SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 7, 2000
DICTAPHONE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-93464 06-0992637
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
3191 Broadbridge Avenue, Stratford, Connecticut 06614
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 381-7000
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2
Item 5. Other Events.
On March 7, 2000, Lernout & Hauspie Speech Products, N.V., a Belgium
corporation ("L&H"), Dark Acquisition Corp., a Delaware corporation and a
direct, wholly owned subsidiary of L&H ("Merger Sub"), and Dictaphone
Corporation, a Delaware corporation ("Dictaphone"), entered into an Agreement
and Plan of Merger (the "Merger Agreement") providing for the merger of
Dictaphone with and into Merger Sub (the "Merger"), with Merger Sub as the
surviving corporation. As a result of the Merger, stockholders of Dictaphone
will become stockholders of L&H. Pursuant to the Merger Agreement, each issued
and outstanding share of common stock, par value $.01 per share, of Dictaphone
("Dictaphone Common Stock") will be converted into the right to receive
0.310352941 shares of common stock, BEF 21.54 fractional value per share, of L&H
("L&H Common Stock") for an aggregate of up to 4,743,434 shares of L&H Common
Stock.
Stonington Capital Appreciation 1994 Fund, L.P., the holder of a
majority of the outstanding shares of Dictaphone Common Stock, has agreed with
L&H to vote such shares in favor of the Merger.
A copy of the press release issued by L&H on March 7, 2000 is attached
hereto as Exhibit 99.1 and is hereby incorporated by reference in its entirety.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1. Press Release issued by Lernout & Hauspie Speech Products,
N.V. on March 7, 2000.
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EXHIBIT INDEX
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Exhibit
No. Description
- ------- -----------
99.1. Press Release issued by Lernout & Hauspie Speech Products, N.V.
on March 7, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DICTAPHONE CORPORATION
Date: March 8, 2000 /s/ DANIEL P. HART
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Name: Daniel P. Hart
Title: Senior Vice President, General
Counsel and Secretary
FOR IMMEDIATE RELEASE
LERNOUT & HAUSPIE SIGNS DEFINITIVE AGREEMENT TO
ACQUIRE DICTAPHONE CORPORATION
Acquisition to Give L&H Resources to Establish Stronghold in Healthcare
Solutions, Enhance Position in Call Center and Information Management Market
BURLINGTON, MASS. & IEPER, BELGIUM -- March 7, 2000 -- Lernout & Hauspie
(NASDAQ: LHSP, EASDAQ: LHSP) (L&H(TM)) announced today that it has signed a
definitive agreement to acquire Dictaphone Corporation of Stratford Conn., a
privately held leader in dictation and telephony call center recording systems
and solutions.
The acquisition of Dictaphone will build L&H's product and management resources
and its customer base in the medical dictation arena and the telecommunications
market. The additional assets from the acquisition should immediately establish
L&H as a leader in the healthcare medical records and information management
industry, expedite the launch of a separate entity dedicated to healthcare
solutions and enhance and broaden L&H's offerings for telecommunications and
data management.
The transaction calls for L&H to acquire all of the outstanding stock of
Dictaphone for approximately 4.75 million shares of L&H Common Stock. Dictaphone
is controlled by a fund managed by Stonington Partners, a New York private
investment fund. Stonington has agreed to hold 2 million of the shares it will
receive for a period of 2 years and has agreed to assign voting rights to these
shares during this two-year period to an entity controlled by Messrs. Lernout &
Hauspie. In connection with this transaction, L&H will be required to assume or
refinance approximately $425 million of Dictaphone debt and other obligations.
The company plans to use the purchase method to account for this acquisition.
After the replacement of the debt, L&H expects the acquisition to be accretive
to its EPS (excluding goodwill). The acquisition is expected to close by
approximately the end of April.
"Dictaphone had revenues of approximately $350 million for the fiscal year 1999,
with EBIT of approximately $30 million. By combining the two companies we
significantly add to L&H's revenue base while paying approximately 15% of our
current market capitalization," stated Carl Dammekens, CFO of L&H.
Dictaphone has successfully transformed itself from a maker of stand-alone,
analog recording equipment to a leader in digital dictation and call recording
systems and solutions for the fast growth healthcare and telecommunications
markets. Dictaphone's revenues in the past have come primarily from North
America. L&H expects that going forward its own strength in Europe and Asia
Pacific will help increase worldwide sales opportunities for Dictaphone
solutions, and that the two companies will combine their assets to create
products and services that address new market opportunities.
"As the leader in the medical dictation and patient record management market,
Dictaphone Corporation gives L&H instant access to the resources to facilitate
our launch of an entity dedicated to healthcare solutions. This should enable us
to create an industry leading solution utilizing speech and web technology to
reduce transcription costs enterprise wide and effectively manage patient
information," said Gaston Bastiaens, president and CEO of L&H. "Dictaphone's
call center recording and quality monitoring systems will complement L&H's
existing focus on the telecommunications market and should enable us to leverage
our data mining and information management technologies to create new solutions
for this rapidly growing field."
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L&H To Acquire Dictaphone Page 2
"We believe that tremendous synergies will be realized by combining our two
companies, particularly in technology and geographic market coverage," said John
Duerden, chairman, chief executive officer and president of Dictaphone. "We both
share a common vision -- that voice is changing our world, creating enormous
opportunities to bring effective solutions to market. This acquisition is the
logical next step for Dictaphone and its customers."
"Dictaphone's name and reputation in the voice business have made it synonymous
with quality dictation products," said Amy Wohl, an industry analyst who began
her career by following the vendor in the late 70's. "The tremendous synergy
that the integration of Dictaphone's reputation, customer base, and physical
infrastructure can have with L&H's knowledge of the Internet and advanced speech
technologies is astounding. Together, they will be able to offer a range of
products and technologies that will quickly move the voice industry to its next
stages."
Separate Entities
L&H has recently announced that it plans to create separate legal entities for
its Telecommunications & Enterprise Solutions Group, Globalization and Internet
Translation Group and Healthcare Solutions Group. With the acquisition of
Dictaphone, it expects to form a powerful Healthcare Enterprise business group
that has immediate access to Dictaphone's large customer base and the
opportunity to integrate leading technologies from L&H in order to create new
healthcare enterprise market solutions. At the same time, L&H is considering
having this Healthcare unit set up a separate entity for Web-based healthcare
market services.
Healthcare Market Strategy Furthered
L&H's intended acquisition of Dictaphone will provide it with a wide range of
assets with which to further its healthcare business strategies. Dictaphone's
healthcare market assets include its 5,000 medical industry customers worldwide,
its 100 sales representatives, its strong national network of technical service
representatives, its experienced executive management team and its broad range
of solutions for medical industry dictation and data management. Dictaphone is
known worldwide for its medical record workflow systems and its transcription
business -- in 1999 Dictaphone had healthcare market revenues of $130 million.
Its market penetration is noteworthy: according to industry analysts as many as
400,000 physicians in the U.S. use Dictaphone to dictate 100,000 hours of
dictation each day for clinical record processing.
Acquisition Also Enhances Telephony Business
Dictaphone is also a leader in the communications recording business, evidenced
by its 1999 revenue of more than $100 million for that sector and the industry
acclaim it received for its two recently announced communications recording
products. L&H plans to integrate its data and audio-mining solution with
Dictaphone's leading products for telephony and call center recording and
quality monitoring, thus expanding its product offerings and creating a solution
that processes recorded speech to identify speakers and topics. L&H's data and
audio mining technology allows organizations to more easily and quickly archive,
browse and sort audio information from recorded sources such as telephone
transactions.
-- More --
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L&H To Acquire Dictaphone Page 3
Companies are Complementary
According to L&H executives, Dictaphone's products and other resources
complement L&H's existing businesses and further its strategy in a variety of
other ways. Dictaphone's document creation solutions, including its digital
portable hand held voice recorders, transcription job administration and
document distribution offerings, are additional resources that should help L&H
in the development of its enterprise healthcare solution. Dictaphone currently
sells its offerings to several of L&H's key vertical markets: medical, legal,
insurance, police/public safety, and corporate, giving L&H an increased customer
base and sales force in those arenas. L&H's worldwide reach, particularly its
European and Pacific Rim presence, will complement Dictaphone's mainly U.S.
presence, avoiding duplication of sales, marketing and administrative resources.
Organizational Structure
With this acquisition L&H also has access to an experienced and professional
management team that will further strengthen the companies structure. The
company expects to retain the Dictaphone management team and the company's
Stratford, Conn. Headquarters.
"I look forward to working with John Duerden, who is a world-class executive,
and his strong management team that will allow the company to prepare for
further growth opportunities." said Gaston Bastiaens, President and CEO of L&H.
About Dictaphone
Dictaphone Corporation of Stratford, Conn., is a leader in the development,
manufacture, marketing, service and support of Integrated Voice and Data
Management systems and software, including dictation, voice processing, record
management and communications recording. Dictaphone's product offerings include
Enterprise Express, a powerful dictation/transcription management software
suite allowing voice to be moved anywhere on the healthcare network (LAN/WAN) or
the Internet. Enterprise Express improves customer's document creation processes
by uniting leading edge technologies (speech recognition, digital mobile voice
recorders, server based dictation, document life cycle management, etc.).
In the recording business, Dictaphone offers a wide range of voice recording and
quality monitoring systems which it markets to the public safety, financial
services and call center markets, including two recent important product
introductions, the da Vinci and Freedom recording systems. Dictaphone has a
marketing, sales, service and support organization of more than 1,400
representatives in 171 cities in the U.S., the United Kingdom, Canada, and
Germany. The company also markets worldwide through a growing number of
distributors in Europe, Latin America, Asia Pacific, South Central Asia, the
Middle East and Africa. Visit Dictaphone at www.Dictaphone.com.
About Lernout & Hauspie
Lernout & Hauspie (L&H) is a global leader in advanced speech and language
solutions for vertical markets, computers, automobiles, telecommunications,
embedded products, consumer goods and the Internet. The company is making the
speech user interface (SUI) the keystone of simple, convenient interaction
between humans and technology, and is using advanced translation technology to
break down language barriers. The company provides a wide range of offerings,
including: customized solutions for corporations; core speech technologies
marketed to OEMs; end user and retail applications for continuous speech
products in horizontal and vertical markets; and document creation, human and
machine translation services, Internet translation offerings, and linguistic
tools. L&H's products and services originate in four basic areas: automatic
speech recognition (ASR), text-to-speech (TTS), digital speech and music
compression (SMC) and text-to-text (translation). For more information, please
visit Lernout & Hauspie on the World Wide Web at www.lhs.com or www.lhsl.com.
This Press Release contains forward-looking information, including but not
limited to statements involving the financial and other contributions expected
from the acquisition, L&H's development plans and L&H's plans to form a new
healthcare solutions entity. There can be no assurance that actual results will
not be materially different than those anticipated in these forward-looking
statements. Factors that could cause actual results to materially differ from
those anticipated in these forward looking statements include known and unknown
risks, including those set forth below. The acquisition of Dictaphone will
involve numerous risks, including the ability to refinance the Dictaphone debt
on favorable terms, if at all, difficulties in the assimilation of and
integration of operations, technologies and products of Dictaphone, and the
potential loss of customers and key employees. Moreover, consummation of the
acquisition is subject to certain conditions. As a result there can be no
assurance that the expected acquisition will be consummated on the terms
described herein, if at all. The forward looking statements contained herein are
also subject to the significant known and unknown risks and uncertainties
generally applicable to L&H's business, including uncertainty of new product
development, the risk that newly introduced products may contain undetected
errors or defects or otherwise not perform as anticipated, early stage of
development of the speech and medical information technology market, the
company's ability to manage its growth and changing business, the retention of
key technical and other personnel, currency and other risks related to
international operations, rapid technological change and intense competition, as
well as other risks set forth in L&H's filings with the Securities and Exchange
Commission. L&H cautions readers not to place undue reliance upon any such
forward-looking statements, which speak only as of the date made. L&H expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any such statements to reflect any change in the L&H's expectations
or any change in events, conditions or circumstance on which any such statement
is based.
###
L&H Contact Info:
Worldwide PR/IR: Ellen Spooren, Lernout & Hauspie, (781) 203-5344,
[email protected]
Corporate Comm. US: Audrey Pobre, Lernout & Hauspie, (781) 203-5341,
[email protected]
Corporate Comm Europe Ron Schuermans, L&H, (32) 57-2295-24,
[email protected]
Investor Contact Europe: Annemieke Blondeel, Lommaert & Blondeel Consultants,
(44) 1322-520-180, [email protected]
Corporate Comm AP: Geraldine Kan, Lernout & Hauspie, (65) 799-8956,
[email protected]
