EXHIBIT 99.1 FOR IMMEDIATE RELEASE - --------------------- Contact: Thomas B. Doherty Chief Financial Officer Kurzweil Applied Intelligence, Inc. Tel.: (617) 893-5151 KURZWEIL APPLIED INTELLIGENCE, INC. ANNOUNCES MERGER AGREEMENT WITH LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. AND UNAUDITED FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED JANUARY 31, 1997 WALTHAM, Mass., April 14, 1997 --- Kurzweil Applied Intelligence, Inc. (NASDAQ: KURZ) today announced the signing of a definitive merger agreement which provides for a merger with Lernout & Hauspie Speech Products N.V., a Belgian corporation listed on the Nasdaq National Market (NASDAQ: LHSPF) and a developer of advanced speech technology for various commercial applications and products. Under the terms of the merger agreement, which has been approved by the Boards of Directors of both companies, Kurzweil AI shareholders will receive $4.20 in cash and $1.05 in Lernout & Hauspie stock for each share of Kurzweil AI common stock, subject to adjustment under certain circumstances. As a result of the transaction, Kurzweil AI will become a wholly-owned subsidiary of Lernout & Hauspie. The acquisition will be accounted for using purchase accounting, and the closing is subject to certain conditions and approvals, including the approval of Kurzweil AI's shareholders. The parties currently anticipate that the transaction will be consummated in June 1997. In addition, to finance Kurzweil AI's working capital needs prior to the closing of the acquisition, Lernout & Hauspie has agreed to make available to Kurzweil AI a line of credit of up to $1,500,000. Thomas E. Brew, Jr., the Company's President and Chief Executive Officer, said: "Kurzweil AI is pleased to be joining forces with internationally-recognized Lernout & Hauspie. We expect the combined companies' strengths will lead to the introduction of innovative speech products and increased market share in the speech recognition technology arena. Our recent entry into the PC retail channel is now starting to significantly increase revenues for our PC applications products which I believe will result in increased revenues in the succeeding quarters in fiscal 1998. In addition, our medical software and PC applications research and development teams will add an extra dimension to Lernout & Hauspie's increasing focus on the growing voice-enabled PC market." Kurzweil AI also released its unaudited financial results for the fiscal year ended January 31, 1997. The Company reported revenue of $8,547,000 and a net loss of $4,140,000 or ($.50) per share, for the fiscal year ended January 31, 1997 as compared to revenue of $9,360,000 and a net loss of $2,586,000 or ($.38) per share for the fiscal year ended January 31, 1996. The Company reported revenue of $2,193,000 for the fourth quarter ended January 31, 1997, a 5% increase over the $2,096,000 of revenue reported for the same period in the prior fiscal year. The net loss in the fourth quarter of fiscal 1997 was $1,425,000 or ($.16) per share, as compared to a net loss of $1,282,000 or ($.19) per share for the fourth quarter of fiscal 1996. The Company has attached unaudited balance sheets and statements of operations for the fiscal years ended January 31, 1997 and January 31, 1996. - 5 - Kurzweil Applied Intelligence, Inc., headquartered in Waltham, Mass., was founded in 1982. The Company develops, markets and supports automated voice recognition systems used to create documents and interact with personal computers by voice. ### All product names referenced herein are trademarks of their respective companies. This release and other information related to Kurzweil Applied Intelligence, Inc. can be referenced on the Company's home page on the World Wide Web at http://www.kurzweil.com, or by calling (671) 893-5151. ### This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of risks, factors and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, which could cause the actual results or performance of the Company to differ materially from those described herein. For a more detailed description of the risks, factors and uncertainties affecting the Company, refer to the discussions under the headings "Certain Factors That May Affect Future Results" and "Cautionary Statement" in the Company's Annual Report on Form 10-KSB and other of the Company's publicly available filings with the Securities and Exchange Commission ### - 6 - KURZWEIL APPLIED INTELLIGENCE, INC. BALANCE SHEETS (unaudited) (in thousands, except for per share data) January 31, 1997 January 31, 1996 ---------------- ---------------- ASSETS Current assets: Cash and cash equivalents $456 $2,084 Marketable securities available for sale 982 501 Trade accounts receivable, net 2,158 1,221 Inventory 354 398 Other current assets 188 262 ------- ------- Total current assets 4,138 4,466 Property and equipment, net 721 924 Intangible assets 678 1,745 Capitalized software development costs, net 2,532 1,593 Other assets 104 136 ------- ------- Total assets $8,173 $8,864 ======= ======= LIABILITIES Current liabilities: Accounts payable $1,115 $665 Accrued expenses 2,100 2,211 Capital lease obligations 29 Current portion of other long-term liabilities 1,019 902 ------- ------- Total current liabilities 4,234 3,807 Capital lease obligations Other long-term liabilities 1,152 2,169 Commitments and contingencies STOCKHOLDERS' EQUITY Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued and outstanding Common stock, $.01 par value, 15,000,000 shares authorized; 9,061,880 and 5,773,387 shares issued and outstanding respectively 91 57 Additional paid-in capital 66,727 57,647 Common stock to be issued 5,075 Accumulated deficit (64,031) (59,891) Total stockholders' equity 2,787 2,888 -------- -------- Total liabilities and stockholders' equity $8,173 $8,864 ======== ======== - 7 - KURZWEIL APPLIED INTELLIGENCE, INC. STATEMENTS OF OPERATIONS (unaudited) (in thousands, except for per share data) Three Months Ended January 31, Twelve Months Ended January 31, ------------------------------- ------------------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Revenues $2,193 $2,096 $8,547 $9,360 Operating costs and expenses: Cost of product and maintenance revenue 1,158 1,521 3,937 4,777 Sales and marketing 1,168 878 4,057 3,582 Research and development 818 578 3,066 2,340 General and administrative 512 454 1,752 1,503 ---------- ---------- ---------- ---------- Total operating costs and expenses 3,656 3,431 12,812 12,202 ---------- ---------- ---------- ---------- Operating loss (1,463) (1,335) (4,265) (2,842) Interest expense 2 3 12 Interest income 38 46 115 196 Other (expense) income, net 9 13 72 Net loss ($1,425) ($1,282) ($4,140) ($2,586) ========== ========== ========== ========== Net loss per common share ($0.16) ($0.19) ($0.50) ($0.38) ========== ========== ========== ========== Weighted average number of common shares outstanding 9,060,555 6,766,466 8,342,157 6,755,779 ========== ========== ========== ========== - 8 -