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Exhibit 99.3
April 9, 2001
Hugh Ward
Office of the United States Trustee
Curtis Center, Suite 950 West
601 Walnut Street
Philadelphia, Pennsylvania 19106
Dear Mr. Ward:
RE: MONTHLY OPERATING REPORT
L&H HOLDINGS USA, INC.
CASE NO. 00-4399 (JHW)
DISTRICT OF DELAWARE
Enclosed is the Monthly Operating Report of L&H Holdings USA, Inc. for
the period of January 1, 2001 through January 31, 2001.
Please contact me with any questions or comments.
Yours truly,
L&H HOLDINGS USA, INC.
/s/ Allan Forsey
Allan Forsey
Vice President - Finance
L&H Holdings USA, Inc.
cc: Clerk of the Bankruptcy Court
Philippe Bodson Lernout & Hauspie Speech Products N.V.
Thomas Denys Lernout & Hauspie Speech Products N.V.
Luc A. Despins Milbank, Tweed, Hadley & McCloy LLP
Allan S. Brilliant Milbank, Tweed, Hadley & McCloy LLP
Matthew S. Barr Milbank, Tweed, Hadley & McCloy LLP
Robert Dehney Morris, Nichols, Arsht & Tunnell
Claude Gonthier Liedekerke Wolters Waelbroeck Kirpatrick & Cerfontaine
Daniel H. Golden Akin, Gump, Strauss, Hauer & Feld, LL
Bruce Zirinsky Cadwalader, Wickersham & Taft
Bill Lenhart BDO Siedman
Frans Samyn BDO
Tom Thompson Chanin Capital Partners
Kerry Krisher Crossroads LLC
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TRANSMITTAL OF FINANCIAL REPORTS AND
CERTIFICATION OF COMPLIANCE WITH
UNITED STATES TRUSTEE OPERATING REQUIREMENTS
FOR THE PERIOD OF JANUARY 1 - JANUARY 31, 2001
DEBTOR NAME: L&H Holdings USA, Inc.
CASE NUMBER: Case No. 00-4399 (JHW)
As Vice President - Finance of L&H Holdings USA, Inc.
("Holdings"), 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 or in the
ordinary course.
The attached Statements were prepared by Holdings under my
direction and supervision. Holdings 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: April 9, 2001 /s/ Allan Forsey
-------------------------
Allan Forsey
Vice President - Finance
L&H Holdings USA, Inc.
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L & H HOLDINGS USA, INC.
MONTHLY OPERATING REPORT
L & H HOLDINGS USA, INC.
(Debtor in Possession)
BALANCE SHEET
AS OF JANUARY 31, 2001
(Unaudited)
ASSETS ($000s)
---------
Current Assets:
Cash & Cash Equivalents $ 486
Accounts Receivable, Net - Trade 2,190
Inventories 1,597
Prepaids & Other Current Assets 445
---------
Total Current Assets 4,718
---------
Property, Plant and Equipment $ 12,247
Less: Accumulated Depreciation (10,743)
---------
Property, Plant and Equipment (Net) 1,504
Investment in Affiliated Companies (cost) 192,216
Advances to Subsidiaries (NOTE 5) 3,233
Goodwill, net 393,674
---------
TOTAL ASSETS $ 595,345
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LIABILITIES
Current Liabilities:
Accounts Payable - Trade $ 669
Net Accounts Payable - Intercompany 152
Accrued Liabilities 7,619
Deferred Revenue 2,958
---------
Total Current Liabilities 11,398
---------
Liabilities Subject to Compromise under Chapter 11 (NOTE 4) 37,954
Borrowing under GECC DIP Facility:
Amount due to Dictaphone Corporation (NOTE 3) 4,459
Long-Term Deferred Revenue 3,112
---------
TOTAL LIABILITIES 56,923
---------
STOCKHOLDER'S EQUITY
Common Stock --
Additional Paid-In Capital (NOTE 4) 621,836
Accumulated Deficit (83,414)
---------
TOTAL STOCKHOLDER'S EQUITY 538,422
---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 595,345
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L&H HOLDINGS USA, INC.
CASE NO. 00-4399 (JHW)
MONTHLY OPERATING REPORT
L & H HOLDINGS USA, INC.
(Debtor in Possession)
STATEMENT OF OPERATIONS
FOR THE MONTH ENDED JANUARY 31, 2001
(Unaudited)
($000s)
-------
REVENUE
Product Sales $ 2,174
Royalties 1,020
Other 128
-------
TOTAL REVENUE 3,322
-------
COST OF SALES
Cost of Sales 367
-------
TOTAL COST OF SALES 367
-------
GROSS PROFIT 2,955
-------
EXPENSE
Selling, General & Administrative 869
Research & Development 1,268
Depreciation & Amortization 95
Goodwill Amortization 7,571
Other 185
-------
TOTAL EXPENSE 9,988
-------
NET LOSS $(7,033)
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L & H HOLDINGS USA, INC.
MONTHLY OPERATING REPORT
L & H HOLDINGS USA, INC.
(Debtor in Possession)
STATEMENT OF CASH FLOWS
FOR THE MONTH ENDED JANUARY 31, 2001
(Unaudited)
($000s)
-------
OPERATING ACTIVITIES
Net Loss $(7,033)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation & Amortization 7,666
Changes in Assets & Liabilities:
Accounts Receivable (2,140)
Inventories 234
Other Current Assets 88
Accounts Payable & Accrued Liabilities (365)
Intercompany Receivables (3,233)
Intercompany Payables 152
Deferred Revenue 40
Liabilities Subject to Compromise (NOTE 5) 237
-------
NET CASH USED IN OPERATING ACTIVITIES (4,354)
-------
INVESTING ACTIVITIES
Net Investment in Fixed Assets
-------
NET CASH PROVIDED BY INVESTING ACTIVITIES --
-------
FINANCING ACTIVITIES
Borrowing under the GECC DIP Facility 4,276
-------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,276
-------
(DECREASE) IN CASH DURING THE PERIOD $ (78)
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Cash, beginning of period $ 564
Cash, end of period $ 486
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CASE NO. 00-4399 (JHW)
L&H HOLDINGS USA, INC.
NOTES TO MONTHLY OPERATING REPORT
1. THE MONTHLY OPERATING REPORT OF L&H HOLDINGS USA, INC. ("HOLDINGS")
INCLUDES ONLY THE ASSETS, LIABILITIES AND OPERATIONS OF HOLDINGS 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. The financial information is unaudited and is subject to further review and
potential adjustment. Holdings has not yet determined the amount, if any,
of royalties due to or from Lernout & Hauspie Speech Products N.V. ("L&H
NV"), Dictaphone Corporation ("Dictaphone") or any of their subsidiaries.
In addition, Holdings has not yet completed its review of cash
disbursements to determine the portion of any such disbursements that
should be allocated to L&H NV or Dictaphone or any of their subsidiaries.
Holdings has not yet recorded its share of interest and fees related to its
borrowing under the GE Capital Corporation ("GECC") DIP Facility. As
Holdings closes its books and evaluates the net realizable value of its
assets, including receivables, other adjustments may be required. 3. Each
of Holdings, L&H NV and Dictaphone 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
$585,000 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. Holdings borrowed $4,459,000 under the GECC DIP Facility as
of January 31, 2001. Dictaphone will allocate all interest and fees under
the DIP only to those entities that have used the proceeds of the DIP,
including Holdings, in accordance with the related Bankruptcy Court Order.
Such allocations have not yet been made.
4. Liabilities subject to compromise under Chapter 11 include the following:
($000s)
-------
Accounts Payable - Trade $ 5,281
Net Accounts Payable - Intercompany 32,673
-------
TOTAL $37,954
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- - Holdings included $437,716,000 as a part of the intercompany liability to
L&H NV subject to compromise in their December MOR. Substantially all of
this liability reflected the value of L&H NV stock issues by L&H NV on
behalf of Holdings in connection with Holdings' acquisition of Dragon
Systems, Inc. L&H NV has now determined that such amount should have been
recorded as additional paid-in capital
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CASE NO. 00-4399 (JHW)
on Holdings balance sheet and as such, has reclassed this amount from
liabilities subject to compromise.
Holdings is in the process of reviewing intercompany allocations since the
date of acquisition by L&H NV to determine the appropriateness, accuracy
and proper classification of any such amounts.
5. Advances to Subsidiaries represents amounts that were loaned to Holdings
under the GECC DIP Facility and subsequently loaned to two non-debtor
subsidiaries, Lernout & Hauspie Speech Products USA, Inc. and L&H
Applications USA, Inc.
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L&H HOLDINGS USA, INC.
CASE NO. 00-4399 (JHW)
SUMMARY OF BANK ACCOUNTS
AS OF JANUARY 31, 2001
(in US)
($000s)
Bank Name Account # Description Book Balance
- --------- --------- ----------- ------------
Fleet 387-18363 Zero balance sweep account for payroll $ 7
Fleet 13926069 Zero balance sweep account for credit card payments --
Fleet 387-18355 Operating account which sweeps any 479
remaining balances from the payroll and
credit card bank accounts
Fleet 941585-3014 Bank account no longer used --
Morgan Stanley Dean Witter 593112121 Brokerage account which is no longer --
used and balance is zero
-----
TOTAL $ 486
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L&H HOLDINGS USA, INC.
CASE NO. 00-4399 (JHW)
STATEMENT OF PAYMENTS TO INSIDERS
FOR THE MONTH ENDED JANUARY 31, 2001
(in US $)
NAME GROSS PAY REASON
- ---- --------- ------
Shagoury, John D. $ 20,833 Salary
Shagoury, John D. 782 Expense Reimbursement
McCann, Jeanne F. 16,667 Salary
Roth, Robert S. 12,348 Salary
Roth, Robert S. 11,544 Vacation Payout
--------
TOTAL PAYMENTS TO INSIDERS $ 62,174
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