LERNOUT & HAUSPIE AND GTE FORM ALLIANCE L&H Licenses BBN HARK Recognizer(TM) Large Vocabulary Speech Engine; GTE Internetworking's BBN Technologies Licenses L&H Technology

BURLINGTON, Mass. - Lernout & Hauspie (NASDAQ: LHSPF; EASDAQ: LHSP.ED) (L&H
), today announced that it has entered into an alliance with GTE Internetworking's BBN Technologies division in which it will have perpetual rights to license and further develop the BBN HARK Recognizer large-vocabulary speech recognition engine and toolkit. BBN Technologies will also license from L&H a full range of speech technologies, including the company's recently introduced next generation L&H RealSpeak text-to-speech (TTS) technology that produces high quality, human-sounding synthesized speech.

The BBN HARK Recognizer is a high-accuracy, large-vocabulary engine that will give L&H and its customers the capability to design high-end telephony applications and address the rapidly growing demand for speech-enabled offerings among telephony vendors. The agreement also calls for L&H and BBN Technologies to embark on a multi-year Research & Development initiative.

Under the terms of the agreement, L&H, a worldwide market leader in speech and linguistic technologies, products and services, will gain perpetual rights to the BBN HARK Recognizer engine and toolkit source code for $5million. BBN Technologies will license L&H RealSpeak, its newest TTS technology that produces a human sounding voice, and represents a breakthrough in terms of voice quality and intelligibility. BBN Technologies will also license other technologies from L&H, which enable electronic equipment to:

Recognize natural and fluently spoken words, continuous digits, isolated words, keywords and the alphabet in multiple languages, a technology known as automated speech recognition (ASR);

Convert any computer readable text into natural-sounding speech based on in-depth linguistic understanding in multiple languages, a technology called text-to-speech (TTS);

Significantly reduce the size of voice and audio files for transmissions and storage while maintaining high quality, known as speech and music coding (SMC).

L&H's family of ASR products includes the ASR 200, a small-vocabulary recognizer for use in automotive and consumer electronics applications, and the ASR 1500 and ASR 1600 engines, phonetic speaker independent recognizers designed for embedded computer, multimedia and telecommunications applications.

"This relationship is central to our strategy of forming alliances with industry-leading product companies to extend the market reach for our stand-alone speech technologies while we continue to grow our R&D, applications, and embedded solutions business," said Phil Paul, senior vice president of GTE Internetworking BBN Technologies. "L&H, with its global presence in the speech market is an outstanding company to deploy some of our technologies. Conversely, we will rapidly integrate their products such as the RealSpeak TTS engine with our solutions throughout GTE and to our customers. The alliance will also fuel continued improvements in speech technology for the benefit of customers of both companies."

"By licensing the BBN HARK Recognizer large vocabulary speech recognition engine we can significantly reduce our time to market for high-end telephony applications and more quickly meet the demand for speech in the telephony market overall," said Gerald Calabrese, president of L&H Core Speech Technology Division. "This strategic alliance with GTE will strengthen our position in the telephony market which is, according to industry analysts, one of the fastest growth opportunities in the speech industry."

According to TMA Associates, an industry analyst group based in Tarzana, California, the market opportunity for speech technology in the telephony industry was $42 million in 1997 and is expected to grow to $1.06 billion by 2002.

"BBN, as a long-time participant in the government's DARPA research program, has world-class speech technology. The agreement should make Lernout &Hauspie a strong competitor in 'natural-language' telephone speech recognition, and should help BBN in extending its technology to other languages," stated William Meisel, president, TMA Associates.

The BBN HARK Recognizer is a commercially proven, open client/server-based speech recognition system. It supports a large, active vocabulary comparable in size to other engines in the market today. The HARK engine is scalable, enabling companies to expand speech recognition applications as their requirements grow. It is currently deployed in commercial and government applications and R&D projects. L&H expects to use and resell the engine for development of automotive applications such as navigation systems and, in particular, for the high growth, high end telephony applications including call centers, operator services, automated attendants and IVR platforms.

About GTE Internetworking

GTE Internetworking's Speech and Language Processing group has been a leader in performing advanced research and development of speech recognition and associated technologies for nearly three decades. Prime focus areas have been in speech recognition, natural language understanding, text processing, and optical character recognition. These advanced technologies are often transferred to products in the Speech Solutions group which custom speech-based solutions to the commercial marketplace, including call center, central office telephony, and automotive environments. To support these products GTE Internetworking also offers a full range of professional services.

GTE Internetworking, is a division of GTE Corp. (NYSE: GTE). This division offers customers a full spectrum of integrated Internet services using IP networking technologies, including dial-up and dedicated Internet access, Web hosting, managed Internet network management, systems integration, and Web-based applications development for integrating the Internet into business operations. Essential to GTE Internetworking are its R&D capabilities, which provide effective solutions for implementing faster, more effective and more cost-efficient ways to use the Internet. For more information visit www.bbn.com.

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 www.lhs.com.

This press release contains forward-looking information, including statements regarding L&H's plans, objectives, expectations and intentions. Such statements include, without limitation the evaluation of the BBN HARK Recognizer and it's value to the market, discussions relating to the expected integration, completion of development and commercial introduction of certain products. Readers are cautioned that such forward- looking statements involve risk and uncertainties, including, with limitation, the risk that the company or one or more of the companies licensees will not successfully complete the development of these products on a timely basis, if at all, that the technologies will not perform as anticipated, that L&H or BBN will chose to use alternative technologies, and the general risks associated with the intense competition and rapid technological change characteristic of the speech technology markets. The forward-looking statements are also subject to risks set forth in L&H's reports filed with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this Report. L&H expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in L&H's expectations or any change in events, conditions or circumstances on which any such statement is based.

All product names and trademarks mentioned herein are trademarks of L&H, BBN or their respective owners.

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