AUSTIN, Texas--(BUSINESS WIRE)--June 14, 2004--Forgent^™ Networks (Nasdaq:FORG) today announced the results of the 2004 fiscal third quarter ending April 30, 2004. Highlights for the quarter include:

• Initiated litigation against 31 technology companies for
  infringement of United States Patent No. 4,698,672 (the '672
  Patent)
  
  
• Achieved a significant reduction in operating expenses from
  the 2004 fiscal second quarter with additional reductions
  planned for the 2004 fiscal fourth quarter
  
  
• Grew NetSimplicity software revenues by more than 50%
  sequentially
  
  
• Maintained healthy cash balances

"Forgent initiated litigation against some of the largest global technology firms during the quarter. We took this step after seeking to reach license agreements with these companies. We are committed to developing and protecting all of our assets, and will devote the efforts necessary to prevail in this litigation," said Richard Snyder, chairman and CEO of Forgent. "We have also moved quickly to reduce headcount and expenses to reflect our go-forward focus on intellectual property licensing and the NetSimplicity product line. This will be a smaller, lighter-weight company that will only invest where we see profitable growth."

Fiscal Third Quarter Results

Revenues were $0.8 million for the 2004 fiscal third quarter, compared to $6.6 million for the 2004 fiscal second quarter, due to lower intellectual property and software revenues. The company initiated a significant reduction in headcount in the third quarter due to the implementation of a new software business model, which requires less staff. As of the end of the third quarter Forgent had approximately 44 full time employees, a 58% reduction since the end of the 2004 fiscal second quarter. As a result, Forgent was required to take a $0.6 million restructuring charge related to employee severance payments and certain lease payments.

Including the effects of the charge, the net loss was $4.4 million or $0.18 per share for the third fiscal quarter of 2004. Cash, cash equivalents and short-term investments were approximately $21 million at the end of the third quarter of 2004.

Intellectual Property

The intellectual property program revenues decreased to $0.3 million for the fiscal third quarter of 2004 compared to $5.8 million for the second quarter of fiscal 2004. As an evolution of the Company's intellectual property program, and as always anticipated by Forgent, after working actively to license the '672 Patent, Forgent has initiated litigation against 31 companies for infringement of the '672 Patent in the United States District Court for the Eastern District of Texas, Marshall Division. Over the last two years the intellectual property business has generated approximately $90 million from licensing the '672 Patent to 30 different companies in Asia, Europe and the United States. The '672 Patent relates to digital image compression, and fields of use include any digital still image device used to compress, store, manipulate, print or transmit digital still images such as digital cameras. However, the '672 Patent extends beyond digital cameras and includes many digital still image devices such as personal digital assistants, cellular telephones, printers, scanners, and other devices used to compress, store, manipulate, print or transmit digital still images. Forgent has the exclusive right to license and enforce all the claims under the '672 Patent in all fields of use involving digital still image compression.

Software

Software revenues were $0.5 million for the third quarter of fiscal 2004 compared to $0.8 million for the second quarter of fiscal 2004. The decrease is due to lower ALLIANCE^™ revenues as Forgent realigns its software sales focus to the NetSimplicity product line, which has shown significant sales growth. In addition, NetSimplicity's telesales model is a more cost efficient distribution approach that streamlines the purchase process and simplifies the overall sale. Forgent's software division offerings include Meeting Room Manager, it's flagship product that provides room scheduling capabilities.

Although the company continues to see interest in ALLIANCE^™, the interest has not been sufficient to meet sales targets. Forgent will continue to support the software and its customers and will determine the future of the ALLIANCE^™ Scheduler and Media Manager over the next few months. The company is focusing on NetSimplicity's Meeting Room Manager, which is the strategic scheduling platform of the future.

Outlook

Subsequent to the end of the third quarter, Forgent has continued efforts to license the '672 Patent and expects to recover additional license revenues in the fourth fiscal quarter of 2004 based on results achieved in this quarter to date. As a result, Forgent anticipates that there will be additional IP licensing revenues during the pendency of the recently filed patent litigation, although predicting the timing and amounts will be complicated because of licensing negotiations and the pending litigation. Forgent believes that NetSimplicity software revenue for the fourth fiscal quarter of 2004 will grow.

"We will continue our efforts to license and enforce the '672 Patent, with the objective of achieving significant license revenues in the future." added Snyder. "We will focus on revenue, profitability, and managing our expenses so that we improve our cash position. As we grow cash we will look for attractive opportunities to expand the business.

Conference Call and Webcast

Forgent has scheduled a conference call with the investment community for Monday, June 14, 2004, at 10:00 a.m. CT (11:00 a.m. ET) to discuss the quarter and outlook.

To participate, dial 888-482-0024 ten minutes before the conference call begins, ask for the Forgent event, and use a pass code of 13144208. International callers should dial 617-801-9702 and use a pass code of 13144208. 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 (Nasdaq:FORG) develops and licenses intellectual property and provides scheduling software to a wide variety of customers. Forgent's intellectual property licensing program is related to communication technologies developed from a diverse and growing patent portfolio. Forgent's software division, NetSimplicity provides a spectrum of scheduling software that enables all sizes of organizations to streamline the scheduling of people, places and things. For additional information please 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 associated with 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, Austin
Nelson Duffle, 512-437-2532
nelson_duffle@forgent.com
or
Michael Noonan, 512-437-2476
michael_noonan@forgent.com

SOURCE: Forgent Networks