ScanSoft, Inc. (Nasdaq: SSFT), a global leader of speech and imaging solutions, today announced that it has signed an agreement to acquire ART Advanced Recognition Technologies Inc., a leader in embedded speech and handwriting for wireless mobile devices.

As businesses and consumers increasingly demand reliable and immediate access to content, data and images, today's mobile devices need to be more accessible and user-friendly for a global population. ART solutions provide state-of-the-art speech recognition technologies that let people use voice-activated controls on their mobile device to set meetings, call people, read emails and retrieve information from enterprise applications.

With the acquisition of ART, ScanSoft expands its portfolio of embedded speech solutions to include a deep set of resources, expertise and relationships with the world's leading mobile device manufacturers and service providers. ART specializes in applications that create voice-based, conversational interfaces that enable users to dial by voice and manage and access their contacts for mobile devices. The handwriting recognition software for smartphones extends the applications and enables Multimodal activation. The combination of ScanSoft and ART also provides an opportunity to help accelerate the convergence of device and server-based speech applications for the world's leading telecommunications carriers and device suppliers.

"We are excited to welcome ART to ScanSoft, as the company brings an impressive portfolio of technology, expertise and innovation for the rapidly growing mobile device market," said Paul Ricci, chairman and CEO, ScanSoft. "With nearly 600 million mobile devices shipped each year, the market opportunity is significant, and offers a broad opportunity for us to bring speech interfaces for mobile devices to the next level. We look forward to the combined strength of our organization and expertise."

The transaction has been approved by both companies' boards of directors and is expected to close in January 2005. The transaction is valued at approximately $21.5 million, net of ART's expected closing cash balance of $5 million. Consideration comprises cash payments of approximately $5 million due at closing, net of the estimated closing cash balance, and $16.5 million due in December 2005.

Today, more than 30 manufacturers worldwide have implemented ART solutions in more than 40 million devices around the world, including cellular phones, smart phones, PDAs, and automotive systems. Its current customer portfolio includes many of the leaders in the wireless and device industries, including Analog Devices, Agere Systems, Hitachi, LG Electronics, Intel, Mitsubishi Electric, Motorola, NEC, Panasonic, Qualcomm and Texas Instruments.

"The industry has shifted rapidly to devices with greater connectivity, functionality and performance which has created growing demand for simplified, familiar interfaces that are accessible to users across the globe," said Yakov Shulman, acting CEO and vice president of sales, at ART. "ScanSoft and ART individually have been working diligently toward the goal of creating universal, speech-based interfaces for mobile devices. By joining forces with ScanSoft, we will benefit from a tremendous breadth of resources and global reach. Together, our resources, expertise and market penetration will accelerate these efforts and put new, innovative speech capabilities in the hands of the billions of mobile phone users around the world."