Tuesday February 3, 4:48 pm Eastern Time
Company Press Release
Lernout & Hauspie Reports Record Revenues and Record Earnings Before
One-Time Charges for Fourth Quarter 1997 and Fiscal Year 1997
IEPER, Belgium, and BURLINGTON, Mass.--(BUSINESS WIRE)--Feb. 3, 1998--
Announces 2-For-1 Stock Split
Q4 Revenues of $33.8 Million, or $ 0.32 Per Share for 1997, Before
One-Time Charge and Gain in Currency Exchange; Strong Increase of
Recurring Revenues
Lernout & Hauspie (Nasdaq:LHSPF, Easdaq:LHSP-ED) today announced results for the fourth quarter of over $33.8 million in
revenue, or a 150% increase in the reported revenue of $13.4 million for the fourth quarter 1996. For fiscal year 1997 the company
reported total revenues of $99.2 million, or an increase of 220% over the reported revenues of $31 million for 1996.
Revenue for Q4 1997 included approximately $8.5 million from the company's core speech technologies, $10.1 million from the
dictation division, $10.5 million from translation services and $4.8 million from machine translation. Recurring revenues from its
core speech division increased to $ 5.7 million in Q4 1997 compared to $2.0 million in Q4 1996.
Net income then adjusted for one-time charges and the gain in currency exchange for the fourth quarter of 1997 equaled $7.8
million, or $0.32 per share on 24.2 million average diluted shares outstanding, compared to $2.5 million or $0.14 per share on 17.7
million average outstanding shares in the fourth quarter of 1996.
The one-time charges and unusual items consist of a gain on currency exchange of approximately $3 million, $0.9 million for the
premium paid in the conversion of approximately $9 million in convertible bonds and the expenses associated with the combination
of L&H USA and the former Kurzweil operations totaling approximately $0.7 million.
The Company reported approximately $9.3 million in net income available to common stockholders for the fourth quarter of 1997 or
EPS of $0.38 cents per share on 24.2 million average diluted shares outstanding.
Net income for the full year of 1997, excluding one-time charges, totaled $22 million or $1.14 per share on 19.4 average diluted
shares compared to $3.5 million or $0.21 per share on 16.8 million average diluted shares. The net income excludes a one-time
charge of $55 million for in process R&D and a premium for debt conversion for $0.9 million.
''Compared to this time last year, speech technology has progressed considerably in terms of its market acceptance and technical
capability,'' said Gaston Bastiaens, president and CEO of Lernout & Hauspie. ''Our increased success in partnering and developing
applications in the automotive, telecommunications and medical markets are direct evidence of these advances. L&H is uniquely
positioned to continue to capitalize on this trend - we have an established track record with a wide array of customers and offer a
full complement of speech technologies, something few vendors in the market today can match.''
The company signed a record-breaking 121 contracts in fiscal year 1997, including a landmark 35 contracts during the fourth
quarter.
''Speech is quickly becoming the preferred user interface to many of the devices people rely on everyday in both their business and
personal lives. In the near future we believe it will become the ubiquitous interface,'' said Jo Lernout, co-founder and co-chairman
of L&H. ''With a complete breadth of applications, platforms and languages upon which to develop speech-enabled offerings,
L&H is properly positioned to lead this transition.''
L&H's continuing strength in vertical applications of its core technologies was a powerful driver of its strong performance in 1997.
The company's successful penetration of the automotive and medical markets significantly contributed to the company's revenue
growth. The core technologies division includes automatic speech recognition (ASR), text-to-speech (TTS), digital speech
compression and text-to-text (translation).
STOCK SPLIT ANNOUNCED
In conjunction with its fourth quarter and year end earnings results, the company also announced its intention to institute a 2-for-1
stock split.
''We are initiating the split in order to make L&H shares more accessible to a wider audience of potential buyers, as well as to
broaden the float of our shares in both the Nasdaq and Easdaq markets,'' said Pol Hauspie, co-founder and co-chairman..
Subject to obtaining necessary approval by the company shareholders it is expected that the stock split will be effective in March
the precise date to be set.
HIGHLIGHTS OF THE QUARTER
SGS-Thomson Microelectronics Licensing Agreement
L&H finalized an agreement with SGS-Thompson, a global independent semiconductor company, to develop a dedicated Digital
Signal Processor (DSP) to run L&H's ASR200 speech recognition software in automotive, multimedia and other electronic
systems. This circuit will be used to speech enable applications for vehicles, such as navigation systems and cellular phones,
allowing hands free control to enhance road safety and user convenience.
Alpine Licensing Agreement
L&H announced in October that Alpine will use its automatic speech recognition (ASR) and text-to-speech (TTS) software for
car navigation systems. The new automotive application, built on a popular NEC processor, will incorporate L&H's ASR1600
engine, which allows machines to recognize and respond to spoken words.
Introduction of New Dictation Products
In Q4 1997 L&H introduced its latest additions to the Kurzweil line of medical reporting solutions: Clinical Reporter Version 2.0 for
Radiology and Emergency Medicine. The enhanced products add continuous speech recognition capabilities to the complete clinical
reporting system and specialty knowledge bases for individual medical disciplines. The systems will help reduce report turn-around
time, decrease transcription costs and increase productivity in healthcare organizations. On top of that the company demonstrated
Voice Xpress at Comdex, the first fully integrated product for continuous dictation and command and control.
Translation Acquisitions
L&H broadened its strength in pan-European localization and translation and helped speed delivery of multi-lingual products by
acquiring two Scandinavian companies specializing in translation: Trantex of Finland and Wordwork of Sweden and a third one,
Kermit S.r.l. of Italy. All three translation companies are recognized leaders in their respective markets and will help the company
further its leadership base in translation services and provide the groundwork for the development of other multi-lingual speech
products.
HIGHLIGHTS OF FISCAL YEAR 1997
- During fiscal year 1997 L&H strengthened its long-term financial position by completing a public offering of 2,400,000 shares of
Common Stock, and listing on the Brussels-based Easdaq stock exchange. - The company also entered into a broad strategic
alliance with Microsoft (Nasdaq: MSFT - news) to fuel development of the next generation of voice-enabled computing on the
Microsoft Windows platform. - Consolidation of our leadership in core technology (acquisition of True Voice of Centigram,
introduction Arabic text-to-speech, introduction of several new speech engines, etc..) - Acquisition of Kurzweil and the set-up of
the Dictation Division - Acquisition of GMS and set-up of Machine Translation Division - Expansion and consolidation of Mendez
as a market leader in the translation services market - Important vertical application speech recognition products were launched in
1997, including systems for medical reporting, automobile navigation, voice-paging and various other consumer-oriented offerings -
the introduction of a new corporate identity indicates the NEW L&H.
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).
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 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 on
which any such statement is based.
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.
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LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
(Unaudited)
Three Months Twelve Months
Ended December 31 Ended December 31
1997 1996 1997 1996
Revenues
Core Technologies 8,452 5,458 28,951 21,622
Dictation 10,083 2,500 26,808 2,500
Translation Services 4,800 5,404 11,951 6,892
Machine Translation 10,509 -- 31,661 --
Total net revenues 33,844 13,362 99,371 31,014
Cost of revenues
Core Technologies 1,204 431 4,656 1,518
Dictation 3,548 989 10,736 989
Translation Services 1,627 -- 4,122 --
Machine Translation 6,448 3,229 19,257 4,174
Total cost of revenues 12,827 4,649 38,771 6,681
Gross profit 21,017 8,713 60,600 24,333
Operating expenses:
Sales and marketing 5,201 1,160 12,510 4,652
Research & Development 2,003 1,544 6,393 6,700
General and administrative 4,871 2,427 14,288 8,330
Goodwill Amortization 1,950 514 5,163 638
Transition Expense 697 -- 697 --
In-process R&D write-off -- 11,514 55,100 11,514
Total operating expenses 14,722 17,159 94,151 31,834
Income from operations 6,295 (8,446) (33,551) (7,501)
Other (income) expenses
Financial (income)
expense (4,823) (213) (3,655) (672)
Share in loss unconsol
affiliates 418 303 1,117 531
Expenses for debt
conversion 933 -- 933 --
Net income (loss) before
taxes 9,767 (8,536) (31,946) (7,360)
Taxes 239 482 1,023 579
Net income (loss) 9,528 (9,018) (32,969) (7,939)
EPS Calculation
Embedded dividend on
Preferred Stock (251) -- (976) --
Net Income (loss) available
to common stockholders 9,277 (9,018) (33,945) (7,939)
Net Loss Per Share - Basic 0.43 (0.59) (1.94) (0.53)
Net Loss Per Share - Diluted 0.38 -- -- --
Average number of shares -
Basic 21,735 15,349 17,466 14,900
Average number of shares -
Diluted 24,215 -- -- --
EPS before one time charges
Net Income (loss) before one
time charges (includes In
Process R&D and expenses for
debt conversion) 10,210 2,496 22,088 3,575
EPS before one time charges 0.42 0.14 1.14 0.21
Average number of shares -
Diluted 24,215 17,735 19,432 16,826
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LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
At Dec. 31, At Dec. 31,
1997 1996
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents 127,822 28,650
Accounts receivable 29,093 12,379
Recoverable VAT and Tax 902 --
Prepaid expenses and other current assets 4,566 2,200
Inventories 935 --
TOTAL CURRENT ASSETS 163,318 43,229
Property and equipment, net 9,022 5,299
Investments, net 6,875 2,075
Goodwill 61,699 27,843
Deferred financing costs 1,238 1,428
Intangibles net of amortization 6,329 --
Software development costs 1,426 --
TOTAL ASSETS 249,907 79,874
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable -- 7,658
Current portion of long-term debt 2,337 1,299
Accounts payable 11,628 5,691
Accrued expenses 14,156 8,555
Deferred Revenue 808 570
Net liabilities of discontinued operations 335 571
TOTAL CURRENT LIABILITIES 29,264 24,344
Long-term debt, less current portion 33,530 38,941
TOTAL LIABILITIES 62,794 63,285
Minority Interest 27 54
Common stock and additional paid-in capital 312,470 106,021
Accumulated deficit (116,631) (82,686)
Cumulative currency translation adjustments (8,753) (6,800)
SHAREHOLDERS' EQUITY 187,086 16,535
TOTAL LIABILITIES
& SHAREHOLDERS' EQUITY 249,907 79,874
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Contact:
Worldwide PR/IR:
Lernout & Hauspie
Ellen Spooren, 781/203-5344
espooren@lhs.com
or
Media Contact US:
Lernout & Hauspie
Audrey Pobre, 781/203-5341
apobre@lhs.com
or
Investor Contact US:
FitzGerald Comm.
Alicia Verity, 617/494-9500
averity@fitzcomm.com
or
Investor Contact Europe:
Lommaert & Blondeel Consultants
Annemieke Blondeel, (44) 181 850 6880
lommaertblondeel@netmatters.co.uk |
