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Exhibit 99.5
May 16, 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 February 1, 2001 through February 28, 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
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 FEBRUARY 1 - FEBRUARY 28, 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 Receipts and Disbursements
- 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. Professional fees have been paid on behalf of
Holdings by Dictaphone Corporation in connection with
applications submitted to the court. Through
February, Holdings has not paid professional fees to
ordinary course professionals.
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: May 16, 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 FEBRUARY 28, 2001
(Unaudited)
($000s)
---------
ASSETS
Current Assets:
Cash & Cash Equivalents $ 232
Accounts Receivable, Net - Trade 2,860
Inventories 1,439
Prepaids & Other Current Assets 396
---------
Total Current Assets 4,927
---------
Property, Plant and Equipment $ 12,249
Less: Accumulated Depreciation (10,836)
---------
Property, Plant and Equipment (Net) 1,413
Investment in Affiliated Companies (cost) 192,216
Advances to Subsidiaries (NOTE 5) 6,757
Goodwill, net 386,103
---------
TOTAL ASSETS $ 591,416
=========
LIABILITIES
Current Liabilities:
Accounts Payable - Trade $ 581
Net Accounts Payable - Intercompany 423
Accrued Liabilities (NOTE 6) 14,094
Deferred Revenue 2,898
---------
Total Current Liabilities 17,996
---------
Liabilities Subject to Compromise under Chapter 11 (NOTE 4) 37,999
Borrowing under Ableco DIP Facility:
Amount due to Dictaphone Corporation (NOTE 3) 7,983
Long-Term Deferred Revenue 3,112
---------
TOTAL LIABILITIES 67,090
---------
STOCKHOLDER'S EQUITY
Additional Paid-In Capital (NOTE 4) 621,836
Accumulated Deficit (NOTE 6) (97,510)
---------
TOTAL STOCKHOLDER'S EQUITY 524,326
---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 591,416
=========
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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 FEBRUARY 28, 2001
(Unaudited)
($000s)
--------
REVENUE
Product Sales $ 1,759
Royalties 716
Other 103
--------
TOTAL REVENUE 2,578
--------
COST OF SALES
Cost of Sales 442
--------
TOTAL COST OF SALES 442
--------
GROSS PROFIT 2,136
--------
EXPENSE
Selling, General & Administrative 687
Research & Development 1,007
Depreciation & Amortization 91
Goodwill Amortization 7,571
Other 204
--------
TOTAL EXPENSE 9,560
--------
NET LOSS $ (7,424)
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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 FEBRUARY 28, 2001
(Unaudited)
($000s)
--------
OPERATING ACTIVITIES
Net Loss $ (7,424)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation & Amortization 7,662
Changes in Assets & Liabilities:
Accounts Receivable (670)
Inventories 158
Prepaids & Other Current Assets 49
Accounts Payable & Accrued Liabilities (280)
Intercompany Receivables (3,524)
Intercompany Payables 266
Deferred Revenue (60)
Liabilities Subject to Compromise (NOTE 5) 45
--------
NET CASH USED IN OPERATING ACTIVITIES (3,778)
--------
INVESTING ACTIVITIES
Net Investment in Fixed Assets
--------
NET CASH PROVIDED BY INVESTING ACTIVITIES --
--------
FINANCING ACTIVITIES
Borrowings under the Ableco DIP Facility 3,524
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,524
--------
(DECREASE) IN CASH DURING THE PERIOD $ (254)
========
Cash, beginning of period $ 486
Cash, end of period $ 232
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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 or its
subsequent borrowing under the Ableco Capital Management L.P. ("Ableco")
DIP Facility. As Holdings closes its books and evaluates the net realizable
value of its assets, including receivables, other adjustments may be
required.
3. On February 23, 2001, Holdings, L&H NV and Dictaphone entered into a $60.0
million DIP Facility Agreement with Ableco (the "Ableco DIP facility")
composed of two Term Loans - Term Loan A for $30.0 million and Term Loan B
for $10.0 million and a $20.0 million Revolving Credit Facility. On that
same date, the Debtors borrowed the entire amount of Term Loan A of the
Ableco DIP Facility and paid GECC the $10.0 million initially borrowed plus
$734,000 in DIP fees and interest charges. Each of Holdings, L&H NV and
Dictaphone are jointly and severally liable for amounts due to Ableco under
the Ableco 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 Ableco. However, for ease of
reference, Dictaphone's Monthly Operating Report reflects the $30.0 million
borrowed from Ableco (includes Ableco DIP fees, interest and related
expenses of $960,000 of which $423,000 has been deferred) as a liability of
Dictaphone, reduced by any use made of a portion of this amount by L&H NV
and Holdings. Holdings borrowed $7,983,000 under the Ableco DIP Facility as
of February 28, 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.
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CASE NO. 00-4399 (JHW)
L&H HOLDINGS USA, INC.
NOTES TO MONTHLY OPERATING REPORT
4. Liabilities subject to compromise under Chapter 11 include the following:
($000s)
-----------
Accounts Payable - Trade $ 5,280
Net Accounts Payable - Intercompany 32,719
-----------
TOTAL $ 37,999
===========
- - As stated in the January MOR, 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 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 Cerberus DIP Facility and subsequently loaned to two non-debtor
subsidiaries, Lernout & Hauspie Speech Products USA, Inc. and L&H
Applications USA, Inc.
6. Subsequent to the filing of the January 2001 MOR, Holdings adjusted January
accrued expenses to include approximately $6.6 million in restructuring
charges related to the Bankruptcy. The net effect of this adjustment is to
increase the operating loss for the month ended January 31, 2001 by the
same amount.
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L&H HOLDINGS USA, INC.
CASE NO. 00-4399 (JHW)
SUMMARY OF BANK ACCOUNTS
AS OF FEBRUARY 28, 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 225
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 $ 232
=====
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L&H HOLDINGS USA, INC.
CASE NO. 00-4399 (JHW)
STATEMENT OF PAYMENTS TO INSIDERS
FOR THE MONTH ENDED FEBRUARY 28, 2001
(in US $)
NAME GROSS PAY REASON
- ---- --------- ------
Shagoury, John D. $ 20,833 Salary
Shagoury, John D. 2,222 Expense Reimbursement
McCann, Jeanne F. 16,667 Salary
Roth, Robert S. 1,140 Salary
--------
TOTAL PAYMENTS TO INSIDERS $ 40,862
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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)
SUMMARY OF RECEIPTS AND DISBURSEMENTS
FOR THE MONTH ENDED FEBRUARY 28, 2001
(UNAUDITED)
($000S)
-------
Beginning Balance at February 1, 2001 $ 486
Receipts 5,300
Disbursements (5,554)
Transfers --
-------
Ending Balance at February 28, 2001 $ 232
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