ScanSoft Reports Third Quarter 1999 Results

PEABODY, MA, October 29, 1999 - ScanSoft, Inc. (NASDAQ: SSFT) today announced revenue for the third quarter ended September 30, 1999 of $8,210,000 and net income of $1,127,000 (before goodwill amortization), or $0.04 per share on a diluted basis. Including the effects of goodwill amortization, the company reported net income of $472,000, or $0.01 per diluted share, for the third quarter of 1999.

For the nine months ended September 30, 1999, ScanSoft reported revenue of $22,986,000 and net income (before unusual items and goodwill amortization) of $2,529,000, or $0.09 per diluted share. Including the effects of unusual items and goodwill amortization, the company reported a net loss of $2,730,000, or $0.11 per share, for the nine months ended September 30, 1999.

"As we expected, the company's revenue for the third quarter of 1999 decreased from the revenue reported for the second quarter of 1999, due in part to seasonal sales trends that have historically affected our third quarter results. In addition, while the scanner market is still growing, a slower rate of growth in scanner sales over the past few months impacted our revenue for the third quarter of 1999 beyond normal seasonal issues," said Michael Tivnan, ScanSoft's president and chief executive officer. "Accordingly, we made adjustments in our operations to limit expenditures in the third quarter. Also, our ongoing efforts to improve productivity within the company yielded increased efficiencies within our direct and retail marketing programs, resulting in the second most profitable quarter in the company's history."

"Since the second quarter, we continued to expand our retail channel to include Costco, Sam's Club, BJ's Wholesale Club, and Circuit City in the United States, as well as Staples, Costco, Promarkt, Conforama, and other retailers across Europe," added Mr. Tivnan. "We also formed several new strategic relationships, including an agreement under which Hewlett-Packard will bundle ScanSoft's Pagis Pro 2.0 with their new HP CapShare 920 portable e-copier and another agreement under which Olivetti Lexikon will bundle Pagis Pro with their multi-function products. We recognize the importance of these relationships in helping us to broaden our markets and to establish our products as a standard around the world, and we will continue to search for opportunities to partner with premier companies in the digital imaging field."

About ScanSoft, Inc.

On March 2, 1999, Visioneer, a hardware and software company, acquired the ScanSoft subsidiary of Xerox. The company subsequently changed its name to ScanSoft. Prior to the acquisition, Visioneer sold its hardware business to Primax Electronics, Ltd. on January 6, 1999. Revenue and costs for 1998 include these divested hardware products.

Headquartered in Peabody, MA, ScanSoft, Inc. is a leading developer of digital imaging and optical character recognition (OCR) software. The company's award-winning products allow small office/home office (SOHO) and corporate users to leverage the power of their desktop scanners, digital cameras, and other electronic input devices to accurately capture and convert paper documents and photos into digital files that can be easily edited, organized, and shared via email and the Internet. There are approximately 2.4 million registered users of ScanSoft software worldwide.

ScanSoft's digital imaging software is marketed through retail distributors and the Internet and ships with the desktop imaging and networkable multi-function devices of leading manufacturers including Apple, Brother, Canon, Compaq, Epson, Hewlett-Packard, IBM, Mustek, Olivetti, Primax, Visioneer, and Xerox. For more information, please visit us on the Internet at www.nuance.com.

Except for the historical information contained herein, the matters set forth in this press release are forward-looking statements. These statements are based on the company's current expectations and estimates as to prospective events and circumstances which may or may not be in the company's control and as to which there can be no firm assurances given. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to, market acceptance of the company's products, competitive products, pricing, maintenance of distribution channels, and other risks detailed from time to time in ScanSoft's SEC reports. ScanSoft disclaims any intent or obligation to update these forward-looking statements.

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

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