LHSP beats estimates!!!
FWIW bought back lhsp @28.5
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Tuesday August 8, 4:42 pm Eastern Time
Press Release
Lernout & Hauspie Reports Record Revenues of Approximately $155 Million for Q2, 2000 and Earnings of $0.05 Before Goodwill Amortization and Exceptional Items
IEPER, Belgium and BURLINGTON, Mass.--(BUSINESS WIRE)--Aug. 8, 2000--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 second quarter ended June 30, 2000.
L&H's total revenues were approximately $155 million, an increase of 104% over reported revenues of $76 million for the second quarter of 1999. Thirty-one million dollars of the company's second quarter 2000 revenues came from Dictaphone and Dragon. Excluding Dictaphone and Dragon, L&H's second quarter revenues were $124 million, a 63% increase from revenues of $76 million in the second quarter of 1999. The company attributes 72% of this increase to organic growth.
Net income before goodwill and exceptional items for the second quarter of 2000 were $7.1 million, or $0.05 per share on approximately 140 million average diluted shares outstanding as compared to $7.6 million, or $0.15 per share during the second quarter of 1999 on approximately 119 million average diluted shares outstanding.
Goodwill amortization and exceptional items for the second quarter of 2000 were $44.5 million, $35.5 million of which was attributable to goodwill amortization, $8.6 million to in process R&D write-off associated with the acquisition of Dragon Systems and the remainder attributable to unrealized functional currency exchange losses. During the second quarter of 1999, goodwill amortization and exceptional items were $7.7 million, $7.2 million of which was ascribed to goodwill amortization and the balance was attributable primarily to unrealized functional currency exchange losses.
L&H's second quarter 2000 financial results reflected the acquisitions of both Dragon Systems and Dictaphone Corporation, which initially have an overall negative effect on L&H's net income. Dragon's and Dictaphone's revenues were adversely impacted in the second quarter by their adoption of L&H's more conservative revenue recognition policies. Furthermore, Dragon and Dictaphone revenues are reflected for only the post-acquisition portion of the quarter. Net income was also impacted by $xx million of interest expense associated with the assumption of approximately $430 million of obligations in connection with the Dictaphone acquisition.
Revenue for the second quarter 2000 consisted of:
Technology and Solutions Division - approximately $78.9 million,
$11.2 million from Dictaphone's CRS business;
Applications Division - approximately $50.4 million,
$11.2 million from Dictaphone's Healthcare unit,
$7.9 million from Dictaphone's Integrated Voice Solutions unit,
$1.7 million from Dragon Systems;
Globalization and Internet Translation Division - approximately $25.5 million
$7.4 million, or 29% of which was Internet-related revenue.
Geographical Analysis of Revenues in the Second Quarter
European revenues were approximately $36.4 million or 23% of total revenues compared to $29.3 million or 39% in the second quarter of 1999.
Revenues for North America were approximately $48.2 million or 31% of total revenues compared to $18.7 million or 25% of total revenues for the second quarter 1999. The increase in U.S. revenue is largly attributable the Dictaphone and Dragon acquisitions.
Korea contributed approximately $68 million or 44% of total company revenues.
Currently, L&H has over 150 corporate customers in Korea including Art Lab, Digital Life, Digital Sei Young Ltd, EPC, Hanvit Bank, Hanvit Securities, Hung Chang, Hyundi Securities, Koscom, LG Electronics, Samsung Electronics, and Terrasoft. Its second quarter 2000 revenues continued to be strong in Korea.
The increase in U.S. revenue is largely attributable to the Dictaphone and Dragon acquisitions.
``The combination of Dragon and Dictaphone with L&H and the retention of the talented executive management from both companies provide us with an organization and resources that are unquestionably the strongest and finest in this industry,'' said Gaston Bastiaens, president and CEO of L&H. ``We are very excited to apply these resources to tackle the ever growing opportunities in healthcare, enterprise and telephony, applications, globalization and the Internet. There has never been a more exciting or promising period in the speech and language technology industry.''
``The second quarter of 2000 was filled with successes that we believe we can replicate in other areas of our business,'' said Jo Lernout, co-founder and chairman of L&H. ``During the second quarter we continued to move toward a solutions oriented approach, as evidenced by the introduction of our healthcare solutions, our consumer applications and our NAK prototype solution. We also had numerous solutions sales in Asia. We believe these achievements can serve as a model for additional growth in the U.S. and Europe.''
Highlights of the Quarter
During the second quarter, L&H stockholders approved the company's proposed two-for-one stock split. The record date for the stock split was April 28, 2000 and the distribution date was May 12, 2000.
Technologies & Solutions
During the second quarter of 2000, L&H's Technologies and Solutions Division experienced significant successes in the telephony and enterprise markets, including the burgeoning voice for Web market and in the Asian market overall. In the fast-growth voice for web and Web portal industry Earth9.com, Tellme Networks, Inc., InternetSpeech, and Webversant were among the vendors that licensed L&H(TM) RealSpeak(TM) natural sounding text-to-speech (TTS) technologies for use in their services. L&H's RealSpeak was also selected during Q2 for use in the world's first virtual newscaster, ``Ananova'', a service that plans to broadcast on demand personalized news and information via the Internet.
While at PC Expo in June, L&H demonstrated for the first time L&H(TM) AudioMining(TM) technology. L&H(TM) AudioMining(TM) is a revolutionary new digital media management solution that employs a speech recognition engine to provide indexing of streaming multimedia content over the Internet. It uses an award-winning speech recognition engine to quickly capture and manage information contained in a wide variety of audio materials including: recorded video footage, radio broadcasts, telephone conversations, call center dialogues, help desk recordings, and more.
In the automotive market, L&H and Visteon Corporation, a leading automotive supplier, announced their intent to create a joint venture dedicated to advancing and accelerating the speech interface in automotive applications. This joint venture is expected to include automotive Internet speech portal services and solutions. It will also develop voice-enabled solutions for automobile equipment manufacturers and the aftermarket.
Additional second quarter Technology and Solutions Division contracts included those with Cisco, Ericsson, iBasis, Lucent, MailVision, Mastermind, Price Interactive, VoiceLogix and VoiceTel.
Applications Division
Healthcare Solutions Group Announces New Offerings
While at the HIMSS trade show in April, L&H demonstrated for the first time L&H(TM) iChart Service, a healthcare clinical documentation system that integrates large vocabulary speech recognition over the telephone, advanced digital dictation, natural language technology and transcription capabilities, all conveniently delivered via the Internet using an application service provider (ASP) model. The L&H(TM) iChart Service is expected to be an outsourced solution for a wide variety of healthcare organizations and builds on L&H's existing complement of product offerings.
Healthcare Contracts
During the second quarter, the following healthcare organizations signed contracts with L&H's Healthcare Solutions Group for its PowerScribe®Radiology solution: Wyoming Valley Health Systems, Wiles-Barr, Wy.; St. Luke's Hospital, Bethlehem, Penn.; and Boca Raton, Florida. Contracts for L&H Dictaphone Enterprise Express Systems during the 2nd Quarter included Dana Farber Cancer Institute (Partners Healthcare Systems), Boston, Mass.; Indiana Heart Physicians/Physicians Partner Group, Indianaplis, Ind.; University of Texas, M.D. Anderson Cancer Center, Houston, Texas; and St. Margaret Mercy Healthcare Centers, Hammond, Ind. and others. Community Hospital, Boca Raton, Fla.. Dana Farber Cancer Institute (Partners Healthcare System), Boston, Mass.; Indiana Heart Physicians/Physicians Partner Group, Indianapolis, Ind.; University of Texas, M.D. Anderson Cancer Center, Houston, Texas; and St. Margaret Mercy Healthcare Centers, Hammond, Ind. and others.
PC Applications Group Expands Enterprise Offerings
While at PC Expo in June L&H demonstrated for the first time the Enterprise Version of L&H(TM) Dragon Naturally Speaking®. The new offering is a true networked solution for the enterprise market that allows the transfer of speech files from the network to laptop PCs and gives users access to their speech files from any PC on the network. Thesolution, which provides support for hundreds of users, also allows users to dictate from any properly configured PC on the network.
During the second quarter of 2000 L&H's PC Applications Group also shipped L&H Voice Xpress version 5, which includes significantly improved accuracy and usability as well as enhanced support for Web-based applications such as e-mail, Internet browsing and chat.
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Globalization & Internet Translation
L&H's Globalization & Internet Translation Division signed several agreements during the second quarter, including one with Worldmine, one of the world's fastest growing travel Web sites. The agreement calls for L&H to provide translation and localization services for the Singapore-based company's on-line travel Web site content. The project is a large and complex agreement calling for extensive human translation, machine translation and linguistic expertise. L&H will initially translate and localize Worldmine's Web pages into Japanese and German followed by Asian languages such as Mandarin and Korean and then European languages.
Additional contracts signed during the second quarter included Webbe, Inc. -- in which L&H's iTranslator machine translation engine will provide instant foreign language translation in the chat module of Webbe -as well as Loral Cyberstar and British Telecom.
New organization
During the second quarter of 2000, L&H finalized its acquisition of Dragon Systems, significantly increasing the company's consumer market speech and language offerings and giving it the assets to further accelerate its development efforts in telephony and healthcare and to pursue emerging market opportunities. It integrated the Dragon and Dictaphone organization into its own, retaining the key management of both acquired companies, and creating a new company structure leveraging the strengths of each organization.
L&H's new company structure creates divisions that are even more focused on customer and market specific solutions. These new divisions, which also reflect important growth areas for L&H, are as follows:
The Healthcare Solutions Division includes offerings from Dictaphone's former Integrated Healthcare Solutions (IHS) group as well as the many solutions and services for the healthcare market from Dragon and L&H. John Duerden, who was previously Chairman and CEO of Dictaphone, will serve as president and CEO of the Healthcare Solutions Division.
The Enterprise and Telephony Solutions Division will include L&H technologies and solutions for enterprise and telephony markets, as well as Dictaphone Communications Recording Services (CRS) offerings. John Seo will serve as president of this new division.
L&H's Globalization and Internet Translation Division will remain largely unchanged, with responsibilities for translation and globalization of Web content and services. Florita Mendez serves as president of the division.
The Application Division is comprised of end user vertical and horizontal market applications, including those from Dragon Systems as well as some Dictaphone products. John Shagoury, formerly president of Dragon, will serve as president of the division.
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