5/9 LHSP... Lernout & Hauspie Reports Record Revenues and Strong Earnings for First Quarter 2000
biz.yahoo.com
Company Achieves Revenues of $110.7 million and EPS of $0.37
Before Goodwill Amortization and Exceptional Items
Lernout & Hauspie (Nasdaq: LHSP, Easdaq: LHSP) (L&H), a worldwide market leader in speech and language technologies, products and services, today announced financial results for the first quarter ended March 31, 2000.
For the first quarter of 2000, L&H's total revenues were $110.7 million, an increase of 57% over reported revenues of $70.7 million for the first quarter of 1999. The company attributes the increased revenues to continued growth in telephony, enterprise solutions and embedded market strengths. Approximately 74% of the revenue increase was attributed to organic growth.
Net income before exceptional items for the first quarter of 2000 reached $12.2 million, or $.19 per share on 63.9 million average diluted shares outstanding which is a 75% increase when compared to $7.0 million in net income, or $0.12 per share on 58.1 million average diluted shares outstanding for the first quarter of 1999. The excluded exceptional amount in Q1 2000 was a $4.2 million net benefit (mainly unrealized currency exchange gain). Earnings per share, EPS before goodwill amortization, were $0.37 compared to $0.24 during the first quarter of 1999.
Revenue for the first quarter 2000 included approximately $58.9 million from the company's Technologies and Solutions division, including $31.0 million from Telephony and Enterprise Solutions; $28.0 million from the Applications division and $23.8 million from the Globalization and Internet Translation Division, $5.5 million of which was Internet-related revenue. Internet-related activity within its Globalization and Internet Translation Division reached a record 23% of the division's revenues, signaling the division's successful evolution to an Internet focus. In Q1 2000, Technologies and Solutions division signed 86 new contracts.
``As we enter the new millennium L&H continues its growth not only with the development and introduction of leading, next generation speech and language solutions but also by laying the foundation for future growth through strategic acquisitions like Dictaphone and through the pending acquisition of Dragon,'' said Gaston Bastiaens, president and CEO of L&H. ``We believe that we are creating sound infrastructures that can tackle the rapid growth opportunities in the Globalization and Internet Translation, Healthcare, and Telephony and Enterprise Solutions markets.''
L&H took many significant steps in Q1 to advance its strategy to seize leadership in the healthcare, telephony and Internet markets -- most notably its acquisition of Dictaphone. Combined, the acquisitions bring L&H additional technology and R&D expertise, seasoned management and strong customer bases, all of which can be leveraged to expand and enhance its position in key, high growth industries. The company also signed a number of contracts in its key markets, created strategic alliances and introduced prototype technologies -- all serving to increase the role of speech and language technology for diverse markets.
``The company is now ready to take on the next phase in our strategy: bringing speech into the mainstream,'' said Jo Lernout, co-founder and chairman of L&H. ``We will address that opportunity through the development and commercialization of speech platforms, such as our NAK technology, that allows vendors to quickly and easily speech-enable a broad range of consumer devices, thus supporting the widespread adoption of speech as a user interface.''
Highlights of the Quarter
Agreements Signed to Acquire Dragon and Dictaphone
L&H's acquisition of Dictaphone, which closed on May 8, 2000 builds L&H's product and management resources and its customer base in the medical dictation arena and the telecommunications market. The management teams for both companies have worked diligently to integrate both organizations' operations in order to more quickly penetrate within the healthcare, telephony, call center and legal dictation markets.
John Duerden, formerly chairman and CEO of Dictaphone, will become president of a newly created Division. The Division will include: Dictaphone's call center activities integrated with L&H's advanced data mining technologies; the combination of Dictaphone's Interactive Voice Solutions with L&H's PC Applications group; and a newly formed Consumer Group comprised of L&H's embedded, PC/multi-media technologies, and wireless and mobile solutions (NAK); as well as the companies' combined healthcare solutions. In addition, the company has established a separate entity focused on transcription and Internet-hosted services for the healthcare market.
During Q1 L&H also signed a definitive agreement to acquire Dragon Systems Inc. of Newton, Mass. By combining resources, L&H and Dragon plan to create a ``brain trust'' that is expected to use the best of the technologies developed in both companies to work on projects designed to accelerate the use of speech and language in emerging and mainstream markets. The completion of the acquisition is subject to customary conditions to closing including obtaining all necessary regulatory approvals.
Shares Sold in Shelf Registration
In January 2000, L&H filed a shelf registration statement to sell up to $150 million of its common stock. In that month, the company issued a total of 1,142,857 shares of its common stock for $52.5 per share to BT&T of Switzerland, Acqua Wellington North American Equities Fund, Ltd and KBC Asset Management of Belgium. The company received net proceeds of $58.3 million after expenses. L&H also completed on March 31, 2000 and April 3, 2000, additional draw downs from the shelf registration, with two of the parties from the first issuance. The first additional tranche of 360,000 shares was issued at $111.50 for total proceeds of $40.1 million and the second additional tranche of 250,000 shares was issued at $113.00 for total proceeds of $28.2 million. L&H is using the net proceeds from the sale to help support ongoing preparations to create separate entities for its Healthcare Solutions, Globalization and Internet Translation, and Enterprise and Telephony Solutions business groups. It also expects to use the proceeds to provide working capital and funds for its recent healthcare acquisitions and for other general corporate purposes.
NLU Integral to Healthcare Solutions and Call Centers
L&H also announced today that it has acquired Interactive Systems Inc. (ISI), a Pittsburgh-based speech and language technology developer, for approximately $8.9 million in cash with a $4 million earn out over 2 years. The assets from this acquisition will provide L&H with additional expertise with which to further natural language understanding (NLU), a technology that figures prominently in data mining, data management, audio mining, clinical language understanding and other processes needed for comprehensive healthcare and telecommunications solutions.
ISI, formed by leading researchers from Carnegie Mellon University (CMU) and Karlsruhe University, is widely recognized for its world-class research and development engineering staff that has been advised by Alex Waibel, a prominent speech and language scientist associated with CMU. L&H expects to leverage ISI's R&D staff and its technological expertise, including its strengths in robust parsing, dialogue management and conversational speech technology, for use not only in its healthcare and telecommunications solutions but also in translation and Internet services. L&H also announced today that Dr. Alex Waibel would join Raymond Kurzweil as a member of the L&H technology advisory board. Dr. Janet Baker will chair the technology advisory board (pending the completion of the Dragon Systems acquisition).
Technologies & Solutions Builds Assets
During Q1 L&H enhanced its existing speech technologies and solutions by acquiring speech engineering resources from Matra Nortel Communications, a speech processing developer widely recognized for its noise cancellation and other technologies, and all of the assets of Elan Informatique, a France-based text-to-speech (TTS) technology provider. The acquisitions will not only enhance L&H technologies but will also broaden L&H's European customer base and provide the company with increased research and development resources and expertise.
In January, L&H joined with several entertainment industry leaders to form NightStorm Media (NSM), a joint venture in which L&H will localize its technologies and solutions for the Korean market and adapt them to the educational and entertainment field.
Telephony & Enterprise Contracts Grow
During Q1, L&H signed several contracts in which it licensed its technologies to developers for use in telephony market applications. Key Q1 contracts included Lucent Technologies' license of L&H's RealSpeak(TM) text-to-speech technology for use with its new Enhanced Media Resource Server (eMRS), a next-generation platform for deploying Internet and calling services. Hung Chang Co., Ltd. signed, during Q1, under which it licensed L&H's speech technologies in multiple languages to develop speaker verification and reservation applications. L&H RealSpeak(TM) has also been licensed by Dialogic©, an Intel Company, to be integrated with its CT Media server software for Windows NT©. Additional Q1 telephony contracts include MailCall, OneBox, InterVoice Bright, and BeVocal.
Application Division Demonstrates LVR for StrongARM Platform and New Products
While at the DEMO 2000 conference in February, L&H demonstrated its FIRST prototype software for handheld devices that has a large vocabulary continuous speech dictation engine to easily send and receive e-mail, surf the Web and conduct e-commerce transactions. NAK's open architecture should allow for portability to the major operating systems such as Windows CE, Linux, Symbian, etc.
During Q1 L&H's Applications Division launched several new products for the consumer market. The company showcased for the first time its L&H(TM) Kurzweil 3000(TM) for the Mac©, extending the benefits of the innovative reading tutor software to the millions of current Apple computer users. It also announced version 5.0 of its L&H(TM) Kurzweil 1000, adding the award-winning L&H(TM) RealSpeak(TM) human sounding text-to-speech (TTS) and other features to the reading software program for the blind.
The company shipped version 7 of L&H(TM) Power Translator© Pro translation software with enhancements such as the addition of L&H(TM) RealSpeak(TM), and integration with Microsoft© Office 2000 products.
Medical Market Momentum
L&H's Healthcare Solutions Group signed contracts in the first quarter for its PowerScribe©Radiology solution with: Brockton Hospital, Brockton Mass.; Lenox Hill Radiology and Medical Imaging, New York, NY; Children's Hospital, Seattle Wash., and Muhlenberg Regional Medical Center, Plainfield NJ. The group also signed Yale New Haven Hospital, New Haven, Conn. for L&H(TM)Clinical Reporter(TM)in the Emergency Department.
Globalization and Internet Translation: Increases Internet Focus
During Q1 L&H's Globalization and Internet Translation Division increased its emphasis on Internet-related offerings and business, moving it closer to readiness for separate entity status. The division named Jeff Hopkins, as vice president of development. Mr. Hopkins is an expert in language technologies and Intelligent Content Management. The division also launched availability of its Internet translation services through Microsoft's Office Update web site (http://www.officeupdate.com), providing millions of users with quick, easy access to L&H's machine translation services.
Further emphasis was placed on Internet activity as all of the company's iTranslator(TM) Internet translation service offerings were transferred to the Globalization and Internet Translation Division from other groups and divisions. As a result, the division has begun to market and sell a complete family of iTranslator services and solutions.
Contracts
During the first quarter, the Globalization and Internet Translation Division signed contracts for localization and/or translation in a wide range of languages with, among others: FIAT Torino, InterClubNet, Arburg, SEAT, Deutsche Isuzu, VDO Car Communication, Friedrich Grohe, and CMPnet Asia.
Increased SAIL Labs Investment to Enhance NLU for Translation
In order to support the rapid deployment of Machine Translation over the Internet, as well as the broader requirements of the company in the field of Natural Language Understanding, the company announced today that it has increased its holdings in SAIL Labs. SAIL Labs is a research and development lab specializing in artificial intelligence (AI), natural language understanding (NLU), machine translation (MT), Advanced Natural Language Search Technology and a host of other advanced technologies. L&H has held a minority interest in SAIL Labs since 1999 while a consortium of other investors held a majority interest. With today's announcement L&H has increased its holdings to approximately 30%.
SAIL Labs, which has facilities in Antwerp, Barcelona, Berlin, Munich and Vienna, employs approximately 190 engineers, scientists and linguists' expert in the field of speech, artificial intelligence and language technology.
About Lernout & Hauspie
Lernout & Hauspie (L&H) is a global leader in advanced speech and language solutions for vertical markets, computers, automobiles, telecommunications, embedded products, consumer goods and the Internet. The company is making the speech user interface (SUI) the keystone of simple, convenient interaction between humans and technology, and is using advanced translation technology to break down language barriers. The company provides a wide range of offerings, including: customized solutions for corporations; core speech technologies marketed to OEMs; end user and retail applications for continuous speech products in horizontal and vertical markets; and document creation, human and machine translation services, Internet translation offerings, and linguistic tools. L&H's products and services originate in four basic areas: automatic speech recognition (ASR), text-to-speech (TTS), digital speech and music compression (SMC) and text-to-text (translation). For more information, please visit Lernout & Hauspie on the World Wide Web at www.lhs.com or www.lhsl.com.
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 strategic direction, new product introductions and developments and market growth. Readers are cautioned forward looking statements include known and unknown risks, including uncertainty of new product development, the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated, early stage of development of the speech, language and medical information technology markets, the company's ability to predict accurately the demand for its products in these emerging markets and to develop strategies to address these markets successfully, the company's ability to manage its growth and changing business, the company's ability to successfully integrate the operations of Dictaphone, the retention of key technical and other personnel, risks associated with the financial leverage associated with the company's assumption and/or repayment of Dictaphone indebtedness, currency and other risks related to international operations, rapid technological change and intense competition, as well as other risks set forth in L&H's filings with the Securities and Exchange Commission. 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 on which any such statement is based.
All product names and trademarks mentioned herein are trademarks of L&H or their respective owners |
