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, 1999

                                        OR

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

       For the transition period from _______________ to _________________

                         Commission file number: 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 13, 2000, was  approximately  $150,859,000  (See Item 5).
The  number of shares of Common  Stock  outstanding  as of March 13,  2000,  was
9,193,116.

                      DOCUMENTS INCORPORATED BY REFERENCE:

    Comdial's  1999  Annual  Report  to  the  Stockholders  is  incorporated  by
reference under Part II and portions of Comdial's Definitive Proxy Statement for
its 1999 Annual Meeting of Stockholders, which will be filed with the Securities
and  Exchange   Commission   within  120  days  after  December  31,  1999,  are
incorporated by reference under Part III of this Form 10K.

                                       1
<PAGE>

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

Part I

Item 1.     Business                                                      4
            (a)   General Development of Business                         4
                     Safe Harbor Statement                                5
                     Industry Background                                  5
                     Strategy                                             9
            (b)      Financial Information About Industry Segment        11
                     Product Sales Information                           12
            (c)   Narrative Description of Business                      12
                     Products                                            12
                     Business Segment Products                           12
                         Digital Systems                                 12
                         Solutions and Software                          14
                         Analog and Other                                17
                     Sales and Marketing                                 17
                     Engineering, Research and Development               19
                     Manufacturing and Quality Control                   20
                     Competition                                         21
                     Intellectual Property                               21
                     Year 2000 Issue                                     22
                     Employees                                           23

Item 2.     Properties                                                   23

Item 3.     Legal Proceedings                                            24

Item 4.     Submission of Matters to a Vote of
            Security Holders                                             24

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

Part II

Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Matters                                          25

Item 6.     Selected Financial Data                                      25

Item 7.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                          25

Item 8.     Financial Statements and Supplementary Data                  25

Item 9.     Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure                          25

                                       2
<PAGE>
-------------------------------------------------------------------------------
TABLE OF CONTENTS (Cont'd.)
-------------------------------------------------------------------------------
Part III

Item 10.    Directors and Executive Officers

            of the Registrant                                            26

Item 11.    Executive Compensation                                       26

Item 12.    Security Ownership of Certain Beneficial
            Owners and Management                                        26

Item 13.    Certain Relationships and Related Transactions               26

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

Part IV

Item 14.    Exhibits, Financial Statement Schedules,
            and Reports on Form 8-K                                      27




                                       3
<PAGE>

PART I

  ITEM 1.  Business

   (a)  GENERAL DEVELOPMENT OF BUSINESS

       Comdial  Corporation  (together  with its  subsidiaries,  "Comdial") is a
Delaware corporation based in Charlottesville,  Virginia. Comdial was originally
incorporated in Oregon in 1977 and was  reincorporated  in Delaware in 1982 when
it acquired General Dynamics  Telephone Systems Center,  Inc. (formerly known as
Stromberg-Carlson  Telephone Systems, Inc.) a wholly-owned subsidiary of General
Dynamics Corporation. Comdial's Common Stock is traded in the National Market(R)
of the National  Association  of Security  Dealers  Automated  Quotation  System
("Nasdaq(R)") under Comdial's symbol, CMDL.

       Comdial  creates  integrated  communications  solutions that  incorporate
convergent voice and data  technologies.  These  technologies  include Comdial's
traditional   strength  in  voice  switching   augmented  by  acquisitions   and
partnerships in voice  processing,  voice-over the Internet,  computer-telephone
integration ("CTI"), and on-site wireless communications .

       Building on its base business of advanced digital  switching  systems for
small to mid-sized businesses, Comdial is actively engaged in creating specialty
applications which integrate voice/data solutions for specific vertical markets.
The Company plans to grow by continuing to ably serve its  traditional  customer
base while capitalizing on growth  opportunities for integrated  products within
these vertical markets.

    In 1996,  Comdial  acquired  Aurora Systems,  Inc.  ("Aurora") and Key Voice
Technologies,   Inc.  ("KVT"),  two  companies  involved  in  computer  software
applications  and solutions which became  wholly-owned  subsidiaries of Comdial.
Based in Sarasota,  Florida, KVT develops,  assembles,  markets, and sells voice
processing  systems and related  products  for  business  applications.  Aurora,
originally   based  in  Acton,   Massachusetts,   was  a  leading   provider  of
off-the-shelf  computer software products. In 1997, Aurora sold its right, title
and  interest in the  FastCall  product,  Aurora's  primary  asset,  to Spanlink
Communications,  Inc. (see Note 2 to the Consolidated Financial Statements).  In
1998,  Comdial  acquired  Array  Telecom Inc.  ("Array").  The  principal  asset
purchased was the intellectual  property  associated with VoIPgate software,  an
Internet   Protocol  ("IP")  based  telephony   software   platform.   With  its


                                       4
<PAGE>

acquisitions  for the past several years,  Comdial has become a leading provider
of  personal  computer  ("PC")-based  voice  processing  systems  and  telephony
gateways for routing voice and fax communications  over the private intranet and
the public internet.

       Comdial's   products   accommodate   businesses   that   require   up  to
approximately  500 ports.  A port could be  occupied by a  telephone,  facsimile
machine,   modem,  or  similar   device.   Comdial  has  an  installed  base  of
approximately  350,000 telephone systems and 3.7 million  telephones.  Comdial's
growth has been principally as a result of increased sales of digital  telephone
systems and  solutions and software  products.  Comdial's  application  software
encompasses a wide range of products that enable end-users to perform  telephony
functions from desktop PCs or PCs served by a local area network ("LAN").

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

       Some  of the  statements  included  or  incorporated  by  reference  into
Comdial'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  Comdial's
filings with the  Securities  and Exchange  Commission.  These risks could cause
Comdial's  actual  results for 2000 and beyond to differ  materially  from those
expressed in any forward-looking statement made by, or on behalf of, Comdial.

Industry Background

       Comdial's   primary  business  and  product  offerings  fall  into  three
categories:  (1) voice switching systems for small to mid-size  businesses,  (2)
voice  processing  systems,   and  (3)  integrated   voice/data  solutions  that
incorporate  voice  switching and  processing  products  with advanced  computer
technologies  and/or internet  applications.  All of these businesses are highly
competitive  and are influenced by trends and events in technology,  regulation,
and the general economy.

  Voice Switching Systems

       Comdial  produces  digital voice  switching  systems that are  key/hybrid
systems and are the  foundation of Comdial's  Digital System  business  segment.
Historically,  voice  switching  systems  have been divided  between  key/hybrid
systems and Private Branch Exchanges ("PBXs").  Key/hybrid systems are typically
purchased by small to medium-sized  businesses of three to 500 employees,  while


                                       5
<PAGE>

larger businesses  typically purchase PBXs. However,  advances in the designs of
key/hybrid systems and PBXs in recent years has blurred the distinctions between
them.  As key/hybrid  systems  continue to grow to  accommodate  more users with
increasing  functionality,  they have  begun to  encroach  on the  domain of the
traditional PBXs.

       Voice  switching  systems are  measured in terms of "ports." A port is an
access  point on the switch to an outside line or terminal  device.  Examples of
terminal devices include telephones, facsimile machines, modems, and voice mail
ports. Examples of lines include standard business lines as well as higher speed
integrated services digital network (ISDN), digital transmission link (T-1), and
others.  With the proliferation of modems,  facsimile  machines,  and voice mail
devices,  the demand for greater port capacity for  key/hybrid  systems has been
growing.  A basic business  telephone system consists of (a) a central telephone
switching unit, (b) telephone instruments, (c) associated wiring and connections
hardware,  (d)  system  software,  and (e)  adjunct  devices  such as  facsimile
machines and voice processing systems.

       The domestic market for key/hybrid  switching systems,  as projected by a
leading  industry  consulting firm, is expected to grow by six percent from 1999
to 2000. Comdial ranks among the top six of industry  participants.  Significant
trends in this market are (1) the continuing growth of digital systems,  (2) the
growing  importance of larger systems (over 40 occupied  station ports) relative
to smaller  systems,  and (3) the trend toward  "open"  systems that comply with
industry  hardware  and  software  standards.  Open  systems  is a term  used to
describe the ability to attach  third party  devices and software to an existing
system.

       In 1992,  Comdial began a transition from  proprietary  analog systems to
larger digital systems.  That year,  Comdial  introduced the Digital  Expandable
("DXP")  switch.  In 1994,  the  capacity of the DXP was  expanded to 560 ports,
making  it  competitive  with  smaller  PBXs  and  providing  access  to  larger
businesses  and   organizations  and  the  resellers  that  serve  these  larger
businesses.   CTI  connectivity  was  provided  via  proprietary   software  and
development tools that complied with the de facto industry standard of the time,
Telephony Server Application Programming Interface ("TSAPI").

       In 1996, responding to growing market interest in CTI, Comdial introduced
connectivity  software that integrated with a broader range of network operating
systems.  In 1997,  Comdial  introduced Impact FX, a 96 port switch that allowed
software applications,  such as voice processing,  to be enabled electronically.
In 1998, the Impact FX was substantially  enhanced to address a broader range of


                                       6
<PAGE>

applications (40 to 560 ports) and the design architecture modified to provide a
more cost-effective  approach to expansion needs. New software applications were
created to provide even greater functionality.

       In 1992, approximately 20 percent of Comdial's sales were attributable to
digital  systems.  In 1999,  digital  systems  comprised 60 percent of Comdial's
sales and analog systems accounted for less than eight percent of sales.

       In 1994, Comdial  introduced its first wireless device,  the Tracker,  an
on-site paging system,  followed by two-way wireless  telephones,  Scout and Air
Impact. The cost differential between wired and wireless telephones is declining
and the functionality of the wireless devices closely mimics  full-featured desk
phones.

       Voice switching  systems is a mature business.  The size of the market in
any given year is dependent on many factors,  including  employment  growth, the
rate of new business formations and expansions,  obsolescence, and new entrants.
During the 1990s,  business conditions for switching systems have been generally
good,  characterized by annual growth in excess of the general economy,  few new
entrants,  and  moderate  price  decreases  driven by lower  material  costs and
advances in technology.

 Voice Processing

       The  ability to  digitize  analog  voice  signals  gave rise to the voice
processing  business in the 1980s.  In the 1990s,  the  introduction of powerful
personal computers  provided a platform to make voice processing  affordable for
even small businesses.

       Originally,  the  primary  voice  processing  feature  was "voice  mail."
Callers could be  automatically  routed to the desired party and record detailed
messages if the called  party was not  immediately  available.  This  alleviated
organizations  from the cost of  extensive  operator  and  secretarial  staff to
answer  calls and take  messages.  Now,  voice  processing  is much more robust.
Advances  such  as  integrated   voice   response,   voice/speech   recognition,
notification  via  wireless  devices,   PC-based  administration,   "follow  me"
features,  and unified messaging have raised the popularity of voice processing.
Voice  processing is almost  ubiquitous in larger  organizations.  But even now,
less than half of smaller  businesses  have a modern  voice  processing  system,
which presents an opportunity for continued sales growth.



                                       7
<PAGE>

       Comdial's  voice  processing  products  are  part  of its  Solutions  and
Software business segment. Comdial entered the voice processing business in 1990
via an  original  equipment  manufacturing  ("OEM")  agreement  with  a  leading
producer  of  these   products.   Seeking  more  design  control  and  increased
profitability,  in 1996 Comdial  acquired KVT, a small private producer of small
to mid-sized  voice  processing  products.  The  association has worked well for
Comdial.  Sales have grown  sharply and overall  gross  margins  have  improved.
Products  are  sold to both  resellers  of  Comdial  switching  products  and to
resellers of competitive  switching products.  Special integration features have
been designed for a variety of popular switching systems.

       After a very rapid growth spurt in the early 1990s,  the voice processing
industry is entering a mature phase.  The domestic  market for voice  processing
products,  as projected by a leading  industry  consulting  firm, is expected to
continue to grow by approximately 25 percent from 1999 to 2000. Voice processing
systems are also  measured by "ports" but the term refers to the number of voice
processing  calls  that can be  handled  simultaneously.  A 12-port  system  can
process 12  simultaneous  calls,  while a four port  system can handle only four
calls at one time.

       KVT  products  can provide up to 64 ports of voice  processing  capacity.
Most  Comdial  generated  sales  are  in the  two to  eight  port  range,  which
corresponds with the small to mid-size  businesses  which are Comdial's  primary
markets.  Industry  shipments  are measured  both in terms of systems and ports.
Among PC-based systems, Comdial believes that KVT is an industry leader, ranking
second in terms of systems shipped.

    In the third quarter of 1999,  Comdial introduced a unified messaging system
combining voice mail, fax, and e-mail, called iNTerchange(TM). The system allows
the user to manage  information by choosing the best way to respond to messages.
The  system is  scalable  to 128 ports and  integrates  with over 100  different
telephone systems. The system is produced by Comdial's subsidiary, KVT.

  Integrated Voice/Data Solutions

       One of Comdial's  Solutions and Software segment  strengths is its design
control over four core technologies - voice switching, voice messaging,  unified
messaging,  and IP telephony.  Comdial seeks to accelerate  its sales and profit
growth by marketing  integrated  "solutions"  which  incorporate  two or more of
these  technologies  via computer  integrated  software.  The integration can be
completed by resellers,  who have the technical skills to accomplish  voice/data


                                       8
<PAGE>

integration at the user level, or by Comdial itself.  A typical solution product
is an intelligent call center.  With outbound call centers,  predictive  dialing
devices automatically generate outbound calls from the user's database. Answered
calls are  instantly  connected to an available  agent (based on  pre-determined
criteria),  a data screen is "popped"  providing  a script,  contract,  or other
appropriate  record,  and the call is promptly  processed with virtually no idle
time due to wrong numbers, unanswered calls, or misplaced paper files.

       With inbound calls,  Comdial's QuickQ ACD software  intelligently answers
and routes the call to the appropriate  agent,  based on user-defined  criteria,
such as availability and language skills.  Appropriate records are automatically
produced on workstations,  based on the identified calling number or user keypad
entries.

       Additionally,  Comdial has  designed  specialized  solutions  for certain
vertical markets.  The Senior Housing systems offer integration with third party
alarm devices,  such that elderly residents  experiencing an emergency condition
can activate the device in their residence or on their person, sending a message
to wireless devices worn by on-site caregivers.

       The size of the  market  for  integrated  solutions  is  unknown,  but is
believed to be large because such solutions result in greatly improved  customer
service and/or lower operating costs.

       Array,  a subsidiary of Comdial,  is a producer of special  software that
converts  analog  voice  signals to IP data packets and routes the call over the
public  Internet or private  networks.  The  advantages of IP telephony are much
lower transmission  costs and better  utilization of network bandwidth.  Array's
products  are sold to new  generation  carriers,  such as prepaid  calling  card
companies, and to private enterprises for off-loading intracompany voice and fax
transmissions  to reduce costs.  In 1999,  Array  released the Array Series 3000
line  carrier  class voice over IP gateway  products.  The Series 3000  provides
voice  quality  by  incorporating   the  latest  in  jitter  buffer   management
technology.  The system supports centralized deployment of IP telephony services
and offers built-in global routing software.

Strategy

       Comdial  seeks to expand sales and profits at  acceptable  risk levels by
implementing the following:

     (1)  leveraging expertise in core communications  technology to develop and
          introduce advanced solutions,



                                       9
<PAGE>

     (2)  pursuing development of the next generation  communications  platforms
          and applications by leveraging expertise in Microsoft Windows(R),
     (3)  developing integrated solutions for fast-growing vertical markets,
     (4)  expanding its channels of distribution and methods of product delivery
          to both markets, and
     (5)  increasing  direct sales through  national account programs with large
          end-users and vertical market accounts.

    Product Offerings

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

    Product Development

    Comdial's  recent  sales and  profit  growth  are  largely  attributable  to
customer  acceptance of its Digital Systems and Solutions and Software products.
Comdial's  system products are sold under the Impact and Impression  brands that
serve customer  applications from 24 to 560 ports. In 1999,  Comdial  introduced
important  enhancements such as IP telephony and a Unified Messaging System that
combines voice mail,  fax, and e-mail.  Comdial intends to continue to add value
to its  core  digital  switching  products  such  as the  Concierge  hospitality
product.  Comdial  introduced various new features that the Concierge system now
offers such as wireless telephones and call costing.

       Comdial believes that in order to maximize  profitability in the emerging
markets  for  integrated  solutions,  it must  continue  to  develop  and market
higher-value applications for software and switching platforms. Comdial's Impact
and Impact FXS Series digital switching  platforms will form the basis for these
solutions,  augmented by software developed by Comdial's  subsidiaries,  (Array,
Comdial  Enterprises  Systems,  Inc., and KVT), and  applications  software from
third parties.

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



                                       10
<PAGE>

        Product Distribution

        Comdial  focuses  its   distribution  of  products   primarily   through
independent  dealers that resell Comdial's  products to end users. These dealers
enable Comdial to achieve broad geographic  coverage in a cost effective manner.
Comdial's  primary  means of  distribution  is through a key group of  wholesale
supply houses, which stock Comdial's products and resell to independent dealers.
Comdial's  strategy of selling  through  wholesale  supply houses  enables it to
minimize receivables exposure,  reduce sales administration  expenses and reduce
inventory costs.  Most  importantly,  the use of supply houses allows Comdial to
extend  product  distribution  to  virtually  any  market in the  United  States
("U.S.") and Canada.  Wholesale  supply houses  benefit from their  relationship
with  Comdial by earning a margin on the sale of  Comdial'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,  Comdial  also  markets its
products  directly to national  accounts,  third party  system  developers,  OEM
customers, and the federal government via its Government Services Administration
("GSA") schedule contract.  National accounts are Comdial's direct sales through
vertical  markets  such as senior  housing,  hospitality,  and new real  estate.
Products  produced  by KVT are sold both  through the supply  house  channel and
direct to dealers. Array products are sold to private carriers, both in the U.S.
and abroad.

        Strategic Alliances

        Comdial 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 Scout wireless key
system  telephone  (Uniden  America  Corporation),  and the VVP and Small Office
voice processing systems (Rhetorex and Dialogic).

 (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENT

        During  the  fiscal  years  ended  December  31,  1999,  1998 and  1997,
substantially  all of Comdial's sales,  net income,  and identifiable net assets
were attributable to the telecommunications industry.  Additional information is
incorporated by reference to Comdial's 1999 Annual Report to Stockholders.



                                       11
<PAGE>

   Product Sales Information

        The following table presents  certain  relevant  information  concerning
Comdial's business segments for the periods indicated:

-------------------------------------------------------------------------------
                                          Years Ended December 31,
(In thousands)                      1999             1998              1997
-------------------------------------------------------------------------------
    Business Segment Sales:

        Digital Systems            $88,479          $80,452           $70,181
        Solutions and Software      48,713           36,194            31,625
        Analog and Other            10,768           12,331            16,755
                                  --------         --------          --------
            Net Sales             $147,960         $128,977          $118,561
                                  ========         ========          ========
-------------------------------------------------------------------------------

   (c) NARRATIVE DESCRIPTION OF BUSINESS

        Products

        Comdial  offers  a  variety  of  telephone  systems,  including  Digital
Systems, Solutions and Software applications, and Analog and Other products. For
further  clarification  of  Comdial's  business  segments  see  Note  12 to  the
Consolidated Financial Statements.

        Comdial's  telecommunications  products meet the  requirements  of three
agencies: (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.  Comdial has or is in the process of homologating  certain of
its products for use in certain other countries.

    Business Segment Products

        Digital Systems

        Impact FX Computer  Telephony  Applications  Server  ("FX") is Comdial's
most recent switching  platform and was introduced in 1997. The FX is expandable
to 560 ports. The FX differs from Comdial'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 FX is designed to popular industry standards,  which makes
the FX amenable to customization by Comdial and by third party integrators.



                                       12
<PAGE>

        Impact DXP system,  originally introduced in 1992, has had several major
upgrades since then. There are various Impact DXP Systems: Impact 224 and Impact
560. The numeric  suffix  denotes the maximum number of ports served by the base
switch,  without need for any product  displacement.  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  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 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.

        Impact  SCS was  introduced  in 1997.  Impact  SCS  retains  many of the
current  features of the original Impact  telephone  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,  introduced in 1996, 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.

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

        Scout,  introduced  in 1995,  is  Comdial'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
Comdial'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


                                       13
<PAGE>

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 Comdial. 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.

        Solutions and Software

        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,  and special hospitality
software.  The single-line guest telephones used with the Concierge are not sold
by Comdial. The system is linked to a personal computer via Comdial's Enterprise
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 up to approximately 400 rooms.

        Avalon, introduced in 1998, is the first communications systems designed
specifically for assisted living  communities.  Avalon  integrates a Comdial DXP
digital switch system and telephones, wireless communications devices, wired and
wireless   alerting  devices,   and  custom  software.   Avalon  provides  basic
telecommunications  service  to  residents  and  staff,  but its most  important
advantage is to allow elderly residents to alert on-site  caregivers of the name
and  location of an alarm  condition.  Should a resident  activate a  compatible
in-room alerting device (such as a pull cord), dial "911," or take certain other
actions indicating an alarm condition,  messages are transmitted from the Avalon
system to the  displays  of pagers or  wireless  phones  carried by  caregivers.
Computer records of the emergency alert and response are also generated.  Avalon
is an example of Comdial's focus on integrated solutions for vertical markets.

        VVP (Versatile Voice Processing),  introduced in 1996, is the trade name
of a PC-based voice processing  system produced by KVT and sold by Comdial.  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


                                       14
<PAGE>

voice  messages  from a PC)  are  also  available.  VVP can be  integrated  with
Comdial'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 Comdial'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.

        Small  Office  Lite was  introduced  in 1997.  Small  Office  Lite voice
processing  system  features the latest  advances in  communications  technology
specially streamlined to fit the needs of small businesses. With Comdial's Small
Office Lite,  even small  businesses  can take  advantage of a  voice-processing
feature  set that is  state-of-the-art,  but also  affordable.  In  addition  to
automated attendant functionality, Small Office Lite allows users to personalize
their individual mailboxes with custom greetings.

        VVP-NT  and  Small   Office-NT  were   introduced  in  1998.   They  are
user-friendly  voice  mail  systems,  with a  proven  design,  that  are easy to
establish and maintain. Each system accommodates a different number of users and
is built on a Windows NT(R) operating  system  platform.  In addition,  enhanced
graphical  screens let system  supervisors  quickly adjust user  information and
retrieve vital call processing data.

        Debut  was  introduced  in 1998 to meet the  needs  of small  businesses
seeking basic voice processing capabilities at an attractive price.

        INTerchange(TM)  is a unified  messaging  system which was introduced in
the third quarter of 1999. This system was  specifically  designed to meet small
and large company's  needs.  It is a new Windows NT(TM) based unified  messaging
system that fits into any office LAN and  combines  voice  mail,  fax and e-mail
capabilities.  The system provides a way to better prioritize messages with more
efficient  alternatives  for receiving and responding to each type of electronic
messaging.



                                       15
<PAGE>

        Ctvoice  was  introduced  in 1998.  Ctvoice  gives  organizations  an IP
telephony   gateway  that  provides   high-quality,   real-time  voice  and  fax
communications  over any IP network,  including the public  Internet and private
intranets.  Ctvoice is provided by Comdial's subsidiary Array which was acquired
in 1998.

        VoIPgate is the brand name for  carrier-class  IP  gateways  produced by
Comdial's  subsidiary  Array.  VoIPgate  interfaces  with standard analog lines,
ISDN, and T-1.  VoIPgate provides a broad range of network  management  features
and is compliant with popular industry standards.

     Series 3000,  introduced by Comdial's  subsidiary  Array,  was released for
production in the third quarter of 1999. The Series 3000 IP gateway product is a
completely  modular  system that offers  scalability  from two to  thousands  of
ports.  Its built in  multi-lingual  voice  response  (IVR) supports an infinite
number of multi-language voice prompts customizable by the end user.

        Enterprise, introduced in 1993, is Comdial's open applications interface
("OAI") software  developer's tool kit.  Enterprise allows independent  software
developers to access the Impact, DXP, DXP Plus, or FX system software using more
than 190 commands.  These tools allow Comdial to create unique  applications for
specific vertical markets,  such as telemarketing  groups,  emergency  services,
call centers, taxi services, and multi-media centers.

        PCIU  (PC  Interface  Unit),   introduced  in  1997,  is  an  affordable
hardware/software  solution  that  extends  computer  integration  across all of
Comdial's  digital  switches,  via the broadly  accepted  Telephone  Application
Programming  Interface ("TAPI") standard.  The hardware component is a black box
with multiple  connectors for a digital port off the switch,  Comdial's  digital
display telephone, a PC serial port, and electric power.

        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 Impact FX 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.



                                       16
<PAGE>

        Analog and Other

        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 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. This product
was discontinued in the fourth quarter of 1999.

        Other products included in the Analog and Other business segment are ATC
Terminals,  Maxplus, Solo II, Voice Express, and Custom Manufacturing.  In 1998,
the Maxplus  product was  discontinued,  and in 1999,  Solo II and Voice Express
were  discontinued.  Comdial will continue to provide support for these products
pertaining to warranty claims and replacements.

    Sales and Marketing

        Comdial markets its products through both direct and indirect  channels.
Indirect  channels  include  both  two-tiered  and  three-tiered   distribution.
Comdial'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 Comdial, normally
by letters of credit, and resell to end users or other dealers.

        Three  supply  houses each  account for more than 10% of  Comdial's  net
sales. These are ALLTEL Supply, Inc. ("ALLTEL"),  Graybar Electric Company, Inc.
("Graybar"),  and Sprint/North Supply, Inc. ("North Supply"). In 1999, net sales
to ALLTEL,  Graybar,  and North Supply amounted to  approximately  $24.4 million
(16%), $34.8 million (24%), and $25.3 million (17%), respectively.

        Comdial has established four classes of dealers that purchase  Comdial's
products  from  supply  houses  and  resell to end  users.  These  are  Platinum
Preferred,  Preferred Gold, Preferred,  and Associate Dealers. Comdial offers an
attractive  incentive  package  for  Platinum  Preferred,  Preferred  Gold,  and
Preferred Dealers,  including exclusive access to certain products, cash rebates


                                       17
<PAGE>

related to dealer purchase levels, cooperative advertising allowances, a measure
of  territorial  protection,   toll  free  assistance,  and  training.  Platinum
Preferred,  Preferred  Gold,  and  Preferred  Dealers  have  sales  quotas,  and
Comdial's sales  department  monitors their  performance  against these targets.
Associate  Dealers  purchase  Comdial'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 Comdial.

        Comdial  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.

        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 at Comdial are
available to help engineer complex  configurations and solve technical problems.
All direct sales personnel earn incentive income based on sales results.

        Comdial's  dealers  are  primarily  responsible  for  selling  Comdial's
products  to end  users  as well  as  providing  support.  Comdial  maintains  a
technical  support  staff  devoted to dealer  support.  Comdial  also  generally
provides a limited  warranty  on  elements  of its  products up to maximum of 24
months. Products manufactured by Comdial can be returned within 24 months of the
production date.

        Other indirect channels include OEM relationships,  international sales,
and dealer  direct sales.  Selected  dealers are  authorized to purchase  Impact
Concierge systems direct from Comdial and resell to hotels and motels. 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, Comdial 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 (Comdial) for sales and support,  while achieving local
installations  and maintenance  from Comdial's  network of independent  dealers.
This program is also a key delivery vehicle for sophisticated computer telephony
solutions  sales that often require  advanced  custom  integration  and superior


                                       18
<PAGE>

knowledge and understanding of end user communications and business  objectives.
The National  Accounts Program allows Comdial to work directly with end users to
assure  that the best  combination  of Comdial  and, if  necessary,  third party
products,  are incorporated  into the final solution.  Comdial employs dedicated
personnel to sell and support national accounts.

        Because Comdial'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 Comdial's business.

        Engineering, Research and Development

        Comdial  believes  that it must  continue to introduce  new products and
enhance existing products to maintain a competitive position in the marketplace.
Comdial'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 are 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  1999,  1998,  and 1996  comprise  the  majority of
engineering,  research,  and development  costs,  which were $9.7 million,  $7.3
million,  and $6.5  million,  respectively.  Comdial 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 1999,  1998, and 1997 were $2.9 million,  $2.8 million,  and $2.0
million,  respectively.  The  amounts  of  software  development  cost that were
amortized in 1999, 1998, and 1997 were approximately $1.8 million, $1.4 million,
and $1.0 million,  respectively.  Comdial is committed to improving its existing
products and developing new telecommunications equipment in order to maintain or
increase its market share.



                                       19
<PAGE>

        Manufacturing and Quality Control

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

        One of Comdial'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,
Comdial can now turn around customer  orders in days,  compared to weeks or even
months that may be taken by other competitors. Manufacturing is able to schedule
production runs on a daily basis which provides Comdial 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.  Comdial 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 Comdial's wholly-owned subsidiary American Phone Centers, Inc.
("APC"), and by contracting for selective custom manufacturing assignments.

        Comdial 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.
Comdial  believes  that this high level of automation  and vertical  integration
improves  quality,  cost, and customer  satisfaction.  Comdial also manufactures
injection molded plastic parts, fabricated metal parts, and other components.

        In 1994,  Comdial 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.



                                       20
<PAGE>

        Competition

        The  market  for  Comdial's  products  is  highly  competitive.  Comdial
competes with over 25 suppliers of small  business  telephone  systems,  many of
which have significantly greater resources. Examples are Inter-Tel, Inc., Lucent
Technologies,  Inc., Nortel Networks,  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. Comdial 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 Comdial provides.  In marketing its telephone  systems,
Comdial 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.  Comdial
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  factors  include  reliability,  memory
capacity, features, ease-of-use,  compliance with common industry standards, and
price.

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

        Intellectual Property

        From  time  to  time,   Comdial  is  subject  to  proceedings   alleging
infringement  by  Comdial  of  intellectual  property  rights  of  others.  Such
proceedings could require Comdial 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 Comdial's  business.  Moreover,  Comdial
relies  upon  copyright,  trademark,  and trade  secret  protection  to  protect
Comdial's  proprietary  rights in its products.  There can be no assurance  that
these  protections  will be  adequate  to deter  misappropriation  of  Comdial'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


                                       21
<PAGE>

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.  Comdial
itself has received  claims of patent  infringement  from several  parties which
sometimes  seek  substantial  sums.  In response to prior  infringement  claims,
Comdial has pursued and  obtained  nonexclusive  licenses  entitling  Comdial to
utilize certain fundamental patented functions that are widely licensed and used
in the  telecommunications  manufacturing  industry.  These licenses will either
expire at the end of the patent license or the end an agreed-to period.

        In order to assure  that it  currently  owns or has  adequate  rights to
utilize all material technologies relating to its products,  Comdial attempts to
diligently review all claims of infringement.  Often Comdial's  investigation of
these claims is limited by claims' lack of specificity, the limited availability
of factual  information and documentation  related to the claims and the expense
of pursuing  exhaustive  patent  reviews.  As Comdial  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 Comdial or, even
if available, that the terms of any such license would be satisfactory.

        Year 2000 Issue

        In early  1997,  Comdial  established  a team of people  (the "Year 2000
Team") to evaluate whether, and to what extent,  Comdial's business and products
may be affected by the Year 2000 and potential  problems caused by the inability
of certain computers and  microprocessors  to distinguish  between the year 2000
and the year 1900. Through a series of industry-recognized  tests, the Year 2000
Team believes that it has identified which of Comdial's products,  devices,  and
computerized systems contain embedded  microprocessors that required remediation
or  replacement  because of  potential  Year 2000  issues.  Comdial has provided
upgrades or taken other  remedial  steps to correct any  non-compliant  products
that remain under warranty.  Comdial did not make any  significant  expenditures
solely to address Year 2000 issues.

        Management  believes  that Comdial has properly  addressed the Year 2000
issues in order to  mitigate  any  adverse  operational  or  financial  impacts.
Furthermore,  Comdial has implemented a requirement  that its suppliers  certify


                                       22
<PAGE>

that all products and services  provided to Comdial are Year 2000 compliant (see
Note 13 to the Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations).

       Employees

        As of  December  31,  1999,  Comdial,  including  subsidiaries,  had 922
full-time  employees,  of  whom  553  were  engaged  in  manufacturing,  124  in
engineering,  188 in  sales  and  support,  and  57 in  general  management  and
administration.  Comdial has never  experienced a work stoppage and no employees
are represented by labor unions.  Comdial  believes that its employee  relations
are good.

ITEM 2.  Properties

        Comdial 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
Comdial's operations and development are located at this facility, which Comdial
owns.  Comdial  believes that its facilities are adequate both for the operation
of its  business as presently  conducted  and for  expansion in the  foreseeable
future.

        KVT operates out of an approximately 6,200 square foot building, located
in  Sarasota,  Florida.  All other  additional  space  used by  Comdial  and its
subsidiaries is either leased or rental property.

        Comdial'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 Comdial's capital expenditures,  earnings, or competitive position,  and it
is not anticipated to have a material adverse effect in the future.

        In 1988, Comdial 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,  Comdial  developed a plan of remediation  that was approved by the
Virginia Water Control Board on January 31, 1989. The plan was later amended and


                                       23
<PAGE>

approved by the  Virginia  Department  of  Environmental  Quality  ("DEQ"),  the
successor  administrative  agency to the Sate Water Control  Board,  after which
Comdial commenced the remediation efforts required thereunder.

    In October 1994, Comdial 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.

    DEQ also required some assessment work of the chlorinated solvents under the
Underground  Storage Tank Petroleum  Program,  however Comdial determined in the
late  1990s that it could  expedite  matters by  entering  Virginia's  Voluntary
Remediation Program (the "VRP").

    In 1999,  Comdial  was  accepted  into the VRP to start  the  final  closure
process  for the  assessment  and clean  up, if  necessary,  of  leakage  of the
petroleum and chlorinated solvents. The petroleum leakage was subsequently added
to the VRP with the chlorinated solvents in 2000. A Voluntary Remediation Report
("VRR") required under DEQ's regulations consists of a site  characterization of
the horizontal and vertical extent of the contamination, a risk assessment and a
remedial action plan. The completion of the site characterization portion of the
VRR will require several new wells to determine the extent of the  contamination
and some additional sampling.

    Comdial has hired outside  consultants  to do all the  necessary  testing as
well as all the work  required  to clean up, if  necessary,  the  contamination.
Comdial is planning on completing this process by the end of year 2000,  subject
to the necessary review and approval of DEQ.

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 1999 to a vote of
Comdial's security holders.



                                       24
<PAGE>

PART II

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

      Information is  incorporated  by reference in Comdial's 1999 Annual Report
to stockholders  under the caption "Related  Stockholders  Matters." As of March
13, 2000 there were 1,965 record holders of Comdial's Common Stock.

ITEM 6.  Selected Financial Data

      Information is  incorporated  by reference in Comdial's 1999 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 in Comdial's  1999 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 in Comdial's 1999 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.



                                       25
<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  Comdial"  on pages 7  through 9 and 10  through  13 of
Comdial's  definitive  proxy statement for the annual meeting of stockholders to
be held on May 4, 2000.

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 Comdial's  definitive  proxy  statement for the annual  meeting of
stockholders to be held on May 4, 2000.

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 4 through 6 of
Comdial's  definitive  proxy statement for the annual meeting of stockholders to
be held on May 4, 2000.

ITEM 13.          Certain Relationships and Related Transactions

      Information  is  incorporated  by  reference  under  the  caption  "Family
Relationships" and "Certain  Relationships and Related Transactions" on pages 13
and 21 of  Comdial's  definitive  proxy  statement  for the  annual  meeting  of
stockholders to be held on May 4, 2000.


                                       26
<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  Comdial's  1999  Annual  Report  to
                 stockholders  (page references are to page numbers in Comdial's
                 Annual Report):

                                                             Page Number
                                                             -----------

                 Independent Auditors' Report                      22
                 Report of Management                              22

       Financial Statements:
       Consolidated Balance Sheets -

          December 31, 1999 and 1998                               23
       Consolidated Statements of Operations -
          Years ended December 31, 1999, 1998, and 1997            24
       Consolidated Statements of Stockholders' Equity -
          Years ended December 31, 1999, 1998, and 1997            25
       Consolidated Statements of Cash Flows -
          Years ended December 31, 1999, 1998, and 1997            26
       Notes to Consolidated Financial Statements -
          Years ended December 31, 1999, 1998, and 1997         27-41

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.)*



                                       27
<PAGE>

          (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  10.3 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. (Exhibit 10.5
                     to  Registrant's  Form 10-K for the year ended December 31,
                     1997.)*

              10.6   Amendment No. 4 to the  Registrant's  1992 Stock  Incentive
                     Plan.  (Exhibit 10.6 to Registrant's Form 10-K for the year
                     ended December 31, 1997.)*

              10.7   Amendment  No.  4 to  the  Registrant's  1992  Non-employee
                     Directors   Stock   Incentive   Plan.   (Exhibit   10.7  to
                     Registrant's  Form  10-K for the year  ended  December  31,
                     1997.)*

              10.8   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.)*

              10.9   Amendment  No.  1  to  the  Registrant's   Executive  Stock
                     Ownership  Plan  dated  July 31,  1997.  (Exhibit  10.17 to
                     Registrant's  Form  10-K for the year  ended  December  31,
                     1997.)*



                                       28
<PAGE>

              10.10  Amendment  No.  2  to  the  Registrant's   Executive  Stock
                     Ownership  Plan dated  January 1, 1998.  (Exhibit  10.18 to
                     Registrant's  Form  10-K for the year  ended  December  31,
                     1997.)*

              10.11  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.)*

              10.12  Amendment  No. 1 to the  Registrant's  Executive  Severance
                     Plan dated July 31, 1997.  (Exhibit  10.19 to  Registrant's
                     Form 10-K for the year ended December 31, 1997.)*

              10.13  Development and Purchase  Agreement dated February 21, 1997
                     among Registrant and Harris Corporation.  (Exhibit 10.20 to
                     Registrant's  Form  10-K for the year  ended  December  31,
                     1997.)*

              10.14  FastCall  Purchase  Agreement dated December 31, 1997 among
                     Aurora  Systems,  Inc.  and Spanlink  Communications,  Inc.
                     (Exhibit 10.21 to Registrant's Form 10-K for the year ended
                     December 31, 1997.)*

              10.15  Asset  Purchase  Agreement  dated  July 14,  1998 among the
                     Registrant   and  Array  Telecom  Inc.  and  Array  Systems
                     Computing Inc.  (Exhibit 10.2 to Registrant's Form 10-Q for
                     the quarter ended June 28, 1998.)*

              10.16  Second  Amendment to Comdial's  401(k) Plan dated  November
                     29, 1998.  (Exhibit 10.25 to Registrant's Form 10-K for the
                     year ended December 31, 1998.)*

              10.17  Third Amendment to Comdial's  401(k) Plan dated February 8,
                     1999.

              10.18  Credit  Agreement  dated October 22, 1998 among  Registrant
                     and NationsBank,  N.A.  (Exhibit 10.26 to Registrant's Form
                     10-K for the year ended December 31, 1998.)*



                                       29
<PAGE>

              10.19  Comdial's Retirement Benefit Restoration Plan dated July 5,
                     1999.

 *  Incorporated by reference herein.


                                       30
<PAGE>

           (11)  Schedule of Computation of Earnings Per Common
                 Share

           (13)  Registrant's 1999 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
                 Array Telecom 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.
                 Telecom Technologies Inc. (formerly known as Scott
                    Technologies Corporation)

           (23)  Independent Auditors' Consent

                Accountants  consent to the  incorporation by reference of their
                report dated January 28, 2000, appearing in the Annual Report on
                Form 10-K of Comdial Corporation for the year ended December 31,
                1999, 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
1999.


                                       31
<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 29th day of
March, 2000.

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

         *              Director                 March 29, 2000
--------------------
 Robert P. Collins

         *              Director                 March 29, 2000
--------------------
 Barbara J. Dreyer

         *              Director                 March 29, 2000
--------------------
 A. M. Gleason

         *              Director                 March 29, 2000
--------------------
 John W. Rosenblum

         *              Director                 March 29, 2000
--------------------
 Robert E. Spekman

         *              Director                 March 29, 2000
--------------------
 Dianne C. Walker

/s/ William G. Mustain  Chairman of the Board,   March 29, 2000
----------------------  President and Chief
 William G. Mustain     Executive Officer


/s/ Tara Y. Harrison    Controller               March 29, 2000
--------------------
 Tara Y. Harrison

* By:/s/ William G. Mustain
     --------------------------
  William G. Mustain, Attorney-In-Fact


                                       32