SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 2000.                                                               
|
| | [   ]     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 1-15139

LANIER WORLDWIDE, INC.

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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 59-2606737                          
|                                                              
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

|                                         |  |       |  | 
|---------------------------------------- |  | ----- |  | 
|2300 Parklake Drive, Atlanta, Georgia    |  | 30345
|                                        
|(Address of Principal Executive Offices)

Registrants Telephone Number, including Area Code 770-496-9500

---

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.

Indicate by check [X] 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 outstanding as of the close of business on
April 28, 2000: 83,024,596



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TABLE OF CONTENTS



|           |                                                                                                |                                                                     |  |  |  |  |  | 
|---------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- |  |  |  |  |  | 
|PART I    
|           | ITEM 1. FINANCIAL STATEMENTS.                                                                 
|           |                                                                                                | CONSOLIDATED BALANCE SHEETS                                        
|           |                                                                                                | CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                      
|           |                                                                                                | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                  
|           |                                                                                                | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)             
|           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
|           |                                                                                                | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|PART II   
|           | Item 5. OTHER INFORMATION.                                                                    
|           |                                                                                                | UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME              
|           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                      
|SIGNATURES




TABLE OF CONTENTS

|           |         |                                                                 |    |  |    | 
|---------- | ------- | --------------------------------------------------------------- | -- |  | -- | 
|PART I     |        
|           | Item 1. | Financial Statements (Unaudited)                               
|           |         | CONSOLIDATED BALANCE SHEETS                                     |    |  | 3 
|           |         | CONSOLIDATED STATEMENTS OF INCOME                               |    |  | 4 
|           |         | CONSOLIDATED STATEMENTS OF CASH FLOWS                           |    |  | 5 
|           |         | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      |    |  | 6  | 
|          
|           | Item 2. | Managements Discussion and Analysis of Financial Condition and
|           |         | Results of Operations                                           |    |  | 8  | 
|          
|           | Item 3. | Quantitative and Qualitative Disclosures About Market Risk      |    |  | 15 | 
|          
|PART II   
|          
|           | Item 5. | Other
Information                                               |    |  | 16
|
|           |         | UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS
OF INCOME           |    |  | 17 | 
|          
|           | Item 6. | Exhibits and Reports on Form 8-K                                |    |  | 18 | 
|          
|SIGNATURES |         |                                                                 | 18 | 

2



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PART I




Item 1.Financial Statements.

LANIER WORLDWIDE, INC. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |           |           |           |  | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | ------------------------------------------ | ------- | --------- | -------------- | - | --------- | --------- | --------- |  | 
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           | March 31,      |   | July 2,  
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           | 2000           |   | 1999     
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           | (Unaudited)    |   | (Audited)
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           | (In thousands)
|ASSETS                              
|                                    
|                                    
|                                    
|                                    
|Current Assets                      
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                                                                                                                                                                                  |                           | $                                          | 10,318  |           |                | $ | 18,209    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Trade receivables                                                                                                                                                                                                                                                                          |                           |                                            | 307,270 |           |                |   | 348,604   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables from former parent company                                                                                                                                                                                                                                                     |                           |                                            |         |           |                |   | 194,521   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                                                                                                                                                                                                                                                                                |                           |                                            | 163,744 |           |                |   | 166,404   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses                                                                                                                                                                                                                                                                           |                           |                                            | 18,169  |           |                |   | 17,107    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income taxes                                                                                                                                                                                                                                                                      |                           |                                            | 61,440  |           |                |   | 39,276    |          
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|                                     |                                                                                                                                                                                                                                                                                            | Total current assets      |                                            |         | 560,941   |                |   |           | 784,121   |          
|                                    
|                                    
|                                    
|                                    
|Other Assets                        
|                                    
|                                    
|                                    
|                                    
|                                     | Rental equipment, less allowance for
depreciation ($213,597 at March 31,
2000 and $205,232 at July 2, 1999)                                                                                                                                                                                |                           |                                            | 129,989 |           |                |   | 140,718   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Property, plant and equipment, less
allowance for depreciation ($81,313 at
March 31, 2000 and $76,053 at July 2, 1999)                                                                                                                                                                     |                           |                                            | 41,938  |           |                |   | 42,755    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Notes receivable  net                                                                                                                                                                                                                                                                     |                           |                                            | 218,078 |           |                |   | 203,657   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Intangibles, less accumulated
amortization ($43,636 at March 31,
2000 and $38,610 at July 2, 1999)                                                                                                                                                                                         |                           |                                            | 116,556 |           |                |   | 125,504   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other                                                                                                                                                                                                                                                                                      |                           |                                            | 36,586  |           |                |   | 40,953    |          
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|                                     |                                                                                                                                                                                                                                                                                            | Total other assets        |                                            |         | 543,147   |                |   |           | 553,587   |          
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|                                     |                                                                                                                                                                                                                                                                                            | Total assets              |                                            | $       | 1,104,088 |                |   | $         | 1,337,708 |          
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|LIABILITIES AND
STOCKHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|Current Liabilities                 
|                                    
|                                    
|                                    
|                                    
|                                     | Notes payable                                                                                                                                                                                                                                                                              |                           | $                                          | 58,643  |           |                | $ | 138,011   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Trade payables                                                                                                                                                                                                                                                                             |                           |                                            | 57,215  |           |                |   | 86,815    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Retirement plan obligations                                                                                                                                                                                                                                                                |                           |                                            | 43,913  |           |                |   | 38,964    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued compensation                                                                                                                                                                                                                                                                       |                           |                                            | 30,441  |           |                |   | 39,066    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued interest and sundry taxes                                                                                                                                                                                                                                                          |                           |                                            | 19,878  |           |                |   | 21,772    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other accrued items                                                                                                                                                                                                                                                                        |                           |                                            | 29,023  |           |                |   | 33,610    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned service income                                                                                                                                                                                                                                                                    |                           |                                            | 55,407  |           |                |   | 57,898    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Income taxes                                                                                                                                                                                                                                                                               |                           |                                            |         |           |                |   | 15,460    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Long-term debt current portion                                                                                                                                                                                                                                                             |                           |                                            | 58,653  |           |                |   | 2,582     |          
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|                                     |                                                                                                                                                                                                                                                                                            | Total current liabilities |                                            |         | 353,173   |                |   |           | 434,178   |          
|                                    
|                                    
|                                    
|                                    
|Other Liabilities                   
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income taxes                                                                                                                                                                                                                                                                      |                           |                                            | 34,604  |           |                |   | 16,170    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Long-term debt                                                                                                                                                                                                                                                                             |                           |                                            | 560,574 |           |                |   | 4,622     |          
|                                    
|                                    
|                                    
|                                    
|Stockholders
Equity:               
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred Stock, $.01 par value:
authorized 25,000,000 shares; none
issued
Common Stock, $.01 par value, 500,000,000
shares authorized; issued 87,851,196
shares at March 31, 2000; and $1.00 par value,
1,000,000 shares
authorized; issued and outstanding 41,893 shares at July 2, 1999 |                           |                                            | 879     |           |                |   | 42        |          
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                                                                                                                                                                                 |                           |                                            | 202,313 |           |                |   | 329,679   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                                                                                                                                                                                                                          |                           |                                            | 7,809   |           |                |   | 586,556   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss                                                                                                                                                                                                                                                       |                           |                                            | (37,855 | )         |                |   | (33,539   | )        
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stocks                                                                                                                                                                                                                                                                            |                           |                                            | (17,409 | )        
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|                                     |                                                                                                                                                                                                                                                                                            |                           | Total stockholders equity                 | 155,737 |           |                |   | 882,738   |          
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          
|                                     |                                                                                                                                                                                                                                                                                            |                           | Total liabilities and
stockholders equity |         | $         | 1,104,088      |   |           | $         | 1,337,708 | 
|                                     |                                                                                                                                                                                                                                                                                            |                           |                                            |         |           |                |   |          

3



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LANIER WORLDWIDE, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |         |  |   |           |         | 
|--------------------------------------------------------------- | ----------------------------------- | - | ------------------------------------ | ------- | ----------------- | - | -------------- | ------- | ------------- | - | ------- | ------- |  | - | --------- | ------- | 
|                                                                |                                     |   | Quarter Ended                        |         | Nine Months Ended
|                                                                |                                     |   |                                      |         |                  
|                                                                |                                     |   | March 31, 2000                       |         | April 2, 1999     |   | March 31, 2000 |         | April 2, 1999
|                                                                |                                     |   |                                      |         |                   |   |                |         |              
|                                                                |                                     |   | (In thousands except per share data)
|Revenue                                                        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Product sales and rentals           |   | $                                    | 172,310 |                   |   | $              | 199,225 |               |   | $       | 540,333 |  |   | $         | 582,511 | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Service income                      |   |                                      | 136,805 |                   |   |                | 157,653 |               |   |         | 418,274 |  |   |           | 465,978 | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Finance income                      |   |                                      | 10,784  |                   |   |                | 9,565   |               |   |         | 31,925  |  |   |           | 28,223  | 
|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |         |  |   |           |        
|                                                                |                                     |   | 319,899                              |         |                   |   | 366,443        |         |               |   | 990,532 |         |  |   | 1,076,712 |        
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and Expenses                                             
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Cost of product sales and rentals   |   |                                      | 127,778 |                   |   |                | 136,121 |               |   |         | 387,475 |  |   |           | 381,927 | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Cost of service                     |   |                                      | 79,481  |                   |   |                | 89,112  |               |   |         | 232,381 |  |   |           | 262,185 | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Selling and administrative
expenses |   |                                      | 91,051  |                   |   |                | 107,941 |               |   |         | 291,605 |  |   |           | 326,615 | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Interest expense                    |   |                                      | 14,926  |                   |   |                | 6,597   |               |   |         | 33,995  |  |   |           | 17,142  | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Other  net                         |   |                                      | 6,579   |                   |   |                | 1,641   |               |   |         | 10,312  |  |   |           | 1,626   | 
|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |         |  |   |           |        
|                                                                |                                     |   | 319,815                              |         |                   |   | 341,412        |         |               |   | 955,768 |         |  |   | 989,495   |        
|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |         |  |   |           |        
|                                                                | Income before income taxes          |   |                                      | 84      |                   |   |                | 25,031  |               |   |         | 34,764  |  |   |           | 87,217  | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Income taxes                        |   |                                      | 32      |                   |   |                | 9,447   |               |   |         | 13,211  |  |   |           | 31,051  | 
|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |         |  |   |           |        
|Net Income                                                      |                                     | $ | 52                                   |         |                   | $ | 15,584         |         |               | $ | 21,553  |         |  | $ | 56,166    |        
|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |         |  |   |           |        
|Weighted average number of shares
outstanding                   |                                     |   | 83,025                               |         |                   |   |                |         |               |   | 85,877  |        
|                                                               
|                                                               
|                                                               
|                                                               
|Basic earnings per share                                        |                                     | $ | 0.00                                 |         |                   |   |                |         |               | $ | 0.25    |        
|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |        
|Weighted average number of shares
outstanding assuming dilution |                                     |   | 83,356                               |         |                   |   |                |         |               |   | 86,202  |        
|                                                               
|                                                               
|                                                               
|                                                               
|Diluted earnings per share                                      |                                     | $ | 0.00                                 |         |                   |   |                |         |               | $ | 0.25    |        
|                                                                |                                     |   |                                      |         |                   |   |                |         |               |   |         |        

4



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LANIER WORLDWIDE, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                      |                                    |                                        |                                                     |          |         |                           |         |               |          |          |   | 
|----------------------------------------------------- | ---------------------------------- | -------------------------------------- | --------------------------------------------------- | -------- | ------- | ------------------------- | ------- | ------------- | -------- | -------- | - | 
|                                                      |                                    |                                        |                                                     |          |         | For The Nine Months Ended
|                                                      |                                    |                                        |                                                     |          |         |                          
|                                                      |                                    |                                        |                                                     |          |         | March 31, 2000            |         | April 2, 1999
|                                                      |                                    |                                        |                                                     |          |         |                           |         |              
|                                                      |                                    |                                        |                                                     |          |         | (In thousands)           
|OPERATING ACTIVITIES:                                
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net income                         |                                        | $                                                   | 21,553   |         |                           | $       | 56,166        |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Adjustments to net income:        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Depreciation                           |                                                     |          | 75,781  |                           |         |               | 90,505   |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Amortization                           |                                                     |          | 5,089   |                           |         |               | 6,341    |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Non-current deferred income taxes      |                                                     |          | 18,434  |                           |         |               | (22,400  | )       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Changes in assets and liabilities:
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Trade receivables                      |                                                     |          | 37,114  |                           |         |               | 26,871   |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Receivables from parent                |                                                     |          | 41,326  |                           |         |               | (82,604  | )       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Inventories                            |                                                     |          | 2,660   |                           |         |               | 40,961   |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Prepaid expenses                       |                                                     |          | (1,062  | )                         |         |               | (13,251  | )       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Trade payables and accrued liabilities |                                                     |          | (35,170 | )                         |         |               | 11,956   |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Unearned service income                |                                                     |          | (2,491  | )                         |         |               | (32,851  | )       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Income taxes                           |                                                     |          | (37,624 | )                         |         |               | 27,404   |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Other                                  |                                                     |          | (9,426  | )                         |         |               | (1,490   | )       
|                                                      |                                    |                                        |                                                     |          |         |                           |         |              
|                                                      |                                    |                                        | Net cash provided by operating activities           |          |         | 116,184                   |         |               |          | 107,608  |  
|                                                     
|                                                     
|                                                     
|                                                     
|INVESTING ACTIVITIES:                                
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Capital expenditures:             
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Divestitures and acquisition           |                                                     |          | 716     |                           |         |               | (171,117 | )       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Property, plant and equipment          |                                                     |          | (14,921 | )                         |         |               | (20,144  | )       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                    | Rental equipment                       |                                                     |          | (59,573 | )                         |         |               | (53,535  | )       
|                                                      |                                    |                                        |                                                     |          |         |                           |         |              
|                                                      |                                    |                                        | Net cash used in investing activities               |          |         | (73,778                   | )       |               |          | (244,796 | )
|                                                     
|                                                     
|                                                     
|                                                     
|FINANCING ACTIVITIES:                                
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from borrowings           |                                        |                                                     | 737,544  |         |                           |         | 222,145       |         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Payments to parent                 |                                        |                                                     | (573,634 | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Repurchase of stock                |                                        |                                                     | (17,409  | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Repayments of borrowings           |                                        |                                                     | (193,463 | )       |                           |         | (106,738      | )       
|                                                      |                                    |                                        |                                                     |          |         |                           |         |              
|                                                      |                                    |                                        | Net cash (used in) provided by financing activities |          |         | (46,962                   | )       |               |          | 115,407  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Effect of exchange rates on cash and cash equivalents |                                    |                                        | (3,335                                              | )        |         |                           | 5,828   |              
|                                                      |                                    |                                        |                                                     |          |         |                           |         |              
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      |                                    |                                        | (7,891                                              | )        |         |                           | (15,953 | )            
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and cash equivalents at beginning of year        |                                    |                                        | 18,209                                              |          |         |                           | 87,096  |              
|                                                      |                                    |                                        |                                                     |          |         |                           |         |              
|CASH AND CASH EQUIVALENTS AT END OF PERIOD            |                                    | $                                      | 10,318                                              |          |         | $                         | 71,143  |              
|                                                      |                                    |                                        |                                                     |          |         |                           |         |              

5



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LANIER WORLDWIDE, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2000

Note A.Basis of Presentation

On October 22, 1999, the Board of Directors of Harris Corporation
(Harris), the then sole stockholder of Lanier Worldwide, Inc. (Lanier),
declared a pro rata distribution, effective 11:59 p.m., Atlanta time, on
November 5, 1999 of one share of Lanier common stock (together with associated
preferred stock purchase rights) for each share of Harris common stock held by
stockholders of record of Harris at the close of business on November 1, 1999,
to effectuate the spin-off (the Spin-off) of Lanier as a separate public
company. The Lanier shares distributed constituted approximately 90% of the
outstanding shares of Lanier common stock after the Spin-off. Harris retained
approximately 10% of the outstanding shares of Lanier after the Spin-off.

The unaudited consolidated financial statements include the accounts of
Lanier, and certain subsidiaries partially or wholly owned by Harris, that were
transferred to Lanier prior to the Spin-off.

The consolidated balance sheet as of March 31, 2000, the consolidated
statements of income for the quarter and nine months ended March 31, 2000 and
the consolidated statement of cash flows for the nine months ended March 31,
2000 have not been audited but have been prepared in conformity with the
accounting principles applied in the audited consolidated financial statements
for the fiscal year ended July 2, 1999 contained in Laniers Registration
Statement on Form 10, as amended (Registration Statement). In the opinion of
management, the financial statements include all material adjustments necessary
for a fair presentation. This Form 10-Q should be read in conjunction with the
audited consolidated financial statements and notes included in the
Registration Statement.

Note B.Acquisition

In the first quarter of fiscal year 1999, Lanier acquired the Copying
Systems Division of the Agfa-Gevaert Group, which is a member of the Bayer
Group, Leverkusen, Germany (the Agfa Acquisition). The transaction was
accounted for as a purchase. The purchase price, which is subject to
adjustment, was $168.3 million in cash. The purchase price exceeded the fair
value of net assets acquired by approximately $46 million, which is being
amortized on a straight-line basis over 20 years. The results of the Agfa
Acquisition are included in the accompanying unaudited consolidated financial
statements from the date of acquisition.

Note C.Long-Term Debt

Retention of Indebtedness of Lanier Subsidiaries

In connection with the Spin-off, all intercompany accounts payable to
Harris were eliminated and forgiven on November 5, 1999. Further, Lanier
retained existing indebtedness totaling $146.5 million.

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LANIER WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  (Continued)

Under the credit agreement governing the
Credit Facility, Lanier has the right to maintain a total of $150 million of
debt outside of the Credit Facility, of which $63.0 million was outstanding as
of March 31, 2000. Additionally, Lanier has the right to securitize $100
million of European receivables under the facility noted below as well as the
right to securitize $250 million of domestic trade and lease receivables. The
proceeds of a domestic receivable securitization must be used to pay down the
$250 million term loan.

Bank Credit Agreement

On October 20, 1999, Lanier entered into a $900 million credit facility
with three lead agent banks (the Credit Facility). The $900 million Credit
Facility consists of a $450 million five-year revolver, a $250 million two-year
term loan and a $200 million 364-day revolver.

On November 4, 1999, the credit agreement was amended to add a syndicate
of eighteen other banks. On that day, Lanier drew $590 million of debt,
consisting of $250 million from the two-year loan and $340 million from the
five-year revolver. Proceeds were used to make a $545 million cash payment to
Harris, to pay Harris $22.8 million for the transfer of ownership in two
subsidiaries which had $22.8 million of net cash, and for working capital
needs.

In addition to the Credit Facility, Lanier has an existing European
receivable securitization facility totaling $100 million, under which $23.8
million was outstanding as of March 31, 2000.

Note D.Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss relates solely to foreign currency
translation adjustments related to Laniers foreign subsidiaries.

Note E.Share Repurchase

On November 30, 1999, Laniers Board of Directors authorized the
repurchase of up to eight million shares of Lanier common stock (the Share
Repurchase Program). Shares purchased will be retained as treasury stock and
are available for use under Laniers stock option plan and for other corporate
purposes. Subject to restrictive covenants in Laniers credit facilities, the
repurchases will be made from time to time at managements discretion in the
open market or in privately negotiated transactions.

Pursuant to the Share Repurchase Program, in December 1999 Lanier
purchased 4.8 million shares of Lanier common stock in open market transactions
at a total cost of $17.4 million, or approximately $3.61 per share.

7



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Item  2.Managements Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The consolidated balance sheet as of March 31, 2000, the consolidated
statements of income for the third quarter and nine-month period ended March
31, 2000, and the consolidated statement of cash flows for the nine-month
period ended March 31, 2000 have not been audited but have been prepared in
conformity with the accounting principles applied in the audited consolidated
financial statements for the fiscal year ended July 2, 1999 contained in
Laniers Registration Statement. In the opinion of management, this information
includes all material adjustments necessary for a fair presentation. This Form
10-Q should be read in conjunction with the audited consolidated financial
statements and notes included in the Registration Statement.

Forward-Looking Statements

This document contains forward-looking statements that reflect Laniers
current assumptions and estimates of future performance and economic
conditions. Such statements are made in reliance upon the safe harbor
provisions of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Lanier may
make these statements directly in this document or incorporate such statements
into this document by reference to other documents. Lanier may also include
statements pertaining to periods following March 31, 2000. Many of these
statements may be identified by words such as believes, expects, plans,
anticipates, projects, estimates, should result or are expected to,
or similar expressions. Any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to differ
materially from those projected, stated or implied by the forward-looking
statements.

Laniers results and the accuracy of the forward-looking statements could
be affected by, among other things: general economic conditions in the markets
in which Lanier operates; economic developments that have a particularly
adverse effect on one or more of the markets Lanier serves; the ability to
execute managements internal operating plans; stability of key markets for
office products and document management solutions; fluctuation in foreign
currency exchange rates and the effectiveness of currency hedging program; and
worldwide demand and product and service pricing for office products and
document management solutions. Additional information concerning these risks
and uncertainties is contained in the Registration Statement, as filed with the
Securities and Exchange Commission. Caution should be taken not to place undue
reliance on any forward-looking statements, since such statements speak only as
of the date of the making of such statements. Lanier disclaims any intention or
obligation to update or revise any forward-looking statements whether as a
result of new information, future events, or otherwise.

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Results of Operations

Lanier is reporting lower revenue and earnings for both the third quarter
and first nine months of fiscal 2000 versus comparable periods in the prior
fiscal year. Management believes the decline was principally attributable to:
(i) competitive pricing pressures largely attributable to the industry-wide
transition from analog to digital products; (ii) a reduction in service revenue
primarily related to a decline in unit population within the core business;
(iii) divestitures during the fourth quarter of fiscal 1999 of Laniers direct
sales operation in France and its U.S.-based medical transcription business,
which contributed a combined $10.9 million and
$33.4 million of revenue for the third
quarter and nine-month period ended April 2, 1999, respectively; and (iv)
strengthening of the U.S. dollar against foreign currencies, primarily
European, which decreased revenues by $10.6 million and $27.7 million in the
third quarter and nine-month period ended March 31, 2000, respectively,
calculated on a constant-rate basis.

Gross margin declined to 35.2% for the third quarter and 37.4% for the
first nine months of fiscal 2000 from 38.5% and 40.2%, respectively, for the
comparable periods in the prior fiscal year. Management believes the decline
was principally attributable to competitive pressures which have impacted both
product and service margins and, to a lesser extent, the strengthening of the
Japanese yen versus the U.S. dollar. Further, management believes margin
erosion will likely continue, at least for the duration of the industry
transition to digital products, but cannot predict accurately the rate of
margin erosion or when, if at all, margins will improve.

Revenue

Revenue for the third quarter of fiscal 2000 decreased $46.5 million, or
12.7%, to $319.9 million from $366.4 million for the third quarter of fiscal
1999. For the first nine months of fiscal 2000, revenue decreased $86.2
million, or 8.0%, to $990.5 million from $1,076.7 million for the comparable
period in fiscal 1999. During the twelve months ended March 31, 2000, the U.S.
dollar strengthened 11.0% against the Euro, which decreased Laniers reported revenue
for the third quarter and first nine months of fiscal 2000 by $10.8 million and
$29.0 million, respectively. Net of the currency translation effect of a
strong U.S. dollar and the divestitures in fiscal 1999 of Laniers direct sales
operations in France and its U.S.-based medical transcription business, third
quarter revenue decreased $25.0 million or 6.8% from the prior years quarter.
Management believes recurring revenues consisting of service and supplies were
adversely impacted by a decline in the unit population within the core business
as well as copiers losing page output to printers.

Product Sales and Rentals.Product sales and rentals revenue for the third
quarter of fiscal 2000 decreased $26.9 million, or 13.5%, to $172.3 million
from $199.2 million for the third quarter of fiscal 1999. For the first nine
months of fiscal 2000, product sales and rentals revenue decreased $42.2
million, or 7.2%, to $540.3 million from $582.5 million for the comparable
period in fiscal 1999. Calculated on a constant rate basis, the strengthening
of the U.S. dollar versus foreign currencies, primarily European, reduced
revenue by $6.2 million and $16.1 million for the third quarter and first nine
months of fiscal 2000, respectively. Laniers divestiture in the fourth
quarter of fiscal 1999 of its direct sales operations in France lowered revenue
by $1.8 million and $6.9 million for the third quarter and first nine months of
fiscal 2000, respectively. Net of the foregoing currency translation effect
and divestitures, product sales and rentals revenue decreased $18.9 million, or 9.5% for the third quarter of fiscal 2000

9



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and decreased $19.2
million, or 3.3%, for the first nine months of fiscal 2000 versus comparable
periods in the prior year. Management believes increased discounting as
competitors attempt to maintain or increase their installed base and a greater
market presence from manufacturers are the primary contributors to this
decline.

Service Income.Service income for the third quarter of fiscal 2000
decreased $20.9 million, or 13.2%, to $136.8 million, from $157.7 million for
the third quarter of fiscal 1999. For the first nine months of fiscal 2000,
service income decreased $47.7 million, or 10.2%, to $418.3 million from $466.0
million for the comparable period in fiscal 1999. Laniers divestiture in the
fourth quarter of fiscal 1999 of its direct sales operations in France and its
medical transcription business lowered service income by $2.6 million and $6.5
million, respectively, for the third quarter of fiscal 2000 and $7.8 million
and $18.8 million, respectively, for the first nine months of fiscal 2000.
Calculated on a constant rate basis, the strengthening of the U.S. dollar
against foreign currencies, primarily European, reduced revenue by $4.4 million
and $11.6 million for the third quarter and first nine months of fiscal 2000,
respectively. Net of the foregoing divestitures and currency translation
effect, service income decreased $7.4 million, or 4.7%, for the third quarter
of fiscal 2000 and $9.5 million, or 2.0%, for the first nine months of fiscal
2000, versus the comparable periods in fiscal 1999. Management believes the
remainder of the decline was attributable to a combination of copiers losing
page output to printers, pricing pressures associated with the industry
transition to digital products and a lower machine population.

Finance Income.For the third quarter of fiscal 2000, finance income
increased $1.2 million, or 12.5%, to $10.8 million from $9.6 million for the
third quarter of fiscal 1999. For the first nine months of fiscal 2000, finance
income increased $3.7 million, or 13.1%, to $31.9 million from $28.2 million
for the comparable period in fiscal 1999. Management attributed this years
increase to the companys continued emphasis of sales-type lease arrangements
over operating lease programs.

Gross Margin.Presented below is detailed information on gross margin:

|                                     |  |         |      |         |  |             |      |        |  |        |      |             |  |       |      |       |  |  |      |   |  |  |      |  
|------------------------------------ |  | ------- | ---- | ------- |  | ----------- | ---- | ------ |  | ------ | ---- | ----------- |  | ----- | ---- | ----- |  |  | ---- | - |  |  | ---- | -
|                                     |  |         |      |         |  |             |      |        |  |        |      |             |  | First |      | First
|                                     |  | Third   |      | Third   |  | Change      |      | Nine   |  | Nine   |      | Change     
|                                     |  | Quarter |      | Quarter |  | (Percentage |      | Months |  | Months |      | (Percentage
|                                     |  | F2000   |      | F1999   |  | Points)     |      | F2000  |  | F1999  |      | Points)    
|                                     |  |         |      |         |  |             |      |        |  |        |      |            
|Total Gross Margin                   |  |         | 35.2 | %       |  |             | 38.5 | %      |  |        | (3.3 | )           |  |       | 37.4 | %     |  |  | 40.2 | % |  |  | (2.8 | )
|                                    
|                                    
|                                    
|                                    
|Product Sales & Rentals Gross Margin |  |         | 25.8 | %       |  |             | 31.7 | %      |  |        | (5.9 | )           |  |       | 28.3 | %     |  |  | 34.4 | % |  |  | (6.1 | )
|                                    
|                                    
|                                    
|                                    
|Service Gross Margin                 |  |         | 41.9 | %       |  |             | 43.5 | %      |  |        | (1.6 | )           |  |       | 44.4 | %     |  |  | 43.7 | % |  |  | 0.7  |  

Total gross margin for the third quarter of fiscal 2000 decreased by $28.6
million, or 20.2%, to $112.6 million from $141.2 million for the third quarter
of fiscal 1999. For the third quarter, $2.8 million of this decline was
attributable to Laniers divestiture of its direct sales operations in France
and its medical transcription business, $3.4 million arose from the currency
translation effect from the strengthening of the U.S. dollar relative to
foreign currencies, primarily European, calculated on a constant rate basis,
and $2.4 million was the result of the strengthening

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of the Japanese yen relative to the
U.S. dollar and Euro currencies. Management believes the remainder of the
decline was principally attributable to ongoing price competition for unit
placements.

Total gross margin for the first nine months of fiscal 2000 decreased by
$61.9 million, or 14.3%, to $370.7 million from $432.6 million for the
comparable period in the prior fiscal year. For the nine-month period, $7.8
million of the decrease was attributable to the divestitures discussed above,
$9.1 million was due to currency translation effects and $7.7 million reflected
the impact of the strengthening of the Japanese yen versus the U.S. dollar and
Euro currencies. Management believes the remainder of the decline was
principally attributable to ongoing price competition and a related decline in
unit population.

Management believes the decreases in gross margin on product sales and
rentals for the third quarter and first nine months of fiscal 2000 were
principally attributable to ongoing price competition on both analog and
digital product lines and the strengthening of the Japanese yen against the
U.S. dollar and Euro currencies. Management believes the decrease in gross
margin on service for the third quarter was primarily related to: (i) billing
system conversion problems within the European countries; (ii) lower copy
volume on cost per copy billing programs; (iii) continued competitive pricing
pressures; and (iv) lower overall unit populations. Management believes the
margin increase on service for the first nine months of fiscal 2000, was
attributable to margin improvements in Laniers facilities management business
and to restructuring of the worldwide service organization completed in the
second half of fiscal year 1999 offset by the third quarter impacts outlined
above.

Selling and Administrative Expenses.Selling and administrative expenses
for the third quarter of fiscal 2000 decreased $16.9 million, or 15.7%, to
$91.0 million from $107.9 million for the third quarter of fiscal 1999. For
the first nine months of fiscal 2000, selling and administrative expenses
decreased $35.0 million, or 10.7%, to $291.6 million from $326.6 million for
the comparable period in the prior year. Management attributed the reduction to
the restructuring program instituted and completed in fiscal 1999, and lower
payments under the companys bonus and profit sharing plans.

Administrative expenses for the third quarter and for the first nine
months of fiscal 1999 included a management fee allocation of $6.0 million and
$19.0 million, respectively, for Laniers pro rata share of Harris overhead
expenses. For the first four months of fiscal 2000, this allocation was
reduced to $2.3 million, to reflect the level of expenses management expects to
incur as an independent public company in fiscal 2000.

Interest Expense and Other.Interest expense for the third quarter of
fiscal 2000 increased $8.3 million, to $14.9 million from $6.6 million for the
third quarter of fiscal 1999. Other expense for the third quarter and first
nine months of fiscal 2000 totaled $6.6 million and $10.3
million, respectively, compared to $1.6 million for both comparable periods in the prior
fiscal year. Differences were principally attributable to interest income and
currency gains on loans to Harris entities in fiscal year 1999 which were
forgiven as part of the Spin-off.

Provision for Income Taxes.Laniers effective tax rate for the third
quarter and first nine months of fiscal 2000 were 38.1% and 37.9%,
respectively, versus 37.6% and 35.7% for comparable periods in the prior fiscal
year, respectively. This years increase in the effective tax rate was
primarily attributable to foreign losses for which Lanier was unable to
recognize a tax benefit.

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Net Income.Net income for the third quarter of fiscal 2000 decreased to
$52,000 from $15,584,000 for the third quarter of fiscal 1999. For the first
nine months of fiscal 2000, net income decreased $34.6 million, or 61.6%, to
$21.6 million from $56.2 million for the comparable period in the prior year.
The decline is principally attributable to declines in revenue and gross
margin, as described above, and the additional interest and other expenses
incurred as a result of the Spin-off.

Earnings per Share.For the third quarter of fiscal 2000, basic and
diluted earnings per share amounted to 0 cents. This amount was calculated
based on 83,024,596 shares, the weighted average number of shares outstanding
during the quarter, after giving effect to Laniers December 1999 purchase of
4,826,600 shares pursuant to the Share Repurchase Program. The weighted average
number of diluted shares included a dilutive effect of 331,455 shares related
to stock option and performance share programs.

Subsequent Events

Subsequent to quarter end, Lanier announced a worldwide restructuring
program intended to improve its competitive position and lower its overall cost
structure. In connection with this program, Lanier announced its intent to
record a $25  $30 million pre-tax provision in the fourth quarter. This
restructuring charge will be used primarily for severance costs and the costs
of closing facilities and Lanier expects the elimination of 400  500 jobs worldwide,
including currently open positions.

After a strategic review of operations, Lanier has announced its intention
to sell its voice products (dictation) business. The Robinson-Humphrey Company,
LLC, an investment banking firm, has been retained to assist with the sale of
the business.

Liquidity and Capital Resources

Laniers operations are funded by cash provided from operating activities
and by financing provided under its $900 million Credit Facility and various
other credit facilities. As of March 31, 2000, the Credit Facility and various
other credit facilities had $614.9 million and $63.0 million outstanding,
respectively. On April 10, 2000, Lanier paid $44 million of the $250 million
term loan, reducing the total balance available under the Credit Facility to
$856 million. The payment was funded by Laniers $50 million trade receivable
securitization facility, of which $42.5 million was drawn on April 10, 2000.
Given current conditions and pricing indicated, Lanier plans to enter into a
$200 million domestic lease receivable securitization facility in the fourth
quarter, the proceeds of which will be used to pay down the term loan. It is
the companys intention to completely pay down the term loan before November 5,
2000. Once the term loan is repaid, Lanier will have a $650 million Credit
Facility, a $50 million trade receivable securitization facility, a $200
million lease receivable securitization facility and various other credit
facilities.

Analysis of Cash Flows

Net cash provided by operating activities for the first nine months of
fiscal 2000 increased $9.0 million to $116.6 million from $107.6 million for
the first nine months of fiscal 1999. The increase was offset by a one-time
increase in accounts payable in fiscal 1999 resulting from a change in the mix
of vendors as well as a change in negotiated payment terms with certain
vendors, which contributed $12.0 million in the prior-year period. Further,
inventory levels for the first nine months of fiscal 1999 declined by $41.0
million.

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For the first nine months of fiscal 2000, the following net changes in
assets and liabilities impacted operating cash flow: (i) a decrease in trade
receivables of $37.1 million primarily due to lower sales; (ii) $41.3 million
used to settle intercompany accounts forgiven by Lanier in connection with the
Spin-off; (iii) a decrease in payables of $35.2 million attributable to
settling in the current fiscal year unusually high prior-year-end balances from
trade vendors as a result of backlog of digital products during the fourth
quarter of fiscal 1999; and (iv) a net use of cash of $19.2 million from net
changes in income taxes primarily as a result of the Spin-off.

Capital expenditures for the first nine months of fiscal 2000 were $14.9
million for property, plant and equipment and $59.6 million for rental
equipment, compared to $20.1 million and $53.5 million, respectively, for the
comparable periods in the prior fiscal year. During the prior years first
quarter, $168.3 million was used for the Agfa Acquisition.

Cash used in financing activities in the first nine months of fiscal 2000
was $47.0 million, compared to cash provided by financing activities of $115.4
million for the first nine months of 1999. The prior-year period reflects net
borrowings used for the Agfa Acquisition. Proceeds from borrowings under
credit facilities for the first nine months of fiscal 2000 totaled $737.5
million. This amount includes net borrowings of $590.0 million under the
Credit Facility to fund $573.6 million of cash payments to Harris in connection
with the Spin-off and $17.4 million for share repurchases pursuant to the Share
Repurchase Program. The remainder of the borrowings were used to fund working
capital requirements. Repayments under credit facilities in the first nine
months of fiscal 2000 were $193.5 million, primarily due to
refinancing short term working capital requirements.

Lanier has no material commitments other than supply agreements with
vendors. Lanier will continue to make additional investments in facilities,
equipment and computer equipment to support revenue requirements. Cash flow
from operations, together with anticipated borrowing arrangements, is expected
adequately to finance operating cash requirements and capital expenditures
during this fiscal year. Lanier expects to fund future acquisitions, if any,
and long-term growth primarily with cash flows from operations, borrowings
under the Credit Facility and possible future issuance of equity or debt
securities.

Credit Facility

Lanier has a $900 million Credit Facility with ABN AMRO Bank N.V., as
administrative agent, SunTrust Bank, Atlanta, as syndication agent, and
Wachovia Bank N.A., as document agent.

The Credit Facility consists of three tranches: a $200 million 364-day
revolving debt facility, a $250 million 2-year term loan and a five-year
revolving debt facility. Covenants, restrictions and rates are essentially the
same for all three tranches of the Credit Facility.

At March 31, 2000, Lanier had total borrowings under the Credit Facility
of $614.9 million. The maximum amount of $250 million was advanced under the
term loan, $364.9 million was advanced under the five-year revolver and there
were no borrowings under the 364-day revolver.

The Credit Facility contains financial covenants. In particular, the
Credit Facility contains: (i) a covenant regarding maintenance of a leverage
ratio, which is defined as total debt divided by EBITDA (earnings
before

13



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interest, taxes, depreciation and
amortization); (ii) an interest coverage covenant, which is defined as EBITDAR
(earnings before interest, taxes, depreciation, amortization and rental
expense) divided by interest and rental expense; and (iii) a minimum net worth
covenant. The Credit Facility restricts Laniers ability to pay dividends or
make other distributions and to redeem, purchase or otherwise acquire shares of
its capital stock, and prohibits any such dividend, distribution, redemption,
purchase or other acquisition during the existence of a default or event of
default thereunder. The Credit Facility contains covenants limiting total
acquisitions in any fiscal year to $150 million. This limit increases to $250
million upon repayment of the two-year term loan portion of the Credit Facility
and $350 million upon achieving a senior unsecured debt rating of BBB or
better by Standard & Poors Ratings Group or Baa or better by Moodys
Investors Service, Inc.

Additionally, the Credit Facility contains covenants which, among other
things, require production of financial statements, notice of material
litigation and material governmental and environmental proceedings, compliance
with laws and contractual obligations, payment of taxes, maintenance of
insurance and Year 2000 compliance and limit the incurrence of additional
indebtedness, mergers, consolidations and sales of assets, dividends,
prepayment of other debt, investments and acquisitions, capital expenditures,
sales and leaseback transactions and transactions with affiliates. Further,
the Credit Facility restricts the cumulative dollar amount of share repurchases
and dividends to 25% of the prior fiscal years net income. The Credit
Facility also contains customary events of default, including payment defaults,
inaccuracies of representations and warranties, violation of covenants and
cross defaults to other indebtedness.

Indebtedness under the Credit Facility is guaranteed by Laniers domestic
and foreign subsidiaries, and will be secured by a pledge of the capital stock
of certain subsidiaries. Lanier may also incur additional indebtedness under
the Credit Facility from time to time for general corporate purposes, including
working capital, capital expenditures and future acquisitions.

Year 2000

Lanier previously recognized the material nature of the business issues
surrounding computer processing of dates into and beyond the Year 2000 and
began taking corrective action. Laniers efforts were focused on three basic
aspects of its business operations: internal information technology (IT)
systems, including sales order processing, contract management, financial
systems and service management; internal non-IT systems, including office
equipment and test equipment products; and material third-party relationships.
Management believes Lanier has completed all of the activities within its
control to ensure that Laniers systems are Year 2000 compliant, and Lanier has
experienced no interruptions to normal operations due to the start of the Year
2000.

Year 2000 readiness costs were $11.5 million, approximately $500,000 of
which were incurred in the current fiscal year. These costs were funded by
cash from operations and generally were not incremental to existing IT budgets.
Internal resources were re-deployed and timetables for implementation of
replacement systems were accelerated. Lanier does not currently expect to
apply any further funds to address Year 2000 issues.

As of the date of this filing, Lanier has not experienced any material
disruptions of its internal computer systems or software applications, and has
not experienced any problems with the computer systems or software
applications of its third party vendors,

14



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suppliers or service providers. Management will continue to
monitor these third parties to determine the impact, if any, on Laniers
business and the actions to take, if any, in the event of non-compliance by any
of these third parties. Based upon an assessment of compliance by third
parties, there appears to be no material business risk posed by any such
non-compliance. Moreover, Lanier generally believes that the vendors that
supply products to Lanier for resale are responsible for the products Year
2000 functionality.

Euro Conversion

On January 1, 1999, certain member nations of the EMU adopted a common
currency, the Euro. For a three-year transition period, both the Euro and
individual participants currencies will remain in circulation. After January
1, 2002, the Euro will be the sole legal tender for EMU countries. The adoption
of the Euro affects many financial systems and business applications as the
commerce of these nations will be transacted in both the Euro and the existing
national currency. Approximately 19% of Laniers revenue for the first nine
months of fiscal 2000 were derived from EMU countries.For fiscal 1999,
Lanier derived approximately 21% of its revenue from EMU countries.

Lanier is currently addressing Euro-related issues and its impact on
information systems, currency exchange rate risk, taxation, contracts,
competition, and pricing. To date, Lanier has not experienced an adverse impact
or material expense related to the adoption of the Euro. All costs associated
with the adoption of the Euro have been expensed as incurred. Lanier has
completed the Euro-related information systems conversion for all information
systems except for the European financial systems. Lanier has implemented the
Euro-compliant version of the European financial systems; however, several
manual billing processes remain which are on track to be fully automated by the
second quarter of fiscal year 2001.

Seasonality

Laniers business is somewhat seasonal as a result of its sales incentive
programs with the strongest revenue and profit occurring in the second and
fourth quarters. The results of operations for any interim quarter are not
necessarily indicative of results for a full year.




Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

Impact of Foreign Exchange.Laniers international sales are generally
denominated in the currency of the foreign entities, which exposes it to
fluctuations in foreign currency exchange rates and to other material risks
associated with international operations. Historically, earnings have not been
adversely impacted by currency fluctuations. Currency risk associated with
foreign investments has been mitigated by liabilities denominated in local
functional currencies. In addition, Lanier utilizes exchange rate agreements,
which provide limited protection against currency exchange risks. Factors that
could impact the effectiveness of the hedging program include volatility of
currency markets and the cost and availability of hedging instruments. A
ten-percent adverse change in currency exchange rates for foreign currency
derivatives held at March 31, 2000 would have an impact of approximately $3.8
million on the fair value of such instruments. This quantification of exposure
to the market risk associated with foreign exchange financial
instruments does not take into account the offsetting impact

15



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of changes in the
fair value of foreign denominated assets, liabilities, and firm commitments.

Historically, gains and losses resulting from currency rate fluctuations
have not had a material effect on results of operations. However, Laniers risk
exposure may increase as international sales increase in volume and geographic
distribution. The impact of translating the assets and liabilities of
international operations into U.S. dollars is included as a component of
stockholder equity.

Interest Rate Risk.Lanier uses interest rate swap agreements to hedge
its exposure to the change in interest rates on floating rate debt. A ten
basis point adverse change in interest rates would have an impact of
approximately $150,000 on the fair value of interest rate swaps to which Lanier
was a party as of March 31, 2000.




PART II




Item 5.Other Information.

LANIER WORLDWIDE, INC.




UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

Introduction to Unaudited Pro Forma Consolidated Statements of Income

Lanier was acquired by Harris in 1983. The Spin-off was completed on
November 5, 1999. Accordingly, Lanier has an operating history as an
independent company for approximately five months. The historical unaudited
consolidated statements of income contained in this 10-Q reflect periods during
which we did not operate as an independent company, and certain assumptions
were made in preparing the statements of income. Therefore, the historical
unaudited consolidated statements of income may not necessarily reflect the
consolidated results of operations that would have existed had Lanier been an
independent company.

The following unaudited pro forma consolidated statements of income make
adjustments to the historical unaudited consolidated statements of income for
the nine months ended March 31, 2000, as if the Spin-off had occurred on July
2, 1999.

The unaudited pro forma consolidated statements of income should be read
in conjunction with the historical unaudited Consolidated Financial Statements
of Lanier and the Notes thereto contained elsewhere in this Form 10-Q and the
audited Consolidated Financial Statements contained in Laniers Registration
Statement. The pro forma consolidated statements of income are presented for
informational purposes only and may not necessarily reflect the results of
operations or what the results of operations would have been had Lanier
operated as an independent company for the periods indicated.

16



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LANIER WORLDWIDE, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

For the Nine Months Ended March 31, 2000

|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |         | 
|-------------------------- | ----------------------------------- | - | --------------------------------------- | ------- | ----------- | - | --------- | ------ | ---- | - | ------- | ------- | 
|                           |                                     |   | Historical                              |         | Adjustments |   | Pro Forma
|                           |                                     |   |                                         |         |             |   |          
|                           |                                     |   | (In thousands except per share amounts)
|REVENUE                   
|                          
|                          
|                          
|                          
|                           | Product sales and rentals           |   | $                                       | 540,333 |             |   |           |        |      |   | $       | 540,333 | 
|                          
|                          
|                          
|                          
|                           | Service income                      |   |                                         | 418,274 |             |   |           |        |      |   |         | 418,274 | 
|                          
|                          
|                          
|                          
|                           | Finance income                      |   |                                         | 31,925  |             |   |           |        |      |   |         | 31,925  | 
|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |        
|                           |                                     | $ | 990,532                                 |         |             |   |           |        |      | $ | 990,532 |        
|                          
|                          
|                          
|                          
|COST AND EXPENSES         
|                          
|                          
|                          
|                          
|                           | Cost of product sales and rentals   |   |                                         | 387,475 |             |   |           |        |      |   |         | 387,475 | 
|                          
|                          
|                          
|                          
|                           | Cost of service                     |   |                                         | 232,381 |             |   |           |        |      |   |         | 232,381 | 
|                          
|                          
|                          
|                          
|                           | Selling and administrative expenses |   |                                         | 291,605 |             |   |           |        |      |   |         | 291,605 | 
|                          
|                          
|                          
|                          
|                           | Interest                            |   |                                         | 33,995  |             |   |           | 12,408 | (A)  |   |         | 46,403  | 
|                          
|                          
|                          
|                          
|                           | Other   Net                        |   |                                         | 10,312  |             |   |           |        |      |   |         | 10,312  | 
|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |        
|                           |                                     | $ | 955,768                                 |         |             | $ | 12,408    |        |      | $ | 968,176 |        
|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |        
|Income before income tax   |                                     |   | 34,764                                  |         |             |   | (12,408   | )      |      |   | 22,356  |        
|                          
|                          
|                          
|                          
|                           | Income taxes                        |   |                                         | 13,211  |             |   |           | (4,715 | )(B) |   |         | 8,496   | 
|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |        
|NET INCOME                 |                                     | $ | 21,553                                  |         |             | $ | (7,693    | )      |      | $ | 13,860  |        
|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |        
|Basic earnings per share   |                                     | $ | 0.25                                    |         |             | $ | (0.09     | )      |      | $ | 0.16    | (C)    
|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |        
|Diluted earnings per share |                                     | $ | 0.25                                    |         |             | $ | (0.09     | )      |      | $ | 0.16    | (D)    
|                           |                                     |   |                                         |         |             |   |           |        |      |   |         |        

Notes to Unaudited Pro Forma Consolidated Statement of Income



| |  |                                                                                                                                   
| |  | ----------------------------------------------------------------------------------------------------------------------------------
| |  | The following adjustments were made to Laniers historical consolidated
income statement for the nine months ended March 31, 2000:



|(A) |  | Adjustment to interest expense to reflect additional long-term debt
of Lanier using an annual estimated interest rate of 8.3% assuming
$700 million of indebtedness net of cash for the period July 3, 1999
to November 5, 1999, the Spin-off date.                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(B) |  | Adjustment for income tax provision related to pretax adjustments.                                                                                                                                                                                                                                       
|   
|(C) |  | Basic earnings per share is computed based on 85,877,353 shares,
which represents the weighted average number of Lanier shares
outstanding for the nine months ended March 31, 2000 giving effect to
Laniers repurchase of 4.8 million shares in December 1999 pursuant
to its share repurchase program.
|   
|(D) |  | Diluted earnings per share is computed based on 86,201,814 shares,
which represents the weighted average number of diluted shares for
the nine months ended March 31, 2000.                                                                                                                              

17



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ITEM 6.Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------

|               |  |                                                                                                                                                                                                                        
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibits                                                                                                                                                                                                
|               |  |                                                                                                                                                                                                                        
|10.1           |  | Credit and Security Agreement, dated as of March 31, 2000, among
Lanier Trade Funding LLC, Lanier Worldwide, Inc., Lanier Collections
Limited Partnership, Blue Ridge Asset Funding Corporation and
Wachovia Bank, N.A.
|              
|              
|              
|              
|10.2           |  | Performance Guaranty, dated as of March 31, 2000, by Lanier
Worldwide, Inc., as Guarantor.                                                                                                                             
|              
|              
|              
|              
|27.1           |  | Financial Data Schedules (For SEC use only).                                                                                                                                                                           

| | 
| | 

(b)    Reports on
Form 8-K.
         None.




SIGNATURES

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

|                    |  |                                                                                                                                               
|------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|                    |  | LANIER WORLDWIDE, INC.                                                                                                                        
|                   
|Dated: May 11, 2000 |  | By:/s/ James A. MacLennan                                                                                                                     
|                    | 
|                    |  | James A. MacLennan
Executive Vice President and Chief Financial Officer
(Authorized Officer and Principal Financial Officer
of the Registrant)

18