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: Nuance Communications, Inc.
Commission File No.: 000-30203
On May 9, 2005, ScanSoft, Inc. posted the following Frequently Asked Questions on its website.
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ScanSoft and Nuance to Merge
Frequently Asked Questions
1. Why did the companies decide to merge their businesses?
Speech solutions have transformed the way people communicate and interact with information, devices
and systems. As industries increasingly turn to speech solutions to manage and improve customer
interactions, combining our organizations creates a trusted provider of industry-defining
technologies and applications. The combined company will be better equipped to meet expanding
customer and partner requirements, and better armed to compete against large, well-resourced
companies in an increasingly competitive market.
2. Why are the companies merging now?
Bringing together the talents and resources of the two companies will not only help provide
focus to building the market but will also accelerate the technical developments, which will lead
to more affordable, easier to deploy and manage solutions. Together, the combined organization
will have the people, technologies and resources to fuel innovation and develop next-generation
speech solutions that propel the industry forward and deliver enhanced value to customers.
3. What do you see as the opportunities for the combined company going forward?
Speech technology has the power to change the way people communicate and interact with information
– across virtually every type of device and for all types of applications. The great opportunity
for the combined company is to make this shared vision a reality. By combining resources we can
more heavily invest in building today’s market but also invest in the technologies, services, and
applications that will serve customers and partners in the future.
4. How does this announcement fit into both Nuance and ScanSoft’s respective growth strategies?
Core to both companies’ growth strategies is growing the use and utility of speech solutions. The
merger is a combining of experience, resources and IP that will better enable the new company to do
just that.
5. What will be the name of the combined company?
The combined company will assume the name “Nuance” after the transaction closes. The Nuance brand
is widely respected in the speech market and is inclusive enough to serve as an identity for the
combined company’s entire product line.
6. How many employees does ScanSoft have? Nuance?
As of March 31, 2005, ScanSoft had approximately 900 employees and Nuance approximately 290.
7. What are the terms of the transaction?
ScanSoft will acquire all of the outstanding common stock of Nuance, merging the two organizations
into a single company. Under the terms of the agreement, ScanSoft will issue approximately 28
million shares of its common stock to Nuance shareholders, who will receive 0.77 shares of ScanSoft
common stock for each share of Nuance common stock that they own. Additionally, each Nuance
shareholder will receive $2.20 of cash per share of Nuance common stock owned. The transaction is
valued at approximately $221 million based on the closing price of ScanSoft common stock of $4.46
per share on May 6, 2005, or $122 million net of Nuance’s cash and equivalents of $98.7 million on
March 31, 2005, which includes $11.1 million of restricted cash.
8. What are the financial projections for the combined company?
Upon closing, ScanSoft expects to have approximately $80 million in cash and marketable securities.
The transaction is expected to generate cost synergies between $20 million and $25 million per
year through headcount reductions, office site consolidations and elimination of duplicate
operating expenses. In ScanSoft’s fiscal year 2006, the company expects combined revenue to exceed
$315 million. ScanSoft expects that the transaction will be accretive to ScanSoft shareholders for
fiscal year 2006.
9. Will the combined organization continue to look for M&A opportunities?
Yes, as part of the combined company’s strategy, we will continue to pursue opportunities that will
provide operational and strategic benefits.
10. When will the transaction close?
Pending regulatory and shareholder approvals, the companies expect the transaction to close in
September 2005.
11. When will the two companies seek and receive shareholder approval?
The companies will file a Form S-4 with the SEC. The special meetings of shareholders will be
announced at a later date.
12. What is required to close the transaction? What key regulatory or third party consents will
be required for this merger to take place?
This transaction has been unanimously approved by both Boards of Directors and is subject to the
approval of ScanSoft and Nuance 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 will be announced at a later date.
13. What will the management structure of the combined company be?
Paul Ricci, Steve Chambers and John Shagoury will remain in their current positions at ScanSoft. Both ScanSoft and Nuance have strong, talented management teams and the combined company will take advantage of their skills as it scales the business. Decisions regarding management and structure will be made as the companies near the closing date later this year. As part of the agreement however, two of Nuance’s board members, including Chuck Berger, president and CEO of Nuance, will join the ScanSoft board of directors upon closing the transaction.
14. How will the integration process of the two companies be managed?
The integration will be managed through an integration team that will include executives and
employees from both companies in a variety of operational areas.
15. Does ScanSoft have experience successfully executing acquisitions like this?
ScanSoft has demonstrated that it has the operational experience to integrate businesses, and
expects to repeat its success in this transaction. With the help of the integration team, the
company expects a smooth and timely integration of the two companies. The integration team
comprising people from both companies will begin work this week.
16. Does ScanSoft anticipate divesting from its imaging business?
ScanSoft’s imaging business is an important component of its growth and success and there are no
plans to sell the business.
17. Do you anticipate a reduction in force as a result of this transaction?
Headcount reductions will be necessary to achieve the synergies projected in the financial plans of
the combined organization.
18. Will all of the reduction in employees come from one company or the other, or both companies?
Both companies. The integration team is chartered to build the strongest possible combined
organization and will begin work immediately to assess business requirements and make decisions
about staffing and resources.
19. Where will the company’s headquarters be located? What happens to Nuance’s Menlo Park
facilities? Montreal?
Upon closing, the company will be headquartered in Burlington, Massachusetts, a suburb of Boston.
ScanSoft expects to move its corporate headquarters into the new Burlington facility in June 2005.
The company will maintain a significant presence in Menlo Park and Montreal.
20. How do the Nuance and ScanSoft product lines compare? Is there any product overlap? If yes,
how will that be addressed?
Nuance and ScanSoft have both enjoyed strong acceptance of their product lines through the years.
Where overlap exists, we will work to garner the best of both, bringing forth an even stronger
product in the given category. Customers can be assured that we are committed to not only deliver
the best new products but also to protect their significant investment in technology and
applications.
21. What product integration will happen and when will details be available?
The companies believe that its broad, combined product portfolio will enable it to serve a larger
market opportunity and better address customer requirements. The integration team will be
evaluating the combined organization’s product portfolio and over time will utilize techniques and
technologies from each company to improve the performance of its products. Neither company can
disclose any detailed product integration plans until the transaction is closed.
22. Will the combined company continue to support both companies’ product offerings?
All existing, currently supported ScanSoft and Nuance products will continue to receive support to
protect customers’ significant investment and to maintain companies’ commitments to customer
success. As demonstrated from past integrations, ScanSoft’s future development of an integrated
product set will provide a smooth transition for ScanSoft or Nuance customers.
23. Does the combined company have plans for the Nuance Voice Platform (NVP) going forward?
The combined company is committed to maintaining a channel-focused, channel-friendly distribution
model. When integration planning begins, the company will evaluate the platform technology – and
other ScanSoft and Nuance products – to develop specific plans for product, market and channel
development. With respect to NVP in particular, the company intends to maintain commitments to
support NVP customers and partners.
24. Why is this good for customers?
ScanSoft and Nuance are two of the leading suppliers of speech technologies, spanning a number of
areas including dictation, text-to-speech, network-based speech recognition, speaker verification
and embedded/mobile markets and related professional services. By joining forces, customers can
expect the combined organization to offer the broadest array of speech technologies available on a
global scale to provide more complete solutions to customers and partners more effectively and
efficiently. A key premise will be to ensure that customers will have as seamless a transition as
possible.
25. Once the transaction is complete, how will the combined company ensure uninterrupted product
support?
The combined company will dedicate significant resources to ensure that customers experience
minimal disruption during the integration and transition process. The combined company will
maintain support and development organizations for existing products.
26. What do I do if I want to purchase, get training, or be trained on a Nuance products? How long
will training be offered on Nuance products?
ScanSoft is committed to Nuance customers and believes both training and support are critical
components of providing a complete customer solution.
27. When will customers know who will be managing their account?
We will remain and operate as independent entities until the acquisition is closed. In the interim,
customers should continue to work through existing contacts for support, professional services, and
sales to address any ongoing needs you may have.
28. What does this mean for Nuance and ScanSoft business partners?
The benefits to business partners are significant. First and foremost, the combined company will
be firmly committed to an effective channel strategy and will continue to support its partners with
investments in technology, account management, services and demand-generation. Secondly, the
combined organization will offer customers a comprehensive speech portfolio with expertise in all
speech domains. Third, the combined organization brings together a strong array of resources to
continue a heritage of innovation and industry firsts. Lastly, a deep and experienced speech
focused professional services organization will be available to assist business partners in
providing services to thousands of applications worldwide.
29. For partners of Nuance, ScanSoft or both, how does the transaction affect the business
relationship?
Until the transaction closes, respective terms and conditions still apply.
30. When will business partners know who will be managing their account?
The companies expect to close this transaction In September 2005. We will remain and operate as
independent entities until the acquisition is closed. We encourage you to continue to work through
your existing partner account manager for support, professional services, and sales to address any
ongoing needs you or your customers may have.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
ScanSoft plans to file with the SEC a Registration Statement on Form S-4 in connection with the transaction and ScanSoft and Nuance plan to file with the SEC and mail to their respective stockholders a Joint Proxy Statement/Prospectus in connection with the transaction. The Registration Statement and the Joint Proxy Statement/Prospectus will contain important information about ScanSoft, Nuance, the transaction and related matters. Investors and security holders are urged to read the Registration Statement and the Joint Proxy Statement/Prospectus carefully when they are available. Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus and other documents filed with the SEC by ScanSoft and Nuance through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus from ScanSoft by contacting ScanSoft Investor Relations at (978) 977-2000 or from Nuance by contacting Nuance Investor Relations at (650) 847-0000.
ScanSoft and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of ScanSoft and Nuance 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 2005 Annual Meeting of Stockholders, which was filed with the SEC on January 28, 2005. This document is available free of charge at the SEC’s web site at www.sec.gov and from ScanSoft by contacting ScanSoft Investor Relations at (978) 977-2000.
Nuance and its directors and executive officers also may be deemed to be participants in the solicitation of proxies from the stockholders of ScanSoft and Nuance 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 Nuance’s proxy statement for its 2005 Annual Meeting of Stockholders, which was filed with the SEC on May 2, 2005. This document is available free of charge at the SEC’s web site at www.sec.gov and from Nuance by contacting Nuance Investor Relations at (650) 847-0000.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this document regarding the proposed transaction between ScanSoft and Nuance, the expected timetable for completing the transaction, future financial and operating results, benefits and synergies of the transaction, future opportunities for the combined company, expectations that the merger will be accretive to ScanSoft’s results, future expectations regarding the assets of the combined company, future expectations concerning available cash and cash equivalents, the growth of the speech industry and the demand for speech solutions, the future composition of the board of directors of the combined company, and any other statements about ScanSoft or Nuance managements’ future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including
statements containing the words “believes,” “plans,” “anticipates,” “expects,” estimates and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the transaction; the ability of ScanSoft to successfully integrate Nuance’s operations and employees; the ability to realize anticipated synergies and cost savings; the failure of the acquisition to be materially accretive in a timely manner; the failure to retain customers; and the other factors described in ScanSoft’s Annual Report on Form 10-K for the year ended September 30, 2004 and Nuance’s Annual Report on Form 10-K for the year ended December 31, 2004 and their most recent quarterly reports filed with the SEC. ScanSoft and Nuance disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document.