMS Industries Inc. announced today its results of operations for the fiscal 2000 first quarter ended September 30, 1999. WMS also reported that it would discontinue its pinball and cabinets manufacturing operations. Revenues from continuing operations for the fiscal 2000 first quarter increased 135% to $51.2 million compared with $21.8 million in the prior year period. Income from continuing operations, on an after-tax basis, increased to $8.9 million, $0.29 per share, from a loss of ($0.1) million, nil per share, in the prior year period. The Company's gaming subsidiary, WMS Gaming Inc., which designs, manufactures and markets casino gaming devices and video lottery terminals, reported a 155% increase in revenues to $48.0 million in the fiscal 2000 first quarter, up from $18.8 million in the prior year's first fiscal quarter. The revenue increase in the September 1999 quarter resulted from the sale of 4,083 video and reel type gaming devices compared to 2,333 in the prior year quarter, and $15.7 million of participation and lease revenues in the September 1999 quarter compared to $2.0 million in the prior year quarter. The participation and lease revenue is primarily from the Company's MONOPOLY(R)-themed gaming machines, introduced in October 1998. WMS has decided to discontinue the operations of its pinball and cabinets segment as a result of a prolonged period of weak demand and ongoing losses. The Company estimates the after-tax loss on disposal to be ($13.2) million, which reflects the write down of certain assets to anticipated realizable value and the accrual of shutdown expenses, including $4.2 million of pre-tax severance pay and related benefits. The Company's prior period consolidated financial statements have been restated to reflect the operating loss from the segment as loss from discontinued operations. Net cash to be generated from the liquidation of the assets and liabilities of the pinball and cabinets segment is anticipated to be approximately $9.4 million, including tax benefits, although the exact amount of the loss ultimately recorded will depend on several factors, including the ultimate proceeds received for assets. The Company does not anticipate that the discontinued pinball and cabinets segment operations will have a material negative impact on its liquidity or its future operating results. The pinball and cabinets segment experienced operating losses of $7.0 million in fiscal 1999, $7.8 million in fiscal 1998, and $3.0 million in fiscal 1997. Reflecting the one-time charges, the Company's net loss for the period ended September 30, 1999 was ($4.7) million, ($0.15) per share, compared to a loss of ($1.6) million, ($0.06) per share, in the same quarter in the prior year.