WMS Industries Inc. ”
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we LISTEN 2 0 0 9 ANNUAL REPORT W M S I N D U S TR I E S I NC. WMS “SUCCeeDS and continues to achieve profitable GROWTH because we carefully LISTEN to our EMPLOYees & CUSTOmeRS. WMS Industries Inc. ” LIS·TEN (verb) 1. TO PAY ATTENTION 2. TO HEAR WITH THOUGHTFUL CONSIDERATION: TO HEED 3. TO BE ALERT TO CATCH AN EXPECTED SOUND WMS is known worldwide for our groundbreaking gaming experiences and cutting-edge industry technology. Behind our progress and advancement lies a strong Culture of Innovation: an organizational community in which every voice is heard. We have built a formidable talent base and a culture of open minds that remain alert to marketplace changes; and we have the courage to heed what we hear and execute with imagination and insight. 1 WL E ISTEN… a thought, a sound, AN IDEA, an image, a story, an evolution of sustainable long-term growth. STORIE S of a Successful IDEA Mark Foster Damon Gura Human Resources, Director, Advanced R&D, Director, Organizational Development Advanced Applications “ There is a genuine sense of “ Our culture feeds on itself. community, teamwork and Ideas are not only encouraged engagement of our people to and appreciated; they drive accomplish more than we our passion.” can independently.” Colleen Stanton Arturo Hernandez Marketing, Senior Marketing Manager Norm Wurz Manufacturing, Production Supervisor Engineering and Technology, Vice President, Hardware Development “ Great products are no accident—they “ Everyone is valued for their contri- result from a systematic approach and “ We deliver innovative, player-appealing products, because we listen butions and empowered to develop our unique, innovative culture.” to the marketplace and incorporate the ‘Voice of the Customer’ ways to make our processes better.” in every aspect of our development process.” It just takes a SPARK Sara Banks Finance Director—Operations Finance, Planning and Analysis “ Our success is directly attributable to our focus on investing in people, technology and intellectual property.” Bruce Frey Supply Chain, Vice President of Global Sourcing, Procurement and Planning Nadi Podgurski “ We don’t stand still; we have a deeply Information Technology, Business Solutions Specialist Catina Moore rooted culture that embraces change “ Our dedication to continuous improvement Joel Jaffe Gaming Operations, Senior Manager of Operations Game Development, Director of Games and wants to move the ball forward.” and commitment to teamwork propel our “ Respecting each others’ contributions and vision, our actions and our successes.” “ We love the challenge of innovation; it’s in our DNA. carefully listening to customers ensure we The amazing talent of our workforce enhances each consistently exceed their expectations.” product’s creative vision, rather than compromising it.” THE WMS brand is built upon the “ CREATIVITY, PAssION and EnthUSIasm of our EmPLOYEES— a group of highly dedicated and talented individuals who make it their job to exceed expectations. BRIAN R. GAMACHE—Chairman of the Board” and Chief Executive Officer 4 to OU R StoC KHOLDERS: Once again, in Fiscal 2009, WMS We are especially gratified by these results achieved record financial and oper- given the substantial headwinds that existed ating results in many of our most during the year. The last twelve months have important performance metrics. been, without a doubt, the worst conditions Fully diluted earnings per share increased that I can ever recall, both in the gaming 38% to $1.59 with total revenues rising to industry and the general economy. The over- $706 million, a 9% increase over Fiscal 2008. all economic malaise has had a dramatic Our total revenues are now 57% higher than impact on consumer spending. Credit and in Fiscal 2006, just three years ago. This tre- capital markets exhibited turmoil and volatil- mendous success was accomplished despite ity not seen in generations, and as a result, the challenges presented by an industry in industry unit shipments slowed further from which it is estimated that overall total unit already trough-level replacement rates. In sales in North America declined in each of addition, we experienced a record level of those three years. Over the same period, our new casino delays and postponements. net income nearly tripled from $33 million to Yet while these headwinds impacted nearly $92 million. This substantial growth in earn- everyone, WMS’ employees found innovative ings has been driven by the combination of ways to execute and grow by almost every our revenue growth and the significant measure. This distinguishing difference is improvement in operating margin—to 19% directly attributable to the creativity, tenac- from 11% in Fiscal 2006—that has been ity, discipline, skills and quality of our peo- achieved through consistent progress in our ple throughout our organization. Through operating execution. And while the tumultu- the alignment of our strategic priorities, our ous economic conditions created uncertainty employees were able to stay focused on tak- and significant marketplace instability, we ing care of our customers’ needs and meeting, generated strong cash flow and maintained and in many cases exceeding, their expecta- a fortress-like balance sheet. tions. I cannot be prouder of our people and 5 W M S I N DU st R I E S I nc . 2 0 0 9 an N U A L RE po R T tota L R E V EN UES GREW 9% reaching $706 million in FY 2009 their accomplishments, and I would like to and nurtured carefully over many years. acknowledge their achievements and thank Over time, we have worked diligently to all my colleagues for living our core values refine and enhance that capability into the of Innovation, Passion, Integrity, Quality and competitive advantage it has become today. Respect each and every day. That culture and mindset are manifest in our In this environment where business icons far-reaching research into better understand- have stumbled, you might be asking how we ing the values, wants and desires of casino were able to circumvent the pitfalls. Simply players. We use that Player Driven Innovation™ put, it is because of the talented workforce we focus in our product development efforts to employ and our laser-like focus on and disci- create innovative and differentiated products pline in listening to our employees and our that have consistently generated high player customers. Listening, really listening and appeal. We hold extensive dialogue with our considering what others are saying, is not customers to understand their needs and easy. It takes practice, patience and humility. desires so that we can create differentiated It takes an open mind. As a wise man once products and services that will offer them said, “You can observe a lot just by watch- greater value. ing.” I think the same goes for listening. That spirit and capacity for innovation at To create such a culture from scratch is not WMS are also being captured in new ways easy, but at WMS, we are fortunate to have at through our lean sigma initiatives. Beginning our core a Culture of Innovation: the capac- about four years ago, we began our journey ity for having an open mind and an ability to on the lean sigma path with simple initiatives listen. It encompasses the ability to see fresh in our production processes. Today, those possibilities and then take well-calculated business tools and learning principles are action to take advantage of those opportuni- being implemented in our business processes ties. Our culture was incubated decades ago in many areas across our Company, from 6 GaminG opER at ions EXCEEDED $ in average daily revenue per unit 73 in the June 2009 quarter product design and customer order manage- A number of years ago at WMS, we embarked ment to our financial and administrative on a Journey to Greatness. Some people processes. And at the heart of these continu- thought it seemed rather audacious given the ous improvement initiatives is our ability circumstances and challenges we were facing to listen to employees and maximize their at that time. However, as Yogi Berra allegedly diverse skills, talents and most importantly said, “If you don’t know where you are going, their vast, collective experience. By follow- you will end up someplace else.” There is ing this path, our employees become empow- great truth in that statement, and in our case, ered to make a difference and have valued setting visionary goals and having a well- input into the daily operation of our Company. defined path have led to substantial progress, as reflected in our financial results, the We devote significant efforts to encourage favorable feedback received from our custom- that culture and look for new ways to refine ers and, importantly, the improved satisfac- it, including personally recognizing positive tion of our employees. It is a journey of contributions and innovative ideas. One continuous improvement and striving for example implemented during the past year is progress that will allow us to better satisfy an online collaboration repository that allows the needs of our customers and our stock- our employees in all parts of our global holders, and improve employee satisfaction organization to submit and comment on new so that we are the employer of choice in ideas—from product concepts to cost-saving our industry. Building a better workplace enhancements. It incorporates substantial environment goes hand in hand with retain- contributions ranging from feedback on new ing and recruiting the best people, which products to ideas that will improve our work- in turns allows us to continue to lead the place environment or ways to save money. It industry with great products and innovative truly is collaboration at its best. business processes. It allows for not just meeting expectations, but exceeding them and stretching for new higher goals.