ScanSoft Comments on Business Week Article

No Comfort for Short-Sellers

PEABODY, Mass., July 5, 2002 - ScanSoft, Inc. (Nasdaq: SSFT), a leading supplier of digital imaging, speech and language solutions, today commented on the business brief contained in the "Inside Wall Street" column appearing in this week's edition of Business Week.

"Comments appearing in the July 15 edition of Business Week attributed to short sellers seem intended to imply an undue reliance by ScanSoft on its relationship with Xerox and to promote a classic short-seller's agenda," said Paul Ricci, ScanSoft's Chairman and Chief Executive Officer. "No one from Business Week contacted ScanSoft to verify facts before publishing their commentary."

"To set the record straight, while Xerox is a longstanding customer of ScanSoft, they do not account for 14 percent of our revenues. In fact, Xerox has accounted for substantially less than 10 percent of revenues in 2002. Our customer relationship with Xerox has always been at arm's length and Xerox has been steadfast and responsible in their dealings with ScanSoft. Xerox has always settled its payment obligations to ScanSoft in a prompt and professional manner. Xerox - along with Canon, Hewlett-Packard, and our many digital imaging partners - continues to be a solid customer for us, as the use of digital copiers and digital multifunction devices gain more prevalence in corporate imaging solutions.

"We are pleased with the continuing progress in ScanSoft as we completed our second full quarter after the acquisition of the L&H speech and language technologies," concluded Ricci. "While our second quarter results are not yet finalized, we can see nothing in the results that will offer comfort to short-sellers."

About ScanSoft, Inc.

ScanSoft, Inc. (Nasdaq: SSFT) is the leading supplier of imaging, speech and language 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.

Trademark reference: ScanSoft and the ScanSoft logo are registered trademarks or trademarks of ScanSoft, Inc. in the United States and other countries. All other company or product names mentioned may be the trademarks of their respective owners.

Safe Harbor Statement: Except for the historical information contained herein, this press release includes forward-looking statements within the meaning of Section 21(e) of the Securities Exchange Act of 1934. These statements include ScanSoft's second quarter expectations and the outlook for revenue from Xerox in 2002. These statements are based on ScanSoft's current expectations and estimates as to prospective events and circumstances that may or may not be in ScanSoft's control and as to which there can be no firm assurances given. These forward-looking statements are subject to risks and uncertainties, there can be no assurance that any of these forward-looking statements may prove to be correct, and actual results may differ materially. These risks and uncertainties include, but are not limited to, economic conditions in the United States and abroad, the ability to complete and deliver products and services within currently estimated time frames and budgets, the ability to effectively manage diverse and geographically dispersed operations, difficulties with integrating product plans, schedules and resources, difficulties in implementing planned cost reductions, market acceptance of ScanSoft's products, competitive products, pricing pressures, 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.

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