ScanSoft Gains Leading Market Share and Superior Offering in Auto-Attendant Applications

PEABODY, Mass., January 13, 2004 - ScanSoft, Inc. (Nasdaq: SSFT), the leading supplier of speech and imaging solutions, today announced that it has strengthened its SpeechWorks® suite of speech applications through the acquisition of LocusDialog, a leader in speech-enabled, auto-attendant applications, based in Montreal. LocusDialog's applications are widely recognized as superior call routing and auto-attendant solutions in the market with nearly 1,000 installations worldwide, handling approximately one-half billion calls annually.

"ScanSoft is committed to offering the industry's premier speech applications," said Paul Ricci, chairman and CEO of ScanSoft. "The acquisition of LocusDialog, another milestone in our speech application strategy, will enhance our ability to better serve enterprise and carrier customers, strengthen distribution channels and optimize the value and unique capabilities of the SpeechWorks speech portfolio."

The company expects the acquisition to be neutral to earnings in 2004. Richard Martel, previously CEO of LocusDialog, will lead ScanSoft's auto-attendant strategy within ScanSoft's Network Speech Solutions group.

"Speech-activated auto-attendants can deliver compelling ROI to nearly every enterprise and telecommunications business worldwide. Our expanded presence in the auto-attendant market demonstrates ScanSoft's focus on delivering packaged speech applications through our global network of partners," said Steve Chambers, senior vice president and general manager of Network Speech Solutions at ScanSoft. "LocusDialog's premier applications and experienced team, under the direction of Richard Martel, represent strong additions to ScanSoft's application strategy and specifically our SpeechPAK initiatives."

Today, ScanSoft maintains the industry's most extensive portfolio of speech technologies, applications and services, comprising speech recognition, text-to-speech, dictation, auto-attendants, directory assistance and SpeechPAK™ applications for specific vertical markets. The addition of LocusDialog offers many advantages and synergies designed to further expand ScanSoft's market presence and leadership in delivering speech applications, including:

• Current Integration with SpeechWorks Speech Technologies - LocusDialog auto-attendant applications and enhanced call routing platforms are presently built with the superior performance and accuracy of the OpenSpeech Recognizer™ speech recognition software and the natural sounding voice quality of Speechify® text-to-speech (TTS) software.
  
  
• Superior Solutions for Large Name Directories and Sophisticated Call Routing - LocusDialog has successfully deployed more than 800 systems in North America, with a significant Canadian presence featuring French Canadian acoustic data, as well as a growing presence in Europe. Its auto-attendant applications offer competitive product features including support for directories ranging from as little as 200 entries to more than 50,000 entries, menus to direct callers from departments to individuals, call forwarding, voice-activated outbound dialing, and database and directory integration including support for Lightweight Directory Access Protocol (LDAP) to manage large name lists.
  
  
• Robust Channel and Partner Capabilities - Like ScanSoft, LocusDialog's distribution strategy focuses on delivering superior speech applications to the market with and through channel partners. LocusDialog has delivered its solutions in North America and Europe through channels such as Bell Canada, British Telecom, NACR, NEC BNS, NextiraOne, SBC, Telus and others. Together with ScanSoft's existing network of partners, these distribution channels offer years of experience in selling speech applications and provide additional access to and penetration in enterprise markets where future opportunities exist to deliver a broader set of ScanSoft's network speech solutions.

"I'm excited to join the ScanSoft team and look forward to working closely with our many channel partners to deliver state-of-the-art auto-attendants and expand the position of the SpeechWorks product line in the market," said Richard Martel, CEO of LocusDialog. "With ScanSoft's global resources, we can more effectively package our technology and respond to the market and customer requirements. I am also pleased that ScanSoft plans to make Montreal, a dynamic metropolitan area with strong research and innovation, a center for the development of network speech applications."

Investment Protection and Future Solutions

ScanSoft is committed to providing its partners with market-leading technology and applications to better serve their customers. The company will offer tools and training so that its partners can immediately benefit from these auto-attendant applications. In addition, ScanSoft will continue to support its current auto-attendant solutions deployed in the market and will offer a tight, clear migration path from VoiceRequest™ to LocusDialog, should a customer choose to upgrade their solution.

About ScanSoft® Network Speech Solutions

ScanSoft Network Speech Solutions is the global leader in advanced network speech technologies and professional services. Enterprise and telecommunications organizations around the world such as Bank of America, Boeing and United Airlines leverage the power and innovation of the SpeechWorks Suite of Network Speech Solutions to redefine the way they exchange vital information with customers and employees over the telephone. With a global sales and engineering presence, ScanSoft is uniquely positioned to help companies create and implement sophisticated speech solutions that deliver proven economic benefits and the highest levels of caller satisfaction. For more information, visit www.scansoft.com/network/.

About ScanSoft, Inc.

ScanSoft, Inc. (Nasdaq: SSFT) is the leading supplier of speech and imaging solutions that are used to automate a wide range of manual processes - saving time, increasing worker productivity and improving customer service. For more information regarding ScanSoft products and technologies, please visit www.ScanSoft.com.

This press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to potential synergies from, and the integration of, the acquisition of Locus Dialogue; future prospects regarding product lines, sales channels, deployments and market share; the strength of existing products, services and relationships as well as the introduction of new products, services and relationships; the future performance of, and opportunities for growth in, ScanSoft's businesses; and future prospects regarding international operations. Such statements are based on current expectations that are subject to a number of risks and uncertainties, and actual results may differ materially. These risks and uncertainties include, without limitation, the following: difficulties with integrating product plans and operations of acquired businesses and the accounting effects of such acquisitions on ScanSoft's operating results; risks related to speech technologies; economic conditions in the United States and abroad; ScanSoft's ability to control and successfully manage its expenses, inventory and cash position; fluctuations in demand for ScanSoft's existing and future products; the effects of competition, including pricing pressure; possible defects in products and technologies; ScanSoft's dependence on OEM customers; and economic, political, regulatory and other risks associated with international regions. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in ScanSoft's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2002, its most recent quarterly reports on Form 10-Q, and its Registration Statement on Form S-1 declared effective on February 10, 2003, and post-effective amendments thereto filed on June 20, 2003 and October 16, 2003. ScanSoft undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this document.

ScanSoft, VoiceRequest and the ScanSoft logo are registered trademarks or trademarks of ScanSoft, Inc. in the United States and other countries. SpeechWorks, Speechify, OpenSpeech Recognizer and SpeechPAK are registered trademarks or trademarks of SpeechWorks International, Inc. in the United States and other countries. LocusDialog is a trademark of Locus Dialogue Inc. All other company or product names may be the trademarks of their respective owners.

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