SpeechWorks Restructures Operations

BOSTON, MA - SpeechWorks International Inc. (Nasdaq: SPWX), a developer of speech recognition and text-to-speech technologies and services, announced that it is taking steps to achieve an approximate 20% reduction of its current expense base over the next four quarters, including a reduction of its workforce by about 17% primarily in the current quarter. These actions are intended to better align the company to current market conditions and general IT spending. Annualized savings from these measures are expected to total approximately $14-15 million. A one-time charge, related primarily to the reduction in workforce, of approximately $2 million is expected in the third quarter ending September 30, 2002.

"Over the last 18 months, we have built a solid leadership position and leading industry market share," said Stuart R. Patterson, President and CEO of SpeechWorks. "With these actions, we are aligning our costs with current market conditions as we drive towards profitability. SpeechWorks continues to execute well and, as a result, we are reaffirming that our second quarter revenue and loss per share are within the range of guidance provided by SpeechWorks in our last earnings call on April 24, 2002. These steps also contribute to our confidence that we will achieve our target of break-even in the first half of 2003."

The Company will review cost reduction measures and second quarter results in greater detail during its second quarter conference call scheduled for Wednesday, July 24th, 2002 at 5:00 p.m. Eastern Time. Investors and interested parties may listen to the call via a live webcast accessible on the investor relations page of the Company's web site at http://www.speechworks.com. The webcast will be archived on the site for two weeks, while a telephone replay of the call will be available beginning at 8:00 p.m. Eastern Time on July 24, through July 30, at 888-266-2081 or 703-925-2533 (international callers) using reservation #6069453.