Comdial Reports Record Earnings and Revenue; Record Quarterly and Full-Year Sales Drive Earnings Growth.

Business Editors

CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--Feb. 10, 2000

Comdial Corporation (Nasdaq: CMDL) today reported record fourth quarter and fiscal year results for 1999.

Sales and Net Income

In 1999, sales grew 15 percent to a record $148.0 million compared with $129.0 million in 1998. In the fourth quarter of 1999, sales rose 18 percent to a record $42.9 million. Operating income for the year increased 52 percent to $12.4 million.

Net income for the year was $7.9 million, or $0.88 per basic share. Net income for 1999, before tax adjustments, was $10.0 million, or $1.12 per share, compared with $5.7 million or $0.64 per share for the same period in 1998. Net income for the fourth quarter was $0.48 per share.

Success Drivers

National Accounts - Comdial's National Accounts program grew dramatically during the year. Sales in 1999, increased almost 100 percent compared with 1998. The Company increased the scope of its direct sales efforts by adding new senior housing, hospitality and general business customers.

Platinum Dealers - In 1999, the Company increased its number of Platinum Preferred Dealers by 57 percent, as well as increasing its dealer base in several major metropolitan centers including New York, NY, Seattle, WA, Dallas, TX, Los Angeles, CA and Denver, CO.

Key Voice Technologies - In 1999, the Company's Key Voice business unit, captured the number three position in the voice processing market and increased its total market share to over 10 percent. Key Voice's award winning converged communications products, including unified messaging, has helped increase the Company's penetration into new business markets.

Comments of William G. Mustain

&uot;1999 was a year of tremendous growth and expansion for the Company,&uot; commented Comdial President and CEO, William G. Mustain. &uot;We are building upon our tremendous success in 1999 by establishing two new business units. The two newly created business units are: Comdial Enterprise Solutions (CES) - focused on national accounts and vertical markets Comdial Convergent Communications (CCC) - focused on core business solutions products sold through the dealer distribution channel

Each business unit will include sales, marketing, engineering, administration, and service and support personnel. We believe this market-centric focus will provide enhanced opportunities to expand both our core and emerging business markets.&uot;

Gross Margin

Gross margin for 1999 was a new Company record of 44 percent. This higher margin reflects the Company's emphasis on sophisticated communications solutions comprised of software and advanced digital switching products.

Operating Expenses

Operating expenses increased according to plan for both the year and the quarter. Increases in sales, general and administrative (SG&) expenses are attributable to hiring additional sales personnel to support the growing National Accounts program as well as the costs associated with the Company's new corporate marketing campaign.

Income Tax Expense

Income tax expense for the year increased to $2.7 million, compared with an income tax benefit of $10.7 million in 1998.

About Comdial

Comdial is a provider of integrated communications solutions for small and mid-size organizations. The Company's broad product line includes business communications, hospitality, senior living, real estate and call center solutions. For more information about Comdial and its products, please visit our web site at http://www.comdial.com.

This release contains forward-looking statements that are subject to risks and uncertainties including, but not limited to, the impact of competitive products, product demand and market acceptance risks, reliance on key strategic alliances, fluctuations in operating results, delays in development of highly complex products, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. These risks could cause the Company's actual results for 2000 and beyond to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.

     Consolidated Condensed Statements of Operations - Unaudited

                              Three Months Ended:    Years Ended:
                            Dec. 31,    Dec. 31,    Dec. 31,   Dec. 31,
(In thousands except
 per share amounts)          1999         1998        1999       1998
Net sales                  $42,930      $36,348   $147,960    $128,977
    Cost of goods sold      21,999       20,458     82,353      75,597
      Gross profit          20,931       15,890     65,607      53,380
Operating expenses
    Selling, general and
     administrative         12,112       10,292     40,229      34,034
    Engineering, research
     and development         2,657        1,891      9,735       7,342
    Goodwill amortization      799          782      3,180       3,806
      Operating income       5,363        2,925     12,463       8,198
    Interest expense           475          347      1,633       1,216
    Miscellaneous expense
     (income) - net            124          159        286         565
Income before income taxes   4,764        2,419     10,544       6,417
Income tax expense             156          273        543         762
    Net income applicable to
     common stock before
     deferred taxes          4,608        2,146     10,001       5,655
Deferred tax expense
 (benefit)                     267          543      2,147     (11,499)
    Net income applicable
     to common stock        $4,341       $1,603     $7,854     $17,154
Earnings per common share
 and common equivalent share:
    Income before tax
     benefit (expense)       $0.51        $0.24      $1.12       $0.64
    Income tax benefit
     (expense)               (0.03)       (0.06)     (0.24)       1.30
      Net income per
       common share:
                   Basic     $0.48        $0.18      $0.88       $1.94
                   Diluted   $0.48        $0.18      $0.87       $1.89
Weighted average common
 shares outstanding:
                   Basic     8,952        8,922      8,948       8,843
                   Diluted   9,005        9,060      8,989       9,081

                Consolidated Condensed Balance Sheets - Unaudited
                                                 Dec. 31,    Dec. 31,
(In thousands)                                     1999         1998
Assets
    Cash and cash equivalents                      $1,917       $1,599
    Accounts receivable - net                      39,700       23,006
    Inventory                                      22,827       21,434
    Other current assets                            7,633        4,815
      Total current assets                         72,077       50,854
    Property - net                                 19,458       18,023
    Goodwill                                       11,207       14,079
    Deferred tax asset - net                       11,980       17,257
    Other assets                                   18,352        8,777
      Total assets                               $133,074     $108,990
Liabilities and Stockholders' Equity
    Accounts payable                              $15,135      $11,034
    Other accrued liabilities                       7,227        8,165
    Current maturities on debt                        471            6
      Total current liabilities                    22,833       19,205
    Long-term debt                                 31,795       22,140
    Deferred tax liability                          2,622        3,123
    Other long-term liabilities                     4,216        1,361
      Total liabilities                            61,466       45,829
    Stockholders' equity                           71,608       63,161
      Total liabilities and stockholders' equity $133,074     $108,990

EBITDA - Unaudited                                    Years Ended:
                                                  Dec. 31,    Dec. 31,
                                                   1999         1998
    Net Income                                     $7,854      $17,154
      Tax Expense                                   2,690      (10,737)
      Interest Expense                              1,633        1,216
      Depreciation Expense                          3,307        2,804
      Amortization - Goodwill                       3,180        3,806
      Amortization - other                          3,155        2,219
                         Total                    $21,819      $16,462