Dictaphone Announces Strong Third Quarter Results and Plans to Refinance Company.

STRATFORD, Conn.--(BUSINESS WIRE)--Nov. 14, 1997--

Dictaphone Corporation, a leader in integrated voice and data management systems and software, today announced greatly improved results for the quarter ended September 30, 1997.

Sales for the third quarter were $87.7 million versus $83.4 million for the corresponding quarter in 1996. EBITDA increased 11% to $14.4 million compared to $13 million for the same period last year. The improved performance was driven by the Integrated Healthcare Division which recently introduced its new "Enterprise Express"(R) product, a Windows NT voice and data management system; by greatly improved performance in its voice logging systems, and company-wide productivity gains resulting from significant restructuring within the company over the past two years.

Based on the strength of this improving performance, Dictaphone also announced that it is nearing the completion of a refinancing aimed at improving the company's operating flexibility and near-term liquidity.

The anticipated refinancing consist of two elements: a $35 million equity infusion from its owners, the New York private investment firm Stonington Partners, and the issue of a new $62.8 million Tranche C loan which will be used to prepay all of the company's original Tranche A loan and prepay the next four annual principal payments on the company's Tranche B loan.

"This improved financial flexibility will give us the ability to aggressively pursue our new product strategy and to complete the company's transformation into a leading-edge voice and data management company," said John Duerden Chairman and Chief Executive Officer.

Since acquiring control of the Company in August 1995, Dictaphone has invested heavily behind its strategy of integrated voice and data management. R&D spend has significantly increased, new technology has been acquired, and important alliances have been forged with companies such as: Applied Voice Technology of Seattle in unified voice messaging, Phillips NV of Holland in speech recognition, and with systems integrators and VARS specializing in voice systems. New products announced during the past 18 months include:

-- Enterprise Express(R) -- Microsoft Windows NT-based

dictation and transcription system -- Symphony CTI -- advanced call retrieval system for Call Centers

and the financial services market -- "Insight" -- Call Center quality monitoring system -- "Synergy" -- Unified voice messaging system -- FTR (For the Record) -- court recording system -- "Boomerang" -- Network voice exchange system

"We are no longer just a dictation company, but an integrated systems company marketing a range of leadership voice and data systems and solutions through the largest direct sales and service force in our industry," added Duerden.

Commenting on the proposed restructuring, which is still subject to final approval of the company's senior banks, a spokesman for Stonington Partners said, "We are pleased with the progress being made at Dictaphone and we consider that the company's repositioning is now almost complete. Voice and data management is an exciting and dynamic market, and Dictaphone is now well placed to take advantage of this opportunity."

Dictaphone Corporation of Stratford, Conn., is a leader in the development, manufacture, marketing, service and support of Integrated Voice and Data Management systems and software, which include dictation, voice processing, voice response, unified messaging, records management and communication recording. Dictaphone has a marketing, sales, service and support organization of more than 1,600 representatives in more than 190 cities in the U.S., the United Kingdom, Canada, Switzerland and Germany. The Company also markets worldwide through a growing number of distributors in Europe, Latin America, Asia Pacific, South Central Asia, the Middle East and Africa. Company revenues in 1996 were approximately $333 million.

The Company may, from time to time, provide estimates as to future performance. Such estimates would be "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because such statements include risks and uncertainties, actual results may differ from the estimates provided. The Company undertakes no duty to update such forward-looking statements. Factors that could cause actual results to differ from these forward-looking statements include, but are not limited to, those included in the Company's 10-K form.

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