Filed by ScanSoft, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: SpeechWorks International, Inc.
Commission File No.: 000-31097
On April 24, 2003, ScanSoft, Inc. and SpeechWorks International, Inc.
issued a joint press release announcing that ScanSoft and SpeechWorks had
entered into an Agreement and Plan of Reorganization. The text of the joint
press release follows.
NEWS RELEASE
CONTACTS: FOR IMMEDIATE RELEASE
Richard Mack Marie Ruzzo
Director, Corporate Communications Public Relations Manager
ScanSoft, Inc. SpeechWorks International, Inc.
978-977-2175 617-428-4444
Email: richard.mack@scansoft.com Email: marie.ruzzo@speechworks.com
SCANSOFT AND SPEECHWORKS TO MERGE; BRINGS TOGETHER THE BROADEST PORTFOLIO
OF SPEECH TECHNOLOGIES, APPLICATIONS AND SERVICES
Transaction Expected to be Ten Percent Accretive to ScanSoft's
Earnings per Share, before Amortization of Intangibles, in 2004;
Strengthens Financial Resources, Customer Base
and Global Partnerships
PEABODY, MASS., AND BOSTON, APRIL 24, 2003 - ScanSoft, Inc. (NASDAQ: SSFT) and
SpeechWorks International, Inc. (NASDAQ: SPWX) today announced a definitive
agreement for ScanSoft to purchase all of the outstanding common stock of
SpeechWorks. Under the terms of the agreement, ScanSoft will issue approximately
32.6 million shares of its common stock to SpeechWorks shareholders who will
receive 0.860 shares of ScanSoft common stock for each share of SpeechWorks
stock that they own. The transaction is valued at approximately $132 million,
net of SpeechWorks' cash balance of $49 million as of December 31, 2002 and
based on the closing price of ScanSoft common stock on April 23, 2003 of $5.56
per share. Based on the average closing price for the companies' shares during
the last 30 days, the premium paid is approximately 63 percent. The transaction
will be accounted for as a purchase.
The combination of ScanSoft and SpeechWorks will result in a global organization
with the broadest portfolio of speech technologies, applications and services in
the industry. The company will apply its innovative and patented technologies to
produce next-generation speech interfaces and solutions and leverage its
financial strength and operational discipline to provide customers and partners
with a stable and reliable global supplier of standards-based speech
applications.
Upon completion, ScanSoft expects to have total assets of approximately $386
million, including approximately $60 million in cash. The transaction is
expected to generate cost synergies of approximately $27 million through
headcount reductions in major operating functions of each company, office site
consolidations and reductions in marketing and administrative expenses. As a
result of these
ScanSoft and SpeechWorks to Merge
April 24, 2003
synergies, most of which will be realized at closing, ScanSoft expects the
transaction to be neutral to earnings, before amortization of
acquisition-related intangibles, for the first full quarter; approximately five
percent accretive to earnings for the first full year; and approximately 10
percent accretive to earnings for the full year 2004. In 2004, ScanSoft expects
combined revenue to exceed $200 million, including more than $125 million in
speech-related revenue, and earnings per share of approximately $0.42 to $0.43,
before amortization of acquisition-related intangibles.
"The combined organization gives ScanSoft the resources to lead the speech
industry with a diverse and proven set of assets," said Paul Ricci, chairman and
CEO of ScanSoft. "With this transaction, ScanSoft's innovative technologies and
solutions, broad channels, professional services expertise, strong management
and talented employees will allow us to accelerate the development and adoption
of innovative speech-enabled applications and services worldwide."
The transaction has been approved unanimously by both Boards of Directors and is
subject to the approval of ScanSoft and SpeechWorks shareholders and various
closing conditions including expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The
special meetings of shareholders are to be announced at a later date. Following
regulatory and shareholder approval, ScanSoft expects the transaction to close
by August 1, 2003. Evercore Partners served as financial advisor to ScanSoft in
the transaction and Morgan Stanley served as financial advisor to SpeechWorks.
Benefits of the transaction include:
o BROAD TECHNICAL STRENGTH AND ENHANCED PRODUCT OFFERINGS - The combined
organization will possess the industry's foremost speech portfolio,
bringing together a rich set of technologies in speech recognition,
text-to-speech (TTS) and speaker verification; a broad range of
intellectual property; and a full complement of applications in dictation,
customer service, telecommunications and automotive solutions. In addition,
the combined organization demonstrates an ongoing commitment to open
standards as evidenced through its leadership and active participation in
all key standards organizations.
o STRONGER, MORE ROBUST CHANNEL AND PARTNER CAPABILITIES - The company will
continue to partner with industry leaders such as Cisco, IBM, Intel and
Microsoft to drive the adoption of speech. The company remains committed to
maintaining a broad channel strategy to deliver its solutions and will
leverage the strengths of the combined global channel network to expand its
worldwide reach. As a result, ScanSoft will be better positioned to serve
its range of partners, including Avaya, Convergys, Delphi, Edify,
Intervoice, Motorola, Nortel Networks, Sony Entertainment, Texas
Instruments, Visteon and VoiceGenie, with an expanded portfolio of
technologies and applications, a deeper set of services and support
capabilities, and a greater capacity to operate in nearly every country
with speech solutions that support 45 languages.
o GREATER GLOBAL PRESENCE - The expanded organization will include
representation in more than 70 countries and employ approximately 800
individuals, with nearly half located internationally. The company will
have significant engineering sites in Australia, Belgium, Canada, Germany,
Hungary, Japan and the U.S. The transaction also provides for a greater
international presence in distribution networks, expanded product
capabilities and stronger global support and service centers, all
particularly important for further penetrating European and Asian markets.
The combined experience in international markets, paired with
multi-language product capabilities, will help the company provide superior
solutions on a global scale and extend its presence in important regions.
The company expects international revenue to comprise more than 40 percent
of total revenue.
o EXPERIENCED, DEDICATED SERVICES ORGANIZATION - The speech industry has
evolved from the deployment of isolated applications to more comprehensive,
enterprise-wide systems, increasing the need for experienced professional
services and support. SpeechWorks brings an intimate knowledge
ScanSoft and SpeechWorks to Merge
April 24, 2003
of the speech industry and is well versed in the complex customer
requirements, market trends and deployment intricacies associated with
state-of-the-art speech applications. Following the transaction, the
combined organization will be better equipped to serve its major enterprise
accounts, channel partners and telecommunications carriers worldwide.
INVESTMENT PROTECTION AND FUTURE SOLUTIONS
In recognition of the global success of SpeechWorks' and ScanSoft's current
automated speech recognition (ASR) and TTS product suites, both companies'
products will continue to be available and supported. The company plans to
integrate its offerings and provide seamless API interfaces, based on industry
standards, to facilitate product and application updates.
"SpeechWorks is committed to the proliferation of speech solutions on a global
scale, and we believe this transaction brings value to the entire industry,"
said Stuart R. Patterson, CEO of SpeechWorks. "We look forward to combining our
resources with ScanSoft. Our collective strengths and expertise, combined with
our global network of partners, will allow us to provide enterprise and carrier
customers around the world with even more powerful and efficient speech
solutions that generate new revenues, reduce costs and enhance customer
satisfaction."
SCANSOFT EXECUTIVE TEAM
Paul Ricci will remain Chairman and Chief Executive Officer of ScanSoft. Upon
the close of the transaction, Stuart Patterson will become President of
ScanSoft. In addition, several key members of the SpeechWorks executive team
will join the senior management ranks of ScanSoft. Paul Ricci added, "I am
enthusiastic about Stu joining the ScanSoft team in this key executive role.
With the tremendous opportunities that lie ahead for the combined organization,
his 20 years of experience in telecommunications and leadership in the speech
industry will be invaluable assets."
In conjunction with this announcement, ScanSoft today also announced the
retirement of Michael Tivnan from his positions as President, COO and Board
Member. Mr. Tivnan will continue to serve as a senior advisor for the company.
"Throughout his tenure, Mike has led the company through several transformations
and made innumerable contributions to the growth and development of ScanSoft. I
wish to express my sincere appreciation for his tireless efforts," added Mr.
Ricci.
INVESTOR CALL
In conjunction with this announcement, ScanSoft will conduct a conference call
today at 8:30 a.m. ET to discuss the transaction. Those who wish to listen to
the live broadcast should visit the Investor Relations section of ScanSoft's Web
site at www.scansoft.com at least 15 minutes prior to the event and follow the
instructions provided to assure that the necessary audio applications are
downloaded and installed.
The conference call also can be heard live by dialing (719) 457-2728 or (800)
475-3716 five minutes prior to the call. A replay of the call will be available
from 11:30 a.m. ET on Thursday, April 24, 2003, through 11:30 p.m. ET on
Wednesday, April 30, 2003. To access the replay, dial (888) 203-1112 or (719)
457-0820 and refer to confirmation code 762476.
ABOUT SPEECHWORKS
Organizations around the world trust SpeechWorks to manage their customer
conversations. As a leading provider of speech technologies and services,
SpeechWorks helps companies create and implement unique Speech Strategies that
ensure maximum financial return and the highest levels of caller satisfaction.
The Company provides speech recognition, text-to-speech (TTS) and speaker
verification for network and embedded environments, including new multimodal
devices with both an audio interface and visual display. SpeechWorks' customers
include carriers, corporations and government organizations such as Aetna, AOL
Time Warner, Bank of America, The Boeing Company, Citibank Europe, Deutsche
ScanSoft and SpeechWorks to Merge
April 24, 2003
Telekom, Microsoft, and United Airlines. For more information, please call
617.428.4444 or visit www.speechworks.com.
ABOUT SCANSOFT, INC.
ScanSoft, Inc. (Nasdaq: SSFT) is a 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.
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 herein may be the trademarks of their respective owners.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
ScanSoft intends to file a registration statement on Form S-4 in connection with
the transaction, and ScanSoft and SpeechWorks intend to file with the SEC and
mail to their respective stockholders a joint proxy statement/prospectus in
connection with the transaction. Investors and security holders are urged to
read the joint proxy statement/prospectus when it becomes available because it
will contain important information about ScanSoft, SpeechWorks and the
transaction. Investors and security holders may obtain a free copy of the joint
proxy statement/prospectus (when it is available) at the Securities and Exchange
Commission's web site at www.sec.gov. A free copy of the joint proxy
statement/prospectus may also be obtained by contacting ScanSoft or SpeechWorks
ScanSoft and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of ScanSoft
and SpeechWorks in connection with the transaction described herein. Information
regarding the special interests of these directors and executive officers in the
transaction described herein will be included in the joint proxy
statement/prospectus described above. Additional information regarding these
directors and executive officers is also included in ScanSoft's proxy statement
for its 2002 Annual Meeting of Stockholders, which was filed with the Securities
and Exchange Commission on or about April 30, 2002. This document is available
free of charge at the Securities and Exchange Commission's web site at
www.sec.gov and from ScanSoft.
SpeechWorks and its directors and executive officers also may be deemed to be
participants in the solicitation of proxies from the stockholders of ScanSoft
and SpeechWorks in connection with the transaction described herein. Information
regarding the special interests of these directors and executive officers in the
transaction described herein will be included in the joint proxy
statement/prospectus described above. Additional information regarding these
directors and executive officers is also included in SpeechWorks' proxy
statement for its 2002 Annual Meeting of Stockholders, which was filed with the
Securities and Exchange Commission on or about April 15, 2002. This document is
available free of charge at the Securities and Exchange Commission's web site at
www.sec.gov and from SpeechWorks.
SAFE HARBOR STATEMENT
This press release contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. The forward-looking statements
herein include statements addressing future financial and operating results of
ScanSoft; statements relating to the magnitude, timing, effects, and any
synergies that may result from the proposed acquisition; and statements
concerning the outcome of any necessary regulatory and stockholder approvals
required in connection with the proposed acquisition.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: potential
that the information and estimates used to predict the cost savings and
anticipated revenues were not accurate; failure of the acquisition to be
materially accretive in a timely manner; failure to retain customers;
difficulties with integrating product plans, schedules and resources; risks
associated with the acquisition, including the need for regulatory and
stockholder approvals, as well as transaction costs and the related integration
of operations; difficulties in implementing planned cost reductions; failure to
obtain and retain expected synergies; political and global economic risks
attendant to a greater international presence; and other economic, business, and
competitive factors affecting the business generally.
ScanSoft and SpeechWorks to Merge
April 24, 2003
More detailed information about these factors and other risks affecting ScanSoft
are set forth in ScanSoft's filings with the Securities and Exchange Commission,
including the Annual Report on Form 10-K for fiscal 2002 and the most recent
quarterly reports on Form 10-Q. ScanSoft is under no obligation to (and
expressly disclaims any such obligation to) update or alter the forward-looking
statements, whether as a result of new information, future events or otherwise.
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