Lernout & Hauspie Reports Record Revenues And Record Earnings For Third Quarter 1997.BURLINGTON, Mass.--(BUSINESS WIRE)--Oct. 22, 1997-- Record Revenues of $27.9 Million, Earnings Per Share of $.26, Strong Increase In Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. Revenues For Core Technologies and Dictation Software Revenues Lernout & Hauspie Speech Products (Nasdaq:LHSPF) today announced financial results for the third quarter ended September 30, 1997. For the third quarter of 1997 Lernout & Hauspie's (L&H) total revenues were $27.9 million, an increase of 285% over revenues of $7.3 million in the third quarter of 1996. Revenue included approximately $7.6 million from the company s core speech technologies, $8 million from dictation products, $7.6 million from translation services and $4.7 million from machine translation. Net income for the third quarter of 1997 reached $5.8 million, or $.26 per share, on 20.2 million average fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding, compared with $1.6 million or, $.10 per share, on 17 million shares outstanding for the third quarter of 1996. Recurring revenues from core technologies for the third quarter of 1997 increased substantially to $4.6 million (up 70% from previous quarter), or 61% of the total core technology revenues. The company has realized significant growth in the sales of dictation software. The quarter previous to it's acquisition, Kurzweil AI reported approximately $2.2 million in revenues. In the third quarter of 1997, the company reported $3.5 million in revenues for it's Kurzweil related dictation software, representing approximately a 60% percent increase. The company continues to demonstrate strong financial momentum. For the nine months ended September 30, 1997 revenues were $65.5 million, an 271% increase over the same period of the prior year. Net income before the one time charges for the nine month period was $11.9 million, compared $1.2 million for the same period in 1996. Earnings per share before one time charges were $.63 for the nine months period as compared to $.07 for the same period of the prior year. "We are pleased with the results of Q3. It confirms our belief that consolidation and focus on execution pay off, not only from a corporate and financial standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , but from a product perspective as well. The combination of this quarter's accomplishments, including the Microsoft alliance, the increase in recurring royalties and the increasing revenues of the Dictation Division were supported by product introductions in the horizontal market Refers to the entire marketplace that crosses all industry boundaries. See horizontal market software. Contrast with vertical market. with VoiceCommands, and in vertical markets with continuous speech products from our Healthcare Solutions Group. These milestones demonstrate the companies belief that the market is ready to embrace speech as an established technology," said Gaston Bastiaens Gaston Bastiaens (Westerlo (Belgium) December 16, 1946) is a Belgian engineer and businessman. As a vice president of Philips Electronics, he was responsible for the Compact Disc as well as for CD-i, CD-ROM, Philips' contributions to the MPEG standard and the foundations for the , president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Lernout & Hauspie. L&H Reports Third Quarter 1997 In the third quarter L&H secured a record of 31 contracts for core speech technologies, such as automatic speech recognition (ASR (Automatic Speech Recognition) Using voice recognition to replace keypad entry for telephone voice menus. Typically used to speak the digits 0 through 9 insted of keying them, ASR systems may be able to recognize a limited vocabulary. See voice recognition and AVSR. ), text-to-speech (TTS (1) See text-to-speech. (2) (Transaction Tracking System) Software that monitors a transaction until completion. In the event of a hardware or software failure, it ensures that the database is brought back to its former state before the attempt to ), digital speech compression Encoding digital speech to take up less storage space and transmission bandwidth. The PCM, ADPCM, CELP and LD-CELP methods are commonly used for speech compression. See speech codec and data compression. and text-to-text (translation). This represents a 82% percent increase in the number of contracts from the same quarter in 1996, bringing the total number for the year to 86, totaling over 232 to date. HIGHLIGHTS OF THE QUARTER Public Share Offering Increases US and European Floats L&H completed a public offering of 2,400,000 shares of Common Stock at a price of $45 per share. Of that total, 1,664,239 shares were sold by the company and the balance by selling stockholders. The stock is being traded on both Easdaq and Nasdaq, and constitutes a new financing for the company. Funds from the offering are anticipated be used to repay bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. as well as for general corporate purposes, including investments in the development of human and machine translation services and other speech and language- related businesses. Strategic Alliance with Microsoft L&H announced a broad strategic alliance with Microsoft (Nasdaq:MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ) on September 11, with the goal of accelerating development of the next generation of voice-enabled computing computing - computer on the Microsoft Windows See Windows. (operating system) Microsoft Windows - Microsoft's proprietary window system and user interface software released in 1985 to run on top of MS-DOS. Widely criticised for being too slow (hence "Windoze", "Microsloth Windows") on the machines available then. platform. Microsoft's $45 million investment will help accelerate efforts to create next generation speech-enabled products for the Windows platform. Kurzweil VoiceCommands Continuous Speech Product Introduction In September 1997 L&H launched VoiceCommands, a horizontal market continuous speech command and control editing tool for Microsoft Word A full-featured word processing program for Windows and the Macintosh from Microsoft. Included in the Microsoft application suite, it is a sophisticated program with rudimentary desktop publishing capabilities that has become the most widely used word processing application on the market. (TM). VoiceCommands is designed to increase user productivity by recognizing naturally-spoken words to edit and format Word documents. Significant Strides in Healthcare Solutions Group In September, L&H announced the first in a series of Kurzweil Clinical Reporter products now with continuous speech for the Pathology pathology, study of the cause of disease and the modifications in cellular function and changes in cellular structure produced in any cell, organ, or part of the body by disease. market. The new versions of Kurzweil Clinical Reporter are being integrated with L&H's large vocabulary continuous speech recognition technology, specified knowledge bases for Pathology, an automatic report writer and complete integration services into hospital information systems. Product Introduction to Address Embedded Market Refers to custom-designed, computer-based devices and applications that perform a fixed set of tasks. It may refer to cellphones and other handhelds, network appliances (routers, access points, modems) and myriad consumer electronics products. On October 7, L&H introduced a phonetic-based, speech recognition engine for embedded Inserted into. See embedded system. products. The ASR1600, which is being deployed on a NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. processor for car navigation See GPS. systems such as Pioneer, employs automatic speech recognition (ASR) technology, allowing machines to recognize and respond to spoken words. Complimenting the company's existing ASR200 word-based engine, which is designed for noisy surroundings, the ASR1600 uses phonetic pho·net·ic adj. 1. Of or relating to phonetics. 2. Representing the sounds of speech with a set of distinct symbols, each designating a single sound. recognition algorithms to support flexible, speaker-independent vocabularies without time-consuming data collection or training. L&H Reports Third Quarter 1997 Strategic Acquisitions Strengthen Footholds in Spain, Brazil and Portugal L&H announced during the quarter that it had acquired both C&L Services Linguisticos S.A. of Spain, specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. in lexicography lexicography, the applied study of the meaning, evolution, and function of the vocabulary units of a language for the purpose of compilation in book form—in short, the process of dictionary making. Early lexicography, practiced from the 7th cent. B.C. and terminology, and EMTI EMTI Emergency Medical Technician Intermediate EMTI Enhanced Moving Target Indicator , a company specializing in translation and localization Customizing software and documentation for a particular country. It includes the translation of menus and messages into the native spoken language as well as changes in the user interface to accommodate different alphabets and culture. See internationalization and l10n. services for Brazil and Portuguese languages Portuguese language, member of the Romance group of the Italic subfamily of the Indo-European family of languages (see Romance languages). It is the mother tongue of about 170 million people, chiefly in Portugal and the Portuguese islands in the Atlantic (11 million . These acquisitions signify sig·ni·fy v. sig·ni·fied, sig·ni·fy·ing, sig·ni·fies v.tr. 1. To denote; mean. 2. To make known, as with a sign or word: signify one's intent. L&H's commitment to building comprehensive global translation services and dictation and machine translation applications to meet the worldwide demand for both markets. About Lernout & Hauspie Lernout & Hauspie Speech Products (L&H) is an international leader in the development of advanced speech technology for various commercial applications and products. The company is divided into four divisions: core technologies; dictation, a division dedicated to discrete and continuous speech offerings; translation services and products; and Internet services. Its four core technologies are automatic speech recognition (ASR), text-to-speech (TTS), digital speech compression and text-to-text (translation). The company has its worldwide headquarters in Ieper, Belgium, its U.S. headquarters in Burlington, Massachusetts Burlington is a town in Middlesex County, Massachusetts, United States. The population was 22,876 at the 2000 census. History Burlington was first settled in 1641 and was officially incorporated on February 28, 1799. and international sales offices throughout Asia. This News Release contains forward-looking information that involves risks and uncertainties, including statements about the company s plans, objectives, expectations and intentions. Such statements include, without limitation, discussions concerning the company s new product introductions and developments. Investors are cautioned that such forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involve risks and uncertainties, including, without limitation, the company's reliance on sales by it s customers to generate recurring revenues, the early stage of the speech technology market, the management of growth, the successful integration of the company's recent acquisitions, the ability of the company to develop and successfully market new products, rapid technological change, competition, and the company s increased leverage. The forward-looking statements contained herein speak only as of the date of this News Release. The company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the company s expectations or any change in events, conditions or circumstance Circumstance or circumstances can refer to:
Lernout & Hauspie can be found on the World Wide Web at www.lhs.com. All product names and trademarks mentioned herein are trademarks of L&H and their respective subsidiaries. -0-
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
1997 1996 1997 1996
Net Revenues:
Core Technologies 7,613 5,764 20,498 16,164
Dictation 7,983 0 16,726 0
Machine Translation 4,726 0 7,152 0
Translation Service 7,552 1,488 21,152 1,488
Total net revenues 27,874 7,252 65,528 17,651
Cost of revenues:
Core Technologies 1,488 329 3,452 1,087
Dictation 2,919 0 7,188 0
Machine Translation 1,616 0 2,495 0
Translation Service 4,377 945 12,809 945
Total cost of revenues 10,400 1,274 25,944 2,032
Gross profit 17,474 5,978 39,584 15,619
Operating expenses:
Sales and marketing 3,461 1,156 7,308 3,492
Research and development 1,711 1,373 4,391 5,156
General and
administrative 3,772 1,948 9,417 5,902
Goodwill Amortization 1,708 0 3,215 0
In-process R&D write-off 0 0 55,100 0
Total operating expenses 10,652 4,477 79,431 14,550
Income (loss) from
operations 6,822 1,501 (39,847) 1,069
Other (income) expenses
Financial (income)/expense 516 (142) 1,168 (105)
Share in loss
unconsolidated affiliates 138 0 699 0
Net income (loss) before
taxes 6,168 1,644 (41,714) 1,174
Taxes 355 0 784 0
Net income (loss) 5,813 1,644 (42,498) 1,174
EPS Calculation
Embedded dividend on
Preferred Stock (616) 0 (724) 0
Net Income (loss) Adjusted(a) 5,197 0 (43,222) 0
Net Income (Loss) Per Share(b) .26 .10 (2.70) .07
Average number of fully
diluted shares(c) 20,243 17,062 16,027 16,865
EPS before one time charges
(a) Net Income (loss) before
one time charges 11,878
(b) EPS before one time charges .63
(c) Fully diluted average
shares outstanding 18,854
-0-
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands - Unaudited)
At Sept. 30, 1997 At Dec. 31, 1996
ASSETS
CURRENT ASSETS
Cash and cash equivalents $103,993 $28,650
Accounts receivable 22,113 12,379
Recoverable VAT and Tax 753 0
Prepaid expenses and
other current assets 2,328 2,200
Inventories 1,457 0
TOTAL CURRENT ASSETS 130,644 43,229
Deferred financing costs 1,332 1,428
Investments in affiliate 7,074 2,075
Goodwill 56,254 27,843
Property and equipment, net 6,728 5,299
Intangibles net of amortization 5,973 0
Software development costs, net 1,028 0
TOTAL ASSETS 209,033 79,874
LIABILITIES & SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Notes payable 2,470 7,658
Cutinued operations 350 571
TOTAL CURRENT LIABILIITIES 27, Preferred
stock 277,368 106,021
Accumulated deficit
Ellen Spooren,
erity@fitzcomm.com
or
Investor Contact Europe:
Annemieke Blondeel
Lommaert & Blondeel Consultants
(44) 181 850 6880,
lommaertblondeel@netmatters.co.uk
KEYWORD: MASSACHUSETTS
INDUSTRY KEYWORD: COMED COMPUTERS/ELECTRONICS EARNINGS
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