FORGENT NETWORKS INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2002

Commission file number 0-20008

FORGENT NETWORKS, INC.

A DELAWARE CORPORATION IRS EMPLOYER ID NO. 74-2415696

108 WILD BASIN ROAD
AUSTIN, TEXAS 78746

(512) 437-2700

The registrant has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports) and
has been subject to such filing requirements for the past 90 days.

At December 3, 2002 the registrant had outstanding 24,576,299 shares of its
Common Stock, $0.01 par value.

FORGENT NETWORKS, INC.

CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
- --------------------------------------------------------------------------------

The accompanying notes are an integral part
of these consolidated financial statements

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FORGENT NETWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
- --------------------------------------------------------------------------------

The accompanying notes are an integral part
of these consolidated financial statements

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FORGENT NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
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The accompanying notes are an integral part
of these condensed consolidated financial statements.

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FORGENT NETWORKS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share and employee data unless otherwise
noted)
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NOTE 1 - GENERAL AND BASIS OF FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and accordingly, do not include all information and
footnotes required under accounting principals generally accepted in the United
States for complete financial statements. In the opinion of management, these
interim financial statements contain all adjustments, consisting of normal,
recurring adjustments, necessary for a fair presentation of the financial
position of Forgent Networks, Inc. ("Forgent") as of October 31, 2002 and July
31, 2002 and the results of operations and cash flows for the three months ended
October 31, 2002 and 2001. The results for interim periods are not necessarily
indicative of results for a full fiscal year.

NOTE 2 - INVENTORIES

Inventories consist of the following:

The inventory held as of October 31, 2002 and July 31, 2002
primarily represent third-party equipment to be sold to Forgent's customers
through its Multi-Vendor Program ("MVP").

NOTE 3 - RESTRUCTURING ACTIVITIES

In August 2001, the Company restructured its organization, which
involved the termination of 65 employees, or 17% of the workforce, who were
assisted with outplacement support and severance. The reduction affected 16
employees in Austin, Texas, 30 employees in King of Prussia, Pennsylvania, and
19 employees in remote and international locations. The restructuring was the
result of eliminating certain business elements that did not contribute to
Forgent's core competencies as well as efforts to increase efficiencies and to
significantly reduce administrative costs. All of the employees were terminated
and the Company recorded a one-time charge of $818 in the first quarter of
fiscal 2002 for the restructuring. All of the involuntary termination benefits
were paid in fiscal 2002.

NOTE 4 - DISCONTINUED OPERATIONS

In April 2002, Forgent sold inventory and certain other assets
related to its integration business to SPL Integrated Solutions ("SPL"), a
leading nationwide integrator that designs and installs large-display
videoconferencing systems and fully integrated multimedia systems for
corporations, educational institutions and government agencies. SPL currently
provides all of the integration services for Forgent and Forgent became the
exclusive service provider for SPL, thus allowing each company to strengthen and
to significantly expand its individual core services while complementing each
others' product offerings.

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FORGENT NETWORKS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share and employee data unless otherwise
noted)
- --------------------------------------------------------------------------------

As a result of the sale of its integration business, Forgent
received $150 in cash and a $282 note receivable from SPL. SPL absorbed 15
members of Forgent's Professional Services Integration team and re-located to
Forgent's facility in King of Prussia, Pennsylvania, where the combined team of
engineers and technicians manage and execute the delivery of audio-video system
integration and support. The assets related to the integration business were
sold for approximately their net book value and thus an immaterial amount of
gain was recorded during the third quarter of fiscal 2002. The sale allowed
Forgent to focus its strengths and resources on growing its more profitable
network software and professional services business while still providing
multimedia systems to its customers through SPL.

On October 2, 2001, Forgent announced that it had signed a
definitive sales agreement to sell the operations and certain assets of its
Products business unit, including the VTEL name, in order to devote its energies
and resources to the development of Forgent's network software and professional
services business. The Company's shareholders approved the transaction during
its 2001 annual meeting and the sale was finalized on January 23, 2002. The sale
of substantially all of the assets used in the Products business unit was made
to VTEL Products Corporation ("VTEL"), a privately held company created by the
former Vice-President of Manufacturing of the Products business unit and two
other senior management members of the Products business unit. As a result, the
Company received cash of $500, a 90-day subordinated promissory note, bearing
interest at an annual rate of five percent, for $967, a 5-year subordinated
promissory note, bearing interest at an annual rate of five percent, for $5,000
and 1,045 shares of common stock, par value $0.01 per share, representing 19.9%
of the new company's fully diluted equity. Additionally, Forgent and VTEL
entered into a general license agreement, in which VTEL was granted certain
non-exclusive rights in and to certain patents, software, proprietary know-how,
and information of the Company that was used in the daily operations of the
Products business unit. Due to uncertainties regarding VTEL's future business,
Forgent fully reserved its equity interest in VTEL.

VTEL did not remit payment on its first subordinated promissory
note due in April 2002, as stipulated in the sales agreement. As a result of
this default and due to the uncertainty in collecting the two outstanding notes
from VTEL, the Company recorded a $5,967 charge for the reserve of both notes
from VTEL during the third fiscal quarter of 2002. Management is currently
renegotiating the payment terms of the note in default. During the quarter ended
October 31, 2002, management agreed with VTEL's management to offset Forgent's
accounts payable to VTEL with its accounts receivable from VTEL. The net $499
Forgent liability was offset with the note in default, thus relieving $499 of
the reserve on the notes receivable. No cash was exchanged with this
transaction.

As a result of the sales of the integration and products
businesses, the Company has presented these businesses as discontinued
operations on the accompanying consolidated financial statements, and recorded
$499 in income for its discontinued operations for the three months ended
October 31, 2002 and $2,567 in losses for its discontinued operations for the
three months ended October 31, 2001.

NOTE 5 - ACQUISITIONS

As approved by each company's board of directors, Forgent
acquired certain assets and liabilities of Global Scheduling Solutions, Inc., a
global provider of enterprise conference room scheduling and resource management
solutions, on June, 4, 2002. Forgent paid Global Scheduling Solutions, Inc. a
combination of $4,000 in cash, $700 tied to certain future contingent "earn-out"
payments and the assumption of certain liabilities. The contingent liability is
recorded as part of the current notes payable on Forgent's consolidated balance
sheet as of October 31, 2002 and July 31, 2002 because management

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FORGENT NETWORKS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share and employee data unless otherwise
noted)
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believes it is probable that this amount will be paid. The contingent liability
will be finalized during the second fiscal quarter.

The acquisition was accounted for as a purchase of assets.
Accordingly, the purchase price has been allocated to tangible and identifiable
intangible assets acquired based on their estimated fair values at the date of
acquisition. Total cost in excess of tangible and intangible assets acquired of
approximately $5,229 was recorded as goodwill. Forgent continues to market
Global Scheduling Solutions, Inc.'s acquired flagship product, Global Scheduling
System, an industry leading web-based application that combines the management
of large-scale meeting environments and all necessary resources and services
while reducing the cost and time associated with such management. As a result of
the acquisition, Forgent became a leading vendor that provides complete one-stop
video network scheduling, launching, monitoring and management solution.

NOTE 6 - COMPREHENSIVE INCOME (LOSS)

In accordance with the disclosure requirements of SFAS No. 130,
"Reporting Comprehensive Income", the Company's other comprehensive income
(loss) is comprised of net income (loss), foreign currency translation
adjustments and unrealized gains and losses on short-term investments held as
available-for-sale securities. Comprehensive income for the three months ended
October 31, 2002 was $1,155 and comprehensive loss for the three months ended
October 31, 2001 was $4,318.

NOTE 7 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

On August 31, 2000 the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives) and for
hedging activities. SFAS No. 133 requires the recognition of all derivatives as
either assets or liabilities on the Consolidated Balance Sheet with changes in
fair value recorded in the Consolidated Statement of Operations.

The accounting for changes in fair value of a derivative depends
upon whether it has been designated in a hedging relationship and, further, on
the type of hedging relationship pursuant to SFAS No. 133. Changes in the fair
value of derivatives not designated in a hedging relationship are recognized
each period in earnings. Hedging relationships are established pursuant to the
Company's risk management policies, and are initially and regularly evaluated to
determine whether they are expected to be, and have been, highly effective
hedges. If a derivative ceases to be a highly effective hedge, hedge accounting
is discontinued prospectively, and future changes in the fair value of the
derivative is recognized in earnings each period. For derivatives designated as
hedges of the variability of cash flows related to a recognized asset or
liability (cash flow hedges), the effective portion of the change in fair value
of the derivatives is reported in other comprehensive income and reclassified
into earnings in the period in which the hedged items affect earnings. Gains or
losses deferred in accumulated other comprehensive income associated with
terminated derivatives remain in accumulated other comprehensive income until
the hedged items affect earnings. Forecasted transactions designated as the
hedged items in cash flow hedges are regularly evaluated to assess that they
continue to be probable of occurring, and if the forecasted transactions are no
longer probable of occurring, any gain or loss deferred in accumulated other
comprehensive income is recognized in earnings currently.

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FORGENT NETWORKS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share and employee data unless otherwise
noted)
- --------------------------------------------------------------------------------

The Company utilized derivatives designated as cash flow hedges
to ensure a minimum level of cash flows as related to its investment in the
Polycom stock. The amount of ineffectiveness with respect to these cash flow
hedges was not material. During the three months ended October 31, 2001, the
remaining 77 thousand shares of Polycom were sold under a cash flow hedge and
$1.7 million was reclassed from other comprehensive income to earnings.

NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," as well as the accounting and reporting provisions
relating to the disposal of a segment of a business as required by Accounting
Principles Board No. 30. Effective August 1, 2002, the Company adopted SFAS No.
144, which did not have a significant impact on its financial statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 addresses accounting for
restructuring costs and supersedes previous accounting guidance, principally
Emerging Issues Task Force ("EITF") No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that the
liability associated with exit or disposal activities be recognized when the
liability is incurred. As a contrast under EITF 94-3, a liability for an exit
cost is recognized when a Company commits to an exit plan. SFAS No. 146 also
establishes that a liability should initially be measured and recorded at fair
value. Accordingly, SFAS No. 146 may affect the timing and amount of recognizing
restructuring costs. The Company will adopt the provisions of this statement for
any restructuring activities initiated after December 31, 2002.

NOTE 9 - SEGMENT INFORMATION

As a result of the Company's current business strategy, the
Company operates in three distinct segments: network software and professional
services, technology licensing, and services and other. Forgent's network
software and professional services business provides customers with video
network management and scheduling software applications as well as network
consulting, software installation, training, hardware devices, and other
comprehensive related services. Forgent's technology licensing business is
currently focused on generating license revenues relating to the Company's data
compression technology embodied in U.S. Patent No. 4,698,672 and its foreign
counterparts. The Company's services and other segment helps companies maximize
their video communications investments through maintenance, hardware
installation, technical support and resident engineer services.

The Company evaluates the performance as well as the financial
results of its segments. Included in the segment operating income (loss) is an
allocation of certain corporate operating expenses. The prior year's segment
information has been restated to present the Company's reportable segments as
they are currently defined. The Company does not identify assets or capital
expenditures by reportable segments. Additionally, the Chief Executive Officer
and Chief Financial Officer do not evaluate the business groups based on these
criteria.

The table below presents segment information about revenue from
unaffiliated customers, gross margins, and operating income (loss) for the three
months ended October 31, 2002 and 2001:

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FORGENT NETWORKS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share and employee data unless otherwise
noted)
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following review of Forgent's financial position as of
October 31, 2002 and July 31, 2002 and for the three months ended October 31,
2002 and 2001 should be read in conjunction with the Company's 2002 Annual
Report on Form 10-K and 2002 Amended Annual Report on Form 10-K/A filed with the
Securities and Exchange Commission on October 29, 2002 and November 27, 2002,
respectively.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the
percentage of total revenues represented by certain items in Forgent's
Consolidated Statements of Operations:

THREE MONTHS ENDED OCTOBER 31, 2002 AND 2001

REVENUES. Revenues for the three months ended October 31, 2002
were $12.5 million, an increase of $5.8 million, or 88%, from $6.7 million
reported for the three months ended October 31, 2001. Consolidated revenues
represent the combined revenues including sale of Forgent's software products,
network consulting, installation, training, maintenance services, and
multi-vendor products as well as royalties received from licensing the Company's
intellectual property. Consolidated revenues do not include any revenues from
Forgent's discontinued products business, which manufactured and sold endpoint
systems, or the Company's discontinued integration business, which provided
customized videoconferencing solutions.

Network software and professional services revenues were $1.2
million and $82 thousand for the three months ended October 31, 2002 and 2001,
respectively. Network software and professional services revenues as a
percentage of total revenues were 10% and 1% for the three months ended October
31, 2002 and 2001, respectively. Revenues from this new line of business include
sales of Forgent's Video Network Platform ("VNP"), Global Scheduling System
("GSS"), and VideoWorks, which is a bundling of Forgent's software products and
may include hardware devices based on customer preference. Also included are
network consulting services, and royalties. VNP is an enterprise-class

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network management software designed to manage video, voice and web content on
multi-protocol, multi-vendor networks, and is designed to schedule, monitor and
manage enterprise video networks from a central location, thus improving
ease-of-use, reliability, and manageability of video communications, as well as
cost of ownership. GSS offers a Microsoft Outlook interface as well as a
web-based scheduling application designed for organizations needing to manage
large-scale meeting environments effectively and efficiently. Forgent's network
consulting services provide technical market research, evaluation and analysis
to customers in addition to the means to test multiple network systems for
manageability, interoperability, and optimum network connectivity prior to
installation. During the three months ended October 31, 2002, Forgent sold
fourteen software licenses and network software and professional services
revenues grew by 31% over the fourth fiscal quarter of 2002. The growth is
primarily attributable to an increase in the average selling price. Based on
Forgent's new sales organization, positive market reaction to the software
products and the successful addition of GSS, management anticipates continued
similar growth in its network software and professional services revenues for
the remaining quarters in fiscal 2003.

Intellectual property licensing revenues were $6.2 million and
represented 50% of total revenues for the three months ended October 31, 2002.
No such revenues were generated during the three months ended October 31, 2001.
The first fiscal quarter of 2003 marks the third consecutive quarter that
Forgent has generated licensing revenues. These licensing revenues relate to the
Company's data compression technology embodied in U.S. Patent No. 4,698,672 and
its foreign counterparts, thus continuing the success of the Company's maturing
Patent Licensing Program. Since October 31, 2002, Forgent has entered into
additional licenses and the Company is continuing to actively seek to license
other users of its technology. Forgent's licensing program involves risks
inherent in technology licensing, including risks of protracted delays, possible
legal challenges that would lead to disruption or curtailment of the licensing
program, increasing expenditures associated with pursuit of the program, and
other risks that could adversely affect the Company's licensing program.
Additionally, the U.S. patent, which has generated the licensing revenues,
expires in October 2006 and its foreign counterparts expire in September 2007.
Thus, there can be no assurance that the Company will be able to continue to
effectively license its technology to others.

Service and other revenues were $5.1 million and $6.6 million for
the three months ended October 31, 2002 and 2001, respectively. Service and
other revenues as a percentage of total revenues were 40% and 99% for the three
months ended October 31, 2002 and 2001, respectively. Service and other revenues
include the maintenance and support of thousands of endpoints and bridges under
maintenance agreements, as well as sales of a variety of third-party
manufactured equipment through its Multi-Vendor Partners Program ("MVP"). The
decline in service revenues is due primarily to the decrease in the renewal rate
of service contracts for VTEL products and the decline in the average selling
price of the hardware devices being supported, which correspondingly impacts the
pricing on the service maintenance contracts. As a vendor-neutral service
provider, offering installation, technical support, and maintenance to a wider
array of videoconferencing devices, including endpoints, multipoint control
units, gateways, gatekeepers, and traditional network switches and routers,
Forgent is offsetting the decrease in renewal of VTEL contracts with service
contracts for other third party products. Through focused attention to details,
Forgent increased the number of end points, including VTEL end points, under
service contracts by increasing the renewal rate of its existing maintenance
contracts and adding new customers to yield a 13% increase in service revenues
over the fourth fiscal quarter of 2002. Despite the improvement over the
previous quarter, management anticipates a possible decline in service revenues
during the second fiscal quarter, although rate of the decline is uncertain.
Forgent will continue to sell equipment through its MVP program.

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GROSS MARGIN. Gross margins increased $2.9 million, or 122%, to
$5.2 million for the quarter ended October 31, 2002 from $2.3 million for the
quarter ended October 31, 2001. Gross margins as a percentage of total revenues
were 41% and 35% for the three months ended October 31, 2002 and 2001,
respectively.

The Company's total gross margins grew significantly during the
quarter ended October 31, 2002 as compared to the quarter ended October 31, 2001
and are primarily generated from intellectual property licensing revenues. The
costs associated with Forgent's technology licensing business relates to the
legal fees incurred on successfully achieving signed agreements. The contingent
legal fees are based on a standard percentage of the signed agreement and are
paid to a national law firm, which has personally invested and continues to
invest in developing Forgent's licensing program. Thus, the Company's gross
margin from its technology licensing business is fixed at 50%.

Since the costs associated with the network software and
professional services business result primarily from the amortization of the
Company's capitalized software development costs on a straight-line basis and
from minimal royalty payments to outside vendors, the cost of sales from this
line of business is relatively fixed. During the quarter ended October 31, 2002,
Forgent sold fourteen software licenses, increasing gross margins from the
network software and professional services business by 75% over the quarter
ended July 31, 2002. Gross margins as a percentage of revenues from the network
software and professional services business were 40% and 30% for the quarters
ending October 31, 2002 and July 31, 2002, respectively. As more licenses are
sold, management expects to achieve higher gross margins from this segment, in
absolute terms and in terms of percentage of revenue.

Similarly, the costs associated with the service and other
business are labor intensive and relatively fixed, which causes gross margins to
be directly affected by the level of revenue generated primarily from new and
renewed service contracts. The $1.5 million decrease in service and other
revenues for the quarter ended October 31, 2002 as compared to the quarter ended
October 31, 2001 directly contributed to the 35% decrease in the service and
other gross margins. During the three months ended October 31, 2002, Forgent
reduced headcount in its legacy services business and curtailed other related
expenses to improve service and other margins by 26%, as compared to the three
months ended July 31, 2002. This decrease in expenses did not impact the
services provided to Forgent's customers. Gross margins as a percentage of
revenues for the service and other business were 31% and 28% for the quarters
ending October 31, 2002 and July 31, 2002, respectively.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased by $1.1 million, or 43%, to $3.7 million for
the quarter ended October 31, 2002 from $2.6 million for the quarter ended
October 31, 2001. Selling, general and administrative expenses as a percentage
of revenues were 29% and 39% for the three months ended October 31, 2002 and
2001, respectively.

When Forgent acquired certain assets and liabilities of Global
Scheduling Systems Inc. during the fourth fiscal quarter of 2002, Forgent's
sales force more than doubled. Therefore, the increase in total selling, general
and administrative expenses ("SG&A") is due largely to increased spending
related to the ramp-up efforts in the sales organization. Forgent's new sales
structure was implemented during the first fiscal quarter and has made progress
in delivering in-quarter revenue as well as building a substantial pipeline for
future revenue.

Furthermore, additional international travel and consulting
expenses related to Forgent's Patent Licensing Program were incurred during the
three months ended October 31, 2002. However, management is committed to
maintaining SG&A expenses at reasonable levels in terms of percentage of revenue
and to further decrease any unnecessary SG&A expenses that do not directly
support the generation of revenues for Forgent.

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RESEARCH AND DEVELOPMENT. Research and development expenses
increased by $0.4 million, or 51%, to $1.2 million for the quarter ended October
31, 2002 from $0.8 million for the quarter ended October 31, 2001. Research and
development ("R&D") expenses as a percentage of revenues were 9% and 12% for the
three months ended October 31, 2002 and 2001, respectively.

The increase in the R&D expenses during the three months ended
October 31, 2002 as compared to the three months ended October 3, 2001 relates
to the continued efforts on enhancing Forgent's award-winning VNP and GSS. VNP
Version 2.5, the Company's latest version of its network management software,
allows devices to be grouped by location, department, or company and then
managed by different administrators, who can monitor their networks by discreet
entities and according to the importance of particular calls. VNP Version 2.5
also allows administrators to remotely control camera functions and launch
multipoint calls as well as offers several other advanced features to give
administrators unprecedented levels of control over enterprise-wide
videoconference operations while increasing overall efficiencies and
productivity. GSS Version 3.9, Forgent's latest version of its scheduling and
resource management software, is fully integrated with Microsoft(R) Outlook(R)
and allows users to schedule rooms, equipment, catering service and other
resources in addition to scheduling participants. Both enhanced versions of the
Company's software were on time, on budget, and made available to the general
public in the United States, Europe, and Australia starting in November 2002.
Forgent will continue its research and development based on its strategy of
thrusting its scheduling interface as the prevalent interface used by all
corporate meetings and its focus on providing automated recoveries to further
improve collaboration management.

The R&D expenses are net of $0.8 million and $1.1 million
capitalized during the three months ended October 31, 2002 and October 31, 2001,
respectively. Software development costs are capitalized after a product is
determined to be technologically feasible and is in the process of being
developed for market. At the time the product is released for sale, the
capitalized software is amortized over the estimated economic life of the
related projects, generally three years. All of Forgent's capitalized software
development costs for the first fiscal quarter relate to its VNP software.

During the three months ended October 31, 2002, Forgent filed
seven new collaboration management patents with the United States Patent and
Trademark Office, which brings the total filings count to forty. Forgent
currently holds approximately forty issued patents related to videoconferencing,
data compression, video mail and other technology developed by the Company.

Forgent's ability to successfully develop software solutions to enable
enterprise video networks is a significant factor in the Company's success. As
Forgent develops its research and development strategy, management anticipates
additional costs associated with the recruiting and retention of engineering
professionals. Management will attempt to maintain research and development
expenses at reasonable levels in terms of percentage of revenue. However,
management believes Forgent's ultimate future success is based primarily on the
development and success of its software solution offerings.

RESTRUCTURING CHARGE. During the three months ended October 31,
2001, the Company restructured its organization, which involved the termination
of approximately 65 employees or 17% of the workforce. The restructuring was the
result of eliminating certain business elements that did not contribute to
Forgent's core competencies as well as efforts to increase efficiencies and to
significantly reduce administrative costs. Forgent recorded a one-time charge of
$0.8 million for the restructuring, which represented 12% of total revenues for
the three months ended October 31, 2001.

OTHER INCOME. Other income decreased by $1.7 million to $0.1
million for the quarter ended October 31, 2002 from income of $1.8 million for
the quarter ended October 31, 2001. Other income as

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a percentage of revenues was 1% and 28% for the three months ended October 31,
2002 and 2001, respectively. The decrease is due primarily to the 76,625 shares
of Polycom common stock that were sold under a cash flow hedge, resulting in a
$1.7 million realized gain for the first fiscal quarter of 2002. The Company no
longer has any investment in Polycom as of October 31, 2001.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS. During fiscal year
2002, the Company sold the operations and substantially all of the assets of its
VTEL products business, including the VTEL name, to VTEL Products Corporation
("VTEL") and the operations and assets of its integration business to SPL
Integrated Solutions. Accordingly, the products and integration businesses have
been accounted for and presented as discontinued operations in the consolidated
financial statements.

Income from discontinued operations was $0.5 million for the
three months ended October 3, 2002 and was solely due to the partial reversal of
the reserve on the notes receivable from VTEL (see Note 4). Loss from
discontinued operations was $2.6 million for the three months ended October 31,
2001. Income (loss) from discontinued operations was 4% and (38%) of revenues
for the quarters ended October 31, 2002 and 2001, respectively.

NET INCOME (LOSS). Forgent generated a net income of $0.9
million, or $0.04 per share, during the quarter ended October 31, 2002 compared
to a net loss of $2.6 million, or $0.10 per share, during the quarter ended
October 31, 2001. Net income (loss) as a percentage of revenues was 7% and (39%)
for the three months ended October 31, 2002 and 2001, respectively. The $3.5
million increase in the Company's net income is primarily attributable to the
decrease in the loss from discontinued operations and the increase in gross
margins.

During the three months ended October 31, 2002 Forgent has grown
revenues from its core network software and professional services business,
demonstrated continued revenues and earnings from its intellectual property
business, improved its legacy services operations and met other expectations to
achieve its third consecutive quarter of profitability. These significant
indicators, as well as those achieved in the research and development of the
Company's software products, continue to strengthen the Company's prospects.
However, uncertainties and challenges remain, and there can be no assurance that
the Company can successfully grow its revenues or maintain profitability.

LIQUIDITY AND CAPITAL RESOURCES

On October 31, 2002, Forgent had working capital of $9.5 million,
including $14.6 million in cash, cash equivalents and short-term investments.
Cash used in operating activities was $3.7 million for the three months ended
October 31, 2002 due primarily to the increase in accounts receivable and
decrease in accounts payable. Cash provided by operating activities was $3.4
million for the three months ended October 31, 2001 and largely resulted from
the decrease in accounts receivable. As of October 31, 2002, Forgent had $2.5
million in accounts receivable related to its Patent Licensing Program. The
Company continued to actively pursue collection on its other outstanding
receivables.

Cash used in investing activities was $1.0 million for the three
months ended October 31, 2002 due largely to the capitalization of software
development costs. Cash provided by investing activities was $1.1 million for
the three months ended October 31, 2001 due primarily to net sales of short-term
investments, which were offset by the capitalization of software development
costs. For fiscal 2003, Forgent's capital budget is approximately $0.8 million
and will be used principally to invest in demonstration equipment, spare parts
to support the Company's warranties and services, and various other operational
equipment as needed. Forgent took advantage of certain discounts; thus, capital

14

expenditures incurred during the three months ended October 31, 2002 were
primarily for spare parts to support the Company's service contracts. During the
three months ended October 31, 2001, Forgent sold its remaining investment in
Polycom, resulting in a net cash inflow of $1.8 million, which significantly
contributed to the cash provided by investing activities.

Cash used in financing activities was $0.7 for the three months
ended October 31, 2002 due primarily to the purchase of treasury stock. Cash
used in financing activities was $0.2 for the three months ended October 31,
2001. In fiscal 2001 Forgent announced a stock repurchase program to purchase up
to two million of the Company's common stock. During the first fiscal quarter of
2003, Forgent's board of directors approved the repurchase of an additional
million shares of the Company's stock. During the three months ended October 31,
2002, the Company repurchased 354,686 shares for $0.7 million, bringing the
total number of shares repurchased to date to 1.2 million shares. Management
will continue to evaluate repurchasing additional shares in fiscal 2003,
depending on the Company's cash position, market conditions, and other factors.
During the three months ended October 31, 2001 Forgent entered into a three-year
notes payable of $0.4 million for the purchase of the Company's new accounting
system. At October 31, 2002, Forgent did not have a line of credit in place.
Based on the Company's strong cash position, management does not expect to
obtain any line of credit during the current fiscal year.

Forgent's principal sources of liquidity at October 31, 2002
consisted of $14.6 million of cash, cash equivalents and short-term investments.
Additionally, the Company's working capital has remained relatively stable over
the last several quarters. As more license agreements are signed and related
payments are received under the continued success of the Company's Patent
Licensing Program, management expects the Company's cash position to strengthen.
However, risks and uncertainties remain as to the timing of the receipts of
license fees due, in part, to the inherent nature of a patent licensing program.
Management plans to strategically utilize this positive cashflow to invest
further in developing Forgent's VNP, GSS, and VideoWorks software and to explore
other opportunities for growing the business. However, there is no assurance
that the Company will be able to limit its cash consumption and continue to
preserve its cash balances, and it is possible that the Company's business
demands may lead to cash utilization at levels greater than recently experienced
due to investments in research and development, increased expense levels and
other factors.

LEGAL MATTERS

Forgent is the defendant or plaintiff in various actions that
arose in the normal course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse affect on
the Company's financial condition or results of operations.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and include the accounts of Forgent's wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in the
consolidation. Preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Management periodically
evaluates estimates used in the preparation of the financial statements for
continued reasonableness. Appropriate adjustments, if any, to the estimates used
are made prospectively based upon such periodic evaluation.

15

Management believes the following represent Forgent's critical
accounting policies:

REVENUE RECOGNITION

In general, the Company recognizes revenue when persuasive
evidence of an arrangement exists, service delivery has occurred, fee is fixed
or determinable, and collectibility is probable.

In accordance with Statement of Position 97-2, "Software Revenue
Recognition," software and product revenues are recognized when the software or
product is shipped and invoiced. When a sale contains both delivered and
deferred elements, the Company utilizes vendor-specific objective evidence to
allocate the sale price first to deferred elements and then the residual value
is allocated to the delivered elements.

Service revenues are recorded at the time the services are
rendered.

Revenues for maintenance agreements are recorded ratably over the
contract period. Customer prepayments are deferred until services have been
rendered and there are no significant further obligations to the customer.

Gross intellectual property licensing revenue is recognized at
the time a license agreement has been executed and related costs are recorded as
cost of goods sold.

SOFTWARE DEVELOPMENT COSTS

Costs incurred in connection with the development of software
products are accounted for in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 86, "Accounting for the Costs of Computer Software to Be
Sold, Leased or Otherwise Marketed." Costs incurred prior to the establishment
of technological feasibility are charged to research and development expense.
Amortization of capitalized software begins upon initial product shipment.
Software development costs are amortized over the estimated life of the related
product (generally thirty-six months), using the straight-line method.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company maintains an allowance for doubtful accounts to
estimate losses from uncollectable customer receivables. This estimate is based
in the aggregate, on historical collection experience, age of receivables and
general economic conditions. It also considers individual customers payment
experience, credit-worthiness and age of receivable balances.

IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS

The Company adopted SFAS No. 142, Goodwill and Other Intangible
Assets on August 1, 2001 and thus is required to review the carrying value of
goodwill and other intangible assets annually. Forgent also reviews goodwill and
other intangibles for possible impairment whenever specific events warrant.
Events that may create an impairment review include, but are not limited to:
significant and sustained decline in the Company's stock price or market
capitalization; significant underperformance of operating units; significant
changes in market conditions and trends. If a review event has occurred, the
value of the goodwill or intangible is compared to the estimate of future cash
flows, and if required, an impairment is recorded.

16

RISK FACTORS

There are many factors that affect the Company's business,
prospects and the results of its operations, some of which are beyond the
control of the Company. The following is a discussion of some of these and other
important risk factors that may cause the actual results of the Company's
operations in future periods to differ materially from those currently expected
or desired.

GENERAL ECONOMIC AND INDUSTRY CONDITIONS

Any adverse change in general economic, business or industry
conditions could have a material adverse effect on the Company's business,
prospects and financial performance if those conditions caused customers or
potential customers to reduce or delay their investments in network software and
professional services or legacy services. Due to the current economic
circumstances affecting U.S. businesses, there has been a slow down in capital
spending, which adversely affects the willingness of companies to purchase
enterprise software products, professional services and legacy services. If this
slow down is prolonged, current economic conditions could have a continued
adverse effect on the demand for the Company's products and services and could
result in declining revenue and earnings growth rates for the Company.

TECHNOLOGICAL CHANGES AND PRODUCT TRANSITIONS

The technology industry is characterized by continuing
improvements in technology, which results in the frequent introduction of new
products, short product life cycles and continual improvement in product
price/performance characteristics. These improvements could render the Company's
products noncompetitive, if the Company fails to anticipate and respond
effectively to these improvements and new product introductions. While the
Company believes that its experience in the videoconferencing industry affords
it a competitive advantage over some of its competitors, rapid changes in
technology present some of the greatest challenges and risks for any software
and technology-based company.

SALES CYCLE

Forgent has a long sales cycle because it generally takes time to
educate potential customers regarding the use and benefits of network software
applications. The long sales cycle makes it difficult to predict the quarter in
which sales may fall. Because the Company's expense levels are relatively fixed,
the shift of sales from one quarter to a later quarter will adversely affect
results in operations in an affected quarter, as the Company would not be able
to adjust its expense levels to match fluctuations in revenues. If the Company
failed to meet expectations by shareholders, analysts or others as to products
sales anticipated in any particular quarter, the market price of the Company's
stock may significantly decrease.

PRODUCT IMPLEMENTATION

The Company recognizes a portion of its revenue from product
sales upon implementation of its software, and the timing of product
implementation could cause significant variability in product license revenues
and operating results for any particular period.

NEW BUSINESS MODEL

In accordance with its restructuring efforts previously
described, the Company is currently transitioning its business and realigning
its strategic focus towards a new core market, network software and professional
services. Internal changes resulting from the business restructuring announced
during 2001 and 2002 are substantially complete, but many factors may negatively
impact the Company's ability to implement its strategic focus, including the
ability or possible inability to manage the implementation and development of
its new network product and service business, sustain the productivity of
Forgent's workforce and retain key employees, manage operating expenses and
quickly respond to and recover from unforeseen events associated with the
restructuring. The Company may be required by market conditions and other
factors to undertake additional restructuring efforts in the future. Forgent's
business, results of operations or financial condition could be materially
adversely affected if it is unable to

17

manage the implementation and development of its new business strategy, sustain
the productivity of its workforce and retain key employees, manage its operating
expenses or quickly respond to and recover from unforeseen events associated
with any future restructuring efforts.

LIMITED OPERATING HISTORY

Despite being founded in 1985, Forgent has a limited operating
history because of the Company's recent transition to a network software and
professional services company. As a result of its limited operating history,
Forgent cannot forecast revenue and operating expenses based on historical
results. The Company's ability to accurately forecast quarterly revenue is
limited because Forgent's software products have a long sales cycle that makes
it difficult to predict the quarter in which sales will occur. The Company's
business, operating results and financial condition will be materially adversely
affected if revenues do not meet projections and if results in a given quarter
do not meet expectations.

COMPETITION AND NEW ENTRANTS

The Company may encounter new entrants or competition from
competitors in some or all aspects of its business. The Company competes on the
basis of price, technology availability, performance, quality, reliability,
service and support. The Company believes that its experience and business model
creates a competitive advantage over its competitors. However, there can be no
assurance that the Company will be able to maintain this advantage. Many of the
Company's current and possibly future competitors have greater resources than
the Company and therefore, may be able to compete more effectively on price and
other terms.

SOFTWARE MARKETING AND SALES

Forgent's network software product was introduced in the fall of
2001, and as such, it has limited market awareness and, to date, limited sales.
The Company's future success will be dependent in significant part on its
ability to generate demand for its network software products and professional
services. To this end, Forgent's direct and indirect sales operations must
increase market awareness of its products to generate increased revenue. The
Company's products and services require a sophisticated sales effort targeted at
the senior management of its prospective customers. All new hires will require
training and will take time to achieve full productivity. Forgent cannot be
certain that its new hires will become as productive as necessary or that it
will be able to hire enough qualified individuals or retain existing employees
in the future. The Company cannot be certain that it will be successful in its
efforts to market and sell its products, and if it is not successful in building
greater market awareness and generating increased sales, future results of
operations will be adversely affected.

NETWORK SOFTWARE AND PROFESSIONAL SERVICES DEVELOPMENT

Forgent expects that its future financial performance will depend
significantly on revenue from existing and future enterprise software products
and the related tools that the Company plans to develop, which is subject to
significant risks. There are significant risks inherent in a new product
introduction, such as its existing VNP and GSS software products. Market
acceptance of these and future products will depend on continued market
development for collaboration management. Forgent cannot be certain that its
existing or future products offerings will meet customer performance needs or
expectations when shipped or that it will be free of significant software
defects or bugs. If the Company's products do not meet customer needs or
expectations, for whatever reason, the Company's sales would be adversely
affected and further, upgrading or enhancing the product could be costly and
time consuming.

LICENSE PROGRAM

The Company's intellectual property licensing revenues are
difficult to predict. The Company's licensing program involves risks inherent in
technology licensing, including risks of protracted delays, possible legal
challenges that would lead to disruption or curtailment of the program,
increasing

18

expenditures associated with the pursuit of the program, and other risks that
could adversely affect the Company's licensing program. Thus, there can be no
assurance that the Company will be able to continue to license its technology to
others. If the Company fails to meet the expectations of public market analysts
or investors, the market price of Forgent's common stock may decrease
significantly. Quarterly operating results may fail to meet these expectations
for a number of reasons, including the inability of licensees to pay our license
and other fees, a decline in the demand for the Company's patented technology,
higher than expected operating expenses, and license delays due to legal and
other factors.

PATENTS AND TRADEMARKS

The Company's success and ability to compete are substantially
dependent on its proprietary technology and trademarks. The Company seeks to
protect these assets through a combination of patent, copyright, trade secret,
and trademark laws, as well as confidentiality procedures and contractual
provisions. These legal protections afford only limited protection and
enforcement of these rights may be time consuming and expensive. Furthermore,
despite best efforts, the Company may be unable to prevent third parties from
infringing upon or misappropriating its intellectual property. Also, competitors
may independently develop similar, but not infringing, technology, duplicate
products, or design around the Company's patents or other intellectual property.

The Company's patent applications or trademark registrations may
not be approved. Moreover, even if approved, the resulting patents or trademarks
may not provide Forgent with any competitive advantage or may be challenged by
third parties. If challenged, patents might not be upheld or claims could be
narrowed. Any litigation surrounding the Company's rights could force Forgent to
divert important financial and other resources away from business operations

ACQUISITION INTEGRATION

The Company has made, and may continue to evaluate and make,
strategic acquisitions in public and privately held technology companies.
Because some of these companies may be early-stage ventures with either unproven
business models, products that are not yet fully developed or products that have
not yet achieved market acceptance, these transactions are inherently risky.
Many factors outside of the Company's control determine whether or not the
Company's investments will be successful. Such factors include the ability of a
company to obtain additional private equity financing, to access the public
capital markets, to affect a sale or merger, or to achieve commercial success
with its products or services. Accordingly, there can be no assurances that any
of the Company's investments will be successful or that the Company will be able
to recover the amount invested.

DIVESTITURE TRANSACTIONS

As a result Forgent's transition to a network software and
professional services company, it has substantially completed a program to
divest certain non-core assets, including a videoconferencing endpoint
manufacturing business as well as other related businesses. There can be no
assurance that, having divested such non-core operations, Forgent will be able
to achieve greater or any profitability, strengthen its core operations or
compete more effectively in existing markets. In addition, the Company continues
to evaluate the profitability realized or likely to be realized by our existing
businesses and operations, and Forgent reviews from a strategic standpoint,
which, if any, of its businesses or operations should be divested. Entering
into, evaluating or consummating divestiture transactions may entail risks and
uncertainties in addition to those which may result from the divestiture-related
change in the Company's business operations, including but not limited to
extraordinary transaction costs, unknown indemnification liabilities and
unforeseen administrative complications, any of which could result in reduced
revenues, increased charges, or post-transaction administrative costs or could
otherwise have a material adverse effect on Forgent's business, financial
condition or results of operations.

19

Due to the risk factors noted above and elsewhere in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Forgent's past earnings and stock price have been, and future
earnings and stock price potentially may be, subject to significant volatility,
particularly on a quarterly basis. Past financial performance should not be
considered a reliable indicator of future performance and investors are
cautioned in using historical trends to anticipate results or trends in future
periods. Any shortfall in revenue or earnings from the levels anticipated by
securities analysts could have an immediate and significant effect on the
trading price of the Company's common stock in any given period.

CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE
RESULTS

Certain portions of this report contain forward-looking
statements that reflect the Company's current expectations regarding future
results of operations, economic performance, financial condition and
achievements. Whenever possible, Forgent attempted to identify these
forward-looking statements with the words "believes," "estimates," "plans,"
"expects," "anticipates" and other similar expressions. These statements reflect
management's current plans and expectations that rely on a number of assumptions
and estimates that are subject to risks and uncertainties including, but not
limited to rapid changes in technology, unexpected changes in customer order
patterns, the intensity of competition, economic conditions, pricing pressures,
interest rates fluctuations, changes in the capital markets, litigation
involving intellectual property, changes in tax and other laws and governmental
rules applicable to Forgent's business and other risks indicated in Forgent's
filings with the Securities and Exchange Commission. These risks and
uncertainties are beyond the Company's control, and in many cases, management
cannot predict all of the risks and uncertainties that could cause actual
results to differ materially from those indicated by the forward-looking
statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk exposure relates to interest
rate risk and foreign currency exchange fluctuations. Forgent's interest income
is sensitive to changes in U.S. interest rates. However, due to the short-term
nature of the Company's investments, Forgent does not consider these risks to be
significant. The Company previously invested in Accord Networks ("Accord") an
Israeli-based manufacturer of networking equipment. In June of 2000, Accord
filed an initial public offering on the NASDAQ stock exchange in which the
Company was apportioned 1.3 million shares. In February 2001, Accord was
acquired by Polycom Inc. ("Polycom") and Forgent's investment in Accord
converted to 399,000 shares of Polycom. The Company sold 246,000 shares and then
entered into a cash flow hedge to ensure a minimum level of cash flow from the
153,000 remaining shares. These hedges settled in July and October 2001. During
the three months ended October 31, 2001, the remaining Polycom shares were sold
under a cash flow hedge, realizing $1.7 million in gain and $1.8 million in net
cash flows. As of October 31, 2001, the Company no longer had market risks
related to the Polycom stock.

Forgent's objective in managing its exposure to foreign currency
exchange rate fluctuations is to reduce the impact of adverse fluctuations in
earnings and cash flows associated with foreign currency exchange rate changes.
Accordingly, the Company historically utilized forward contracts to hedge its
foreign currency exposure on firm commitments denominated in the Euro and
Australian dollar. As of October 31, 2002 and October 31, 2001, the Company held
no foreign currency contracts. Due to the Company's reduction in international
offices and related reduction in foreign exchange risks, management does not
anticipate any additional foreign currency hedges.

20

For additional Quantitative and Qualitative Disclosures about
Market Risk reference is made to Part II, Item 7A, Quantitative and Qualitative
Disclosures about Market Risk, in the Company's Annual Report on Form 10-K for
the year ended July 31, 2002.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company's
Chief Executive Officer and Chief Financial Officer, management of the Company
has evaluated the effectiveness of the Company's disclosure controls and
procedures (as defined in Rule 13a-14(c) and Rule 15d-14 under the Securities
Exchange Act of 1934) as of a date within 90 days prior to the filing date of
this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that, as of the date of the evaluation, the
Company's disclosure controls and procedures are effective in timely alerting
them to the material information relating to the Company required to be included
in its periodic filings with the Securities and Exchange Commission.

During the period covered by this report, there were no
significant changes in the Company's internal controls or, to management's
knowledge, in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Forgent is the defendant or plaintiff in various actions that
arose in the normal course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse affect on
our financial condition or results of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

99.1 Certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002

21

(b) Reports on Form 8-K:

None

* * *

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

FORGENT NETWORKS, INC.

December 16, 2002 By: /s/ RICHARD N. SNYDER
---------------------------------------
Richard N. Snyder
Chief Executive Officer

By: /s/ JAY C. PETERSON
---------------------------------------
Jay C. Peterson
Chief Financial Officer

22

FORGENT NETWORKS, INC.
OCTOBER 31, 2002
CERTIFICATIONS

I, Richard N. Snyder, Chief Executive Officer of Forgent Networks, Inc., certify
that:

1. I have reviewed this quarterly report on Form 10-Q of Forgent Networks, Inc.
("Registrant");

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations, and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.

5. The Registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors:

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified
for the Registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and

6. The Registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

/s/ RICHARD N. SNYDER
------------------------------------------
Richard N. Snyder
Chief Executive Officer
December 16, 2002

23

FORGENT NETWORKS, INC.
OCTOBER 31, 2002
CERTIFICATIONS

I, Jay C. Peterson, Chief Financial Officer of Forgent Networks, Inc., certify
that:

1. I have reviewed this quarterly report on Form 10-Q of Forgent Networks, Inc.
("Registrant");

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations, and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.

5. The Registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors:

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified
for the Registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and

6. The Registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

/s/ JAY C. PETERSON
----------------------------------------
Jay C. Peterson
Chief Financial Officer
December 16, 2002

24

INDEX TO EXHIBITS