UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

(MARK ONE)
       |X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934
              For the quarterly period ended June 30, 1999
                                    or
       |_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934

             For the transition period from     to    .


                        Commission File Number: 33-93464

                             DICTAPHONE CORPORATION
             (Exact Name of Registrant as Specified in its Charter)


          DELAWARE                                        06-0992637
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

                             3191 BROADBRIDGE AVENUE
                               STRATFORD, CT 06614
                                 (203) 381-7000
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE,
                   AND TELEPHONE NUMBER, INCLUDING AREA CODE)

            ---------------------------------------------------------
                 (Former name, former address and former fiscal
                       year, if changed since last report)


Indicate by check mark whether the registrant (1) 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  (2) has  been  subject  to such  filing
requirements for the past 90 days.

             YES     X              NO
                    ----                ----

Number of shares of Common Stock,  par value $.01 per share,  outstanding  as of
August 9, 1999:  12,934,000.  The Common Stock of the registrant is not publicly
traded.


<PAGE>



<TABLE>
<CAPTION>
                                  DICTAPHONE CORPORATION

                                           INDEX


                                                                                     PAGE NO.

<S>      <C>                                                                           <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.  Condensed Consolidated Financial Statements

             Unaudited Condensed Consolidated Statements of Operations for the
             Three Months Ended June 30, 1999 and June 30, 1998                         2

             Unaudited Condensed Consolidated Statements of Operations for the
             Six Months Ended June 30, 1999 and June 30, 1998                           3

             Condensed Consolidated Balance Sheets as of June 30, 1999
             (Unaudited) and December 31, 1998                                          4

             Unaudited Condensed Consolidated Statements of Cash Flow for the
             Six Months Ended June 30, 1999 and June 30, 1998                           5

             Notes to Unaudited Consolidated Financial Statements                       6

ITEM 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                           20

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk                    27


PART II.  OTHER INFORMATION

ITEM 1.      Legal Proceedings                                                         28

ITEM 6.      Exhibits and Reports on Form 8-K                                          28

</TABLE>


                                       1
<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                               DICTAPHONE CORPORATION

                             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                               (Dollars in thousands)


             <S>                                                   <C>                     <C>

                                                                   THREE MONTHS            THREE MONTHS
                                                                       ENDED                   ENDED
                                                                   JUNE 30, 1998           JUNE 30, 1999
                                                                   -------------           -------------
             Revenues:
                  Product sales and rentals                         $   51,572              $   48,539
                  Contract manufacturing sales                          11,545                  12,900
                  Support services                                      21,868                  24,221
                                                                    ----------              ----------
                      Total revenue                                     84,985                  85,660
                                                                    ----------              ----------

             Costs and expenses:

                  Cost of sales, rentals and support services           46,957                  46,302

                  Selling and administrative                            28,219                  24,410

                  Amortization of intangibles                            7,833                   3,238

                  Research and development                               3,256                   2,442
                                                                    ----------              ----------

             Operating (loss) profit                                    (1,280)                  9,268

             Interest expense                                            9,922                   9,924

             Other expense                                                 171                      46
                                                                    ----------              ----------

             Loss before income taxes                                  (11,373)                   (702)

             Income tax benefit (expense)                                  662                    (696)
                                                                    ----------              ----------

                  Net loss                                             (10,711)                 (1,398)

                  Stock dividends on PIK Preferred Stock                   755                   1,479
                                                                    ----------              ----------

                  Net loss applicable to Common Stock               $  (11,466)             $   (2,877)
                                                                    ==========              ==========




                     See accompanying notes to condensed consolidated financial statements.


</TABLE>


                                       2
<PAGE>

<TABLE>
<CAPTION>



                                                        DICTAPHONE CORPORATION

                                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                                        (Dollars in thousands)


                                                                             SIX MONTHS              SIX MONTHS
                                                                                ENDED                   ENDED
                                                                            JUNE 30, 1998           JUNE 30, 1999
                                                                            -------------           -------------
             <S>                                                            <C>                     <C>
             Revenues:
                  Product sales and rentals                                  $  101,219              $   96,767
                  Contract manufacturing sales                                   23,492                  23,248
                  Support services                                               44,099                  48,256
                                                                             ----------              ----------
                      Total revenue                                             168,810                 168,271
                                                                             ----------              ----------

             Costs and expenses:

                  Cost of sales, rentals and support services                    91,969                  89,752

                  Selling and administrative                                     55,329                  51,365

                  Amortization of intangibles                                    15,714                   6,477

                  Research and development                                        7,956                   4,880
                                                                             ----------              ----------

             Operating (loss) profit                                             (2,158)                 15,797

             Interest expense                                                    19,719                  20,063

             Other (income) expense - net                                          (655)                    377
                                                                             ----------              ----------

             Loss before income taxes                                           (21,222)                 (4,643)

             Income tax expense                                                     334                     921
                                                                             ----------              ----------

                  Net loss                                                      (21,556)                 (5,564)

                  Stock dividends on PIK Preferred Stock                          1,484                   2,710
                                                                             ----------              ----------

                  Net loss applicable to Common Stock                        $  (23,040)             $   (8,274)
                                                                             ==========              ==========




                                See accompanying notes to condensed consolidated financial statements.

</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>

                                                         DICTAPHONE CORPORATION
                                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                                        (Dollars in thousands)
                                                                                         DECEMBER 31,          JUNE 30,
                                                                                             1998                1999
                                                                                         ------------          --------
                                                                                                              (UNAUDITED)
<S>                                                                                      <C>                <C>
ASSETS
Current assets:
    Cash and cash equivalents                                                            $   11,727         $    5,349
    Accounts receivable, less allowances of $968 and $2,348, respectively                    77,432             86,777
    Inventories                                                                              53,362             49,797
    Other current assets                                                                      7,259              5,283
                                                                                         ----------         ----------
         Total current assets                                                               149,780            147,206
Property, plant and equipment, net                                                           32,425             36,175
Deferred financing costs, net of accumulated amortization of $14,246
 and $15,219, respectively                                                                    9,920              8,949
Intangibles, net of accumulated amortization of $122,595 and $129,072, respectively         206,122            199,704
Deferred tax asset                                                                           39,765             39,654
Other assets                                                                                 16,315             19,156
                                                                                         ----------         ----------
         Total assets                                                                    $  454,327         $  450,844
                                                                                         ==========         ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                                     $    8,778         $    8,746
    Interest payable                                                                         10,067             10,187
    Accrued pension liability                                                                 8,352              8,947
    Accrued liabilities                                                                      31,433             29,221
    Advance billings                                                                         39,586             43,407
    Current portion of long-term debt                                                           795                789
                                                                                         ----------         ----------
         Total current liabilities                                                           99,011            101,297
Long-term debt                                                                              369,737            350,144
Other liabilities                                                                            14,141             13,698
                                                                                         ----------         ----------
         Total liabilities                                                                  482,889            465,139
                                                                                         ----------         ----------
Contingencies (Note 5)
Stockholders' equity:
    Preferred stock ($.01 par value; 7,500,000 shares authorized;  2,391,500 and
      2,559,883  shares  of  14%  PIK  perpetual  preferred  stock  issued  and
      outstanding, liquidation values of $23,915 and $25,599
      at December 31, 1998 and June 30, 1999, respectively)                                  23,915             25,599
    Preferred stock ($.01 par value; 10,000,000 shares authorized; none
      and 2,000,000 shares of 12% Convertible PIK preferred stock issued and
      outstanding, liquidation value of $21,026 at June 30, 1999)                               ---             21,026
    Common stock ($.01 par value; 30,000,000 shares authorized;
      12,934,000 shares outstanding at December 31, 1998 and June 30, 1999)                     130                130
    Notes receivable from stockholders                                                         (741)              (741)
    Additional paid-in capital                                                              120,955            118,245
    Treasury stock, at cost                                                                    (660)              (660)
    Accumulated deficit                                                                    (170,417)          (175,981)
    Accumulated other comprehensive loss                                                     (1,744)            (1,913)
                                                                                         ----------         -----------
         Total stockholders' equity (deficit)                                               (28,562)           (14,295)
                                                                                         ----------         -----------
         Total liabilities and stockholders' equity                                      $  454,327         $  450,844
                                                                                         ==========         ==========

                                See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>

                                                        DICTAPHONE CORPORATION
                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
                                                        (Dollars in thousands)


                                                                                 SIX MONTHS               SIX MONTHS
                                                                                    ENDED                    ENDED
                                                                                JUNE 30, 1998            JUNE 30, 1999
                                                                                -------------            -------------
       <S>                                                                      <C>                      <C>
       Operating activities:
          Net loss                                                                $  (21,556)             $   (5,564)
          Adjustments to reconcile net loss to net cash
           (used in) provided by operating activities:
             Depreciation and amortization                                            24,104                  13,093
             Provision for deferred income taxes                                       1,186                      47
             Changes in assets and liabilities:
                 Accounts receivable                                                    (178)                 (9,259)
                 Inventories                                                          (2,489)                  3,552
                 Other current assets                                                   (713)                  1,860
                 Accounts payable and accrued liabilities                             (9,649)                 (1,264)
                 Advance billings                                                        284                   3,782
                 Other assets and other                                               (5,785)                 (5,987)
                                                                                  ----------              ----------
                    Net cash (used in) provided by operating activities              (14,796)                    260
                                                                                  ----------              ----------

       Investing activities:
          Net investment in fixed assets                                              (4,602)                 (6,152)
          Sale of building                                                            14,000                     ---
                                                                                  ----------              ----------
             Net cash provided by (used in) investing activities                       9,398                  (6,152)
                                                                                  ----------              ----------

       Financing activities:
          Sale of preferred stock                                                        ---                  20,000
          Repayment under term loan facility                                          (1,800)                    ---
          Borrowings under revolving credit facility                                  29,000                  17,250
          Repayment under revolving credit facility                                  (27,000)                (36,750)
          Other                                                                          858                    (951)
                                                                                  ----------              ----------
             Net cash provided by (used in) financing activities                       1,058                    (451)
                                                                                  ----------              ----------

       Effect of exchange rate changes on cash                                           (41)                    (35)
                                                                                  ----------              ----------

       Decrease in cash                                                               (4,381)                 (6,378)

       Cash and cash equivalents, beginning of period                                 10,277                  11,727
                                                                                  ----------              ----------
       Cash and cash equivalents, end of period                                   $    5,896              $    5,349
                                                                                  ==========              ==========

       SUPPLEMENTAL CASH FLOW INFORMATION:

       Interest paid                                                              $   19,029              $   19,136
                                                                                  ==========              ==========
       Income taxes paid                                                          $       73              $      195
                                                                                  ==========              ==========



                                  See accompanying notes to condensed consolidated financial statements.

</TABLE>


                                       5
<PAGE>

                             DICTAPHONE CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                (Dollars in thousands, or as otherwise indicated)


1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

             The  condensed  consolidated  financial  statements  of  Dictaphone
       Corporation  (the  "Company") are unaudited,  as of and for the three and
       six month  periods  ended  June 30,  1999 and June 30,  1998,  but in the
       opinion of management  contain all adjustments  which are of a normal and
       recurring nature  necessary to present fairly the financial  position and
       results of  operations  and cash flows for the periods  presented.  These
       financial  statements  should be read in  conjunction  with the financial
       statements and notes thereto  included in the Company's  Annual Report on
       Form 10-K for the year ended December 31, 1998.

             The   preparation  of  financial   statements  in  conformity  with
       generally  accepted  accounting  principles  requires  management to make
       estimates and  assumptions  that affect the reported amount of assets and
       liabilities  and disclosure of contingent  assets and  liabilities at the
       date of the  financial  statements  and reported  amounts of revenues and
       expenses  during the reporting  period.  Actual results could differ from
       those estimates.

             COSTS AND EXPENSES.  Operating  expenses of field sales and service
       offices which represent the cost of support services revenue are included
       in cost of sales.

             DERIVATIVE  FINANCIAL  INSTRUMENTS.  The Company  has only  limited
       involvement with derivative  financial  instruments and does not use them
       for trading purposes.  The Company enters into interest rate swap and cap
       agreements to reduce its exposure to interest rate fluctuations.  The net
       gain or loss from  exchange of interest  payments is included in interest
       expense in the consolidated financial statements and interest paid in the
       condensed consolidated statements of cash flow.

             ACCOUNTING  PRONOUNCEMENTS.  In June 1998, the Financial Accounting
       Standards  Board  ("FASB")  issued  Statement  of  Financial   Accounting
       Standards No. 133,  "Accounting  for Derivative  Instruments  and Hedging
       Activities"  ("SFAS 133"). The statement  requires companies to recognize
       all  derivatives as either assets or  liabilities,  with the  instruments
       measured at fair value.  The accounting for changes in fair value,  gains
       or  losses,  depends  on  the  intended  use of the  derivative  and  its
       resulting designation. The statement is effective for all fiscal quarters
       of fiscal years  beginning  after June 15,  2000.  The Company will adopt
       SFAS 133 by  January  1,  2001.  Adoption  of SFAS  133 is not  currently
       expected  to  have  a  material  impact  on  the  Company's  consolidated
       financial statements.

             In  March  1998,  the  American   Institute  of  Certified   Public
       Accountants  issued Statement of Position 98-1 ("SOP 98-1"),  "Accounting
       for the Costs of Computer  Software  Developed  or Obtained  for Internal
       Use." The  statement  is  effective  for  fiscal  years  beginning  after
       December 15, 1998. The statement defines which costs of computer software
       developed  or obtained  for  internal use are capital and which costs are
       expensed. The Company adopted SOP 98-1 effective January 1, 1999.




                                       6
<PAGE>

2.     INVENTORIES
<TABLE>
<CAPTION>

             Inventories consist of the following:

                                                                       DECEMBER 31,               JUNE 30,
                                                                          1998                     1999
                                                                       ------------               --------
             <S>                                                        <C>                      <C>
             Raw materials and work in process                          $   15,799               $   18,554
             Supplies and service parts                                     15,376                   13,701
             Finished products                                              22,187                   17,542
                                                                        ----------               ----------
             Total inventories                                          $   53,362               $   49,797
                                                                        ==========               ==========
</TABLE>

             In December 1998,  after assessing  prospective  sales, the Company
       recorded a non-cash charge of $5.0 million  associated with the provision
       for excess inventory related to the Company's Boomerang(TM), Insight(TM),
       FTR(TM) and Synergy(TM) products.

3.     INTANGIBLES

             The following  summarizes  intangible  assets,  net of  accumulated
       amortization and writedowns of $122,595 and $129,072 at December 31, 1998
       and June 30, 1999,  respectively.  Amortization expense for the three and
       six months ended June 30, 1998 was $7,833 and $15,714,  and for the three
       and six months ended June 30, 1999 was $3,238 and $6,477, respectively.
<TABLE>
<CAPTION>

                                                                       DECEMBER 31,               JUNE 30,
                                                                          1998                     1999
                                                                       ------------               --------
             <S>                                                        <C>                      <C>
             Goodwill                                                   $  127,611               $  125,427
             Tradenames                                                     71,265                   70,291
             Service contracts                                               2,530                      473
             Non-compete agreement                                           2,463                    1,877
             Patents                                                         2,253                    1,636
                                                                        ----------               ----------
                                                                        $  206,122               $  199,704
                                                                        ==========               ==========
</TABLE>

4.     INCOME TAXES

             The income tax expense for the three and six months  ended June 30,
       1999 is $696 and $921, respectively.

             The  Company  has  recorded  a gross  deferred  tax asset of $100.6
       million  reflecting the benefit of net operating loss  carryforwards  and
       various  book  tax  temporary   differences.   The  net  operating   loss
       carryforward  for  federal  income tax  purposes  as of June 30,  1999 is
       $134.3  million,  of  which  $13.7  million  of the  net  operating  loss
       carryforward  will expire in the year 2010,  $33.2 million will expire in
       the year 2011,  $40.0 million will expire in the year 2012, $35.7 million
       will  expire in the year 2018 and $11.7  million  will expire in the year
       2020. In order to fully realize the deferred tax asset,  the Company will
       need to generate  future  taxable  income prior to  expiration of the net
       operating  loss  carryforwards.   In  1997,  the  Company  established  a
       valuation  allowance  of $24.1  million  against the deferred tax assets.
       During  1998,  the Company  increased  its  valuation  allowance by $20.8
       million.  During the first six months of 1999, the Company  increased its
       valuation allowance by $2.3 million resulting in a net deferred tax asset
       of $53.4 million.  Management believes,  based upon the Company's history
       of  prior  operating  results,   its  current   circumstances,   and  its
       expectations for the future, that taxable income of the Company will more
       likely than not be sufficient to fully utilize the net deferred tax asset
       of $53.4  million  recorded at June 30, 1999,  prior to  expiration.  The


                                       7
<PAGE>

4.     INCOME TAXES (CONTINUED)

       amount of the deferred tax asset considered realizable, however, could be
       reduced if estimates of future  taxable  income  during the net operating
       loss carryforward period are reduced.

5.     CONTINGENCIES AND CONCENTRATIONS OF RISK

       CONCENTRATIONS OF RISKS

             A substantial  portion of the  Company's  revenues are derived from
       the sale of products manufactured at the Company's manufacturing facility
       which is located in Melbourne,  Florida.  This manufacturing  facility is
       subject to the normal  hazards of any such  facility that could result in
       damage to the  facility.  Any such damage to this  facility or  prolonged
       delay in the  operations  of this  facility  for repairs or other  reason
       would  have  a  materially  adverse  effect  on the  Company's  financial
       position and results of operations.

       CONTINGENCIES

             On February 14, 1995,  Pitney Bowes,  Inc. ("Pitney Bowes") filed a
       complaint against Sudbury Systems,  Inc. ("Sudbury") in the United States
       District court for the District of Connecticut  alleging  intentional and
       wrongful  interference with Pitney Bowes's plans to sell the Company. The
       complaint  seeks  damages  and a  declaratory  judgment  relating  to the
       validity  of a  patent  owned by  Sudbury  entitled  "Rapid  Simultaneous
       Multiple Access Information Storage and Retrieval System" and the alleged
       infringement  thereof by the Company.  Sudbury responded by answering the
       complaint and filing a third-party complaint against the Company alleging
       patent  infringement  and seeking  preliminary  and permanent  injunctive
       relief and treble damages.  Sudbury's  patent expired in April 1998. As a
       result,  injunctive  relief is no longer  available to Sudbury.  Pretrial
       proceedings,  including claim  construction  and dispositive  motions are
       continuing. A trial date in 2000 is likely.

             Management  believes  the Company has  meritorious  defenses to the
       claims  against it.  Consequently,  the Company has not  provided for any
       loss exposure in connection with this complaint. Additionally, regardless
       of the outcome of this litigation, Pitney Bowes has agreed to defend this
       action and to indemnify the Company for any liabilities arising from such
       litigation.

             The  Company  is  subject  to  federal,  state and  local  laws and
       regulations concerning the environment and is currently  participating in
       administrative  proceedings  as a participant  in a group of  potentially
       responsible  parties in connection  with two third party disposal  sites.
       These  proceedings  are in the  preliminary  stage,  and it is  currently
       impossible to reasonably estimate the potential costs of remediation, the
       timing  and  extent  of  remedial   actions  which  may  be  required  by
       governmental authorities, and the amount of the liability, if any, of the
       Company  alone or in relation to that of any other  responsible  parties.
       When  it is  possible  to make a  reasonable  estimate  of the  Company's
       liability  with  respect to such a matter,  a  provision  will be made as
       appropriate. Additionally, the Company has settled and paid its liability
       at three other third party disposal  sites. At a fourth site, the Company
       has paid  approximately  $11  thousand  for its share of the costs of the
       first phase of the clean up of the site and  management  believes that it
       has no continuing material liability for any later phases of the cleanup.
       Consequently,  management believes that its future liability, if any, for
       these four sites is not material. In addition,  regardless of the outcome
       of such  matters,  Pitney  Bowes has agreed to  indemnify  the Company in
       connection  with retained  environmental  liabilities and for breaches of



                                       8
<PAGE>

5.     CONTINGENCIES AND CONCENTRATIONS OF RISK (CONTINUED)

       CONTINGENCIES (CONT.)

       the environmental  representations  and warranties in the Stock and Asset
       Purchase  Agreement,  originally  executed  on April 25, 1995 and amended
       August 11, 1995 between  Dictaphone  Acquisition  Corporation  and Pitney
       Bowes subject to certain limitations.

             The Company is a defendant in a number of  additional  lawsuits and
       administrative  proceedings,  none  of  which  will,  in the  opinion  of
       management,  have a material adverse effect on the Company's consolidated
       financial position or results of operations.

             The Company does not believe that the  ultimate  resolution  of the
       litigation,   administrative   proceedings  and   environmental   matters
       described  above in the aggregate will have a material  adverse effect on
       the Company's consolidated financial position or results of operations.

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION

             The following consolidated financial statements include the Company
       and  all  majority-owned   subsidiaries  as  follows:  Dictaphone  Canada
       Ltd/Ltee,   Dictaphone   Company  Ltd.,   Dictaphone   Deutschland  GmbH,
       Dictaphone  Netherlands BV and Dictaphone  International  A.G.  (together
       "Dictaphone Non-U.S.").

             Dictaphone Corporation has fully and unconditionally guaranteed the
       repayment of $200.0 million of 11-3/4% Senior Subordinated Notes Due 2005
       (the  "Notes")  issued to finance the  acquisition  of the  Company  from
       Pitney  Bowes.  The Notes are  subordinate  to  financing  of the  Credit
       Agreement,  dated August 7, 1995, as amended by five amendments to Credit
       Agreement,  dated June 28, 1996, June 27, 1997,  July 21, 1997,  November
       14, 1997 and December 31, 1998  (collectively,  the "Credit  Agreement"),
       and other senior  indebtedness  as defined in the  indenture  pursuant to
       which the Notes were issued (the "Note Indenture").  The Credit Agreement
       currently  consists of a $75.0  million  Tranche B Term Loan due June 30,
       2002 (the  "Tranche B Loan"),  a $62.75  million  Tranche C Term Loan due
       June 30, 2002 (the "Tranche C Loan" and together with the Tranche B Loan,
       the "Term Loans") and a six-year revolving credit facility of up to $40.0
       million (the "Revolving Credit Facility").  Dictaphone  Non-U.S. is not a
       guarantor  of the Notes.  In January  1998,  Dictaphone  Corporation  was
       merged  into  Dictaphone  Corporation  (U.S.),  whereupon  the  surviving
       corporation changed its name to "Dictaphone Corporation".


                                       9
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION (CONTINUED)

             The  following  are the  supplemental  consolidating  statements of
       operations  for the three and six month  periods  ended June 30, 1998 and
       1999,  the  supplemental  consolidating  balance sheet  information as of
       December 31, 1998 and June 30, 1999,  and cash flow  information  for the
       six month periods ended June 30, 1998 and 1999.

<TABLE>
<CAPTION>

                                                        DICTAPHONE CORPORATION
                               SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
                                                   THREE MONTHS ENDED JUNE 30, 1998


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------
       <S>                                           <C>              <C>              <C>               <C>
       Revenue from:
         Product sales and rentals                   $   49,435       $    4,004        $   (1,867)       $   51,572
         Contract manufacturing sales                    11,545              ---               ---            11,545
         Support services                                20,006            1,862               ---            21,868
                                                     ----------       ----------        ----------        ----------
             Total revenues                              80,986            5,866            (1,867)           84,985
                                                     ----------       ----------        ----------        ----------

       Costs and expenses:
         Cost of sales, rentals and support services     45,405            3,746            (2,194)           46,957
         Selling and administrative                      33,174            2,878               ---            36,052
         Research and development                         3,256              ---               ---             3,256
         Interest expense - net and other                 9,323              770               ---            10,093
                                                     ----------       ----------        ----------        ----------
             Total costs and expenses                    91,158            7,394            (2,194)           96,358
                                                     ----------       ----------        ----------        ----------

       Equity (loss) earnings                              (346)             ---               346               ---
                                                     ----------       ----------        ----------        ----------

       (Loss) income before income taxes                (10,518)          (1,528)              673           (11,373)

       Income tax (expense) benefit                        (187)             982              (133)              662
                                                     ----------       ----------        ----------        ----------

       Net (loss) income                             $  (10,705)      $     (546)       $      540        $  (10,711)
                                                     ==========       ==========        ==========        ==========


</TABLE>


                                       10
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION (CONTINUED)

<TABLE>
<CAPTION>

                                                        DICTAPHONE CORPORATION
                               SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
                                                   THREE MONTHS ENDED JUNE 30, 1999


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------
       <S>                                           <C>              <C>               <C>               <C>
       Revenue from:
         Product sales and rentals                   $   44,754       $    6,536        $   (2,751)       $   48,539
         Contract manufacturing sales                    12,900              ---               ---            12,900
         Support services                                21,841            2,380               ---            24,221
                                                     ----------       ----------        ----------        ----------
             Total revenues                              79,495            8,916            (2,751)           85,660
                                                     ----------       ----------        ----------        ----------

       Costs and expenses:
         Cost of sales, rentals and support services     44,304            4,835            (2,837)           46,302
         Selling and administrative                      25,447            2,201               ---            27,648
         Research and development                         2,442              ---               ---             2,442
         Interest expense - net and other                 9,353              617               ---             9,970
                                                     ----------       ----------        ----------        ----------
             Total costs and expenses                    81,546            7,653            (2,837)           86,362
                                                     ----------       ----------        ----------        ----------

       Equity earnings (loss)                               468              ---              (468)              ---
                                                     ----------       ----------        ----------        ----------

       (Loss) income before income taxes                 (1,583)           1,263              (382)             (702)

       Income tax expense                                    23              638                35               696
                                                     ----------       ----------        ----------        ----------

       Net (loss) income                             $   (1,606)      $      625        $     (417)       $   (1,398)
                                                     ==========       ==========        ==========        ==========

</TABLE>


                                       11
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION  (CONTINUED)

<TABLE>
<CAPTION>

                                                        DICTAPHONE CORPORATION
                               SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
                                                    SIX MONTHS ENDED JUNE 30, 1998


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------
       <S>                                           <C>              <C>               <C>               <C>
       Revenue from:
         Product sales and rentals                   $   96,323       $    9,921        $   (5,025)       $  101,219
         Contract manufacturing sales                    23,492              ---               ---            23,492
         Support services                                40,266            3,833               ---            44,099
                                                     ----------       ----------        ----------        ----------
             Total revenues                             160,081           13,754            (5,025)          168,810
                                                     ----------       ----------        ----------        ----------

       Costs and expenses:
         Cost of sales, rentals and support services     88,559            8,815            (5,405)           91,969
         Selling and administrative                      64,605            6,438               ---            71,043
         Research and development                         7,956              ---               ---             7,956
         Interest expense - net and other                17,641            1,423               ---            19,064
                                                     ----------       ----------        ----------        ----------
             Total costs and expenses                   178,761           16,676            (5,405)          190,032
                                                     ----------       ----------        ----------        ----------

       Equity (loss) earnings                            (1,098)             ---             1,098               ---
                                                     ----------       ----------        ----------        ----------

       (Loss) income before income taxes                (19,778)          (2,922)            1,478           (21,222)

       Income tax (expense) benefit                      (1,360)           1,168              (142)             (334)
                                                     ----------       ----------        ----------        ----------

       Net (loss) income                             $  (21,138)      $   (1,754)       $    1,336        $  (21,556)
                                                     ==========-      ==========        ==========        ==========

</TABLE>


                                       12
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION  (CONTINUED)
<TABLE>
<CAPTION>


                                                        DICTAPHONE CORPORATION
                               SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
                                                    SIX MONTHS ENDED JUNE 30, 1999


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------
       <S>                                           <C>              <C>               <C>              <C>
       Revenue from:
         Product sales and rentals                   $   89,530       $   12,258        $   (5,021)       $   96,767
         Contract manufacturing sales                    23,248              ---               ---            23,248
         Support services                                43,772            4,484               ---            48,256
                                                     ----------       ----------        ----------        ----------
             Total revenues                             156,550           16,742            (5,021)          168,271
                                                     ----------       ----------        ----------        ----------

       Costs and expenses:
         Cost of sales, rentals and support services     85,616            9,261            (5,125)           89,752
         Selling and administrative                      53,403            4,439               ---            57,842
         Research and development                         4,880              ---               ---             4,880
         Interest expense - net and other                18,839            1,601               ---            20,440
                                                     ----------       ----------        ----------        ----------
             Total costs and expenses                   162,738           15,301            (5,125)          172,914
                                                     ----------       ----------        ----------        ----------

       Equity earnings (loss)                             1,073              ---            (1,073)              ---
                                                     ----------       ----------        ----------        ----------

       (Loss) income before income taxes                 (5,115)           1,441              (969)           (4,643)

       Income tax expense                                    45              834                42               921
                                                     ----------       ----------        ----------        ----------

       Net (loss) income                             $   (5,160)      $      607        $   (1,011)       $   (5,564)
                                                     ==========       ==========        ==========        ==========

</TABLE>


                                       13
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION  (CONTINUED)
<TABLE>
<CAPTION>


                                                        DICTAPHONE CORPORATION
                                    SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
                                                           DECEMBER 31, 1998


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------
       <S>                                           <C>              <C>               <C>               <C>
       ASSETS
       Current assets:
         Cash and cash equivalents                   $   10,114       $    1,613        $      ---        $   11,727
         Accounts receivable, less allowances            75,447            6,782            (4,797)           77,432
         Inventories                                     50,666            2,987              (291)           53,362
         Other current assets                             4,062            3,079               118             7,259
                                                     ----------       ----------        ----------        ----------
           Total current assets                         140,289           14,461            (4,970)          149,780

       Investments in subsidiaries                       28,520              ---           (28,520)              ---
       Property, plant and equipment, net                29,320            3,105               ---            32,425
       Deferred financing costs, net                      9,920              ---               ---             9,920
       Intangibles, net                                 192,492           13,630               ---           206,122
       Other assets                                      52,028            4,052               ---            56,080
                                                     ----------       ----------        ----------        ----------
       Total assets                                  $  452,569       $   35,248        $  (33,490)       $  454,327
                                                     ==========       ==========        ===========       ==========

       LIABILITIES AND STOCKHOLDERS'
       EQUITY
       Current liabilities:
         Accounts payable, interest payable
          and accrued liabilities                    $   53,100       $   11,111        $   (5,581)       $   58,630
         Advance billings                                37,294            2,292               ---            39,586
         Current portion of long-term debt                  628              167               ---               795
                                                     ----------       ----------        ----------        ----------
           Total current liabilities                     91,022           13,570            (5,581)           99,011
       Long-term debt                                   369,445           17,783           (17,491)          369,737
       Other liabilities                                 13,324              817               ---            14,141
       Stockholders' equity (deficit)                   (21,222)           3,078           (10,418)          (28,562)
                                                     ----------       ----------        ----------        ----------
       Total liabilities and stockholders' equity    $  452,569       $   35,248        $  (33,490)       $  454,327
                                                     ==========       ==========        ==========        ==========

</TABLE>


                                       14
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION  (CONTINUED)
<TABLE>
<CAPTION>


                                                        DICTAPHONE CORPORATION
                                    SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
                                                             JUNE 30, 1999


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------
       <S>                                           <C>              <C>               <C>              <C>
       ASSETS
       Current assets:
         Cash and cash equivalents                   $    4,454       $      895        $      ---        $    5,349
         Accounts receivable, less allowances            79,888            9,633            (2,744)           86,777
         Inventories                                     48,488            1,496              (187)           49,797
         Other current assets                             2,172            3,358              (247)            5,283
                                                     ----------       ----------        ----------        ----------
           Total current assets                         135,002           15,382            (3,178)          147,206

       Investments in subsidiaries                       29,233              ---           (29,233)              ---
       Property, plant and equipment, net                33,319            2,856               ---            36,175
       Deferred financing costs, net                      8,949              ---               ---             8,949
       Intangibles, net                                 186,903           12,801               ---           199,704
       Other assets                                      54,733            3,754               323            58,810
                                                     ----------       ----------        ----------        ----------
       Total assets                                  $  448,139       $   34,793        $  (32,088)       $  450,844
                                                     ==========       ==========        ==========        ==========

       LIABILITIES AND STOCKHOLDERS'
       EQUITY
       Current liabilities:
         Accounts payable, interest payable
          and accrued liabilities                    $   50,340       $   10,429        $   (3,668)       $   57,101
         Advance billings                                40,525            2,882               ---            43,407
         Current portion of long-term debt                  628              161               ---               789
                                                     ----------       ----------        ----------        ----------
           Total current liabilities                     91,493           13,472            (3,668)          101,297
       Long-term debt                                   349,945           17,190           (16,991)          350,144
       Other liabilities                                 13,083              615               ---            13,698
       Stockholders' equity (deficit)                    (6,382)           3,516           (11,429)          (14,295)
                                                     ----------       ----------        ----------        ----------
       Total liabilities and stockholders' equity    $  448,139       $   34,793        $  (32,088)       $  450,844
                                                     ==========       ==========        ==========        ==========

</TABLE>


                                       15
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION  (CONTINUED)
<TABLE>
<CAPTION>


                                                        DICTAPHONE CORPORATION
                               SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
                                                    SIX MONTHS ENDED JUNE 30, 1998


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------

       <S>                                           <C>              <C>               <C>               <C>
       Operating activities:
         Net loss                                    $  (21,138)      $   (1,754)       $    1,336        $  (21,556)
         Adjustments to reconcile net loss
          to net cash (used in) provided by
          operating activities:
           Depreciation and amortization                 22,699            1,405               ---            24,104
           Provision for deferred income taxes            1,150             (106)              142             1,186
           Change in assets and liabilities:
             Accounts receivable                         (3,475)           2,832               465              (178)
             Inventories                                 (2,153)              44              (380)           (2,489)
             Other current assets                           949           (1,662)              ---              (713)
             Accounts payable and accrued
              liabilities                                (9,673)             339              (315)           (9,649)
             Advance billings                               221               63               ---               284
             Other assets and other                      (3,050)             301            (3,036)           (5,785)
                                                     ----------       ----------        ----------        ----------
       Cash (used in) provided by investing
        activities                                      (14,470)           1,462            (1,788)          (14,796)
                                                     ----------       ----------        ----------        ----------

       Investing activities:
         Net investment in fixed assets                  (4,263)            (339)              ---            (4,602)
         Sale of building                                14,000              ---               ---            14,000
                                                     ----------       ----------        ----------        ----------
       Cash provided by (used in) investing
        activities                                        9,737             (339)              ---             9,398
                                                     ----------       ----------        ----------        ----------

       Financing activities:
         Repayment under term loan facility              (1,800)             ---               ---            (1,800)
         Borrowing from revolving credit facility        29,000              ---               ---            29,000
         Repayment under revolving credit facility      (27,000)             ---               ---           (27,000)
         Other                                              915           (1,845)            1,788               858
                                                     ----------       ----------        ----------        ----------
       Cash provided by (used in) financing
         activities                                       1,115           (1,845)            1,788             1,058
                                                     ----------       -----------       ----------        ----------

       Effect of exchange rate changes on cash              ---              (41)              ---               (41)
                                                     ----------       ----------        ----------         ---------

       Decrease in cash                                  (3,618)            (763)              ---            (4,381)

       Cash and cash equivalents,
        beginning of period                               8,276            2,001               ---            10,277
                                                     ----------       ----------        ----------         ---------

       Cash and cash equivalents,
        end of period                                $    4,658       $    1,238        $      ---        $    5,896
                                                     ==========       ==========        ==========        ==========

</TABLE>


                                       16
<PAGE>

6.     SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT
       INFORMATION  (CONTINUED)
<TABLE>
<CAPTION>


                                                        DICTAPHONE CORPORATION
                               SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
                                                    SIX MONTHS ENDED JUNE 30, 1999


                                                     DICTAPHONE       DICTAPHONE       CONSOLIDATING
                                                     CORPORATION       NON-U.S.         ADJUSTMENTS      CONSOLIDATED
                                                     -----------      ----------       -------------     ------------

       <S>                                           <C>              <C>               <C>               <C>
       Operating activities:
         Net (loss) income                           $   (5,160)      $      607        $   (1,011)       $   (5,564)
         Adjustments to reconcile net loss
          to net cash provided by (used in)
          operating activities:
           Depreciation and amortization                 12,210              883               ---            13,093
           Provision for deferred income taxes              ---               47               ---                47
           Change in assets and liabilities:
              Accounts receivable                        (4,441)          (2,765)           (2,053)           (9,259)
              Inventories                                 2,178            1,478              (104)            3,552
              Other current assets                        1,890              (72)               42             1,860
              Accounts payable and accrued
               liabilities                               (2,884)            (293)            1,913            (1,264)
              Advance billings                            3,231              551               ---             3,782
              Other assets and other                     (6,609)            (591)            1,213            (5,987)
                                                     ----------       ----------        ----------        ----------
       Cash provided by (used in) operating
        activities                                          415             (155)              ---               260
                                                     ----------       ----------        ----------        ----------

       Investing activities:
         Net investment in fixed assets                  (6,039)            (113)              ---            (6,152)
                                                     ----------       ----------        ----------        ----------
       Cash used in investing activities                 (6,039)            (113)              ---            (6,152)
                                                     ----------       ----------        ----------        ----------

       Financing activities:
         Sale of Preferred Stock                         20,000              ---               ---            20,000
         Borrowing from revolving credit facility        17,250              ---               ---            17,250
         Repayment under revolving credit facility      (36,750)             ---               ---           (36,750)
         Other                                             (536)            (415)              ---              (951)
                                                     ----------       ----------        ----------        ----------
       Cash used in financing activities                    (36)            (415)              ---              (451)
                                                     ----------       ----------        ----------        ----------

       Effect of exchange rate changes on cash              ---              (35)              ---               (35)
                                                     ----------       ----------        ----------        ----------

       Decrease in cash                                  (5,660)            (718)              ---            (6,378)

       Cash and cash equivalents,
        beginning of period                              10,114            1,613               ---            11,727
                                                     ----------       ----------        ----------        ----------

       Cash and cash equivalents,
        end of period                                $    4,454       $      895        $      ---        $    5,349
                                                     ==========       ==========        ==========        ==========

</TABLE>


                                       17
<PAGE>

7.     COMPREHENSIVE INCOME

             The Company adopted Statement of Financial Accounting Standards No.
       130, "Reporting Comprehensive Income" ("SFAS 130") as of January 1, 1998.
       SFAS 130 establishes standards for reporting and display of comprehensive
       income and its components.

             Total  comprehensive  loss for the three and six months ending June
       30, 1998 and 1999 consists of the following:
<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                           JUNE 30,                             JUNE 30,
                                                   ------------------------              ---------------------
                                                     1998             1999                 1998              1999
                                                     ----             ----                 ----              ----
       <S>                                       <C>              <C>                  <C>               <C>

       Net loss                                  $  (10,711)      $   (1,398)          $  (21,556)       $   (5,564)

       Foreign currency translation
        adjustments                                    (111)             (55)                (358)             (169)
                                                 ----------       ----------           ----------        ----------

       Total comprehensive loss                  $  (10,822)      $   (1,453)          $  (21,914)       $   (5,733)
                                                 ==========       ==========           ==========        ==========

</TABLE>


                                       18
<PAGE>

8.       DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
         INFORMATION

             Dictaphone  has  two  reportable  segments:   System  Products  and
       Services,  and Contract  Manufacturing.  The System Products and Services
       segment  consists of the sale and service of  system-related  products to
       dictation  and  voice  management  and  communications  recording  system
       customers  in  selected  vertical  markets.  The  Contract  Manufacturing
       segment  consists of the  manufacturing  operations of  Dictaphone  which
       provides outside electronics manufacturing services to original equipment
       manufacturers in the  telecommunications,  data management,  computer and
       electronics industries.

             The  accounting  policies  of the  segments  are the  same as those
       described in the summary of significant  accounting policies.  Dictaphone
       evaluates  performance  based on profit or loss  from  operations  before
       income  taxes,  including  nonrecurring  gains  and  losses  and  foreign
       exchange gains and losses.
<TABLE>
<CAPTION>


                                                        DICTAPHONE CORPORATION
                                                        SEGMENT PROFIT AND LOSS

                                                                     SYSTEM
                                                                   PRODUCTS &        CONTRACT
                                                                    SERVICES       MANUFACTURING         TOTAL
                                                                   ----------      -------------         -----
         <S>                                        <C>           <C>               <C>              <C>
         Revenue from external customers
           Three months ended June 30,              1999          $   72,760        $   12,900       $   85,660
           Three months ended June 30,              1998              73,420            11,565           84,985

           Six months ended June 30,                1999             145,023            23,248          168,271
           Six months ended June 30,                1998             145,318            23,492          168,810

         Intersegment revenues
           Three months ended June 30,              1999                 ---             9,360            9,360
           Three months ended June 30,              1998                 ---            14,029           14,029

           Six months ended June 30,                1999                 ---            19,887           19,887
           Six months ended June 30,                1998                 ---            31,429           31,429

         Segment profit (loss)
           Three months ended June 30,              1999              (2,217)            1,515             (702)
           Three months ended June 30,              1998             (12,148)              775          (11,373)

           Six months ended June 30,                1999              (7,312)            2,669           (4,643)
           Six months ended June 30,                1998             (23,065)            1,843          (21,222)

         Segment assets
           As of June 30,                           1999             407,345            43,499          450,844
           As of December 31,                       1998          $  410,522        $   43,805       $  454,327

</TABLE>


                                       19
<PAGE>

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS


OVERVIEW

<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                     JUNE 30,                       JUNE 30,
                                                             ------------------------        ---------------------
                                                               1998            1999            1998           1999
                                                               ----            ----            ----           ----
                                                                                  (IN MILLIONS)
                                                                                   (UNAUDITED)
       <S>                                                   <C>            <C>             <C>            <C>
       Total revenue                                         $   85.0       $    85.7       $   168.8      $   168.3

       Cost of sales, rentals and support services               47.0            46.3            92.0           89.8
       Selling and administrative expense (1)                    36.0            27.6            71.0           57.8
       Research and development                                   3.3             2.5             8.0            4.9
                                                             --------       ---------        --------      ---------
           Operating (loss) profit                               (1.3)            9.3            (2.2)          15.8
                                                             --------       ---------        --------      ---------

       Net interest expense and other                            10.1            10.0            19.0           20.5
       Income tax benefit (expense)                               0.7            (0.7)           (0.4)          (0.9)
                                                             --------       ---------        --------      ---------

       Net loss                                              $  (10.7)      $    (1.4)       $  (21.6)     $    (5.6)
                                                             ========       =========-       ========      =========

       EBITDA (2)                                            $   11.8       $    15.6        $   22.2      $    27.6
                                                             ========       =========        ========      =========
</TABLE>

---------------------

             (1)  Includes amortization of intangibles.

             (2)  EBITDA is  defined  as income  before  effect  of  changes  in
                  accounting   plus   interest,   income  taxes,   depreciation,
                  amortization  and other  significant  non-cash,  non-recurring
                  charges.  EBITDA is presented  because it is a widely accepted
                  financial  indicator  of a  company's  ability  to  incur  and
                  service  debt.  However,  EBITDA  should not be  considered in
                  isolation or as a substitute  for net income or cash flow data
                  prepared in  accordance  with  generally  accepted  accounting
                  principles  or as a measure of a  company's  profitability  or
                  liquidity,  and is not  necessarily  comparable  to  similarly
                  titled measures of other companies.


                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                     JUNE 30,                       JUNE 30,
                                                             ------------------------        ---------------------
                                                               1998            1999            1998           1999
                                                               ----            ----            ----           ----
                                                                                  (IN MILLIONS)
                                                                                   (UNAUDITED)
       <S>                                                   <C>            <C>              <C>           <C>
       Revenue from:
           Sales:
           Integrated Voice Systems                          $   11.5       $     7.1        $   24.0      $    14.3
           Integrated Health Systems                             10.7            16.8            20.1           29.5
           Communication Recording Systems                       16.4            10.4            29.4           24.7
           Customer Service Parts                                 4.7             4.0             9.1            7.9
           International and Dealer Operations                    7.9             9.9            18.0           19.7
           Rentals                                                0.3             0.4             0.6            0.7
                                                             --------       ---------        --------      ---------
                Product Sales and Rentals                        51.5            48.6           101.2           96.8
                                                             ========       =========        ========      =========
           Support service:
           Customer Service                                      19.9            20.8            39.2           41.6
           Application & Training Specialists                     0.2             1.1             1.1            2.2
           International and Dealer Operations                    1.8             2.4             3.8            4.5
                                                             --------       ---------        --------      ---------
                Total support service                            21.9            24.3            44.1           48.3
                                                             --------       ---------        --------      ---------
           Total System Products and Services                    73.4            72.9           145.3          145.1
           Contract Manufacturing                                11.6            12.8            23.5           23.2
                                                             --------       ---------        --------      ---------
       Total revenue                                         $   85.0       $    85.7        $  168.8      $   168.3
                                                             ========       =========        ========      =========

</TABLE>

RESULTS OF OPERATIONS - SECOND QUARTER 1999 VS. SECOND QUARTER 1998

       Total revenue  increased  0.8% to $85.7 million in the second  quarter of
1999 from  $85.0  million  in the  second  quarter  of 1998.  This  increase  is
attributable  to higher  product sales revenue from  Integrated  Health  Systems
("I.H.S."), higher support service revenue from Customer Service and Application
and Training  Specialists  ("A.T.S.") and higher revenue from  International and
Dealer Operations and Contract  Manufacturing,  offset in part, by lower product
sales  revenue from  Integrated  Voice  Systems  ("I.V.S.")  and  Communications
Recording Systems ("C.R.S.").

       I.V.S.  revenue  declined  38.3% to $7.1  million in  response to actions
taken by the Company in the fourth quarter of 1998 to reduce and consolidate its
sales  force to focus on the more  profitable  systems  business  in  commercial
markets.  I.H.S. revenue increased 56.0% to $16.8 million from $10.7 million due
to the continued growth of Enterprise  Express(TM) sales.  I.H.S.  orders in the
second  quarter of 1999  increased  66.4% to $22.3 million from $13.4 million in
the second quarter of 1998. C.R.S.  revenue declined 36.7% to $10.4 million from
$16.4 million due to lower  Prolog(TM)/Guardian(TM)  sales. C.R.S. orders in the
second  quarter of 1999 declined 2.9% to $15.8 million from $16.3 million in the
second  quarter of 1998.  Customer  Service  revenue  (including  sale of parts)
increased 0.5% to $24.8 million from $24.6 million due to increased installation
and warranty  revenue  partially offset by reduced  proprietary  product service
contract  revenue.  A.T.S.  revenue  increased  by $1.0 million due to increased
training  provided  in support of system  products.  Sales and  support  service
revenue  from  International  and  Dealer  Operations  increased  25.8% to $12.3
million from $9.7 million due primarily to increased system, C.R.S., desktop and
portable and service revenue derived from the Company's Canadian  operations and
increased  C.R.S.  and service  revenue  derived from its  European  operations.
Orders for  International  and Dealer  Operations in the second  quarter of 1999
increased  56.3% to $10.3  million  from $6.6  million in the second  quarter of
1998. Contract Manufacturing revenue increased 11.5% to $12.8 million from $11.6
million in the second quarter of 1998 due to growth from existing customers.


                                       21
<PAGE>

       Cost of  sales,  rentals  and  support  services  declined  1.4% to $46.3
million  (54.1% of  revenue)  in the second  quarter of 1999 from $47.0  million
(55.3% of revenue) in the second quarter of 1998.  This decline in cost of sales
is attributable to lower Customer Service field overhead,  technical and support
costs.

       Selling  and   administrative   expenses   (including   amortization   of
intangibles)  declined  23.3% to $27.6 million  (32.3% of revenue) in the second
quarter of 1999 from $36.0 million  (42.4% of revenue) in the second  quarter of
1998.  This decrease is attributable  to lower  amortization  expense related to
intangibles,   lower  I.V.S.   selling  expenses  associated  with  sales  force
reductions  and related  overhead  expenses  and lower  international  operating
expenses.

       Research and development  expenses of $2.5 million (5.0% of product sales
and rental revenue)  declined 25.0% from $3.3 million (6.3% of product sales and
rental  revenue),  reflecting  reduced  staffing and a more focused  development
effort consistent with the requirements of major projects under development.

       The  Company  recorded  an  operating  profit of $9.3  million  (10.8% of
revenue) during the second quarter of 1999 compared to an operating loss of $1.3
million (1.5% of revenue) for the second  quarter of 1998.  Excluding the impact
of reduced amortization  expense,  operating profit would have increased by $6.0
million due to higher revenue, lower costs and reduced operating expenses.

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1999 VS. SIX MONTHS ENDED
JUNE 30, 1998

       Total revenue for the first six months of 1999 of $168.3 million remained
relatively constant with the prior period. The Company experienced lower product
sales  revenue  from  I.V.S.   and  C.R.S.   and  lower  revenue  from  Contract
Manufacturing,  partially offset by increased product sales revenue from I.H.S.,
higher  support  service  revenue from  Customer  Service and A.T.S.  and higher
revenue from International and Dealer Operations.

       I.V.S.  revenue  declined  40.5% to $14.3  million in response to actions
described  previously  which were taken by the Company in the fourth  quarter of
1998.  I.V.S.  order  backlog at June 30, 1999  increased  18.1% to $5.5 million
versus order backlog at December 31, 1998.  I.H.S.  revenue  increased  46.3% to
$29.5  million  from $20.1  million due to the  continued  growth of  Enterprise
Express(TM)  sales.  I.H.S.  orders for the first six  months of 1999  increased
80.6% to $36.2  million  from  $20.0  million  for the first six months of 1998.
I.H.S.  order backlog at June 30, 1999  increased  44.3% to $21.0 million versus
order  backlog at December  31, 1998.  C.R.S.  revenue  declined  16.0% to $24.7
million due to lower Prolog(TM)/Guardian(TM)  sales. C.R.S. orders for the first
six months of 1999  increased  1.1% to $28.9  million from $28.6 million for the
first six months of 1998. C.R.S.  order backlog at June 30, 1999 increased 83.3%
to $9.3 million  versus order  backlog at December  31, 1998.  Customer  Service
revenue  (including  sale of parts)  increased  2.5% to $49.5 million from $48.3
million due to  increased  warranty,  installation  and hourly  revenue.  A.T.S.
revenue  increased $1.1 million due to increased  customer  training provided in
support of system products. Sales and support service revenue from International
and Dealer Operations increased 11.0% to $24.2 million due to increased Canadian
system,  desktop and portable,  C.R.S.  and service revenue.  International  and
Dealer  Operations  orders for the first six months of 1999  increased  27.8% to
$20.2 million from $15.8 million for the first six months of 1998. Order backlog
for International and Dealer Operations at June 30, 1999 increased 42.6% to $2.4
million  versus  order  backlog at December  31,  1998.  Contract  Manufacturing
revenue  declined  1.0% to $23.2  million  from $23.5  million for the first six
months of 1998.


                                       22
<PAGE>

       Cost of  sales,  rentals  and  support  services  declined  2.4% to $89.8
million  (53.3% of revenue) for the first six months of 1999 from $92.0  million
(54.5% of  revenue)  for the first six months of 1998.  This  decline in cost of
sales  expressed as a percentage of revenue is  attributable  to lower  Customer
Service field overhead,  technical and support costs,  improved Canadian margins
and higher I.H.S. price realization.

       Selling  and   administrative   expenses   (including   amortization   of
intangibles)  declined  18.6% to $57.8 million  (34.4% of revenue) for the first
six  months of 1999 from  $71.0  million  (42.1% of  revenue)  for the first six
months of 1998.  This decrease is attributable  to lower  amortization  expense,
lower selling expenses associated with I.V.S. sales force reductions and related
overhead expenses and lower international operating expenses.

       Research and development  expenses of $4.9 million (5.0% or product sales
and rental revenue)  declined 38.7% from $8.0 million (7.9% of product sales and
rental  revenue),  reflecting  reduced  staffing and a more focused  development
effort.

       The  Company  recorded  an  operating  profit of $15.8  million  (9.4% of
revenue)  during the first six months of 1999  compared to an operating  loss of
$2.2 million  (1.3% of revenue) for the first six months of 1998.  Excluding the
impact of reduced amortization expense, operating profit would have increased by
$8.7 million due to lower costs and reduced operating expenses.

       The Company has  recorded a gross  deferred  tax asset of $100.6  million
reflecting the benefit of net operating loss  carryforwards and various book tax
temporary  differences.  The net operating loss  carryforward for federal income
tax purposes as of June 30, 1999 is $134.3  million,  of which $13.7  million of
the net operating loss  carryforward will expire in the year 2010, $33.2 million
will expire in the year 2011,  $40.0 million will expire in the year 2012, $35.7
million  will expire in the year 2018 and $11.7  million will expire in the year
2020. In order to fully realize the deferred tax asset, the Company will need to
generate  future  taxable  income prior to expiration of the net operating  loss
carryforwards.  In 1997, the Company  established a valuation allowance by $24.1
million against the deferred tax assets.  During 1998, the Company increased its
valuation  allowance by $20.8 million.  During the first six months of 1999, the
Company  increased  its  valuation  allowance by $2.3  million  resulting in net
deferred  tax  asset of  $53.4  million.  Management  believes,  based  upon the
Company's history of prior operating results, its current circumstances, and its
expectations for the future, that taxable income of the Company will more likely
than not be  sufficient  to fully  utilize the net  deferred  tax asset of $53.4
million  recorded  at June 30,  1999,  prior to  expiration.  The  amount of the
deferred tax asset considered realizable, however, could be reduced if estimates
of future taxable income during the net operating loss  carryforward  period are
reduced.

LIQUIDITY AND CAPITAL RESOURCES

       The  Company's  liquidity  requirements  consists  primarily of scheduled
payments of principal and interest on its  indebtedness,  working  capital needs
and capital  expenditures.  At June 30, 1999, the Company had  outstanding  Term
Loans of  $131.6  million,  a $19.0  million  loan  outstanding  under the $40.0
million  Revolving  Credit  Facility  and  the  Notes.  Availability  under  the
Revolving  Credit Facility at June 30, 1999 was $21.0 million.  Scheduled annual
principal  payments on the Term Loans are $0.6  million in 1999 and 2000,  $36.3
million in 2001 and $94.0 million in 2002. There are no scheduled  reductions in
the Revolving Credit Facility over the next two years.

       On December  31,  1998,  the  Company  and the  lenders  executed a fifth
amendment  to the  Credit  Agreement.  Under  the terms of this  amendment,  the
lenders agreed to waive  compliance by the Company with the financial  covenants
as of December 31, 1998 and for the four-Fiscal Quarter period then ended. Other


                                       23
<PAGE>

changes  effected by the amendment were (i)  modifications  to the covenants and
related definitions in respect of certain asset sales and the utilization of the
proceeds  from such asset sales,  (ii)  modifications  to the  required  Maximum
Leverage,  Minimum  EBITDA and Minimum  Interest  Coverage  Ratio  covenants (as
defined in the Credit  Agreement),  (iii) a change in the  maturity  date of the
Tranche C Loans to be equal to that of the Tranche B Loans, and (iv) an increase
in the interest rate on the Tranche B Loans to be equal to that of the Tranche C
Loans.

       In  January  1999,  the  Company  sold  2.0  million  shares  of its  12%
Convertible  Pay-in-Kind Preferred Stock to Stonington Capital Appreciation 1994
Fund, L.P.  ("Stonington") for $20 million. In February 1999, $11.75 million was
used for the semi-annual  interest payment on the Notes.  Proceeds from the sale
were also used to repay amounts outstanding under the Revolving Credit Facility.

       In connection with the terms of the Credit Agreement, the Company entered
into interest  rate swap  agreements in November  1995,  effective  February 16,
1996, with an aggregate  notional  principal amount  equivalent to $75.0 million
which matured on February 16, 1999. The swap effectively  converted that portion
of the Term Loans to a fixed rate component of 5.8%;  thus,  reducing the impact
of changes in interest rates,  converting the total  effective  interest rate on
fifty percent of the initial outstanding Term Loans to 9.55%. No funds under the
swap  agreements were actually  borrowed or were repaid.  Amounts due to or from
the  counterparties  were reflected in interest  expense in the periods in which
they accrued.  On February 11, 1999, the Company  entered into interest rate cap
agreements  effective  February 16, 1999, with an aggregate  notional  principal
amount equivalent to $66.0 million maturing on February 16, 2001. The cap limits
that portion of the Company's Term Loans to a fixed rate component of 5.5%; thus
reducing  the impact of  increases in interest  rates,  limiting  the  effective
interest rate on fifty percent of the currently outstanding Term Loans to 9.25%.

       In addition,  the Credit Agreement  contains covenants that significantly
limit or  prohibit,  among  other  things,  the  ability of the Company to incur
indebtedness,  make prepayments of certain indebtedness, pay dividends on common
stock,   make   investments,   engage  in  transactions  with  stockholders  and
affiliates,  create liens, sell assets and engage in mergers and  consolidations
and requires that the Company maintain certain financial ratios.

       The Company had $200.0 million of Notes  outstanding as of June 30, 1999.
The Notes are subordinated to the Credit  Agreement  financings and other senior
indebtedness,  as defined in the Note  Indenture.  The Notes  contain  covenants
similar to the Credit  Agreement  and  provide for each  noteholder  to have the
right to require that the Company  repurchase the Notes at 101% of the principal
amount upon a change of control (as  defined in the Note  Indenture).  The Notes
bear interest of 11-3/4% per annum, payable semi-annually on each February 1 and
August 1. The Notes mature on August 1, 2005.  At June 30, 1999,  the fair value
of the Notes was favorable $64.0 million based on dealer quotes.

       Capital  expenditures  for the first  six  months  of 1999  totaled  $6.2
million. The Company does not expect that the limitation on capital expenditures
contained in the Credit  Agreement  will limit,  in any material  respects,  the
Company's ability to fund capital expenditures.

       The Company's  quarterly  revenues and other operating  results have been
and will  continue to be affected by a wide variety of factors that could have a
material  adverse  effect on the  Company's  financial  performance  during  any
particular quarter.  Such factors include,  but are not limited to, the level of
orders that are  received and shipped by the Company in any given  quarter,  the
rescheduling and  cancellation of orders by customers,  availability and cost of
materials,  the  Company's  ability  to enhance  its  existing  products  and to
develop,  manufacture and  successfully  introduce and market new products,  new


                                       24
<PAGE>

product developments by the Company's competitors, market acceptance of products
of both the Company and its competitors,  competitive  pressures on prices,  the
ability to attract and retain qualified technical personnel,  significant damage
to or  prolonged  delay  in  operations  at  the  Company's  sole  manufacturing
facility,  and  interest  rate and foreign  exchange  fluctuations.  The Company
introduced a number of new products in its target markets in 1997,  1998 and the
first six months of 1999 and plans to introduce  additional new products  during
the balance of 1999 which are expected to enhance future  revenues and liquidity
of the Company. However, there can be no assurance that the Company will be able
to implement its plans to introduce such products in a timely  fashion,  or that
such products will meet the  expectations  of the Company for either revenues or
profitability.  Notwithstanding  the introduction of its new products,  the 1999
sale of 12%  Convertible  Pay-in-Kind  Preferred  Stock  to  Stonington  and its
availability  under the Revolving Credit Facility,  the Company will continue to
focus on cash flows from operating  activities.  The Company has implemented new
measures to improve working capital in order to provide this improved cash flow,
but there can be no assurance,  however,  that the Company will be successful in
such efforts.

YEAR 2000 READINESS

GENERAL

       Most  businesses are facing a challenge at the turn of the century due to
a common  computer-related  practice employed since the 1960's of representing a
year with just two digits rather than four digits. The problem is not restricted
to system  hardware  components  but will be  manifested  within many  operating
systems,  firmware,  application  software  and  equipment  used  throughout  an
organization.  Dictaphone  has been and  continues  to be  actively  engaged  in
resolving its Year 2000 issues.  The Company has established a Year 2000 Project
Office charged with  evaluating  the Company's Year 2000 issues and  identifying
and  developing  appropriate  remedies  and  action  plans  with  respect to the
Company's  internal  systems  and the  Company's  products  to  ensure  a smooth
transition into the new millennium.

       The Year 2000 Project  Office has adopted a five phase program to address
the Company's  Year 2000 issues  consisting of Phase I - review and inventory of
existing systems, products,  equipment and suppliers that may be affected by the
Year 2000  issue;  Phase II  assessment  of the impact of the Year 2000 issue on
systems,  products,   equipment  and  suppliers;  Phase  III  -  remediation  or
replacement of non-compliant  systems,  products and equipment and determination
and implementation of solutions to address non-compliant  suppliers and vendors;
Phase IV - testing of systems, product and equipment following remediation;  and
Phase V - contingency planning.

       The  Company's  Year 2000  efforts  have been  concentrated  on two major
areas:  1) internal use systems,  equipment and third party products used in the
Company's operations and 2) products sold by the Company to its customers.

STATE OF READINESS

       The Company is utilizing both internal and external  resources to perform
Year 2000  testing on its  internal  systems  and  equipment.  The  Company  has
completed Phase I of the program and has made substantial progress on Phases II,
III  and IV  for  all  of  its  critical  systems  and  equipment.  The  Company
anticipates  completion  of the  work  required  on the  remaining  systems  and
equipment  by the  close of the  third  quarter  1999.  In  connection  with the
Company's efforts to make its internal systems Year 2000 compliant,  the Company
has accelerated the implementation of a new  enterprise-wide  computer system in
certain areas. The implementation timetable for the components of the new system
is currently on schedule and will be completed by the close of the third quarter
1999.

                                       25
<PAGE>

       With respect to third party  suppliers,  in early 1998 the Company  began
the process of identifying and prioritizing  critical  suppliers and vendors and
initiated  communication  concerning their plans to address the Year 2000 issue.
This process is continuing  and the Company  believes  efforts in this area will
continue  throughout 1999 as more information becomes available from these third
parties.

       With respect to products sold to the Company's customers, the Company has
completed  Phase I of the program and is actively  engaged in Phases II, III and
IV. The Company has identified certain products which require  remediation,  has
developed and communicated the necessary remediations to the Company's customers
and  is  installing  such  remediations  at  customer  sites.  Installations  of
remediations will continue throughout 1999.

       Many of the Company's products rely on third party hardware, software and
firmware. The Company has been diligently working with all such third parties to
ascertain their readiness and the affect, if any, of their products'  compliance
status  on the  efficient  and  effective  operation  and  use of the  Company's
products.  Generally,  all  software,  hardware and firmware are supplied to the
Company by leading software companies that have Year 2000 programs of their own.
A majority of these vendors have provided information to the Company as to their
products' Year 2000 compliance status.  However,  there can be no guarantee that
the  software,  hardware or firmware  certified by third  parties,  on which the
Company's products may rely, will operate effectively and efficiently during and
after the  millennium.  The Company has,  however,  conducted  its own Year 2000
testing on integrated  products and believes that the risk of material operating
failures  associated  with the  components  provided by these  third  parties is
consistent with their product representations concerning Year 2000 compliance.

COSTS

       The Company  estimates that the aggregate  costs of its Year 2000 program
will be  approximately  $12.5  million,  including $8.5 million of costs already
incurred. Of the total program costs,  approximately $9.0 million represents new
software and hardware  purchases  for internal  Company  systems which have been
accelerated in connection with the Year 2000 issue. A significant portion of the
remaining  $3.5  million  in  costs  have not  been  and  will  not  consist  of
incremental  costs,  but rather  will  represent  the  redeployment  of existing
Company  resources.  This  redeployment  of  resources is not expected to have a
significant impact on the day to day operations of the Company. Based on current
estimates  and  information,  the Company does not  anticipate  that these costs
associated  with Year 2000  issues  will have a material  adverse  effect on the
Company's consolidated  financial position,  results of operations or cash flows
in  future  periods.  However,  these  cost  estimates,  as well as the  project
timetables  previously  mentioned are based on management's best estimates,  and
there can be no guarantee  that these  estimates will be achieved or that actual
results will not materially differ from these estimates.

RISKS

       With  respect to the  Company's  internal  systems,  the most  reasonably
likely worst case scenario for the Company's  failure to identify or remediate a
Year 2000 problem could be an  interruption  in, or failure of,  certain  normal
business activities or operations.  Such failures could materially and adversely
affect the Company's results of operations,  liquidity and financial  condition.
In addition,  due to the uncertainty of the Year 2000 readiness of third parties
and  suppliers  and  customers,  the Company is unable to determine at this time
whether the  consequences of the Year 2000 failures by these parties will have a
material impact on the Company's  consolidated  financial  position,  results of
operations or cash flows.

                                       26
<PAGE>

       The Company's Year 2000 program,  however,  is expected to  significantly
reduce the Company's  exposure to these types of failures.  The Company believes
that the  implementation  of new systems and the timely  completion  of the Year
2000  program  should  reduce the risk of  internal  business  interruption  and
adverse financial impact.

       With respect to products sold to customers,  the most  reasonably  likely
worst case  scenario for Year 2000 related  product  failures  could include the
suspension of use of such product,  or continued use of the product with reduced
functionality  or  operating  ability.  If this were to occur,  customers  could
attempt to assert  liability  claims against the Company.  However,  the Company
believes  that,  based on the level of Year 2000 testing  performed to date, the
product  remedies being made  available to its customers,  the time remaining to
implement such remedies,  and the legal defenses  available to the Company,  the
likelihood of the occurrence of such worst case scenario is minimized.

CONTINGENCY PLANS

       Contingency plans are being prepared so that critical business  functions
will  continue to  operate.  These plans will  address  the  Company's  internal
systems and equipment, products sold by the Company to customers and third party
supplier  relationships.  The contingency plans will include manual alternatives
to  electronic  processes,  repair or  replacement  of products  and systems and
changes in suppliers.  Contingency  planning  efforts will  continue  throughout
1999,  and will  continue to be updated and revised to reflect the most  current
information on the Company's  state of readiness,  and the state of readiness of
the Company's suppliers and customers.

       The  Company  may,  from  time to time,  provide  estimates  as to future
performance.  Such estimates would be  "forward-looking"  statements  within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities  Exchange Act of 1934.  Because  such  statements  include  risks and
uncertainties,  actual  results  may  differ  materially  from  those  estimates
provided.  The  Company  undertakes  no  duty to  update  such  forward  looking
statements. Factors that could cause actual results to differ from these forward
looking statements include,  but are not limited to, those previously  discussed
herein.


ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       The Company's  cash flows and earnings are subject to  fluctuations  from
changes in interest rates and, to a lesser  extent,  foreign  currency  exchange
fluctuations.  See "Item 2 -  Management's  Discussion and Analysis of Financial
Condition  and Results of  Operations  - Liquidity  and Capital  Resources"  for
further information on interest rate risk.


                                       27
<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1.      LEGAL PROCEEDINGS

       See  Note  5  to  the  Company's  Condensed  Consolidated  Statements  of
Operations (Unaudited) which is incorporated herein by reference.


ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

       (a)   EXHIBITS

                    27     --    Financial Data Schedule.

UNDERTAKING:

       The undersigned,  Dictaphone Corporation,  hereby undertakes, pursuant to
Regulation  S-K, Item 601(b),  paragraph (4) (iii), to furnish to the Securities
and Exchange  Commission upon request all constituent  instruments  defining the
rights  of  holders  of  long-term  debt  of  Dictaphone   Corporation  and  its
consolidated  subsidiaries  not filed  herewith  for the  reason  that the total
amount of securities authorized under any of such instruments does not exceed 10
percent  of the total  consolidated  assets of  Dictaphone  Corporation  and its
consolidated subsidiaries.

       (b)   REPORTS ON FORM 8-K

                    There  were no  Reports  on Form 8-K  filed  by the  Company
             during the three months ended June 30, 1999.




                                       28
<PAGE>

                                   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.




Dated:  August 12, 1999                    DICTAPHONE CORPORATION
                                 --------------------------------------------
                                              (Registrant)




                       By:                 /S/  JOHN H. DUERDEN
                                 --------------------------------------------
                       Name:                    John H. Duerden
                       Title:   Chairman, Chief Executive Officer and President
                                         (Principal Executive Officer)



                       By:                 /S/  JOSEPH D. SKRZYPCZAK
                                 --------------------------------------------
                       Name:                Joseph D. Skrzypczak
                       Title: Chief Operating Officer, Chief Financial Officer
                                              and Director
                                 (Principal Financial and Accounting Officer)





                                       29
<PAGE>

                                  EXHIBIT INDEX


                                                            SEQUENTIALLY
EXHIBITS                 DESCRIPTION                        NUMBERED PAGE
--------                 -----------                        -------------

    27    --  Financial Data Schedule.
















                                       30
<PAGE>