AUSTIN, Texas--(BUSINESS WIRE)--March 9, 2004--Forgent^™ Networks (Nasdaq:FORG) today announced the results of the 2004 fiscal second quarter ending January 31, 2004. Revenues increased by approximately 71% to $6.6 million for the 2004 fiscal second quarter, compared to $3.9 million for the 2004 fiscal first quarter, due to improved intellectual property revenues.

"Forgent's intellectual property program was successful during the quarter and the company continues to seek additional opportunities in licensing its '672 patent. The performance for ALLIANCE^™, however, was below our expectations. As a result, we made the decision to rapidly implement a leaner cost structure, as well as simplify and streamline the product development and sales process for ALLIANCE^™," said Richard Snyder, chairman and CEO of Forgent. "We repositioned ALLIANCE^™ because we are seeing a positive response to our Network Simplicity product line, which is driven largely by a lower cost, telephone and Web-based sales strategy. We are focusing on small and medium-sized businesses, as well as departments and divisions of larger enterprises, where we see the best immediate prospects."

Fiscal Second Quarter Results

The results of the 2004 fiscal second quarter as well as the future outlook for the enterprise software business were less than anticipated and consequently, Forgent was required to take an $11.8 million impairment charge primarily related to certain software assets. The asset impairment charge is broken out as follows:

• A charge of $4.8 million was recorded in cost of goods sold
  for an impairment of capitalized software development related
  to ALLIANCE^™ and certain pre-paid expenses
  
  
• A charge of $7.0 million was recorded in operating expense as
  an impairment of goodwill, certain leases and other assets

As a result of these impairments, gross margins were ($1.9) million for the fiscal second quarter of 2004 compared to $1.6 million for the 2004 fiscal first quarter. Operating expenses increased to approximately $11.5 million, primarily due to the impairments. Including the effects of the charge, which was largely non-cash, the net loss was $13.5 million or $0.55 per share for the second fiscal quarter of 2004, compared to a net loss of $2.5 million or $0.10 per share the first fiscal quarter of 2004. Cash, cash equivalents and short-term investments declined at the end of the second quarter compared to the first fiscal quarter of 2004 to approximately $25 million.

Intellectual Property

The intellectual property program revenues increased by approximately 104% to $5.8 million for the fiscal second quarter of 2004 compared to $2.9 million for the first quarter of fiscal 2004. Since the intellectual property program was initiated, Forgent has garnered over $88 million in license revenue. The '672 patent program has a wide field of use including licensing opportunities with any digital still image device used to compress, store, manipulate, print or transmit digital still images. Forgent has noticed companies in such diverse geographies as Asia, Europe and North America. The company believes that through these efforts it will have additional licensing revenue in subsequent quarters, although we cannot predict the timing and amounts.

Software

Software revenues were $0.8 million for the second quarter of fiscal 2004 compared to $1.0 million for the first quarter of fiscal 2004. Forgent has realigned its software sales strategy to a more cost efficient distribution model that streamlines the purchase process and simplifies the overall sale. Our offerings include Network Simplicity's Meeting Room Manager, which provides room scheduling, and ALLIANCE^™, which provides unified scheduling of all meeting logistics using the corporate calendaring platforms of Lotus Notes and Microsoft Outlook.

Other Items

The company reported income from discontinued operations of $563,000 or $0.02 per share for the 2004 fiscal second quarter resulting from the settlement of funds held for purchase price adjustments related to the sale of the videoconferencing hardware services business.

Conference Call and Webcast

Forgent has scheduled a conference call with the investment community for Tue., March 9, 2004, at 10:00 a.m. CT (11:00 a.m. ET) to discuss the quarter and outlook.

To participate, dial 800-884-5695 10 minutes before the conference call begins, ask for the Forgent event, and use a pass code of 86536175. International callers should dial 617-786-2960 and use a pass code of 86536175. Investors, analysts, media and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the investor relations page of Forgent's Web site at www.forgent.com. To listen to the live call, please visit the Web site at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call on the investor relations page of our Web site at www.forgent.com.

About Forgent

Forgent^™ Networks provides a spectrum of scheduling software that enables organizations to streamline the planning and execution of their meetings. Forgent's offerings include Network Simplicity's Meeting Room Manager, which provides Web-based room scheduling capabilities and ALLIANCE, which provides unified scheduling of all meeting logistics through corporate calendaring platforms Microsoft Outlook and Lotus Notes. For additional information visit www.forgent.com.

Safe Harbor

This release may include projections and other forward-looking statements that involve a number of risks and uncertainties and as such, actual results in future periods may differ materially from those currently expected or desired. Some of the factors that could cause actual results to differ materially include changes in the general economy and the technology industry, rapid changes in technology, sales cycle and product implementations, risks associated with transitioning to a new business model and the subsequent limited operating history, the possibility of new entrants into the scheduling software market, the possibility that the market for the sale of certain software and services may not develop as expected, that development of these software and services may not proceed as planned, risks associated with the company's license program, including risks of litigation involving intellectual property, patents and trademarks, merger activities and acquisition integration. Additional discussion of these and other risk factors affecting the company's business and prospects is contained in the company's periodic filings with the SEC.

CONTACT:
Forgent Networks Inc., Austin
Press contact:
Nelson Duffle, 512-437-2532
nelson_duffle@forgent.com
or
Investor contact:
Michael Noonan, 512-437-2476
michael_noonan@forgent.com

SOURCE: Forgent Networks Inc.