Dictaphone's Communications Recording Group Optimistic About Strong Market Position, New Products.

Business Editors

STRATFORD, Conn.--(BUSINESS WIRE)--Sept. 27, 2001

Dictaphone plans to emerge from Chapter 11

as independent company by year's end.

Dictaphone Corporation, a leading provider of communications recording solutions for public safety, financial and trading organizations and call centers, expressed optimism over significant progress recently made among L&H, Dictaphone and their creditors which will allow Dictaphone to once again become a privately held, independent company.

The emergence agreement, which calls for creditors to exchange debt for equity in the newly formed Dictaphone Corporation, is expected to be complete before the end of 2001. The company, along with its parent, Lernout & Hauspie, has been operating under Chapter 11 protection since late last year.

"Dictaphone's continued growth and strong product position are positive indicators of our future potential," said Rob Schwager, Dictaphone's president and COO. "After the transition, Dictaphone will be operating with very little debt, the lowest we've had, in fact, in more than five years, and with a very strong, comfortable capital structure. I'm happy to say that throughout the difficulties of the past year, Dictaphone has remained profitable and healthy. We're poised to move successfully ahead."

The company's overall R & D spending has remained strong throughout the period and continues today at a rate that is well above the industry average.

"In communications recording, we today have the largest and strongest portfolio of products in the group's history," said Berni Breen, senior vice president and general manager of the company's Communications Recording Systems (CRS) group. "We have rolled out and delivered more new products in the last six months than in any comparable period in memory."

New Freedom System Enjoys Marketplace Success

The CRS group recently launched Freedom FT, whose expanded channel recording capacity will be attractive to a growing number of larger organizations, both in public safety and in financial trading applications. Other products, including Freedom Select, Freedom QMS and Freedom CallCheck, have also been launched within the past several weeks. The launches are just the latest developments in the course of a very successful product. Freedom has been an important success since its launch in the fall of 1999. The company has sold over 4,200 Freedom recorders, which are installed at some 2,000 individual customer locations around the world.

"Our strength has been particularly remarkable in the context of today's difficult market conditions," Breen said. "At a time when our publicly traded competitors are struggling at share-price levels that in some cases are off ninety percent from recent highs, we have maintained a strong R&D and product rollout schedule."

Over the past year, CRS has developed new organizational systems to increase efficiency in both sales and customer service. With a strong, technology-driven, inside sales force coupled with a highly-skilled field force and new e-commerce initiatives, CRS is reaching prospects and customers more effectively than ever. As one measure of that efficiency, the average Dictaphone e-commerce transaction is valued at $22,500. That compares favorably with an industry average estimated to be $500.

About Dictaphone CRS

A division of Dictaphone Corporation, the Dictaphone Communications Recording Systems group (CRS) is a leading provider of communications recording and quality monitoring systems for public safety, financial services, and call centers, with over 18,000 installed customers worldwide. Based on service revenue, Dictaphone is the leading vendor in the call recording industry, according to independent call center industry analyst Datamonitor. Dictaphone CRS' principal product is the Freedom network appliance recording system. The Freedom system's revolutionary design gives call centers all types newfound freedom to access and store their voice information wherever, whenever, and however they want. Dictaphone Corporation has over a century of experience in voice technology. Dictaphone is headquartered in Stratford, Conn. For more information on Freedom FT and Dictaphone, visit http://www.dictaphone.com

The foregoing projections are "forward-looking" statements within the meaning of the Federal Securities Laws. Because such statements include risks and uncertainties, actual results may differ from the estimates provided. The company undertakes no duty to update such forward-looking statements. Factors that could cause actual results to differ from these forward looking statements include, but are not limited to, those disclosed previously and from time to time in the company's Annual Report Form 10-K and other public filings. In addition, readers are cautioned that forward looking statements include known and unknown risks, such as the uncertainties associated with the Company's recent Chapter 11 filings in the United States and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated.