Representing approximately 18.7% of Speech Machines' issued shares, the investment provides L&H with the resources to diversify and increase its already strong position in the medical, telecommunications and general business markets.

"Speech Machines has created a revolutionary new way to deploy speech recognition over the telephone and Internet, making speech recognition-based dictation services much more flexible and productive," said Gaston Bastiaens, president & CEO of Lernout & Hauspie. "This partnership should allow us to penetrate even deeper into the multi-billion dollar medical transcription market and lay the groundwork for expansion into other markets, such as telecommunications and general business."<?p>

Unified Messaging added to CyberTranscriber
Speech Machines' CyberTranscriber is a state-of-the art speech recognition service to transcribe dictation made over the telephone or using audio from a variety of digital recorders, including select handheld devices. L&H's Popeye technology, a patented e-mail TTS pre-processor application, will enhance the service by providing it with multi-lingual unified messaging capabilities. By adding the Popeye technology, CyberTranscriber will allow users to read, access, respond to and send e-mail from anywhere via a simple telephone call.

Relationship Builds Market Opportunities
The L&H/Speech Machines partnership affords both parties an opportunity to broaden the market for its existing products. L&H plans to leverage its partnership with Speech Machines to further its position in vertical markets; most notably to add telephony dictation support to its L&H Kurzweil Clinical Reporter, a speech-enabled dictation and reporting solution for various medical specialties. In the future, Speech Machines will integrate L&H's next generation of Text-to-Speech technology, currently in development, into CyberTranscriber, providing it with the new breakthrough human voice. Speech Machines plans to also use L&H's technology to enhance its own large vocabulary speech engine.

"Our partnership with L&H provides us with technical and financial resources that allow us to significantly accelerate our time to market in deploying even more innovative services," said Michael von Grey, president and CEO, Speech Machines. "In particular, L&H's significant multi-lingual experience and technology will accelerate the launch of Speech Machines services into international markets."

Service to Benefit Users
Speech Machines' CyberTranscriber service allows users to dictate a message of any length by dialing an 800 number or recording an audio file on the Internet or select handheld devices. The message is then automatically transcribed by Speech Machines' advanced speech recognition technology, proofread by human operators (as an option), and e-mailed back within hours.

The L&H/Speech Machines partnership plans to use the same approach to improve the efficiency of medical transcription, the largest category of transcription. Doctors will be able to dictate into their existing dictation systems as they normally do, without having to "enroll" in a new system or otherwise train software. A highly accurate first draft of the doctor's dictation will be created by CyberTranscriber with L&H technology, rather than by a transcriptionist. This process should not only make transcription more efficient, but it can also enhance the productivity of transcription companies today.

About Speech Machines
Speech Machines is an innovator and operator of speech recognition services. The company has garnered numerous awards including "Best E-Commerce Site" in the 1998 Lotus "Works the Web" awards. Speech Machines is a privately held company with offices in Redwood City, Calif. and Great Malvern, England. An instant free trial of CyberTranscriber is available at Speech Machines' web site http://www.speechmachines.com, where users may also register for the service or register by calling 1-888-267-9891.

About Lernout & Hauspie
Lernout & Hauspie Speech Products (L&H) is a global leader in advanced speech and language solutions for 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 cultural barriers. 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 http://www.lhs.com.