ScanSoft Reports First Quarter 1999 Results

PEABODY, MA - May 5, 1999 - ScanSoft, Inc. (NASDAQ:SSFT) reported today net revenue of $4.5 million and net income of $105,000 (before unusual items and goodwill amortization), or $0.00 per diluted share on 23.5 million average shares outstanding, for its first quarter ended March 31, 1999. Including effects of unusual items and goodwill amortization, the Company reported a net loss of $4.0 million or $0.18 per share on 22.2 million average shares outstanding.

The Company's unusual items recorded in the first quarter include a $3.9 million in-process research and development charge related to the acquisition of Xerox Corporation's ScanSoft subsidiary, which closed on March 2, 1999, and the one time net gain of $882,000 on the sale of the hardware business to Primax Electronics, Ltd., on January 6, 1999. Other unusual items include $346,000 in restructuring charges, $158,000 in amortization of acquired intangible assets, and $564,000 in one time expenses related to the transition and consolidation of the two companies.

In order to provide a consistent view of the operating results of the Company, ScanSoft now uses a new EPS metric: Earnings Before Goodwill (EBG). This figure has been adopted by many financial research services as the metric reported for comparative purposes. EBG represents earnings per share, excluding unusual items and goodwill amortization associated with purchase acquisitions.

The acquisition of ScanSoft was finalized on March 2; therefore, revenue results of $4.5 million reflect three months of sales of the PaperPort® product line and only one month of sales of the TextBridge® and Pagis® product lines. On a pro-forma basis, assuming the acquisition had occurred on January 1, 1999, revenue for the first quarter would have been $7.4 million.

Michael Tivnan, ScanSoft president and chief executive officer, said, "Although much of our energy during this first quarter was spent completing the acquisition - consolidating product lines, R&D staff, U.S. facilities, and administrative functions - we were able to successfully launch three major products, and negotiate additional key OEM partnerships.

"Late in the first quarter we successfully shipped PaperPort Deluxe 6.0 and PaperPort ScannerSuite 2.0, both of which feature our award-winning TextBridge® optical character recognition software. In early April we also launched TextBridge Pro 9.0, our most advanced optical character recognition software to date.

"In addition to the product launches, we continued to strengthen our OEM revenue base. We finalized an agreement with Compaq to bundle Pagis ScanWorks and TextBridge Classic with their A900 All-in-One multifunction device; entered a worldwide licensing agreement with Primax for PaperPort; and expanded our relationship with Xerox Corporation by announcing that TextBridge Pro will be bundled with Xerox's WorkCentre 385, and Pagis Pro will be bundled with WorkCentre 480cx multifunction peripherals (MFPs). With the continued success of our OEM partners and our products at retail, the number of registered ScanSoft users grew to approximately 1.5 million names, an increase of 25% from the combined registered user databases at year end."

Given the unique nature of the first quarter, it is important to note that the Company expects second quarter revenue to be at least $9.0 million, or approximately 20% greater than the first quarter pro-forma revenue of $7.4 million.

Except for the historical information contained herein, the matters set forth in this press release are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements may be identified by the use of words such as "expects", "anticipates", "intends", and "plans" and similar expressions. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ, including market acceptance of the company's products, the impact of competitive products, and other risks detailed from time to time in ScanSoft's SEC reports, including its Annual Report on Form 10-K for the fiscal year ended January 3, 1999. ScanSoft disclaims any intent or obligation to update these forward-looking statements.

About ScanSoft, Inc.
ScanSoft, Inc. (NASDAQ: SSFT), is the leading developer of scanning software that enables users to fully leverage the power of their scanners. ScanSoft's product line - Pagis, TextBridge, PaperPort Deluxe, PaperPort ScannerSuite, ScanWorks and Visual Explorer - lets users quickly scan paper-based documents, graphics and photos into electronic documents that can easily be edited in most popular Windows applications. In addition, users can quickly and easily create web pages by converting hard copy into HTML-ready documents.

ScanSoft's family of scanning software has received numerous industry awards, including: PC Computing's A List Rating and 4-Star Award; Windows Magazine's WIN 100 Award; Home PC Magazine's Editors' Choice; Business Week's Silver Product Design Award; PC Magazine's Editors' Choice; Family PC Magazine's Recommended List.

ScanSoft software is sold and marketed worldwide through retail and OEM channels and the Internet, capturing the consumer, small office/home office (SOHO) and corporate markets. There are approximately 1.5 million registered users of ScanSoft products.

For further ScanSoft product and company information, visit us on the Worldwide Web: www.nuance.com.

ScanSoft, PaperPort, Pagis, ScanWorks, and TextBridge are registered trademarks or trademarks of ScanSoft, Inc. All other trademarks are the property of their respective holders.

Note: The financial results of 1998 represent the activity of Visioneer, Inc., which was both a hardware and software company in 1998. Visioneer sold its hardware business to Primax Electronics, Ltd., on January 6, 1999. Visioneer acquired Xerox Corporation's ScanSoft subsidiary on March 2, 1999, and subsequently changed its name to ScanSoft, Inc.

Note: The financial results of 1998 represent the activity of Visioneer, Inc., which was both a hardware and software company in 1998. Visioneer sold its hardware business to Primax Electronics, Ltd., on January 6, 1999. Visioneer acquired Xerox Corporation's ScanSoft subsidiary on March 2, 1999, and subsequently changed its name to ScanSoft, Inc.

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