Microsoft and Lernout & Hauspie Announce Strategic Alliance In Support of Voice-Enabled Computing

REDMOND, Wash., and IEPER, Belgium, Sept. 11, 1997 — Microsoft Corp. and Lernout & Hauspie Speech Products today announced a broad strategic alliance designed to accelerate development of the next generation of voice-enabled computing on the Microsoft® Windows® platform.

Microsoft will invest $45 million in Lernout & Hauspie (L & H) common stock, representing a minority stake in the speech technology company. While no announcement was made regarding specific future products, Microsoft and L & H have agreed to share technologies and expect to cooperate on future speech technology initiatives.

“We believe Microsoft Windows is the ideal platform for providing the benefits of speech technology to customers,” said Gaston Bastiaens, president and CEO of L & H. “L & H is looking forward to continuing our tradition of providing the highest-quality speech applications in the most languages on the Windows platform.”

Microsoft and L & H are both established leaders in the development of computer speech technologies. A goal of Microsoft has always been to enable the Windows operating system to recognize and respond to spoken words. Today’s agreement supports that goal.

Specifically, L & H will develop applications for currently available and future versions of Microsoft’s speech application programming interface (SAPI). L & H will also continue to pursue its goal of providing the broadest range of speech technologies in multiple languages for horizontal and, in particular, vertical markets such as the medical and legal sectors, and will embed speech applications into special purpose hardware devices.

“For the past several years, Microsoft has made great progress toward a vision of the personal computer that can interact with users via spoken language,” said Nathan Myhrvold, chief technology officer at Microsoft. “Through this alliance with Lernout & Hauspie, we are taking a big leap forward in transforming that vision into reality.”

Microsoft will work with L & H to build upon its existing speech technology efforts driven by Microsoft Research, the company’s basic research organization. The alliance is expected to accelerate development of voice-enabled computing that goes beyond today’s speech dictation products.

“We are pleased to announce this strategic relationship with L & H,” said Dan Rosen, general manager of new technology at Microsoft. “Together, we plan to maximize the core competencies of both companies in pursuit of innovative speech technologies that will ultimately benefit computer users around the globe.”

L & H and Microsoft also announced today that Bernard Vergnes, chairman of Microsoft Europe, will join L & H’s board of directors. “We are delighted to have someone with Vergnes’ background and skills joining the L & H board of directors,” said Jo Lernout, co-chairmanof L & H. “His appointment gives us a critical advantage as we pursue speech technology opportunities in the computer sector.”

Flanders Language Valley Fund

In conjunction with this announcement and reaffirming its commitment to speech technology development, Microsoft also announced it plans to invest $3 million (U.S.) in the Flanders Language Valley Fund CVA (FLV), a Belgium-based international technology center dedicated to helping companies develop speech-based technologies and applications. Patrick de Smedt, managing director of Microsoft Belgium, will assume a seat on the Flanders Language Valley Fund board of directors.

Microsoft will also participate in Flanders Language University, a cooperative program that harnesses linguistic initiatives and expertise from universities around the world, focusing on enhancing education and training in computational linguistics.

“Microsoft’s active participation in this international speech technology knowledge center affirms the FLV’s leadership role in multilingual applications development,” said Pol Hauspie, co-chairman of L & H. “The additional resources afforded by this investment, in terms of both funds and expertise, greatly enhances the potential for success.”

The two companies also announced their intent to form a joint venture in Europe to collect and analyze speech and linguistic data. Such data is a necessary component in building future speech recognition products.

Lernout & Hauspie Speech Products (NASDAQ “LHSPF,” EASDAQ “LHSP-ED”) is an international leader in the development of advanced speech technology for various commercial applications and products. The company is divided into four main divisions: core technologies; translation services and products; Internet services; and dictation, a division dedicated to discrete and continuous speech offerings. L & H’s dictation division offers horizontal market applications such as Kurzweil VoicePad and VoicePro and its soon-to-be-introduced Kurzweil

VoiceCommands and vertical applications such as its voice-enabled clinical reporting systems, VoiceMED, and Kurzweil Clinical Reporter. Its four core technologies are automatic speech recognition (ASR), text-to-speech (TTS) and digital speech compression and text-to-text (translation). The company has its worldwide headquarters in Ieper, Belgium, its U.S. headquarters in Burlington, Mass., and international sales offices throughout Asia.

Founded in 1975, Microsoft (NASDAQ
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Other product and company names herein may be trademarks of their respective owners.

This news release contains forward-looking information that involves risks and uncertainties, including statements about each company’s plans, objectives, expectations and intentions. Such statements include, without limitation, discussions concerning the ability to accelerate development of certain products. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, the following risks with respect to L & H: L & H’s reliance on customers to generate recurring revenues, the early stage of the speech technology market, the management of growth, the successful integration of L & H’s recent acquisitions, the ability of L & H to develop and successfully market new products, rapid technological change and competition. The forward-looking statements contained herein speak only as of the date of this news release, and L & H expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the company’s expectations or any change in events, conditions or circumstance on which any such statement is based.

Lernout & Hauspie can be found on the World Wide Web at ( .

Note to editors : If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at on Microsoft’s corporate information pages. For more information about Microsoft Research’s speech technology efforts, including a downloadable demo of its speech-dictation technology and Microsoft’s speech API, please visit .

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