EXHIBIT 99.1
February 9, 2001
Hugh Ward
Office of the United Shares Trustee
Curtis Center, Suite 950 West
601 Walnut Street
Philadelphia, Pennsylvania 19106
Dear Mr. Ward:
Re: Monthly Operating Report
Lernout & Hauspie Speech Products, N.V.
Case No. 00-4398 (JHW)
District of Delaware
Enclosed is the Monthly Operating Report of Lernout & Hauspie Speech
Products N.V. for the period of December 1, 2000 through December 31, 2000.
Please contact me with any questions or comments.
Yours truly,
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
/s/ Philippe Bodson
Philippe Bodson
Chief Executive Officer
Lernout & Hauspie Speech Products, N.V.
cc: Clerk of the Bankruptcy Court
Luc A. Despins Milbank, Tweed, Hadley & McCloy
Allan S. Brilliant Milbank, Tweed, Hadley & McCloy
Matthew S. Barr Milbank, Tweed, Hadley & McCloy
Claude Gonthier Liedekerke Wolters Waelbroeck Kirpatrick
& Cerfontaine
Robert Dehney Morris, Nichols, Arsht & Tunnell
Daniel H. Golden Akin, Gump, Strauss, Hauer & Feld, LLP
Bill Lenhart BDO Seidman
Frans Samyn BDO
TRANSMITTAL OF FINANCIAL REPORTS AND
CERTIFICATION OF COMPLIANCE WITH
UNITED STATES TRUSTEE OPERATING REQUIREMENTS
FOR THE PERIOD OF DECEMBER 1 - DECEMBER 31, 2000
Debtor Name: Lernout & Hauspie Speech Products, N.V.
Case Number: Case No. 00-4398 (JHW)
As Chief Executive Officer of Lernout & Hauspie Speech Products, N.V.,
a corporation organized under the laws of the State of Delaware as the debtor
and debtor in possession in the above-referenced Chapter 11 case (the "Debtor"),
I hereby affirm that:
1. I have reviewed the following statements (the "Statements")
attached hereto, consisting of a:
. Balance Sheet
. Statement of Operations
. Statement of Cash Flows
. Summary of Bank Accounts
. Statement of Payments to Insiders
2. The Statements have been prepared in accordance with normal and
customary accounting practices, and fairly and accurately reflect the Debtor's
financial activity for the applicable period.
3. The insurance described in Section 3 of the Operating Guidelines
and Reporting Requirements for Chapter 11 Cases (the "Operating Guidelines")
remains in force.
4. All postpetition taxes, as described in Section 4 of the
Operating Guidelines, are current and have been paid in the ordinary course of
business.
5. No professional fees have been paid in connection with
applications submitted to the court in the ordinary course.
The attached Statements were prepared by Lernout & Hauspie Speech
Products, N.V. under my direction and supervision. Lernout & Hauspie Speech
Products, N.V. verifies that, to the best of its knowledge, the information set
forth in the Statements is true and correct. Please be advised that the attached
Statements may be subject to certain closing adjustments as well as other
modifications. If any of the attached figures are restated or modified, an
amended operating report will be filed with the U.S. Trustee.
Dated: February 9, 2001 /s/ Philippe Bodson
-----------------------------------------
Philippe Bodson
Chief Executive Officer
Lernout & Hauspie Speech Products, N.V.
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
Case NO. 00-4398 (JHW)
MONTHLY OPERATING REPORT
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
(Debtor in Possession)
BALANCE SHEET
AS OF DECEMBER 31, 2000
(Unaudited)
($000s)
-----------
ASSETS
Current Assets:
Cash & Cash Equivalents $ 1,757
Accounts Receivable - Trade 7,262
Prepaids & Other Current Assets 3,137
-----------
Total Current Assets 12,156
-----------
Property, Plant and Equipment $ 14,257
Less: Accumulated Depreciation (3,439)
-----------
Property, Plant and Equipment (Net) 10,836
Investments in and Advances to Affiliated Companies (cost) 1,586,844
Accounts Receivable - Intercompany 252,173
Goodwill, net 116,003
Deferred Charges, including capitalized intercompany research & development 29,541
-----------
TOTAL ASSETS $ 2,007,583
===========
LIABILITIES
Current Liabilities:
Accounts Payable $ 2,300
Accrued Liabilities 1,438
-----------
Total Current Liabilities 3,738
-----------
Liabilities Subject to Compromise under Chapter 11 (Note 7) 704,260
Borrowing under GECC DIP Facility:
Amount due to Dictaphone Corporation (Note 9) 1,954
-----------
TOTAL LIABILITIES 709,952
-----------
STOCKHOLDERS' EQUITY
Common Stock 1,681,021
Accumulated Deficit (364,059)
Cumulative Currency Translation Adjustment (19,331)
-----------
TOTAL STOCKHOLDERS' EQUITY 1,297,631
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,007,583
===========
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
Case No. 00-4398 (JHW)
MONTHLY OPERATING REPORT
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
(Debtor in Possession)
STATEMENT OF OPERATIONS
FOR THE MONTH ENDED DECEMBER 31, 2000
(Unaudited)
($000s)
---------
REVENUE
License & Engineering $ 859
Service (Maintenance, Training, Support) 1,629
Intercompany royalty charges (excluding Holdings and Dictaphone) 3,013
Other 194
---------
Total Revenue 5,695
---------
COST OF SALES
Cost of Sales - License & Engineering 348
Cost of Sales - Intercompany 395
---------
Total Cost of Sales 743
---------
Gross Profit 4,952
---------
OTHER EXPENSES
Selling, General & Administrative 3,899
Research & Development, including intercompany allocation 4,490
Depreciation & Amortization 2,964
Goodwill Amortization 1,223
---------
Total Other Expense 12,576
---------
Operating Loss (7,624)
Writedown of Assets (Note 10) 100,510
Other Income 16
---------
Net Loss $(108,118)
---------
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
Case No. 00-4398 (JHW)
MONTHLY OPERATING REPORT
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
(Debtor in Possession)
STATEMENT OF CASH FLOWS
FOR THE MONTH ENDED DECEMBER 31, 2000
(Unaudited)
($000s)
----------
OPERATING ACTIVITIES
Net Loss $ (108,118)
Adjustments to reconcile net loss to
Cash used in operating activities:
Depreciation & Amortization 4,187
Write-off of investments 100,510
Net Change in Assets & Liabilities 1,624
----------
Net Cash used in Operating Activities (1,797)
----------
INVESTING ACTIVITIES
Net Investment in Fixed Assets -
----------
Net Cash provided by Investing Activities -
----------
FINANCING ACTIVITIES
Borrowings under GECC DIP Facility:
Amount due to Dictaphone Corporation 1,954
Balance of Capital Contributions from Exercise of Stock Options (Incentive Equity Trust) 1,600
----------
Net Cash provided by Financing Activities 3,554
----------
----------
Increase (decrease) in cash during the period $ 1,757
==========
Cash, beginning of period (Note 6) -
Cash, end of period 1,757
Case No. 00-4398 (JHW)
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
NOTES TO MONTHLY OPERATING REPORT
1. The monthly operating report of Lernout & Hauspie Speech Products N.V. ("L&H
NV"), includes only the assets, liabilities and operations of L&H NV and
excludes any of its subsidiaries. Assets and liabilities are stated at their
historical cost; thus, such amounts do not reflect their fair market value.
2. L&H NV commenced a concordat reorganization proceeding in Belgium on
November 30, 2000, which, subsequently was rejected by the Belgian court on
December 8, 2000. On December 27, 2000, L&H NV commenced a subsequent
concordat reorganization proceeding in Belgium, which was granted on January
5, 2001.
3. The financial information is unaudited and is subject to further review and
potential adjustment. The books and records for the month of December 31,
2000 have not yet been closed and as a result, a number of estimates have
been made in the monthly operating report. L&H NV has not yet determined the
amount, if any, of royalties due to or from Dictaphone Corporation
("Dictaphone") and L&H Holdings USA, Inc. ("Holdings"). In addition, L&H NV
has not yet completed its review of cash disbursements to determine the
portion of any such disbursements that should be allocated to Dictaphone,
Holdings or any of their subsidiaries. L&H NV has not yet recorded its share
of interest and fees related to its borrowing under the GE Capital
Corporation ("GECC") DIP Facility. As L&H NV closes its books and evaluates
the net realizable value of its assets, including receivables, investment in
affiliated companies, goodwill and deferred charges, other adjustments may
be required.
4. L&H NV maintains its books and records under Belgian Generally Accepted
Accounting Principles ("GAAP"). The monthly operating report is prepared
following US GAAP and is in US dollars; accordingly, this report reflects
certain estimates which are subject to change upon further analysis and the
closing of the books. For example, the Investments in and Advances to
Affiliated Companies is recorded at cost rather than equity as required
under US GAAP since the required information is not available at this time.
Research and Development costs, a portion of which has been capitalized and
a portion expensed, includes intercompany allocations and may be adjusted
under US GAAP. The estimated foreign currency translation effects incurred
in December 2000 have been included in the Cumulative Currency Translation
Adjustment as part of Stockholders' Equity, a portion of which may be
required to be included in the Statement of Operations. No provisions for
restructuring costs have been included in the monthly operating report as
reasonable estimates have not yet been determined.
5. L&H NV is in process of completing a restatement of its previously reported
financial statements as a result of certain "accounting irregularities",
principally relating to the
Case No. 00-4398 (JHW)
timing and validity of the reporting of revenue. In that regard, certain
adjustment may be required to this monthly operating report as the
restatement process is completed.
6. Two of the Belgium banks setoff sums held in L&H NV's bank accounts at the
time of the commencement of the Chapter 11 cases. L&H NV is investigating as
to whether the setoff is in violation of the automatic stay.
7. Liabilities subject to compromise under Chapter 11 include the following:
$000s
-----
Notes Payable to Banks $ 333,696
Accounts Payable - Trade 14,227
Accounts Payable - Intercompany 88,457
Accrued Expenses, principally interest and VAT Tax 28,096
Deferred Income 54,642
Long Term Debt - Intercompany 52,294
Obligations under capital lease 7,186
PIERS 115,384
Convertible Bonds 3,366
Other 912
-------
TOTAL $ 704,260
=======
8. Under the concordat, L&H NV may be obligated to pay interest on the Notes
Payable to Banks in the amount of approximates $2.3 million per month. Any
such payments would be subject to US Bankruptcy Court approval. Since no
such approval was sought or granted, no accrual of such interest has been
recorded in the monthly operating report.
9. Each of L&H NV, Dictaphone, and Holdings are jointly and severally liable
for amounts due to GECC under the GECC DIP Facility. Therefore, any of
these entities could be called upon to pay the full amount outstanding
under such facility, and any of them was able to use the funds borrowed
from GECC. However, for ease of reference, Dictaphone's Monthly Operating
Report reflects the $10.0 million borrowed from GECC (plus GECC DIP fees of
$530,000 that were added to the principal borrowed) as a liability of
Dictaphone, reduced by any use made of a portion of this amount by L&H NV
and Holdings. L&H NV borrowed $1.954 million under the GECC DIP Facility as
of December 31, 2000. Dictaphone will allocate all interest and fees under
the DIP only to those entities that have used the proceeds of the DIP,
including L&H NV, in accordance with the related Bankruptcy Court Order.
Such allocations have not yet been made.
Case No. 00-4398 (JHW)
10. Asset write-downs include the following:
$000s
-----
Investments:
Korea $ 68,659
L&H Asia 238
Receivables:
Korea 25,708
Other 3,002
Inter-company Accounts:
L&H Medical Solutions UK 8
L&H Direct LTD 2,894
--------
TOTAL $100,510
========
Lernout & Hauspie Speech Products, N.V.
Case No. 00-4398 (JHW)
Listing of Bank Accounts
For the Month Ended December 31, 2000
(in US $)
($000s)
Bank Name Account # Description Book Balance/2/
- --------- --------- ----------- ---------------
KAS IEPER 5700000 Petty cash 932
KAS WEMMEL 5700001 Petty cash 96
KAS IEPER IN US $ 5710000 Petty cash 1,105
KAS IEPER IN FRANSE FRANK 5710001 Petty cash 343
KAS IEPER IN NEDERLANDSE GULDEN 5710002 Petty cash 265
KAS IEPER IN DUITSE MARKEN 5710003 Petty cash 576
KAS IEPER IN ZWITSERSE FRANK 5710004 Petty cash 132
KAS IEPER IN SPAANSE PESETA 5710005 Petty cash 7
KAS IEPER IN ITALLAANSE LIRES 5710006 Petty cash 301
KAS IEPER IN BRITSE PONDEN 5710007 Petty cash 461
KAS IEPER IN ZWEEDSE KRONEN 5710008 Petty cash 106
KAS IEPER IN CANADESE DOLLAR 5710009 Petty cash 33
KAS IEPER IN JAPANSE YEN 5710010 Petty cash 267
KAS IEPER IN HONGKONG DOLLAR 5710011 Petty cash 157
KAS IEPER SINGAPORE DOLLAR 5710012 Petty cash 324
KAS IEPER IN GRIEKSE DRACHMEN 5710013 Petty cash 14
KAS IEPER IN DEENSE KRONEN 5710014 Petty cash 171
KAS IEPER IERSE PONDEN 5710015 Petty cash 211
KAS IEPER PORTUG ESCUDO'S 5710016 Petty cash 79
KAS IEPER FINSE MARKEN 5710017 Petty cash 36
KAS IEPER IN ZUID-KOREAANSE WON 5710018 Petty cash 139
KAS IEPER NOORSE KRONEN 5710019 Petty cash 199
MENDEZ ACCOUNT Cash Held by Mendez as of 12/31/2000 204,344
---------------
Total Available Cash $ 210,298
---------------
Cash Deposits in Transit (Available) $ 1,546,702
---------------
Total Book Balance $ 1,757,000
===============
Note:
- ----
/1/These are savings accounts.
/2/Converted at the exchange rate of $1.0747 Euros per US dollar
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
Case No. 00-4398 (JHW)
Summary of Payments to Insiders
For the Month Ended December 31, 2000
(in US $)
Name Amount /1/ Reason
- ---- ---------- ------
Jo Lernout $ 13,964 Salary
Ellen Spooren 657 Car Allowance
Dr. Bert Van Coile 28,487 Salary
Dr. Bert Van Coile 12,720 Expense Reimbursements
Carl Dammekens 28,487 Salary
Carl Dammekens 728 Car Allowance
---------
Total Payments to Insiders $ 85,043
=========
Note:
- -----
/1/ Amounts shown above were converted at the December month
end exchange rate of 42.9674 Belgium francs per US dollar.