UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE 
       ACT OF 1934

       For the fiscal year ended December 31, 1997

                                        OR

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

       For the transition period from _______________ to _________________

                         Commission file number: 0-9023

                               COMDIAL CORPORATION
             (Exact name of Registrant as specified in its charter)

             Delaware                                      94-2443673
     (State or Other Jurisdiction of                   (I.R.S. Employer
      Incorporation or Organization)                Identification Number)

      P. O. Box 7266
      1180 Seminole Trail; Charlottesville, Virginia          22906-7266
   (Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code: (804) 978-2200

Securities registered pursuant to Section 12(g) of the Act:

                                 Title of Class
                       COMMON STOCK (Par Value $0.01 each)

    Indicate  by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

    The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 10, 1998, was approximately $94,331,000 (See Item 5). The
number  of  shares  of  Common  Stock  outstanding  as of March  10,  1998,  was
8,715,853.

                      DOCUMENTS INCORPORATED BY REFERENCE:

    The Company's  1997 Annual Report to the  Stockholders  is  incorporated  by
reference under Part II and portions of the Company's Definitive Proxy Statement
for its 1998  Annual  Meeting  of  Stockholders,  which  will be filed  with the
Securities and Exchange  Commission within 120 days after December 31, 1997, are
incorporated by reference under Part III of this Form 10K.
 


<PAGE>

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TABLE OF CONTENTS

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Part I

     Item 1.  Business                                                       4
           (a)    General Development of Business                            4
                  Safe Harbor Statement                                      5
                  Industry Background                                        5
                  Strategy                                                   7
           (b)    Financial Information About Industry Segment              10
                  Product Sales Information                                 10
           (c)    Narrative Description of Business                         10
                  Products                                                  10
                     Business Systems                                       11
                     Proprietary and Specialty Terminals                    16
                     Custom Manufacturing                                   16
                  Sales and Marketing                                       17
                  Engineering, Research and Development                     18
                  Manufacturing and Quality Control                         19
                  Competition                                               20
                  Intellectual Property                                     21
                  Employees                                                 22

     Item 2.  Properties                                                    22

     Item 3.  Legal Proceedings                                             23

     Item 4.  Submission of Matters to a Vote of
              Security Holders                                              23

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Part II

     Item 5.  Market for Registrant's Common Equity and Related
              Stockholder Matters                                           23

     Item 6.  Selected Financial Data                                       23

     Item 7.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                           23

     Item 8.  Financial Statements and Supplementary Data                   23

     Item 9.  Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure                           24


<PAGE>


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

TABLE OF CONTENTS (Cont'd.)

Part III

     Item 10. Directors and Executive Officers
              of the Registrant                                             24

     Item 11. Executive Compensation                                        24

     Item 12. Security Ownership of Certain Beneficial
              Owners and Management                                         24

     Item 13. Certain Relationships and Related Transactions                24
----------------------------------------------------------------

Part IV

     Item 14. Exhibits, Financial Statement Schedules,
              and Reports on Form 8-K                                       25


<PAGE>


PART I

  ITEM 1.  Business

   (a)  GENERAL DEVELOPMENT OF BUSINESS

       Comdial  Corporation (the "Company") is a Delaware  corporation  based in
Charlottesville,  Virginia.  The Company is engaged in the design,  development,
manufacture,  distribution, and sale of advanced telecommunications products and
system solutions.  The Company was originally incorporated in Oregon in 1977. In
1982, the Company was reincorporated in Delaware. It then acquired substantially
all of the assets and assumed  substantially  all of the  liabilities of General
Dynamics  Telephone Systems Center,  Inc.,  formerly known as  Stromberg-Carlson
Telephone  Systems,  Inc.  ("Stromberg-Carlson"),  a wholly-owned  subsidiary of
General Dynamics Corporation.

         The Company's Common Stock is traded  over-the-counter and is quoted on
the National Association of Security Dealers Automated Quotation National Market
System ("Nasdaq National Market") under the symbol "CMDL."


       On March 20,  1996,  the Company  completed  the  acquisitions  of Aurora
Systems, Inc. ("Aurora") and Key Voice Technologies, Inc. ("KVT"), two companies
involved in  computer-telephony  integration  ("CTI")  applications which became
wholly-owned  subsidiaries  of the Company.  KVT,  based in  Sarasota,  Florida,
develops,  assembles,  markets,  and sells voice processing  systems and related
products for business applications.  As of December 31, 1997, Aurora sold all of
its rights, title and interest in the FastCall product,  Aurora's primary asset,
to  Spanlink  Communications,  Inc.  (see Note 2 to the  Consolidated  Financial
Statements).

       The  Company's  products  accommodate   businesses  that  require  up  to
approximately 500 telephones. The Company believes that it is a leading supplier
to this  market,  with an  installed  base of  approximately  250,000  telephone
systems and 3,000,000  telephones.  The Company's  products  include digital and
analog telephone switches and telephones,  voice processing systems, software to
achieve  computer-telephone  integration  ("CTI") and integrated special purpose
systems comprised of the Company's switching platforms and software developed by
the Company and third party  suppliers.  The Company has grown  principally as a
result of sales of digital  telephone  systems  introduced  by the Company since
1992 and CTI products  introduced  since 1993.  CTI  encompasses a wide range of
products,  primarily  software,  that  enable  end  users to  perform  telephony
functions from desktop personal  computers ("PCs") or PCs served by a local area
network ("LAN").

       In early 1997,  the  Company  established  a team of people,  to evaluate
whether,  and to what extent, the Year 2000 would impact the Company's business.
The Year 2000 Team  identified  which of the Company's  products,  devices,  and
computerized   systems  that  contain  embedded   microprocessors  that  require
remediation  or replacement  because of potential  Year 2000 problems.  The Year
2000 Team concluded  that nearly all of the Company's  products are already Year
2000  compliant and those which are not will be compliant by 1999 or before.  On
an ongoing  basis,  the Company has been replacing  existing  systems to improve
efficiency and to address the Year 2000 problem. Such replacements are projected
to be  complete  in 1998.  The  Company  does not  expect  to make any  material
expenditures solely to address Year 2000 issues.

       Management believes that the Company is properly addressing the Year 2000
problem in order to  mitigate  any adverse  operational  or  financial  impacts.
Furthermore, the Company plans to implement a requirement beginning in 1998 that
its suppliers certify that all products and services provided to the Company are
Year 2000 compliant.

"Safe Harbor" Statement
Under the Private Securities Litigation Reform Act of 1995

       Some of the  statements  included or  incorporated  by reference into the
Company's   Securities   and  Exchange   Commission   filings  and   shareholder
communications  are  forward-looking  statements  that are  subject to risks and
uncertainties,  including,  but  not  limited  to,  the  impact  of  competitive
products,  product demand and market acceptance risks, reliance on key strategic
alliances,  fluctuations in operating  results,  delays in development of highly
complex  products,  and other risks  detailed from time to time in the Company's
filings.  These  risks  could cause the  Company's  actual  results for 1998 and
beyond  to  differ  materially  from  those  expressed  in  any  forward-looking
statement made by, or on behalf of, the Company.

Industry Background

       Advances in technology and industry  deregulation  have  accelerated  the
introduction of  technologically  advanced  telephone  systems and applications.
Beginning  in  the  1970s,   electronic   telephone   systems  began  displacing
traditional  electromechanical  key sets that had  served  as the  basic  office
telephone  system since the 1930s.  New telephone  applications  permit business
users to improve internal and external communications by using conference calls,
speakerphones,  voice mail, automated attendants, voice processing applications,
"screen  pops" of caller  profiles,  voice  over the  Internet,  and many  other
enhanced capabilities.

       The Company  primarily  designs and  manufactures  telephone  systems for
small to mid-size  organizations.  A basic business telephone system consists of
(a) a  central  telephone  switching  unit  (key  service  unit or  "KSU"),  (b)
telephone  instruments,  (c) associated  wiring and  connections  hardware,  (d)
system  software,  and (e) adjunct devices such as facsimile  machines and voice
processing systems. Telephone systems are often described in terms of the number
of  telephone  lines and  terminal  devices  that can be supported by a KSU. The
aggregate number of telephone terminals and outside lines that can be configured
as to a specific KSU is the number of "ports."

       Electronic   telephone  systems  were  originally   "analog."  Voice  was
transmitted in a continuous  wave form that is "analogous" to the original voice
signal. Analog transmission is adequate for most voice requirements,  but is not
as  efficient  for  data  transmission.   Analog   transmission  is  subject  to
attenuation,  or  the  continual  degradation  of  transmission  quality  as the
distance between sender and receiver increases. In addition,  ambient noises can
be picked up and transmitted along with the original voice transmission.

       By  the  late  1980s,   digital  telephone  systems  were  available  for
commercial use. The digitization of voice, data, and video is a general trend in
the telecommunications  industry. Such forms of communication are converted into
binary  pulses  (0 and 1) that  may be  stored  or  transmitted.  Within a fully
digital system, the signals are reproduced precisely with minimal degradation of
quality.  Digital  systems  generally  offer  customers more  features,  provide
greater  voice  clarity,  offer  potential  cost  savings  through  the  use  of
high-capacity T-1 transmission lines from  telecommunication  service providers,
enable improved video and data transmission,  and often offer superior platforms
for future CTI  applications.  Businesses  with  digital  systems are  therefore
better  positioned to take  advantage of new CTI  application  features that are
being developed by software companies.

       CTI represents an important  growth  opportunity for the Company.  CTI is
not a product or a  technology,  but rather a set of standards  and hardware and
software elements,  which merge the power of modern telephone systems,  personal
computers,  and computer networks.  This allows  manufacturers and developers to
provide integrated  solutions to broad communications  problems,  such as proper
queuing  in  call   communications   centers  and   specific   vertical   market
applications,  such as real estate  firms,  law firms,  and  financial  business
services.  Using CTI, calls can be processed  from the computer,  users can scan
their computer  screens for incoming voice,  electronic  mail, and fax messages,
and telephone representatives can more promptly serve callers.

       Initially,  implementation of CTI was limited to specialized applications
written to the proprietary  interfaces of individual switch makers. This yielded
a small  number of expensive  products.  With the broad  acceptance  of de facto
standards from major computer and network software suppliers, it is now possible
to implement CTI on a much broader scale and at a substantially lower cost.

       One  of  the  most  significant  developments  in  recent  years  is  the
introduction  of "open" systems that permit users to customize  their  telephone
system by adding CTI application packages suitable to their communication needs.

       Changes in the  telecommunications  industry extend to the  international
market as well. Developing countries recognize that advanced  telecommunications
systems and networks are essential to attract  foreign  investment and stimulate
local  economies.  In some  countries,  people must wait several years for basic
dial tone service.  There is a large, ready demand for delivery systems that can
provide  basic  service in short time  frames and at  economical  prices.  Among
developed nations, there is a sustained trend toward privatization of government
telecommunications  monopolies  in  favor  of  competition  at all  levels.  The
Company, with extensive experience working in a competitive environment, is well
positioned to take advantage of these opportunities.

Strategy

       The  Company  seeks to expand  sales and profits  by: (1)  extending  its
digital  switching  line to serve  large  applications,  (2)  enhancing  current
products  with new  features and  capabilities,  (3)  expanding  its channels of
distribution  and  methods  of  product  delivery,  (4)  producing  higher-value
integrated  voice-data  systems  utilizing CTI tools and  technologies,  and (5)
leveraging its strong relationships with third party vendors and key customers.

    Product Offerings

       The  Company  currently  offers  digital  and analog  business  telephone
systems,  wired and  wireless  terminals,  CTI  applications,  voice  processing
systems,  and other products along with a variety of product  enhancements.  The
Company  believes  that it  offers a wider  range of  products  than most of its
competitors  and this variety allows dealers to meet differing price and feature
requirements. The Company strives to introduce new products to meet the needs of
a changing market.

    Product Development

    The  Company's  recent sales and profit growth are largely  attributable  to
customer  acceptance of its digital switching  systems.  These products are sold
under the Impact and Impression brands that serve customer  applications from 24
to 560 ports. In 1997, the Company  introduced  important  enhancements  such as
feature-rich  software,  compatibility  with ISDN  (Integrated  Services Digital
Network) and T-1 carrier  protocols,  and new wired and wireless  terminals  for
certain of its Impact switches.  Also in 1997, the Company introduced the Impact
FX Series  Computer-Telephony  Applications  Server.  This  product  features an
"open" architecture  compliant with popular industry standards,  an embedded PC,
and other design elements that make it an ideal platform for building  CTI-based
vertical and horizontal market applications.  The Company intends to continue to
add value to its core digital switching products.

       The  Company  believes  that in order to  maximize  profitability  in the
emerging  markets for CTI it must  continue  to develop and market  higher-value
integrated systems.  The Company's Impact and Impact FX Series digital switching
platforms  will  form the  bases  for  these  products,  augmented  by  software
developed by the Company's  subsidiary,  Comdial Enterprises Systems,  Inc., and
applications software from third parties.

       The Company  also  intends to continue to leverage  the  engineering  and
marketing skills of its KVT subsidiary to produce  powerful,  easy-to-use  voice
processing products that are tightly integrated with its switching products.

    Product Distribution

       The  Company  focuses its  distribution  of  products  primarily  through
networks of independent dealers that resell the Company's products to end users.
These networks enable the Company to achieve broad geographic coverage in a cost
effective  manner.  The Company's primary means of distribution is through a key
group of wholesale supply houses,  which stock the Company's products and resell
to independent  dealers.  The Company's  strategy of selling  through  wholesale
supply  houses  enables it to minimize  receivables  exposure  and reduce  sales
administration  and inventory costs. Most importantly,  the use of supply houses
allows the Company to extend product distribution to virtually any market in the
United  States  and  Canada.   Wholesale   supply  houses   benefit  from  their
relationship  with the Company by earning a margin on the sale of the  Company's
products  and on the sale of related  products  such as cable,  connectors,  and
installation  tools.  Dealers  have the  benefits of  competitive  sourcing  and
reduced inventory carrying costs.

       In addition to supply  house  distribution,  the Company also markets its
products directly to national accounts, third party system developers,  original
equipment  manufacturing  ("OEM") customers,  and the federal government via its
Government Services Administration ("GSA") schedule contract.  Products produced
by the Company's KVT  subsidiary  are sold both through the supply house channel
and direct to dealers.

    Strategic Alliances

       The Company has developed  strategic  alliances  with other  companies in
order to build on the  strengths of these  companies and bring the best possible
products to the market at a lower  cost.  Examples  include the Tracker  on-site
integrated  paging  system  (Motorola,  Inc.),  the Scout  wireless  key  system
telephone  (Uniden  America  Corporation),  and the VVP and Small  Office  voice
processing  systems  (Rhetorex  and  Dialogic).  In October  1997,  the  Company
announced a strategic  alliance with Harris  Corporation  ("Harris") whereby the
Company will produce a family of telephone  instruments  for use with  switching
systems manufactured by Harris.




<PAGE>


   (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENT

       During  the  fiscal  years  ended  December  31,  1997,  1996  and  1995,
substantially  all of the Company's  sales,  net income,  and  identifiable  net
assets  were  attributable  to  the  telecommunications   industry.   Additional
information is  incorporated by reference to the Company's 1997 Annual Report to
Stockholders.

Product Sales Information

       The following table presents certain relevant information  concerning the
Company's principle product lines for the periods indicated:
--------------------------------------------------------------------------------
                                                  Years Ended December 31,
(In Millions)                                 1997         1996         1995 
--------------------------------------------------------------------------------
Sales
  Business Systems
    Digital                                   $50.4        $42.8        $40.5
    DXP                                        25.5         17.8         13.8
    CTI                                        27.0         20.5          7.4
    Analog                                     12.1         16.2         22.4
                                              -----         ----         ----
      Sub-total                               115.0         97.3         84.1
  Proprietary and Specialty Terminals           4.1          4.7          6.0
                                              -----         ----         ----
      Sub-total                               119.1        102.0         90.1
  Custom Manufacturing                          0.7          1.3          6.1
                                              -----         ----         ----
      Gross Sales                             119.8        103.3         96.2
  Sales Discount and Allowances                (1.2)        (1.1)        (1.5)
                                              -----         ----         ----
      Net Sales                              $118.6       $102.2        $94.7
                                             ======       ======        =====
--------------------------------------------------------------------------------

   (c) NARRATIVE DESCRIPTION OF BUSINESS

Products

       The Company  offers a variety of  telephone  systems,  including  digital
systems,  Digital Expandable ("DXP") systems,  analog systems, CTI applications,
and other products and product enhancements.

       The Company's  telecommunications products meet three basic criteria, and
are registered with: (1) the Federal  Communications  Commission ("FCC"), (2) an
independent  laboratory  approved  by the  Occupational  Safety  and  Health Act
Commission ("OSHA") to produce safety standards, and (3) a nationally recognized
test laboratory that performs product  evaluations.  Selected  products are also
registered  with the Canadian  government's  Industry  Canadian and are Canadian
safety  certified.  The Company  has, or is in the process of,  registering  its
products in other countries.

  Business Systems

Digital Systems

       Impact,  introduced  in 1992,  is a brand name  which  applies to certain
telephone  instruments  and digital  telephone  systems which are installed with
Impact  telephones.  Impact products may only be sold by the Company's  Dealers.
There are two families of Impact telephones.

       Impact  Telephones,  were  introduced in 1992.  These  terminals  offer a
variety of features,  including an interactive  liquid crystal display  ("LCD"),
programmable feature keys, three color lighted status indicators,  and a subdued
off-hook voice announce for receiving  intercom calls while on a telephone call.
The phones are  offered in a variety of models,  distinguished  by the number of
programmable  buttons, the presence or absence of a display, and the presence or
absence of a speakerphone.

       The Impact SCS was  introduced in the third  quarter of 1997.  The Impact
SCS retains many of the current  features of the original Impact models but with
a different  physical design and  distinguishing  features such as a full-duplex
speakerphone  model,  simultaneous  voice and data,  large  screen  display  and
adjustable viewing angle.

       Impression  is  a  brand  name,   denoting   certain  digital   telephone
instruments  and digital  systems  when the systems are  installed  with digital
switches.   The  Impression  telephones  are  similar  to  the  original  Impact
telephones in terms of functionality and number of models offered.  However, the
physical  design  is quite  different.  Four  Impression  systems  are  offered:
Impression 24,  Impression 48,  Impression  72, and Impression  224.  Impression
telephones and systems were introduced in October 1996.

       DigiTech,  introduced  in 1991,  are digital  systems  with  switches and
telephones  designed for the business  market  supporting  up to 24 lines and 48
telephones.  DigiTech offers  automatic set relocation,  remote  programming,  a
replaceable software cartridge,  and other sophisticated  features. This product
will be discontinued  from production during the second quarter of 1998, but the
Company  will  continue to provide  support  pertaining  to warranty  claims and
replacements.

       Air Impact,  introduced in 1997, is a multi-cell wireless  communications
product for use with the Company's (and other manufacturers') switching systems.
It is designed for use within large buildings and where employees are often away
from their desk phones.  Air Impact  operates  over the 1.9  Gigahertz  personal
communications services ("PCS") band.

       Scout,  introduced in 1995,  is the  Company's 900 megahertz  single cell
wireless,  multi-line  feature phone. Scout extends the advantage of mobility to
users of Impact  systems.  Like Air Impact,  Scout is designed  for  in-building
applications.

       Tracker,  introduced  in 1994,  is an on-site  integrated  paging  system
developed in cooperation  with Motorola.  The purpose of this product is to help
ensure that calls are quickly and  efficiently  completed to individuals who are
at work, but not always near their  telephones.  Tracker,  which operates on the
Company's  digital  telephone  systems,  includes  a Tracker  base  station  and
personal  pagers  equipped  with a LCD.  The  personal  pagers sound an alert or
vibrate to notify  users of incoming  calls or  important  messages.  A user can
retrieve  calls by going to the nearest  system phone and dialing a special code
that is displayed on the LCD. A valuable feature of Tracker is its compatibility
with other products  manufactured by the Company.  In 1997, Comdial enhanced the
basic Tracker product with an  applications  software  package called  QuikTrak.
QuikTrak extends text-messaging  capability to PC users on a local area network.
Brief  messages can be  originated  by selecting  the Tracker  pager user from a
Windows screen, typing the message, and clicking on the "Track" command.

DXP - Impact Systems

       When  Impact  phones are  paired  with  digital  switching  systems,  the
combined product is identified as an Impact System or previously  referred to as
a DXP system.  There are five Impact Systems:  Impact 24, Impact 48, Impact 224,
Impact 560, and Impact FXS.  The numeric  suffix  denotes the maximum  number of
ports served by the base switch, without need for any product displacement.  For
example,  the Impact 24 begins at 12 ports. An expansion  module can be added to
reach 24 ports.  To go beyond 24 ports,  the base unit must be replaced with the
Impact  48  base  unit.  The  switching   platform  for  the  Impact  224,  when
unassociated  with terminals,  is identified as the DXP. The switching  platform
for the Impact 560, when unassociated  with terminals,  is identified as the DXP
Plus.

       Impact  FXS  Computer  Telephony   Applications  Server  ("FXS")  is  the
Company's most recent switching platform and was introduced in the third quarter
of 1997.  The FXS is expandable to 240 ports.  Two basic models are offered with
either a Windows or DOS operating system for the on-board personal computer. The
FXS differs  from the  Company's  other  switching  platforms in that it is more
"open" and more software-intensive.  Voice processing, for example, is available
in the core software whereas it is a hardware option with other Company systems.
The FXS is designed to popular industry standards,  which makes the FXS amenable
to customization by the Company and by third party integrators.

Computer-Telephony Integration Products

       Enterprise,  introduced  in  1993,  is the  Company's  open  applications
interface ("OAI") software  developer's tool kit.  Enterprise allows independent
software  developers to access the Impact, DXP, DXP Plus, or FXS system software
using more than 190  commands.  These tools  allow the Company to create  unique
applications  for  specific  vertical  markets,  such as  telemarketing  groups,
emergency services, call centers, taxi services, and multi-media centers. One of
the initial OAI  applications  developed  using  Enterprise  is an Enhanced  911
("E-911")  emergency  telephone  system.   Enterprise  is  a  platform  for  the
development of applications based upon the convergence of computer and telephony
technologies.

       Wideopen.office,  introduced in 1996, is a software product that provides
telephony  linkage between desktop computers and Impact 224, Impact 560, and FXS
digital switches.  Wideopen.office  supports multiple  applications  programming
interfaces and supports local area network software from Novell,  Microsoft, and
others,  as well as  stand  alone  PCs  running  Windows,  Windows  95,  or OS/2
operating  systems.  Because of this  capability  to provide CTI in a variety of
environments,  the  Company  views  wideopen.office  as  a  universal  telephony
controller.   Wideopen.office   can  be  shipped   separately   or  paired  with
wideopen.call or wideopen.group  applications  software that provides users with
popular  services such as PC-based  call  processing,  integration  with contact
management programs, and "screen pops" of caller information,  provided the user
has some type of caller identification service.

       PCIU,  introduced  in  the  second  quarter  of  1997,  is an  affordable
hardware/software  solution that extends CTI across all of the Company's digital
switches, via the broadly accepted Telephony Applications  Programmers Interface
("TAPI")  standard.  The  hardware  component  is  a  black  box  with  multiple
connectors  for a digital port off the switch,  the  Company's  digital  display
telephone, a PC serial port, and electric power.

       Concierge, introduced in 1996, is a digital telephone system designed for
hospitality  applications.  The system  consists  of an Impact 224 or Impact 560
digital  switch,   multi-line  administration   telephones,   single-line  guest
telephones that are not sold by the Company,  and special hospitality  software.
The system is linked to a personal  computer via the  Company's  Enterprise  CTI
software, and allows hotel personnel to administer guest  check-in/check-out and
other  hotel  activities  from  the  PC  or  specially   programmed  Impact  LCD
telephones. Concierge serves hotel properties of up to approximately 400 rooms.

       QuickQ ACD, introduced in 1994, is an automatic call distributor ("ACD"),
designed for call center use. The system  consists of an Impact 224, Impact 560,
or FXS digital  switch,  voice  announcing  equipment,  special  automatic  call
distribution  software,  and a PC. The QuickQ answers and  distributes  incoming
calls  rapidly  and   efficiently,   helping  to  assure   maximum  call  center
productivity and superior customer response levels.

       E-911  Systems,  introduced in 1994, are specially  engineered  telephone
systems for handling  emergency  ("911")  telephone calls. The Company's systems
deliver   valuable   information   to   emergency   dispatchers   using   caller
identification  technology in conjunction  with databases to access  information
such as the street address and profile of the emergency caller.  Dispatchers are
better  positioned  to send help  swiftly to the  correct  address  and  provide
information  needed  for  emergency  personnel  to  respond  appropriately  to a
situation. All calls are recorded for future reference, and operators can handle
multiple calls without losing valuable  information.  The Company's E-911 System
makes extensive use of CTI. The Company contracts with municipal authorities for
sale of the E-911 System to the municipality.

       ExecuMail,  introduced in 1990, is an integrated voice processing  system
for use with selected telephone systems of the Company.  ExecuMail is offered in
a range of port and voice storage  capacities,  and provides both voice mail and
automated  attendant  service.  ExecuMail products are the result of a strategic
alliance with Active Voice  Corporation.  This product will be discontinued from
production  during the second  quarter of 1998, but the Company will continue to
provide support pertaining to warranty claims and replacements.

       VVP, introduced in 1996, is the trade name of a PC-based voice processing
system  produced  by KVT and sold by the  Company.  The same  product is sold as
Corporate  Office by KVT to its own dealer  network.  Both products  provide all
standard  voice  processing  features  such as auto  attendant,  voice store and
forward,  multiple greetings, and individual voice mail boxes. Advanced features
such as fax tone detection,  audio text (interactive response to user touch-tone
commands), and visual call management (the ability to view voice messages from a
PC) are  also  available.  VVP can be  integrated  with  the  Company's  digital
telephone  systems  so  that  display  messages  on LCD  terminals  prompt  user
operations.  KVT offers similar integration  packages for telephone systems made
by  other  companies.  VVP and  Corporate  Office  are  offered  in 4 to 16 port
configurations.
Voice storage capacity is virtually unlimited - an advantage of PC-based design.

       Small  Office,  introduced  in 1996,  is a  smaller  and more  economical
version of VVP/Corporate  Office, which is also produced by KVT and sold through
both the Company's and KVT's dealer networks.  Small Office offers basically the
same  features as the larger  model,  but is designed  for smaller  enterprises.
Maximum capacity is four ports (four simultaneous  calls) and 100 mailboxes.  In
1997, KVT introduced Small Office Lite, a cost-effective voice processing system
for smaller businesses.

       FastCall,  introduced in 1994, was produced by the Company's wholly-owned
subsidiary  Aurora,  and is a special  class of CTI software that is designed to
"telephony  enable" existing custom data bases and programs,  as well as popular
personal  information  managers  ("PIMs").  Aurora  sold all its  rights  to the
FastCall  product  as of  December  31,  1997  (see  Note 2 to the  Consolidated
Financial Statements).

    Analog Systems

       Unisyn,  introduced  in 1994,  is a  telephone  system  designed to offer
advanced  features to small  organizations.  Two models are  offered,  one model
supports up to three lines and eight  telephones,  and the other  supports up to
six lines and 16 telephones. Display model telephones offer interactive function
keys to simplify  feature access.  Another  capability of Unisyn is its optional
compatibility with standard analog devices, such as single line telephones,  fax
machines, and modems.

       ExecuTech 2000 Unitized  Expandable  Hybrid Systems,  introduced in 1989,
can support up to 24 lines and 56 telephones.  Expansion modules allow end users
to increase  capacity in  increments of four lines and 12 phones or by 16 phones
with no additional lines. These systems provide subdued off-hook voice announce,
built-in  battery  backup  interface,  integrated  call costing,  and many other
features.  This product will be discontinued  from production  during the second
quarter of 1998, but the Company will continue to provide support  pertaining to
warranty claims and replacements.

       ExecuTech XE Key Systems,  introduced in 1989, can support up to 10 lines
and 24  telephones.  All  systems  support  the  same  family  of  full-featured
telephones.  The switch is a unitized  self-contained unit, making the ExecuTech
XE Key System economical to manufacture,  easy to install, and beneficial to end
users who do not have to buy additional components to add features.

       ExecuTech  II Hybrid  products,  introduced  in 1986,  consist  of models
supporting up to 22 lines and 96 telephones.  This product was discontinued from
production  during the second  quarter of 1997, but the Company will continue to
provide support pertaining to warranty claims and replacements.

       InnTouch,  introduced  in  1987,  is a line  of four  analog  hospitality
systems,  the first of which supports up to 22 lines and 128  telephones.  These
systems  feature a front desk video display  terminal,  integrated call costing,
and  multi-featured  room  telephones.  This product will be  discontinued  from
production  during the second  quarter of 1998, but the Company will continue to
provide support pertaining to warranty claims and replacements.

       Solo II, introduced in 1986, is offered in three and four-line models and
provides a  sophisticated  set of  features  that are easy to  program  and cost
effective.

  Proprietary and Specialty Terminals

       HoTelephone,  originally  introduced  in 1984,  is a line of  single  and
two-line  telephones  specially designed for business travelers for use in hotel
and motel guest rooms.  The HoTelephone  offers guest room travelers memory keys
for one-button  dialing of various  services,  plus a message waiting lamp, hold
button,  and  built-in  data  jack for  connecting  portable  computers  and fax
machines. This product was discontinued from production during the third quarter
of 1997, but the Company will continue to provide support pertaining to warranty
claims and replacements.

       Voice  Express,  introduced  in  the  early  1980s,  is a  fully-featured
multi-function  display  telephone  that  includes an  integrated  speakerphone,
autodial,  and many other standard  features for use behind  different  types of
switches.  Voice Express may be optionally  equipped with a two-line  module for
use behind a PBX or the user can add special six and ten-button  modules for use
with older electromechanical key telephone equipment.

       MaxPlus  desk/wall  convertible  telephones range from a basic model with
message waiting to a fully-featured  speakerphone  model with  programmable soft
keys for often-used PBX and Centrex features. This product was discontinued from
production  in the fourth  quarter of 1997,  but the  Company  will  continue to
provide support pertaining to warranty claims and replacements.

       MaxPlus II two-line  telephones offer line status indicators,  electronic
hold and a dataport as basic features.  Additional  models have features such as
message waiting, tap, speakerphone, and programmable soft keys. This product was
discontinued from production in the fourth quarter of 1997, but the Company will
continue to provide support pertaining to warranty claims and replacements.

       ATC Terminals are a line of single and two-line  analog phones that offer
advanced  features  at  a  low  cost.  The  products  are  sourced  by  American
Telecommunications   Corporation  ("ATC"),  a  wholly-owned  subsidiary  of  the
Company.

   Custom Manufacturing

       Custom  manufacturing  consists  primarily of contract work performed for
various original equipment manufacturers.

Sales and Marketing

       The  Company  markets  its  products  through  both  direct and  indirect
channels.   Indirect   channels   include  both   two-tiered  and   three-tiered
distribution. The Company's primary channel of distribution to U.S. and Canadian
markets is through nine major wholesale supply houses,  which in turn, resell to
hundreds of independent dealers.  International sales are accomplished through a
network of international  dealers.  International  dealers buy directly from the
Company,  normally  by  letters  of  credit,  and  resell  to end users or other
dealers.

         Three of the  supply  houses  each  account  for  more  than 10% of the
Company's  net sales.  These are Graybar  Electric  Company,  Inc.  ("Graybar"),
Sprint/North  Supply, Inc. ("North Supply"),  a subsidiary of Sprint, and ALLTEL
Supply, Inc. ("ALLTEL"). In 1997, net sales to ALLTEL, Graybar, and North Supply
amounted to  approximately  $21.5 million (18%),  $33.3 million (28%), and $26.5
million (22%), respectively.

       The Company has  established  three  classes of dealers that purchase the
Company's  products  from  supply  houses  and  resell to end  users.  These are
Platinum  Preferred,  Preferred  Gold,  Preferred,  and Associate  Dealers.  The
Company  offers an attractive  incentive  package for both  Platinum  Preferred,
Preferred Gold, and Preferred  Dealers,  including  exclusive  access to certain
products,   cash  rebates  related  to  dealer  purchase   levels,   cooperative
advertising  allowances,  and a  measure  of  territorial  protection.  Platinum
Preferred,  Preferred  Gold,  and Preferred  Dealers have sales quotas,  and the
Company's sales  department  monitors their  performance  against these targets.
Associate Dealers purchase the Company's products on an as-needed basis, and are
rewarded  through product rebates.  Associate  Dealers do not have quotas but do
receive benefits such as toll-free assistance, training, and other services that
are offered by the Company.  Several  thousand  dealers  purchase the  Company's
products through supply houses.

       The  Company  supports  its  existing  dealers  and seeks to attract  new
dealers  through  national  advertising  in  popular  trade  magazines,  special
promotional programs,  sales and technical training,  and participation in major
industry trade shows.

       The  Company has two primary  sales  groups that focus on indirect  sales
through supply houses. One group concentrates on maximizing the Company's system
sales through Platinum  Preferred,  Preferred Gold, and Preferred  Dealers.  The
second sales group focuses on the Company's  Associate Dealers.  Sales personnel
are located in major metropolitan centers and have territory assignments.

       Each area sales manager is  responsible  for  recruiting  new dealers and
training  and  motivating  existing  dealers.   Dealers  are  supported  through
telephone  contact with Inside  Sales  Representatives,  direct mail,  and local
product seminars often organized by  distributors.  To stimulate  demand,  Field
Sales Representatives make joint sales calls with dealers to end users and train
dealer   sales   personnel  in  product   benefits.   Product   specialists   in
Charlottesville are available to help engineer complex  configurations and solve
technical  problems.  All direct sales personnel earn incentive  income based on
sales results.

       The Company's dealers are primarily responsible for selling the Company's
products to end users as well as  providing  support.  The  Company  maintains a
technical  support staff devoted to dealer  support.  The Company also generally
provides a limited  warranty  on elements of its  products,  permitting  factory
returns within 24 months of the production  date.  Although the Company does not
offer  maintenance  contracts  for a majority  of its systems  (E911  System the
exception), dealers often independently sell maintenance contracts to end users.

       Other indirect channels include original  equipment  manufacturing  (OEM)
relationships, international sales, and dealer direct sales. Dedicated personnel
support OEM and international sales. Sales of voice processing products produced
by KVT are through two channels: supply houses to dealers and direct to dealers.

       In recent years,  the Company  initiated a National  Accounts  Program to
market its products to large  multi-location  end users.  The program allows end
users to contract  with one entity (the  Company) for sales and  support,  while
achieving  local  installations  and maintenance  from the Company's  network of
independent   dealers.   This  program  is  also  a  key  delivery  vehicle  for
sophisticated CTI solutions sales that often require advanced custom integration
and superior knowledge and understanding of end user communications and business
objectives.  The National  Accounts  Program allows the Company to work directly
with end  users to assure  that the best  combination  of the  Company  and,  if
necessary,  third party products are incorporated  into the final solution.  The
Company employs dedicated personnel to sell and support national accounts.

       Because the Company's sales are made under short-term sales orders issued
by customers  on a  month-to-month  basis,  rather than under  long-term  supply
contracts, backlog is not considered material to the Company's business.

Engineering, Research and Development

       The Company  believes that it must continue to introduce new products and
enhance existing products to maintain a competitive position in the marketplace.
The  Company's  engineering  department,   working  in  collaboration  with  the
marketing  and  manufacturing  departments,  is  responsible  for  design of new
products and enhancements.  A significant amount of engineering  expenditures is
dedicated to new product development,  with the balance used for cost reductions
and  performance  enhancements  to existing  products.  Research and development
costs for the fiscal years ended 1997,  1996,  and 1995 comprise the majority of
engineering, research, and development costs, which were $6,497,000, $5,771,000,
and  $4,186,000,  respectively.  The Company is unable to segregate and quantify
the amount of research and development  costs from other  engineering  costs for
such fiscal years.

       Some  of  the  research  and  development   costs   associated  with  the
development  of  product  software  have  been  capitalized  as  incurred.   The
accounting for such software capitalization is in accordance with the provisions
of  Statement  of Financial  Accounting  Standards  ("SFAS") No. 86. The amounts
capitalized in 1997, 1996, and 1995 were $1,956,000,  $1,577,000,  and $840,000,
respectively. The amounts amortized for software development cost in 1997, 1996,
and 1995 were approximately  $1,018,000,  $877,000, and $757,000,  respectively.
The Company is committed to improving its existing  products and  developing new
telecommunications equipment in order to maintain or increase its market share.

Manufacturing and Quality Control

       The Company's  Manufacturing  Operations  organization is responsible for
all  activities  related to  production,  testing,  shipping,  and repair of the
Company's  products.  Other functions that fall under  manufacturing  operations
include maintenance of plant facilities and specialty (contract) manufacturing.

       One of the  Company's  core  competencies,  along  with its  distribution
network, is its manufacturing efficiency. With recent improvements in production
equipment such as surface mount technology ("SMT") and information  systems, the
Company can now turn around customer  orders in days,  compared to weeks or even
months  taken  by  offshore  competitors.  Manufacturing  is  able  to  schedule
production  runs on a daily  basis  which  provides  the  Company  with  maximum
flexibility in responding to order levels,  improved product margins,  and lower
work-in-process and finished goods inventories.

       Improvements in the  manufacturing  function  include the use of advanced
Manufacturing  Resource Planning ("MRP")  information  systems,  continuous flow
assembly lines, just-in-time philosophies, and continual upgrades to the two SMT
lines. The Company has been able to reduce finished goods inventory  levels,  as
common  components  in various  products  have  allowed  manufacturing  to stock
components and subassemblies  rather than finished products.  Manufacturing also
contributes  to  revenues  through  the sale of  repair  services  and  obsolete
equipment through the Company's wholly-owned  subsidiary American Phone Centers,
Inc. ("APC"), and by contracting for selective custom manufacturing assignments.

       The Company also manufactures injection molded plastic parts,  fabricated
metal parts, and other components.

       The Company monitors the quality of its manufacturing process. Individual
assemblers  and machine  operators are trained to inspect  subassemblies  as the
work  passes  through  their  respective  areas.  In  addition,  some  automated
production machines perform quality tests concurrently with assembly operations.
The Company believes that this high level of automation and vertical integration
improves  quality,  cost,  and customer  satisfaction.  In 1994, the Company was
certified and has maintained its certification by the International Organization
for Standardization  ("ISO") at the most rigorous ISO 9001 level, which provides
standards for systems and procedures  for  manufacturing,  engineering,  product
design, and customer service.

Competition

       The market for the Company's products is highly competitive.  The Company
competes  with over 20 suppliers  of small  business  telephone  systems many of
which have significantly  greater resources.  Examples are Lucent  Technologies,
Inc., Nortel Inc., and Toshiba Corporation.  Key competitive factors in the sale
of telephone systems and related  applications  include  performance,  features,
reliability, service and support, name recognition, distribution capability, and
price.  The  Company  believes  that it  competes  favorably  in its market with
respect to the performance, features, reliability,  distribution capability, and
price of its  systems,  as well as the level of  service  and  support  that the
Company  provides.   In  marketing  its  telephone  systems,  the  Company  also
emphasizes  quality,  as  evidenced  by its ISO  9001  certification,  and  high
technology  features  including CTI capability  across its entire Impact line of
digital switching systems.

       The market for voice processing systems is also competitive.  The Company
believes that it is a leading supplier of PC-based voice processing systems, and
that the products  produced by KVT are very  competitive  with regard to the key
factors  important to end users.  These include  reliability,  memory  capacity,
features, ease-of-use, compliance with common industry standards, and price.

       The Company expects that  competition  will continue to be intense in the
markets it serves,  and there can be no assurance  that the Company will be able
to continue to compete  successfully in the marketplace or that the Company will
be able to maintain its current dealer network.

Intellectual Property

       From  time to time,  the  Company  is  subject  to  proceedings  alleging
infringement  by the Company of  intellectual  property  rights of others.  Such
proceedings could require the Company to expend  significant sums in litigation,
pay significant damages, develop non-infringing  technology, or acquire licenses
to the technology that is the subject of the asserted infringement, any of which
could have a material adverse effect on the Company's  business.  Moreover,  the
Company relies upon copyright, trademark, and trade secret protection to protect
the Company's proprietary rights in its products. There can be no assurance that
these  protections will be adequate to deter  misappropriation  of the Company's
technologies or independent third-party development of similar technologies.

       The  business  telecommunications  industry  is  characterized  by  rapid
technological  change.  Industry participants often find it necessary to develop
products and features  similar to those  introduced by others,  with  incomplete
knowledge  of  whether  patent  protection  may  have  been  applied  for or may
ultimately  be  obtained  by  competitors  or  others.  The   telecommunications
manufacturing industry has historically witnessed numerous allegations of patent
infringement and considerable related litigation among competitors.  The Company
itself has received  claims of patent  infringement  from several  parties which
sometimes seek substantial sums. Although the Company's investigation of some of
these claims has been limited by the claims'  lack of  specificity,  the limited
availability of factual information and documentation related to the claims, and
the expense of pursuing exhaustive patent reviews, the Company believes that its
systems  do not  currently  infringe  valid  patents of any such  claimants.  In
response to prior  infringement  claims,  the  Company has pursued and  obtained
nonexclusive  licenses  entitling  the  Company to utilize  certain  fundamental
patented  functions that are widely licensed and used in the  telecommunications
manufacturing industry.  These licenses expire upon expiration of the underlying
patents.

       Although  the Company  believes  that it  currently  owns or has adequate
rights to utilize all  material  technologies  relating to its  products,  as it
continues to develop new products and features in the future it anticipates that
it may  receive  additional  claims  of  patent  infringement.  There  can be no
assurance that a license for any such infringed technology would be available to
the Company or, even if  available,  that the terms of any such license would be
satisfactory.

Employees

       As of December 31, 1997, the Company,  including  Aurora and KVT, had 865
full-time  employees,  of  whom  561  were  engaged  in  manufacturing,   85  in
engineering,  151 in  sales  and  support,  and  68 in  general  management  and
administration.  The  Company  has  never  experienced  a work  stoppage  and no
employees  are  represented  by labor  unions.  The  Company  believes  that its
employee relations are good.

ITEM 2.    Properties

       The  Company  designs,  manufactures,  and  markets  the  majority of its
products   from  a   fully   integrated,   approximately   500,000   square-foot
manufacturing  facility on a 25 acre site located in Charlottesville,  Virginia.
The majority of the Company's  operations  and  development  are located at this
facility,  which the Company owns. The Company  believes that its facilities are
adequate both for the  operation of its business as presently  conducted and for
expansion in the foreseeable future.

       In March 1996, the Company  acquired KVT and Aurora (see Item 1 - General
Development of Business). KVT operates out of an approximately 6,200 square foot
building, located in Sarasota,  Florida. During 1997, Aurora operated out of two
leased suites in an office building located in Acton, Massachusetts, but will be
moving to a new location that has yet to be determined.

       The Company's facilities are subject to a variety of federal,  state, and
local  environmental  protection  laws  and  regulations,  including  provisions
relating  to the  discharge  of  materials  into  the  environment.  The cost of
compliance with such laws and regulations has not had a material  adverse effect
upon the Company's capital expenditures,  earnings, or competitive position, and
it is not anticipated to have a material adverse effect in the future.

       In  1988,  the  Company  voluntarily   discontinued  use  of  a  concrete
underground   hydraulic  oil  and  chlorinated   solvent  storage  tank  at  its
Charlottesville  plant.  In conjunction  therewith,  nearby soil and groundwater
contamination  was  noted.  As  a  result,  the  Company  developed  a  plan  of
remediation that was approved by the Virginia Water Control Board on January 31,
1989.  The plan was later  amended and  approved by the Virginia  Department  of
Environmental Quality, after which the Company commenced the remediation efforts
required  thereunder.  In 1993, the Company  provided a $45,000  reserve for the
estimated cost to implement the remediation plan.

       In  October  1994,  the  Company  installed  all  required  equipment  in
accordance  with the  remediation  plan  and  started  the  process  of  pumping
hydraulic  oil residue from the  underground  water.  The oil is deposited  into
approved  containers and taken to a hazardous  waste site in accordance with the
corrective  action plan. As of December 31, 1997, the Company has incurred total
costs of  approximately  $55,000 and expects the pumping process to be completed
by late 1999.


ITEM 3.        Legal Proceedings

      The  Company  is from time to time  involved  in routine  litigation.  The
Company  believes that none of the litigation in which it is currently  involved
is material to its financial condition or results of operations.

ITEM 4.  Submission of Matters to a Vote of Security Holders

      No matter was submitted during the fourth quarter of 1997 to a vote of the
Company's security holders.


PART II

ITEM 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters.

      Information is  incorporated by reference to page 46 of the Company's 1997
Annual Report to stockholders under the caption "Related Stockholders  Matters."
As of March 10, 1998 there were 1,602  record  holders of the  Company's  Common
Stock.

ITEM 6.  Selected Financial Data.

         Information  is  incorporated  by reference to page 45 of the Company's
1997 Annual Report to stockholders under the caption "Five Year Financial Data."

ITEM 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.

      Information  is  incorporated  by  reference to pages 18 through 24 of the
Company's  1997 Annual Report to  stockholders  under the caption  "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

ITEM 8.  Financial Statements and Supplementary Data.

         Information is  incorporated by reference to pages 27 through 44 of the
Company's 1997 Annual Report to stockholders or filed with this Report as listed
in Item 14 hereof.

ITEM 9.  Changes In and Disagreements With Accountants on
         Accounting and Financial Disclosure.

      No information is required to be reported pursuant to this item.


      Part III

ITEM 10.  Directors and Executive Officers of the Registrant.

      Information  concerning Directors and Executive Officers of the Registrant
is  incorporated  by reference  under the caption  "Election of  Directors"  and
"Executive  Officers  of the  Company" on pages 6 through 8 and 10 through 13 of
the Company's  definitive proxy statement for the annual meeting of stockholders
to be held on April 28, 1998.

ITEM 11.  Executive Compensation.

      Executive   compensation  and  management   transactions   information  is
incorporated by reference under the caption "Executive Compensation" on pages 13
through 22 of the Company's definitive proxy statement for the annual meeting of
stockholders to be held on April 28, 1998.

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management.

      Information is incorporated  by reference  under the captions  "Securities
Ownership of Certain  Beneficial  Owners and Management" on pages 3 through 5 of
the Company's  definitive proxy statement for the annual meeting of stockholders
to be held on April 28, 1998.

ITEM 13.  Certain Relationships and Related Transactions.

      Information  is  incorporated  by  reference  under  the  caption  "Family
Relationships",  "Indebtedness  of Management"  and "Certain  Relationships  and
Related  Transactions"  on pages 13,  22,  and 22  through  23 of the  Company's
definitive  proxy statement for the annual meeting of stockholders to be held on
April 28, 1998.


<PAGE>


Part IV

ITEM 14.  Exhibits, Financial Statement Schedules, and Reports
          on Form 8-K

(a) (1)          The  following  Consolidated  Financial  Statements  of Comdial
                 Corporation and its  Subsidiaries  are incorporated in Part II,
                 Item 8 by  reference  to the  Company's  1997 Annual  Report to
                 stockholders  (page  references  are  to  page  numbers  in the
                 Company's Annual Report):

                                                           Page Number
                                                           -----------
                 Independent Auditors' Report                   25
                 Report of Management                           26

       Financial Statements:
       Consolidated Balance Sheets -
           December 31, 1997 and 1996                           27
       Consolidated Statements of Operations -
           Years ended December 31, 1997, 1996, and 1995        28
       Consolidated Statements of Stockholders' Equity -
           Years ended December 31, 1997, 1996, and 1995        29
       Consolidated Statements of Cash Flows -
         Years ended December 31, 1997, 1996, and 1995          30
       Notes to Consolidated Financial Statements -
         Years ended December 31, 1997, 1996, and 1995          31 - 44

        2.  Financial Statements - Supplemental Schedules:

           All of the schedules are omitted because they are not applicable, not
           required,  or because  the  required  information  is included in the
           consolidated financial statements or notes.

 3.  Exhibits Included herein:

           (3)  Articles of Incorporation and bylaws:

                 3.1     Certificate of  Incorporation  of Comdial  Corporation.
                         (Exhibits (a) Item 3.1 to Item 6 of  Registrant's  Form
                         10-Q for the period ended July 2, 1995.)*

                 3.2     Certificate   of  Amendment  of  the   Certificate   of
                         Incorporation of Comdial  Corporation as filed with the
                         Secretary of State of the State of Delaware on February
                         1, 1994. (Exhibit 3.2 to Registrant's Form 10-Q for the
                         period ended July 2, 1995.)*

                 3.3     Bylaws  of  Comdial   Corporation.   (Exhibit   3.3  to
                         Registrant's  Form 10-K for the year ended December 31,
                         1993.)*

          (10)  Material contracts:

                10.1         Registrant's  1992  Stock  Incentive  Plan and 1992
                             Non-employee   Directors   Stock   Incentive  Plan.
                             (Exhibits  28.1 and 28.2 of  Registrant's  Form S-8
                             dated October 21, 1992.)*

                10.2         Amendment  No.  1 to the  Registrant's  1992  Stock
                             Incentive  Plan  and  1992  Non-employee  Directors
                             Stock  Incentive  Plan.  (Exhibit  10.1 and 10.2 of
                             Registrant's Form 10-Q dated September 28, 1997.)*

                10.3         Amendment  No.  2 to the  Registrant's  1992  Stock
                             Incentive  Plan  and  1992  Non-employee  Directors
                             Stock Incentive Plan. (Exhibit 10.2 of Registrant's
                             Form 10-Q dated June 30, 1996.)*

                10.4         Amendment  No.  3 to the  Registrant's  1992  Stock
                             Incentive  Plan  and  1992  Non-employee  Directors
                             Stock Incentive Plan. (Exhibit 10.2 of Registrant's
                             Form 10-Q dated June 30, 1996.)*

                10.5         Amendment  to Amendment  No. 3 to the  Registrant's
                             1992 Non-employee Directors Stock Incentive Plan.

                10.6         Amendment  No.  4 to the  Registrant's  1992  Stock
                             Incentive  Plan  and  1992  Non-employee  Directors
                             Stock Incentive Plan.

                10.7         Amendment  No.  4 to the  Registrant's  1992  Stock
                             Incentive  Plan  and  1992  Non-employee  Directors
                             Stock Incentive Plan.

                10.8         Loan and Security  Agreement dated February 1, 1994
                             among  Registrant  and  Fleet  Capital  Corporation
                             formerly  Barclays  Business Credit,  Inc. (Exhibit
                             10.13 to Registrant's  Form 10-K for the year ended
                             December 31, 1993.)*

                10.9         Development  Agreement dated December 2, 1993 among
                             Registrant  and  Motorola  Inc.  (Exhibit  10.16 to
                             Registrant's  Form 10-K for the year ended December
                             31, 1993.)*

                10.10        Amendment No. 1 to the Loan and Security  Agreement
                             dated March 13, 1996 among the Registrant and Fleet
                             Capital Corporation.  (Exhibit 10.1 to Registrant's
                             Form 10-Q for the quarter ended March 31, 1996.)*

                10.11        Amendment No. 2 to the Loan and Security  Agreement
                             dated June 28, 1996 among the  Registrant and Fleet
                             Capital Corporation.  (Exhibit 10.1 to Registrant's
                             Form 10-Q for the quarter ended June 30, 1996.)*

                10.12        Amendment No. 3 to the Loan and Security  Agreement
                             dated  September 27, 1996 among the  Registrant and
                             Fleet   Capital   Corporation.   (Exhibit  10.1  to
                             Registrant's   Form  10-Q  for  the  quarter  ended
                             September 29, 1996.)*

                10.13        Amendment No. 4 to the Loan and Security  Agreement
                             dated  September 27, 1996 among the  Registrant and
                             Fleet   Capital   Corporation.   (Exhibit  10.2  to
                             Registrant's  Form 10-Q for the quarter ended March
                             30, 1997.)*

                10.14        Note dated  February  5, 1997 among the  Registrant
                             and Fleet  Capital  Corporation.  (Exhibit  10.1 to
                             Registrant's  Form 10-Q for the quarter ended March
                             30, 1997.)*

                10.15        The  Registrant's  Executive  Stock  Ownership Plan
                             effective  January  1,  1996.   (Exhibit  10.10  to
                             Registrant's  Form 10-K for the year ended December
                             31, 1995.)*

                10.16        The  Registrant's  Executive  Severance  Plan dated
                             August 31,  1995.  (Exhibit  10.11 to  Registrant's
                             Form 10-K for the year ended December 31, 1995.)*

                10.17        Amendment No. 1 to the Registrant's Executive Stock
                             Ownership Plan dated July 31, 1997.

                10.18        Amendment No. 2 to the Registrant's Executive Stock
                             Ownership Plan dated January 1, 1998.

                10.19        Amendment  No.  1  to  the  Registrant's  Executive
                             Severance Plan dated July 31, 1997.

                10.20        Development  and Purchase  Agreement dated February
                             21, 1997 among Registrant and Harris Corporation.


                10.21        FastCall Purchase Agreement dated December 31, 1997
                             among   Aurora    Systems,    Inc.   and   Spanlink
                             Communications, Inc.


*  Incorporated by reference herein.
--------------------------------------------------------------------------------

           (11)  Schedule of Computation of Earnings Per Common Share.

           (13)  Registrant's 1997 Annual Report to Stockholders.

           (21)  Subsidiaries of the Registrant.

                   The following are the  subsidiaries of the Registrant and all
                   are incorporated in the state of Delaware.

                          American Phone Centers, Inc.
                          American Telecommunications Corporation
                          Aurora Systems, Inc.
                          Comdial Business Communications Corporation
                          Comdial Consumer Communications Corporation
                          Comdial Custom Manufacturing, Inc.
                          Comdial Enterprise Systems, Inc.
                          Comdial Technology Corporation
                          Comdial Telecommunications, Inc.
                          Comdial Telecommunications International, Inc.
                          Comdial Video Telephony, Inc.
                          Key Voice Technologies, Inc.
                          Scott Technologies Corporation

           (23)  Independent Auditors' Consent.

                  Accountants consent to the incorporation by reference of their
                  report dated January 30, 1998, appearing in this Annual Report
                  on Form  10-K  of  Comdial  Corporation  for  the  year  ended
                  December 31, 1997, in certain Registration Statements.

           (24)  Power of Attorney.

           (27)  Financial Data Schedule.


 (b)   Reports on Form 8-K:

 The Registrant has not filed any reports on Form 8-K during the last quarter of
1997.



<PAGE>

                                   SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) 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 on the 25th day of March,
1998.

                                   COMDIAL CORPORATION

                                   By: /s/ William G. Mustain
                                      --------------------------------
                                       William G. Mustain
                                       Chairman of the Board, President and
                                       Chief Executive Officer

 Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


Signature                 Title                               Date
---------                 -----                               ----

         *              Vice Chairman                     March 25, 1998
-----------------------
 A. M. Gleason

         *              Director                          March 25, 1998
-----------------------
 Michael C. Henderson

         *              Director                          March 25, 1998
-----------------------
 John W. Rosenblum

         *              Director                           March 25, 1998
-----------------------
 Dianne C. Walker

/s/ William G. Mustain  Chairman of the Board,             March 25, 1998
----------------------- President, and
 William G. Mustain     Chief Executive Officer

/s/ Christian L. Becken Senior Vice President,             March 25, 1998
----------------------- and Chief Financial Officer
 Christian L. Becken   

/s/ Wayne R. Wilver     Senior Vice President,             March 25, 1998
----------------------- Treasurer, and Secretary
 Wayne R. Wilver       

* By:/s/ Wayne R. Wilver
-----------------------
 Wayne R. Wilver, Attorney-In-Fact