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, 1995

                                       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]

Aggregate market value of voting stock held by  non-affiliates of the registrant
as of March 12, 1996 was  approximately  $61,115,000  (See Item 5). Indicate the
number of shares of Common Stock outstanding as of March 12, 1996: 8,146,894.

                      DOCUMENTS INCORPORATED BY REFERENCE:
Comdial's 1995 Annual Report to the  Stockholders  is  incorporated by reference
under Part II and portions of Comdial's  Definitive Proxy Statement for its 1996
Annual  Meeting of  Stockholders,  which will be filed with the  Securities  and
Exchange Commission within 120 days after December 31, 1995, are incorporated by
reference under Part III of this Form 10-K.


<PAGE>



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TABLE OF CONTENTS
------------------------------------------------------------------------------

Part I

     Item 1.      Business                                                 4
           (a)    General Development of Business                          4
                     Industry Background                                   4
                     Strategy                                              6
           (b)    Financial Information About Industry Segment             9
                     Product Sales Information                             9
           (c)    Narrative Description of Business                        9
                     Products                                              9
                        Business Systems                                   9
                        Proprietary and Specialty Terminals               12
                        Custom Manufacturing                              13
                        Other                                             13
                     Sales and Marketing                                  13
                     Engineering, Research and Development                15
                     Manufacturing and Quality Control                    15
                     Competition                                          16
                     Intellectual Property                                16
                     Employees                                            17

     Item 2.      Properties                                              17

     Item 3.      Legal Proceedings                                       18

     Item 4.      Submission of Matters to a Vote of Security Holders     18

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Part II

     Item 5.      Market for the Registrant's Common Equity and Related
                  Stockholder Matters                                     19

     Item 6.      Selected Financial Data                                 19

     Item 7.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                     19

     Item 8.      Financial Statements and Supplementary Data             19

     Item 9.      Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                     19


<PAGE>



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

TABLE OF CONTENTS (Cont'd.)
------------------------------------------------------------------------------

Part III

     Item 10. Directors and Executive Officers of the Registrant          20

     Item 11. Executive Compensation                                      20

     Item 12. Security Ownership of Certain Beneficial Owners and
                  Management                                              20


     Item 13.     Certain Relationships and Related Transactions          20
------------------------------------------------------------------------------

Part IV

     Item 14.     Exhibits, Financial Statement Schedules, and Reports
                  on Form 8-K                                             21


<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, and 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.   Stromberg-Carlson's   facilities,  located  in
Charlottesville,  Virginia  since  1955,  had  engaged  in  the  manufacture  of
telephones since 1894.

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

       The Company  designs,  manufactures,  and markets  small to medium  sized
business  telecommunications  systems  which  support  up to  approximately  500
telephones.  The Company  believes that it is a leading supplier to this market,
with an installed base estimated to be approximately  250,000  telephone systems
and 2,500,000  telephones.  The Company's  products  include  digital and analog
telephone  switches  and  telephones,  as  well  as  a  wide  range  of  product
enhancements to the Company's telephone systems. The Company's recent growth has
occurred  principally as a result of digital telephone systems introduced by the
Company since 1992. These digital products provide end users with the ability to
utilize evolving telecommunications  technologies,  including those arising from
the  convergence  of  telephone  systems and  computers,  or  Computer-Telephony
Integration ("CTI").

       On, March 20,  1996,  the  Company  completed  the  acquisitions  of  two
companies  involved  CTI  applications: Key  Voice  Technologies,  Inc.  ("KVT")
and  Aurora  Systems,  Inc.  ("Aurora").  KVT  located  in  Sarasota,   Florida,
develops  and  sells  voice  mail  software  and  related  products for business
applications, including the Verbatim Voice Processing System and  Small  Office.
Aurora,  headquartered  in  Acon, MAssachusetts, develops, markets, and supports
off-the-shelf software products for the CTI market,  including  FastCall.  As  a
result  of the acquistions, KVT and Aurora have become wholly-owned subsidiaries
of the Company.

Industry Background

       In recent years,  advances in  telecommunications  have  facilitated  the
development of  technologically  advanced  telephone  systems and  applications.
Spurred by the significant  deregulation of the telephone industry that began in
the 1970's,  electronic  telephone  systems  began  displacing  the  traditional
electromechanical  key sets that  served as the basic  office  telephone  system
since the 1930's. New telephone applications are being introduced  continuously,
permitting business users to improve  communications  within their organizations
and with  customers  by  using  conference  calls,  speakerphones,  voice  mail,
automated  attendant,  and  voice  processing   applications,   such  as  speech
recognition.

       A telephone system consists of a telephone switch that routes calls among
individual  telephones  on the system and  telephones  that are connected to the
switch via internal telephone lines. Systems are typically described in terms of
the number of telephone  lines and  telephone  sets that can be connected to the
switch.

       In the 1970's,  solid state electronic telephone systems began displacing
electromechanical  systems.  These original  electronic  telephone  systems were
"analog,"  transmitting  voice  information  in a  continuous  wave form that is
"analogous" to the original voice signal.  Analog transmission is acceptable for
most voice requirements, but is not as efficient for data or video 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, leading to garbled communications.

       By  the  late  1980's,  digital  telephone  systems  were  available  for
commercial use. The digitization of voice, data, and video is a general trend in
the  telecommunications  industry,  whereby  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
low-cost,  high-capacity T-1 transmission lines from  telecommunication  service
providers,  enable  improved  video and data  transmission,  and offer  superior
platforms  for future  features.  Businesses  with  digital  systems  are better
positioned to take advantage of new features.

       While some manufacturers have ceased producing analog systems altogether,
the  Company  offers a broad line of systems  utilizing  both analog and digital
technologies.   The  Company  believes  that  current  industry   shipments  are
approximately half digital, with the digital share growing rapidly. In addition,
the  installed  telephone  system base  remains  predominantly  analog,  thereby
providing  significant  opportunities  for manufacturers who continue to produce
analog  systems.  Such systems are purchased by end users wishing to install new
analog systems, upgrade existing systems, or add to existing systems.

       A recent  major  industry  advancement  is the  development  of CTI.  CTI
applications  merge the power of modern telephone systems with that of computers
to provide integrated solutions to broad communications problems, such as proper
queuing  in  call   communications   centers,   and  specific   vertical  market
applications (such as the real estate,  law firm, and food service markets).  As
an  example,  an  emergency  dispatch  system  may  use  caller   identification
technology in conjunction with databases in order to access  information such as
the street address and profile of the emergency caller which is displayed on the
dispatcher's computer.  Dispatchers can send help quickly to the correct address
and provide the information  needed to respond  appropriately  to the situation.
This growing  industry and user interest in CTI has added a new dimension to the
business  telecommunications  market.  In addition to the  proprietary  products
offered by the Company and others,  the  acceptance  of industry  standards  now
makes it possible for  independent  software  developers to market  applications
software  geared  toward  solving  or  simplifying  a myriad of common  business
communications problems.

       Initially,   the   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 Novell,  Inc.  ("Novell")  and  Microsoft  Corporation
("Microsoft"),  it is now possible to implement  CTI on a much broader scale and
at a  substantially  lower cost.  In a local area network  ("LAN")  environment,
Novell provides software instructions (service provider interfaces or "SPIs") to
telephone system manufacturers  committed to producing the connectivity software
and hardware  required to communicate with the telephony  server.  The telephone
switch effectively becomes another node on a client-server network.

       For users not on a network, the desktop approach promoted by Microsoft is
a possible solution. In this case, telephone system manufacturers design special
software links to Microsoft's  service  provider  interface  ("SPI").  Telephony
software is available as an option on current  Windows@TM  operating systems and
is standard on Windows95@TM.

       Until the late 1980s,  all small and medium sized telephone  systems were
"closed".  If users wished to add new  capabilities to their telephone  systems,
they were restricted to whatever the system  manufacturer chose to offer. 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 those
applications  packages  suitable to their  communications  needs.  Open  systems
provide an Open Applications  Interface ("OAI") through which a telephone system
can be linked to a computer.  The computer can then command the telephone system
to perform  certain  functions,  such as to answer,  hold,  delay,  or  transfer
telephone  calls.  The OAI is different for each switch  manufacturer and useful
only if a Software  Developer  Kit ("SDK") is also  provided to third parties by
the switch manufacturers.

       Because of the technological  advances that have arisen with digitization
and open systems,  more  flexible and useful  telephone  applications  are being
developed to solve current  communications  problems.  For example,  a decade of
down sizing and  corporate  cost  cutting has  produced a large  number of small
businesses and  work-at-home  employees.  The industry  estimates that nearly 30
million  people work at least  part-time out of their homes.  This has created a
large market for small  telephone  systems,  personal  computers,  fax machines,
modems,  and other devices  required by home offices.  These users need products
that better integrate voice and data at the desktop level.

       Changes in the  telecommunications  industry extend to the  international
market as well. Developing countries recognize that advanced telecommuni-cations
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 much  experience  working in a competitive  environment,  is well
positioned to take advantage of these opportunities.

Strategy

       The  Company is  pursuing  three  fundamental  business  strategies:  (1)
maintaining a leadership  position in its core  business of delivering  advanced
telecommunications  systems to the U.S. domestic market through wholesale supply
house  distribution  channels,  (2)  achieving  growth  through  expansion  into
international markets, and (3) being a leader in the emerging market for systems
solutions  based on CTI. The Company seeks to support these  strategies  through
the following approaches:



    Maintaining a Broad and Efficient Distribution Network

       The Company  distributes its products  through a network of approximately
7,400 independent dealers, of which approximately 1,500 have written contractual
arrangements  with the  Company.  This  enables  the  Company to  achieve  broad
geographic penetration, as well as access to some of the fastest growing markets
in the country. The Company's distribution network centers around a key group of
wholesale supply houses, through which the Company's products are made available
to dealers.  These  dealers  market the  Company's  products to small and medium
sized  organizations  and  divisions  of  larger  organizations.  The  Company's
strategy  enables it to  virtually  eliminate  bad debt  exposure  and  minimize
administration,  credit checking,  and sales expenses, as well as finished goods
inventory  levels.  Wholesale  supply  houses  in turn are able to sell  related
products such as cable,  connectors,  and installation  tools.  Dealers have the
benefits of competitive sourcing and reduced inventory carrying costs.

    Targeting Small and Medium Sized Organizations

       The Company has traditionally focused on organizations requiring small to
medium sized  telecommunications  systems, which the Company believes represents
about  six  million  establishments  in the  United  States,  according  to U.S.
government  statistics.  The  Company's  products  offer this market many of the
features previously available only in large, proprietary systems that were often
not as affordable to this market.

    Offering a Broad Range of Products

       The  Company  currently  offers  digital  and analog  business  telephone
systems,  along with a variety of  enhancements to the Company's  products,  CTI
applications,  and several other products.  Due to the fact that the software is
designed to be compatible with most of the Company's  telephones,  end users are
able to enhance  and  upgrade  their  systems  without  having to replace  their
telephone  equipment.  The  Company  believes  that this broad range of products
allows dealers to meet  differing  price and feature  requirements.  The Company
continuously  strives to introduce  new products to meet the needs of a changing
market.

    Developing Strategic Alliances

       The  Company  has  developed   strategic  alliances  with  several  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. For example,  the Company
has developed the Tracker on-site  integrated paging system with Motorola,  Inc.
("Motorola"),  and the Scout  wireless key system  telephone with Uniden America
Corporation  ("Uniden").  In addition,  the Company has joined with Active Voice
Corporation ("Active Voice") for the Company's ExecuMail System,  Novell for its
Enterprise for Telephony,  KVT for its voice  processing  systems and Aurora for
its middleware CTI software.  The Company is in the process of acquiring KVT and
Aurora.

    Pursuing International Opportunities

       Comdial formed a subsidiary,  Comdial  Telecommunications  International,
Inc.  ("CTii") to concentrate on identifying  and developing  opportunities  for
international business. The Company chooses its international markets carefully,
with a preference for emerging yet stable  economies  with  technical  standards
close to those of North America (to minimize costly redesigns), and with an open
and competitive  telecommunications  marketplace.  In 1995,  international sales
were  approximately  $2.7  million  compared to $2.5 million and $1.0 million in
1994 and 1993,  respectively.  This included sales to Canada, Latin America, the
Middle East,  and South  Africa.  The Company has entered  into a licensing  and
original equipment  manufacturer  ("OEM")  relationship with Corporate Telephone
Systems   (Proprietary)   Limited   ("Teleboss"),    a   major   South   African
telecommunications manufacturer and dealer. Pursuant to this agreement, Teleboss
is serving as a distributor of specified products made by the Company, and has a
license  from the Company to  manufacture  certain  subassemblies  used in those
products.


    Computer Telephony Applications

       Comdial formed a subsidiary in 1993,  Comdial Enterprise Systems ("CES"),
to focus on designing,  deploying,  and marketing CTI  applications and software
for the rapidly  growing  markets for CTI products and services.  The Company is
addressing the CTI opportunity on several fronts.  The Company believes that the
essential  ingredients for successful CTI include (1) "open" telephone  systems,
such as the Company's DXP, (2) communication  links between the telephone system
and computer or computer network, (3) a telephony server (if integration is over
a LAN), and (4) applications software.

       The  Company  believes  that in order to  maximize  profitability  in the
emerging markets for CTI, it must create the applications software for promising
vertical markets and small businesses,  such as real estate,  legal, and retail.
The Company's  strategy is to develop  applications  for these vertical  markets
using capabilities already available such as screen pops, directory dialing from
an existing data base, facsimile transmission from the desktop personal computer
("PC"), and unified messaging displays.

    Promoting Industry Accepted Interface Standards

       In order to integrate computers and telecommunications equipment, several
standards  have been  developed.  The  Company  was  among  the first  telephone
manufacturing  companies  to commit to the  Novell  standard,  called  Telephony
Services  Application  Programming  Interface  ("TSAPI").   The  TSAPI  standard
provides a stable  platform for a Novell  NetWare  network to integrate with the
features and  functionality  of a telephone  switch.  This  standard also allows
third-party  developers to write applications in a non-proprietary  environment,
rather than using a specific system  vendor's SDK, thus  decreasing  development
time and  application  investment  costs.  The Company also has  demonstrated  a
prototype working interface device to support Microsoft's  Telephony Application
Programming Interface ("TAPI") standard, that allows users to control any of the
Company's  digital  telephone  systems  through  their  PC  and  access  special
telephony applications now being developed for desktop PC users. Along this same
line, the Company introduced the PATI 3000 (PC And Telephone  Interface),  which
is a low cost CTI product for the fast  growing  small  business and home office
markets.  The PATI 3000 links analog telephones to personal computers (PCs) that
run Microsoft Windows or Windows 95 operating systems.

    Developing of Open Application Interface

       The  Company  believes  that OAI  provides  many  advantages  to  systems
developers  including  reducing  the time  needed to develop  new  products  and
providing  access to a variety of applications  from third-party  vendors.  Some
manufacturers charge high prices for the interface and software development kit.
While this has retarded  growth of CTI  applications,  prices are now declining.
The Company was the second  manufacturer to equip a small to medium sized system
with an OAI, and the first to offer the interface link and SDK  essentially  for
free.


   (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENT

       During  the  fiscal  years  ended  December  31,  1995,  1994  and  1993,
substantially  all of Comdial's sales,  net income,  and identifiable net assets
were attributable to the telecommunications industry. Any additional information
other than sales is  incorporated by reference to the  Registrant's  1995 Annual
Report to Stockholders.

Product Sales Information

       The following  table presents  certain  relevant  information  concerning
Comdial's principle product lines for the periods indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                                         Year Ended December 31,
(In Millions)                                                       1995             1994              1993
------------------------------------------------------------------------------------------------------------
   <S>                                                              <C>              <C>               <C>
   Sales
      Business Systems
         Digital                                                    $51.7            $36.4             $30.9
         Analog                                                      22.2             24.9              26.0
         CTI                                                          6.9              5.2               2.8
         Enhancements                                                 2.0              1.5               1.4
                                                                     ----             ----              ----
           Sub-total                                                 82.8             68.0              61.1
      Proprietary and Specialty Terminals                             5.1              5.5               6.2
      Custom Manufacturing                                            6.1              2.6               0.9
      Other                                                           0.8              1.0               0.9
                                                                     ----             ----              ----
           TOTAL                                                    $94.8            $77.1             $69.1
                                                                    =====            =====             =====
------------------------------------------------------------------------------------------------------------
</TABLE>

   (c) NARRATIVE DESCRIPTION OF BUSINESS

Products

       The Company  offers a variety of  telephone  systems,  including  digital
systems,   analog  systems,   enhancements  to  the  Company's   products,   CTI
applications, and other products.

       Comdial's  telecommunications  products are  registered  with the Federal
Communications  Commission  ("FCC")  and an  Occupational  Safety and Health Act
Commission  ("OSHA") approved National  Recognized Test Laboratory in the normal
course of Comdial's  business.  Selected  products are also  registered with the
Canadian Department of Communications and are Canadian safety certified. Comdial
has, or is in the process of, registering its products in other countries.

   Business Systems

    Digital Systems

       DXP is a digital  switch,  introduced in 1992,  that is  compatible  with
virtually all of the Company's analog and digital telephones. This compatibility
allows the Company  and its  dealers to target  larger end users while using the
same telephones as those used in the Company's smaller systems.  Currently,  the
DXP provides customers with an affordable system that can be expanded to support
up to 224 ports that can be configured as incoming lines or telephones.  The DXP
has more call  processing  features than smaller  systems,  including  automatic
route  selection and an optional  PC-based  attendant  position.  The DXP may be
linked to various  CTI  applications  using the  Company's  Enterprise  Software
Developers Kit ("SDK"),  which allows  external  PC-based  software  packages to
manage the DXP for any number of specialized applications.  The Company's DXP is
also  directly  compatible  with  T-1  service  lines  from   telecommunications
providers.  A T-1 line is a digital  service line that is equivalent to 24 voice
channels or can transmit data at 1.5 megabits per second.

       DXP Plus,  introduced  in the fall of 1995,  is a larger  version  of the
original DXP. The DXP Plus can grow to a maximum of 560 ports  (combinations  of
outside lines and terminal connections).  Like the original DXP, the DXP Plus is
designed with OAI ports, to accommodate third party software developers. The DXP
Plus uses the same  lines and  station  cards as the DXP and  accommodates  most
industry standard telephones and proprietary Comdial terminals.

       Impact digital  telephone  systems were  introduced in November 1992, and
support up to 24 lines and 48 telephones.  This system includes a digital switch
and Impact digital  telephones  which 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.

       DigiTech  digital  systems were  introduced in January 1991 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.

    Analog Systems

       Unisyn introduced in 1994, is designed to offer advanced features to very
small  organizations.  Two models are offered, one of which supports up to three
lines and eight telephones,  and the other which 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.

       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 unitized self-contained unit, making the ExecuTech XE
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 line of  systems  supports
economical  ExecuTech  single-line   telephones  and  a  variety  of  multi-line
terminals including an LCD model.

       InnTouch is a line of four analog hospitality systems, the first of which
was introduced in 1987,  that support up to 22 lines and 128  telephones.  These
systems  feature a front desk video display  terminal,  integrated call costing,
and multi-featured room phones.

       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.

    CTI Applications

       Enterprise is the Company's OAI software  developer's tool kit introduced
in 1993,  used  with the DXP  system.  Enterprise  allows  independent  software
developers  to access the DXP system  software  using more than 100  commands to
create unique applications for specific vertical markets,  such as telemarketing
groups, emergency services, call centers, taxi services, and multimedia centers.
One of the initial OAI  applications  developed using  Enterprise is an Enhanced
911  ("E911")  emergency  telephone  system.  Enterprise  is a platform  for the
development of applications based upon the convergence of computer and telephony
technologies.

       InnTouch DXP is a digital telephone system,  introduced in 1994, designed
for hospitality  applications.  The system consists of a DXP, Impact  multi-line
administration  phones,  single  line  guest  phones,  and  special  hospitality
software.  The guest phones may be industry  standard  message waiting models or
the Company's own HoTelephones. InnTouch serves hotel properties requiring up to
192  telephones.  InnTouch  was  designed  in  cooperation  with an  independent
software developer.

       QuickQ ACD introduced in 1994, is an automatic call distributor  ("ACD").
It is  designed  for call  center  use.  The system  consists  of a DXP,  Impact
telephones,  voice announcing  equipment,  special  automatic call  distribution
software,  and a personal computer.  The QuickQ answers and distributes incoming
calls  rapidly  and   efficiently,   helping  to  assure   maximum  call  center
productivity  and  superior  customer  response  levels.  Up to 96  reports  are
provided,  detailing call volume and call center performance. The QuickQ ACD has
a maximum  capacity of 64 outside  lines to support up to 48  telephones  in use
simultaneously. Like the InnTouch DXP, the QuickQ is a CTI product, based on the
Company's  Enterprise link to the DXP operating  system.  QuickQ was designed in
cooperation with an independent software developer.

       E911 Systems are specially  engineered  telephone systems,  introduced in
1994, 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 can
send help swiftly to the correct address and provide the  information  needed to
respond  appropriately  to the  situation.  All calls are  recorded  for  future
reference,  and operators can handle  multiple  calls  without  losing  valuable
information.  The Company's E911 system makes  extensive use of CTI. The Company
contracts with municipal authorities for the purchase of the equipment.

       Enterprise for Telephony Services is a line of software and documentation
products,  introduced  in 1995,  used by dealers to  integrate a DXP switch with
certain Novell NetWare based LAN networks.  When installed in a network  server,
PC users on the LAN can  command  the DXP to perform  telephony  functions  from
their  PCs and  access  special  applications  software.  Several  products  are
available to support up to 250 users.

       ExecuMail is an integrated voice processing  system for use with selected
Comdial  telephone  systems.  ExecuMail  is offered in a range of port and voice
storage  capacities,  and  provides  both  voice  mail and  automated  attendant
service.

       Small  Office and Verbatim  are trade names of voice  processing  systems
produced by KVT which Comdial began  distributing  in December  1995.  The Small
Office  product  will handle up to four  simultaneous  calls to the system while
Verbatim  will  accommodate  up to 16. By using  available  random access memory
(RAM) from PCs, voice storage  capacity is greatly  increased  over  competitive
systems that rely on internal storage disks, and the cost is lower.

       PATI 3000 links  standard  analog single line  telephones to PCs that use
Windows or Windows  95  operating  systems.  The  device  includes  applications
software  that  allows  users to perform  normal  telephone  functions  and many
advanced  functions from their PCs. Advanced features include the ability to log
calls, dial numbers directly from databases,  automatically  insert calling card
numbers,  and - when  installed in  conjunction  with caller ID service from the
telephone  company -  automatically  bring up caller  profiles  on the  computer
screen.
The device is compliant with TAPI, a standard developed by Microsoft.

       FastCall,  produced by Aurora, 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).  Categorized as "middleware",
FastCall is used by call  centers and  businesses  to  streamline  incoming  and
outgoing calls for improved customer service productivity.  Examples are calling
directly  from  databases  by "point  and  click,"  handling  complex  telephone
operations,  such as  conferencing  from  the PC,  and  automatically  producing
specified  screens  triggered  by the calling or called  number.  Comdial  began
marketing FastCall in December 1995.

    Product Enhancements

       Scout is the Company's first wireless multi-line telephone. The Scout was
introduced in 1995 and developed in cooperation with Uniden, a major supplier of
wireless  communications  products.  This telephone  allows users to roam freely
within their  business  environments  and still  receive or place  calls.  Scout
phones offer an LCD display,  multi-line access, programmable keys, an intercom,
and head-set convenience. The portable handset weighs only 8.5 ounces.

       Tracker is an on-site  integrated  paging  system  introduced in 1994 and
developed in cooperation  with  Motorola.  The purpose of the product is to help
assure that calls are quickly and  efficiently  completed to individuals who are
at work, but not always by their phones.  Tracker,  which operates on one of the
Company's  digital  telephone  systems,  includes  a Tracker  base  station  and
personal  pagers  equipped  with an 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  Impact phone and dialing a special code
that is displayed on the LCD. A valuable  feature of Tracker is its  integration
with related products manufactured by the Company.

   Proprietary and Specialty Terminals

       HoTelephone,  introduced in 1984, comes in a variety of models.  In 1990,
the Company  added  models with  programmable  soft keys and the "Take II" model
that simulates two-line service.  Specially designed for business travelers, the
HoTelephone  for motel and hotel guest rooms offers  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.

       Voice Express is a fully featured  multi-function  display telephone that
was introduced in the early 1980s,  with 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 PBX's
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.

       MaxPlus II two line telephones offer line status  indicators,  electronic
hold,  dataport as a basic feature,  and additional models with features such as
message waiting, tap, speakerphone, and programmable soft keys.

       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"), subsidiary of the Company.

   Custom Manufacturing

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

   Other

      Other sales  consist  primarily  of products  that have been  returned and
reworked for resale.

Sales and Marketing

       The Company has established an extensive two-tiered distribution network,
whereby the Company sells its products to wholesale  supply houses which in turn
sell  the  Company's  products  to  approximately  7,400  independent   dealers.
International sales are accomplished through a network of international dealers.
International  customers  buy direct  from the  Company,  normally by letters of
credit, and resell to end users or other dealers.

       The Company  distributes  products to nine major wholesale supply houses,
three of which each account for more than 10% of the Company's net sales.  These
wholesale supply houses are Graybar Electric Company,  Inc.  ("Graybar"),  North
Supply  Company,  Inc.  ("North  Supply"),  a subsidiary  of Sprint,  and ALLTEL
Supply, Inc.  ("ALLTEL"),  a subsidiary of ALLTEL Corporation,  a stockholder of
the Company,  which in the aggregate in 1995 accounted for  approximately 74% of
the  Company's  sales.  In 1995,  sales to  ALLTEL,  Graybar,  and North  Supply
amounted to  approximately  $20.6 million (22%),  $30.9 million (33%), and $18.4
million (19%), respectively.

       The Company has two classes of dealers,  Preferred and Associate Dealers.
Preferred  Dealers  generally have greater sales and technical  skills,  and are
strongly committed to the Company's  products.  The Company offers an attractive
incentive  package for  Preferred  Dealers,  including  exclusive  access to the
Company's  most popular and advanced  products,  cash rebates  related to dealer
purchase levels, cooperative advertising allowances and a measure of territorial
protection.  For example,  special software is required to connect the Company's
popular  Impact  telephones  with DXP switches,  which is not available from the
wholesale  supply houses,  but rather sold and shipped  exclusively to Preferred
Dealers.  Preferred Dealers have sales quotas, and the sales department monitors
their performance against these targets.  By contrast,  Associate Dealers do not
have quotas.  They  purchase  Comdial  products on an as-needed  basis,  and are
rewarded  through  product  rebates.   The  Company  has   approximately   7,400
independent dealers, of which approximately 1,500 have written arrangements with
the Company, divided about equally between Preferred and Associate Dealers.

       The Company's sales  organization  seeks to recruit,  train,  and support
individual dealers to facilitate  promotion and sale of the Company's  products.
For 1995 and prior,  dealer and  distributor  sales were managed by 14 territory
managers, organized into Western and Eastern regions. Each territory manager had
a  corresponding  Inside  Sales  Representative.   Field  Sales  Representatives
concentrated on supporting Preferred Dealers and the distributors from whom they
purchase.  Within their respective territories,  Field Sales Representatives are
based in large cities and work out of home  offices.  There are also small sales
teams  focused on sales to the United  States  government  and to  international
distributors.

       As of the first  quarter of 1996,  the Company has started the process of
expanding and  restructuring  its sales force. The Company will have two primary
sales groups.  One group concentrates on further maximizing Comdial system sales
through  associate  dealers.  A second  sales  group  is  chartered  to  support
preferred dealers, expand the Company's Value Added Reseller (VAR) channels, and
to  develop  a  broadened  customer  base for the  Company's  newer  CTI  system
solutions.  The second sales group is being  established  to meet the  different
needs of the emerging markets for CTI system solutions and to help the Company's
Preferred Dealers to adapt to the new CTI products and services.  There are also
small  sales teams  focused on national  accounts,  OEM  customers,  and federal
government customers.

       Each 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  street  level  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 sales  personnel earn incentive  income based on sales
results.

       Advertising  and public  relations  efforts are also  directed to dealers
through trade magazines such as Teleconnect and Computer-Telephony.  Trade shows
are a major element of the Company's  marketing  plans.  The Company is always a
major draw at the annual Computer-Telephony conference and exposition.

       E911  systems are sold  directly by sales  personnel,  with  installation
performed by Comdial and  maintenance  performed by qualified  dealers.  Comdial
brand software and bundled  systems  solutions are purchased  through  wholesale
supply  houses  like the  Company's  other  products.  Third-party  applications
software  can be  purchased  directly  from the  Company  through  the CT Direct
catalog.

       The Company's dealers are primarily  responsible for supporting end users
who  purchase  the  Company's  products.  The  Company  does,  however,  provide
substantial  technical support to its dealers at no additional cost to them. The
Company  maintains a technical  support staff devoted to dealer support which is
available on a toll free basis twelve hours per day with  emergency  service and
on weekends.  The Company also generally provides a limited warranty on elements
of its  products,  permitting  factory  returns  within  24 months  after  sale.
Although  the Company  does not offer  maintenance  contracts  for its  systems,
dealers often independently sell maintenance contracts to end users.

       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 the design of these
new products and enhancements.  A significant amount of engineering expenditures
are  dedicated  to new  product  development,  with  the  balance  used for cost
reductions and performance enhancements to existing products. Early in 1993, the
Company changed the  responsibilities  of its engineering  staff to include both
product development and support of a product through its entire life cycle. This
requires  engineers  to perform  multiple  tasks in  addition  to  research  and
development.  Although research and development costs for the fiscal years ended
1995,  1994,  and 1993  comprise  the  majority of  engineering,  research,  and
development   costs,   which  were  $4,186,000,   $3,932,000,   and  $3,424,000,
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 1995,  1994,  and 1993 were  $840,000,  $717,000,  and $721,000,
respectively. The amounts amortized for software development cost in 1995, 1994,
and 1993 were  approximately  $757,000,  $858,000,  and $705,000,  respectively.
Comdial is committed  to improving  its  existing  products and  developing  new
telecommunications equipment in order to maintain or increase its market share.

       At this time, the Company's new product  investments are heavily directed
in three areas (1)  expansion of its digital  product  line,  (2)  extending OAI
capability   to  a  broader   range  of  the   Company's   platforms,   and  (3)
"internationalization"  of  existing  and  new  products.  The  efforts  are not
independent of each other. For example, new digital systems would be designed to
provide an OAI and to be available in models  compatible  with the  standards of
the Company's prime international markets.

Manufacturing and Quality Control

       The Company's  manufacturing  process is vertically  integrated  and uses
advanced  automated   assembly  and  test  equipment  and  computer   controlled
sequencing  machines.  Beginning in 1991, the Company made further  productivity
improvements by employing surface mount technology  ("SMT") in the production of
predrilled  printed wire boards  ("PWBs").  Between  1992 and 1994,  the Company
further expanded SMT  productivity.  Components  designed for SMT production are
smaller,  and allow for the  placement  of more  components  in the same surface
area. In addition,  the components are placed on the surface rather than through
the surface  which allows  placement of  components on both sides of the PWB. In
most cases,  this reduces the required  number of PWBs and  connectors,  thereby
providing a major improvement in quality and product reliability, a reduction in
product cost, and an improvement in profit  margins.  The Company  believes that
approximately 10% of its costs are associated with labor expenses.

       The Company also manufactures injection molded plastic parts,  fabricated
metal parts, and other components.  The Company's  employees  assemble completed
PWBs, components,  plastics,  and other purchased or manufactured  subassemblies
into  completed  products.  The  Company has been able to utilize  excess  plant
capacity by contracting with third-parties to make various  manufacturing  parts
by using the Company's plastic molding or fabrication equipment.

       The Company attempts to monitor the quality of the 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 by the International  Organization for Standardization  ("ISO") at the
most  rigorous  ISO  9001  level,   which  rates  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  approximately  20 companies,  many of which,  such as AT&T Corp.,
Nortel Inc.,  and Toshiba  Corp.,  have  significantly  greater  resources.  Key
competitive  factors in the sale of telephone  systems and related  applications
include  performance,   features,   reliability,   service  and  support,   name
recognition, distribution capability, place of operation, and price. The Company
believes  that  it  competes  favorably  in  its  market  with  respect  to  the
performance,  features, realiability,  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.  In
addition,  the Company  often  competes  to attract  and retain  dealers for its
products.  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.

       Because the telecommunications manufacturing industry is characterized by
rapid technological change with frequent new product and feature  introductions,
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,  including  certain  competitors such as Phonometrics,  Inc.,
which has since  licensed  patented  technology  to the  Company.  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.  Such claims could
result in the Company's incurring  substantial legal expenses and being required
to obtain licenses,  pay damages for  infringement,  or cease offering  products
that  infringe such  patents.  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, 1995, the Company had 849 full-time employees, of whom
619 were engaged in manufacturing,  60 in engineering, 113 in sales and support,
and  57  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 all of its products from a
fully-integrated,  approximately 500,000 square foot manufacturing facility on a
25  acre  site  located  in  Charlottesville,  Virginia.  All 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.

       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  its use of a  concrete
underground  hydraulic oil and chlorinated  solvent storage tank. 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,  Comdial  installed  all  the  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, 1995,  Comdial has incurred costs of
approximately  $25,000 and expects the pumping  process to be completed by early
1998.

       At the end of March 1996, the Company will be acquiring two companies KVT
and Aurora (see Item 1 - General Development of Business). KVT operates out of a
building,  approximately 6,200 square foot, located in Sarasota,  Fl. and Aurora
operates out of two leased  suites within an office  building  located in Arron,
Ma.

ITEM 3.      Legal Proceedings

      Comdial  is from time to time  involved  in  routine  litigation.  Comdial
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 1995 to a vote of
Comdial's security holders.


<PAGE>


PART II

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

      Information is  incorporated  by reference to page 51 of the  Registrant's
1995  Annual  Report to  stockholders  under the caption  "Related  Stockholders
Matters."  As of March 12,  1996 there were 1,879  record  holders of  Comdial's
Common Stock.

ITEM 6.      Selected Financial Data.

          Information   is   incorporated   by  reference  to  page  50  of  the
Registrant's  1995 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 28 through 32 of the
Registrant's 1995 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 33 through 49 of the  
Registrant's  1995 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.

<PAGE>


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 5 through 8 and 10 through 11 of
Comdial's  definitive  proxy statement for the annual meeting of stockholders to
be held on April 30, 1996.

ITEM 11. Executive Compensation.

      Executive   compensation  and  management   transactions   information  is
incorporated by reference under the caption "Executive Compensation" on pages 12
through 22 of Comdial's  definitive  proxy  statement for the annual  meeting of
stockholders to be held on April 30, 1996.

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
Comdial's  definitive  proxy statement for the annual meeting of stockholders to
be held on April 30, 1996.

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 page 12, page 22, and pages 22 through 23 of Comdial's
definitive  proxy statement for the annual meeting of stockholders to be held on
April 30, 1996.


<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  Subsidiaries  are incorporated in Part II, Item 8 by
           reference to the Comdial  1995 Annual  Report to  stockholders  (page
           references are to page numbers in Comdial's Annual Report):
                                                                      Page
           Independent Auditors' Report                                33
           Report of Management                                        33

         Financial Statements:
           Consolidated Balance Sheets -
               December 31, 1995 and 1994                              34
           Consolidated Statement of Operations-
               Years ended December 31, 1995, 1994, and 1993           35
           Consolidated Statement of Stockholders' Equity
               Years ended December 31, 1995, 1994, and 1993           36
           Consolidated Statements of Cash Flows-
                 Years ended December 31, 1995, 1994, and 1993         37
           Notes to Consolidated Financial Statements-
                 Years ended December 31, 1995, 1994, and 1993      38-49

        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 to Item 6 of Registrant's  Quarterly  Report on Form 10-Q for the period ended
July 2, 1995.)*

                3.2     Certificate   of   Amendment  to  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  1979  Long  Term  Incentive  Plan and 1982
                        Incentive Plan.  (Exhibits 4(a) and 4(b) of Registrant's
                        Form S-8 dated February 7, 1984.)*


<PAGE>


          (10) Material contracts: (cont'd.)

                10.2    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.)

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

                10.4    Equity   Agreement   dated   December   23,  1993  among
                        Registrant and PacifiCorp Credit, Inc. (Exhibit 10.14 to
                        Registrant's  Form 10-K for the year ended  December 31,
                        1993.)*

                10.5    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.)*

                10.6    Stock  Purchase  Agreement  dated  April 2,  1985  among
                        Registrant  and ALLTEL  Corporation.  (Exhibit  10.17 to
                        Registrant's  Form 10-K for the year ended  December 31,
                        1993.)*

                10.7    Amendment No. 1 to the Loan And Security Agreement dated
                        April  29,  1994  among  the   Registrant  and  Barclays
                        Business Credit, Inc. (Exhibit 10.1 to Registrant's Form
                        10-Q for the quarter ended April 3, 1994.)*

                10.8    Amendment No. 2 to the Loan And Security Agreement dated
                        April  29,  1994  among  the   Registrant  and  Barclays
                        Business Credit, Inc. (Exhibit 10.1 to Registrant's Form
                        10-Q for the quarter ended April 2, 1995.)*

                10.9    Amendment No. 3 to the Loan And Security Agreement dated
                        April  29,  1994  among  the   Registrant  and  Barclays
                        Business Credit, Inc. (Exhibit 10.1 to Registrant's Form
                        10-Q for the quarter ended July 2, 1995.)*

                10.10   The   Registrant's   Executive   Stock   Ownership  Plan
                        effective January 1, 1996.

                10.11   The Registrant's  Executive  Severance Plan dated August
                        31, 1995.

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

           (13) Registrant's 1995 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 29, 1996, appearing in this Annual Report
                  on Form  10-K  of  Comdial  Corporation  for  the  year  ended
                  December 31, 1995, 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 1995.

           The Registrant  has filed a Form 8-K on March 25, 1996  pertaining to
           the acquisitions of Key Voice Technologies,  Inc. and Aurora Systems,
           Inc.

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


<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 22nd day of
March, 1996.

                                   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.
<TABLE>
<CAPTION>



Signature                                 Title                                         Date

<S>                                       <C>                                           <C>
          *
------------------------                  Vice Chairman                                 March 25, 1996
   A. M. Gleason

          *
------------------------                  Director                                      March 25, 1996
   Michael C. Henderson

          *
------------------------                  Director                                      March 25, 1996
   William E. Porter

          *
------------------------                  Director                                      March 25, 1996
   John W. Rosenblum

          *
------------------------                  Director                                      March 25, 1996
   Dianne C. Walker



  /s/ WILLIAM G. MUSTAIN                  Chairman of the Board,                        March 25, 1996
------------------------
   William G. Mustain                     President, and
                                          Chief Executive Officer


  /s/ WAYNE R. WILVER                     Senior Vice President,                        March 25, 1996
------------------------
   Wayne R. Wilver                        Chief Financial Officer,
                                          Treasurer, and Secretary


* By: /s/ WAYNE R. WILVER
-------------------------
      Wayne R. Wilver, Attorney-In-Fact
</TABLE>