SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 7, 2002.
SCANSOFT, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 000-27038 94-3156479
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9 CENTENNIAL DRIVE
PEABODY, MASSACHUSETTS 01960
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Address of principal executive offices
(978) 977-2000
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Registrant's telephone number, including area code
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURES
This Current Report on Form 8-K (the "Report") is filed by ScanSoft, Inc., a
Delaware corporation (the "Registrant").
[SCANSOFT LOGO] [PHILIPS LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACTS:
Richard Mack Andre Manning
Director, Corporate Communications Corporate Communications
ScanSoft, Inc. Philips International
Tel: +1 978 977 2175 Tel : +31 20 59 77199
Email: richard.mack@scansoft.com Email: andre.manning@philips.com
SCANSOFT TO ACQUIRE PHILIPS SPEECH PROCESSING BUSINESS UNITS
AND RELATED INTELLECTUAL PROPERTY FOR $35.4 MILLION
World-class Speech Recognition Engines and Enterprise Productivity Applications
Establish ScanSoft as a Leading Supplier in Telephony,
Automotive and Embedded Markets
PEABODY, MASS. AND AMSTERDAM, THE NETHERLANDS, OCTOBER 7, 2002 - ScanSoft, Inc.
(Nasdaq: SSFT) and Royal Philips Electronics (NYSE: PHG, AEX: PHI), Europe's
largest manufacturer of electronics products, today announced that the companies
have signed a definitive agreement whereby ScanSoft will acquire the Philips
Speech Processing Telephony and Voice Control business units, and related
intellectual property.
Consideration for the transaction is $35.4 million, comprising $3.0 million in
cash; a $4.9 million 5% interest note due December 31, 2003; and a $27.5 million
three-year, zero-interest convertible debenture, convertible into common shares
of ScanSoft at $6.00 per share. The transaction has been approved by the boards
of directors for both companies, and is expected to close during the first
quarter of 2003.
For more than two decades, Philips has been a global leader in the field of
speech processing, offering a full line of state-of-the-art products and
technologies for the telecommunications, automotive and consumer electronics
industries. The acquisition provides ScanSoft with significant resources and
market opportunities to:
- Broaden ScanSoft's embedded automatic speech recognition (ASR)
solutions for automobiles, mobile devices and consumer electronics,
and adds new reference accounts including Bosch-Blaupunkt, Daimler
Chrysler, General Motors, Land Rover, Motorola, Opel and Siemens.
- Provide enterprise- and carrier-level productivity solutions for the
telephony market, such as directory assistance and automated attendant
applications, that are consistent with ScanSoft's strategy of
delivering repeatable applications to targeted markets. Leading
telecommunications companies, including British Telecom, MCI/Worldcom
and Portugal Telecom, have deployed these solutions.
ScanSoft Acquires Philips Speech Processing Business Units
October 7, 2002
Page 2
- Add telephony-based ASR solutions to complement ScanSoft's
market-leading RealSpeak(TM) text-to-speech (TTS) capabilities and
enable ScanSoft to offer a combined ASR/TTS solution through its
existing channel and technology partners.
- Allow ScanSoft to leverage and expand its current global channel
network by providing resellers with market-leading telephony
technology and applications.
"Philips is a pioneer and a great believer in the future of the speech
recognition industry. By merging our speech telephony businesses into ScanSoft,
we will contribute to making a worldwide market leader in this area," said Tom
Verbeek, Head of Philips Corporate Investments. "Because of our confidence in
the speech industry and ScanSoft in particular, we have elected to receive
consideration with a clear upside potential rather than in cash." The Philips
Speech Processing Dictation business is not part of this transaction and will
remain within Philips to develop applications for its medical businesses and
other professions in the fields of hardware and software dictation systems.
An ongoing partnership between Philips and ScanSoft is an integral component of
the transaction. This partnership includes continued support and collaboration
with Phillips Research in speech technology and innovations, joint assertion of
acquired patent rights and designation of ScanSoft as the preferred supplier of
embedded speech capabilities for Philips consumer electronics. As part of the
transaction, ScanSoft will acquire a full complement of products and
technologies, a roster of premier partners and customers, ownership of critical
intellectual property and an existing royalty revenue stream. ScanSoft will add
to its operations employees that are located in Europe, North America and Asia.
"Philips' people, products and technology have gained the respect of customers
and competitors for their leadership and innovative capabilities, assets that
will help accelerate ScanSoft's success," said Paul Ricci, ScanSoft's chairman
and chief executive officer. "We are especially enthusiastic about our ongoing
partnership with Philips in research, patent assertion and development of
consumer markets for speech."
This acquisition enhances ScanSoft's speech portfolio with solutions that will
expand its market opportunities with existing business partners and global
channels. As the integration of Philips' speech business begins, ScanSoft will
apply the same focus on controlling expenses and enhancing productivity employed
during the recent integration of the L&H business. ScanSoft expects the acquired
businesses to generate revenues approximating $18 million in 2003 and to be
accretive for the full year, adding $.02 per share to earnings before the
amortization of acquisition-related intangibles.
The businesses to be acquired by ScanSoft include:
- TELEPHONY - The Philips Speech Processing Telephony business allows
enterprise customers, telephony vendors and carriers to speech-enable
a range of services, including directory assistance, interactive voice
response and voice portal applications. Philips automatic speech
recognition (ASR) engine, SpeechPearl(R), supports more than 40
languages and can process a vocabulary of more than one million words,
making it the solution of choice for telephony applications that
target global and broad regional markets. Philips has also leveraged
its expertise in telephony ASR to develop VoiceRequest, an enterprise
auto-attendant solution, and automated directory assistance
implementations that have been deployed by Telia in Sweden, the Japan
Multimedia Service and Telefonica de Argentina, among others.
ScanSoft Acquires Philips Speech Processing Business Units
October 7, 2002
Page 3
- VOICE CONTROL - The Philips Speech Processing Voice Control business
is addressing growing consumer demand for speech-enabled automotive,
mobile and consumer electronics products. Philips's SpeechWave and
VoCon small-footprint speech recognition engines are ideal for
embedded applications including voice-control of climate and
entertainment features within cars. These solutions are also used
within navigation systems and to enable automated voice dialing within
mobile phones, including those from Philips.
INVESTOR CALL
In conjunction with this announcement, ScanSoft will conduct a conference call
at 9:00a.m. (ET) today, Monday, October 7, 2002. To listen to the call, please
telephone (800) 500-0177 or (719) 457-2679 approximately 10 minutes beforehand.
For those who are not available to listen to the live conference call, a
telephone replay will be available starting at approximately 2:00 p.m. (ET) on
Monday, October 7 until 11:30 p.m. (ET) on Sunday, October 13. The access number
for the replay is (719) 457-0820 or (888) 203-1112; the confirmation number is
794663. The conference call will also be broadcast live over the Internet.
Investors interested in listening to the call should log onto the Company's Web
site at www.scansoft.com at least 10 minutes prior to the broadcast. Investors
will also have access to an archived version of the call on the Company's Web
site.
ABOUT ROYAL PHILIPS ELECTRONICS
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of EUR 32.3 billion in
2001. It is a global leader in color television sets, lighting, electric
shavers, medical diagnostic imaging and patient monitoring, and one-chip TV
products. Its 184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:
PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips
is located at www.philips.com/newscenter.
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.
ScanSoft, RealSpeak 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.
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, and the timing, benefits and other aspects of 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;
difficulties in implementing planned cost reductions; failure to obtain and
retain expected synergies; risks associated with the acquisition, transaction
costs and the related integration of operations; and other economic, business,
and competitive factors affecting the business generally.
ScanSoft Acquires Philips Speech Processing Business Units
October 7, 2002
Page 4
More detailed information about these factors is set forth in ScanSoft's filings
with the Securities and Exchange Commission, including the Annual Report on Form
10-K for fiscal 2001 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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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCANSOFT, INC.
/s/ Gerald C. Kent, Jr.
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Gerald C. Kent, Jr., Chief Accounting Officer &
Controller (Principal Accounting Officer)
Date: October 8, 2002