Comdial will delay some shipments to January as demand outstrips production; action will reduce December- quarter earnings.

CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--Dec. 7, 1995--Comdial Corp. (Nasdaq NM:CMDL) Thursday said that results for its fourth quarter ending Dec. 31, 1995, will be below consensus expectations due to a larger-than-expected response to its new DXP products, to delayed shipments of its PATI product line and to increased expense related to a planned 50 percent increase in the company's sales force and a 25 percent increase in its software engineering staff.

President and chief executive officer William G. Mustain commented: "We expect that both revenue and earnings will be below consensus expectations for December due to the timing of shipments and expense. The good news is that the backlog entering January will be far higher than anticipated. Since the introduction of our new DXP products this fall, the demand for DXP Plus and other DXP products has far outstripped our ability to build and ship during the quarter.

"The ripple effect is that shipments of certain of our allied and alternative product lines have been slowed pending fulfillment of DXP orders, the bulk of which will be shipped beginning in January.

"In addition, the PATI 3000 product, which was announced in the fall, was expected to ship in sizable initial quantities during the December quarter. Due to the time required to implement software enhancements deemed necessary following field trials, we did not release PATI 3000 for customer deliveries until this week. Consequently the bulk of PATI 3000 shipments will also be made after January 1.

"Because we are experiencing very strong demand in a fast-growing industry, we made a strategic decision not to delay our increased staffing plans in sales and software, in spite of these timing problems with product shipments.

"We are committed to maximize our growing position in computer telephony integration (CTI), and are increasing the sales force by approximately 50 percent, and have hired approximately 25 percent more software engineers to speed up the development of additional CTI applications. The cost of these new hires will negatively affect the December-quarter results but, given the surging demand, we saw no reason to postpone bringing these people on board.

"The impact of delayed shipments and increased expense is likely to be that revenue will be in the range of $21 million, vs. the $22 million that analysts expect. EPS for the quarter, traditionally our slowest, are likely to be in the range of $0.05, as opposed to the general expectation for $0.10.

"Such earnings would give us a 1995 primary EPS of approximately $0.66, instead of the approximately $0.70 that analysts had predicted. However, these results will make 1995 a record year for Comdial in regard to both revenues and earnings. These EPS figures exclude a one-time tax benefit reported earlier in the year.

"In my opinion, 1996 will be a banner year for Comdial and for our DXP and CTI product lines. I also believe that our common stock is significantly undervalued at current prices."

Comdial is a leading designer, manufacturer and supplier of a broad range of advanced telecommunications products and systems solutions.

CONTACT: South Coast Communications

Joseph Allen, 714/252-8440