Global Private Equity Firm to Purchase 15.9 Million Shares Held by Xerox Corp.; William Janeway, a Warburg Pincus Vice Chairman, to Join ScanSoft Board of Directors

PEABODY, Mass., March 19, 2004 - ScanSoft, Inc. (Nasdaq: SSFT), the leading supplier of speech and imaging solutions, today announced that Warburg Pincus has agreed to purchase all outstanding shares of ScanSoft stock held by Xerox Corporation (NYSE: XRX) for approximately $80 million. Warburg Pincus, the global private equity firm and a leading technology investor, has been a lead investor in premier enterprise communications and software companies such as Avaya Inc. (NYSE: AV), BEA Systems (Nasdaq: BEAS) and VERITAS Software (Nasdaq: VRTS).

"We are impressed with ScanSoft's business strategy, market-leading solutions and worldwide capabilities," said William H. Janeway, a Warburg Pincus vice chairman who will join ScanSoft's board of directors. "We have followed the company's progress for several years and are enthusiastic about its potential for continued growth. We believe that ScanSoft has the vision and resources to extend its position as the leading provider of global speech and imaging solutions."

Xerox and Warburg Pincus reached an agreement today for the private equity firm to acquire the entire Xerox holding, comprising 11,853,602 shares of ScanSoft's common stock; 3,562,238 shares of non-voting Series B preferred stock; and a warrant to purchase up to 525,732 shares of common stock. In addition, Warburg Pincus has acquired a warrant to purchase 2.5 million shares of common stock from ScanSoft.

"ScanSoft's success represents the effective monetization of Xerox innovation. It has grown from an imaging application developed in Xerox research labs to a robust company that is expanding its market reach," said Lawrence A. Zimmerman, Xerox senior vice president and chief financial officer. "Xerox's decision now to sell our ownership stake in ScanSoft is aligned with our strategy to focus investments in areas related to Xerox's document management core business. Although Xerox will no longer maintain an equity position in ScanSoft, we plan to continue working with the company as a business partner and application provider."

"Warburg Pincus is renowned for helping enterprise software companies reach new levels of achievement, as evidenced in its portfolio companies," said Paul Ricci, chairman and CEO at ScanSoft. "We are proud to have Warburg Pincus as a significant investor and partner in our growth and especially pleased to welcome William Janeway to our board of directors."

The transaction has been approved by ScanSoft's Board of Directors and remains subject to expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

About Warburg Pincus

Warburg Pincus has been a leading private equity investor since 1971. The firm currently has approximately $9 billion under management and $5 billion available for investment in a range of sectors including information and communication technology, business services, energy, financial services and technologies, healthcare and life sciences, media and real estate. The firm has invested approximately $4.8 billion in 140 technology companies, including Avaya (NYSE: AV), BEA Systems (Nasdaq: BEAS), Manugistics Group (Nasdaq: MANU), and VERITAS Software (Nasdaq: VRTS). Warburg Pincus is an experienced partner to entrepreneurs seeking to create and build durable companies with sustainable value. The firm has an active portfolio of about 125 companies. For more information, please visit www.warburgpincus.com.

About ScanSoft, Inc.

ScanSoft, Inc. is the leading supplier of speech and imaging solutions that 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 forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding the following: the anticipated closing of the purchase of equity by Warburg Pincus, ScanSoft's potential for future growth, ScanSoft's position as a provider of speech and imaging solutions, and Xerox's plan to continue working with ScanSoft. 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: economic conditions in the United States and abroad; 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; the satisfaction of the closing conditions to the transaction, including compliance with applicable antitrust laws; and the ability of ScanSoft and Xerox to work with one another. A detailed discussion of 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, 2003. ScanSoft undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

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