GENERAL DATACOMM INDUSTRIES INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 1995 Commission File number 1-8086
_______________

General DataComm Industries, Inc.
(Exact name of registrant as specified in its charter)

Delaware 06-0853856
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1579 Straits Turnpike
Middlebury, Connecticut 06762-1299
(Address of principal executive offices)

(203) 574-1118
(Registrant's telephone number, including area code)
______________

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

Title of each Class Name of each exchange on which registered
Common Stock, $.10 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 the 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. { }

The aggregate market value of the voting stock of the Registrant
held by nonaffiliates as of December 4, 1995: $345,692,624

Number of shares of Common and Class B Stock outstanding as of
December 4, 1995:

18,307,865 Shares of Common Stock
2,207,836 Shares of Class B Stock

Item 10 as to Directors and Items 11, 12 and 13 to be filed by
definitive proxy statement.
2
GENERAL DATACOMM INDUSTRIES, INC.

TABLE OF CONTENTS

PART I Page

Item 1. Business 3
Item 2. Properties 12
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of
Security Holders 13

PART II

Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters 14
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis
of Results of Operations and Financial
Condition 16
Item 8. Financial Statements and Supplementary Data 22
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure 36

PART III

Item 10. Directors and Executive Officers of the
Registrant 37
Item 11. Executive Compensation 39
Item 12. Security Ownership of Certain Beneficial
Owners and Management 39
Item 13. Certain Relationships and Related
Transactions 39

PART IV

Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 40

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PART I

ITEM 1. BUSINESS

General DataComm Industries, Inc. (the "Corporation" or "GDC")
was incorporated in 1969 under the laws of the State of
Delaware. Unless the context otherwise requires, the terms
"Corporation" and "GDC" as used here and in the following pages
mean General DataComm Industries, Inc. and its subsidiaries.

Overview

GDC is a leading worldwide provider of wide area networking and
telecommunications products. The Corporation designs,
assembles, markets, installs and maintains products and services
that enable telecommunications common carriers, corporations and
governments to build, upgrade and better manage their global
telecommunications networks. Products include Asynchronous
Transfer Mode ("ATM") cell switches, multiplexers,
internetworking equipment, digital data sets, analog modems,
network management systems and comprehensive support services.
The Corporation sells and leases its products through its own
worldwide sales and service organizations, as well as through
distributors, value-added resellers and system integrators.

GDC's customer base includes: Local Exchange Carriers including
all seven Regional Bell Operating Companies, Bell Canada and
GTE; Competitive Access Providers including MFS Datanet;
Interexchange Carriers including AT&T, MCI and Sprint; corporate
end users such as American Airlines, Citicorp, EDS, Chrysler,
Amoco, Hitachi and Hong Kong & Shanghai Bank; government
entities including the British Ministry of Defence, the French
Ministry of State, NASA, the U.S. State Department and many
state and local governments; and international communication
carriers such as Telecom Finland, Impsat (Argentina and
Colombia), Telefonos de Mexico, France Telecom and Deutsche
Telekom.

The Corporation's executive offices are located at 1579 Straits
Turnpike, Middlebury, Connecticut, 06762-1299 and its telephone
number is (203) 574-1118.

Strategy

The Corporation's broad product line provides integrated
networking solutions used to construct global data, voice and
video communications networks. The Corporation's core product
line of multiplexers and internetworking equipment, digital data
sets and analog modems has historically combined advanced wide
area networking technology with analog and digital transmission
capabilities. During the last several years the Corporation has
emphasized its digital product offerings over its analog
products as telephone companies upgrade their transmission
facilities and offer new digital services at substantially lower
rates.

In the early 1990s, the Corporation identified ATM technology as
the preferred solution for addressing problems caused by the
increasing limitations of conventional Local Area Network
("LAN") and Wide Area Network ("WAN") technologies. ATM
provides a dramatic increase in network capacity, carrying both
LAN and WAN traffic faster than conventional networking
technologies. ATM also enables the transmission of voice, video
and high-speed data traffic on a single communications line.
After reviewing various strategic alternatives for entering the
ATM market, the Corporation entered into a distribution and
technology transfer agreement with Netcomm Limited ("Netcomm")
in December 1992. The Corporation subsequently acquired Netcomm
in 1993.

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By offering ATM solutions to its customers, the Corporation
believes it has enhanced its position as a leading supplier of
wide area networking and telecommunications products. The
Corporation's strategy of providing integrated solutions to its
customers is based upon the following:

Capitalizing on ATM Technology. The Corporation believes it has
a leading position in the ATM switch market. The following
entities have deployed GDC's ATM cell switches in their ATM
networks: Bell Canada; MCI; MFS Datanet; Telecom Finland;
France Telecom and Deutsche Telekom. As of September 30, 1995,
GDC, including Netcomm, had shipped approximately 550 ATM
switches and related products to a variety of customers in
approximately 20 countries. Additionally, the Corporation has
shipped non-revenue products for trial and evaluation. The
Corporation also believes that growing market awareness of its
ATM switch technology has increased customer exposure to GDC's
other products.

Providing Cost-Effective Flexible Product Solutions. The
Corporation's product families are designed with architectures
that scale to most network sizes and cost requirements.
Customers can select the products that are most appropriate for
their needs and migrate to higher capacity products over time.
GDC's common software modules across product families allow the
end user to utilize a single network management system, which
provides value-added capabilities such as extensive alarm
reporting, diagnostics and advanced service restoral options for
each circuit in the network.

Improving Performance of Customer Networks. The Corporation's
products are designed to improve network efficiency by
increasing transmission speed, compressing and consolidating
voice and data communication and providing dynamic bandwidth
allocation.

Leveraging Global Customer Base, Distribution and Support. The
Corporation has a worldwide customer base of corporate and
government users and telecommunications carriers. The
Corporation has global distribution capabilities and products
installed in more than 60 countries around the world. GDC's
ability to provide international customer service and support is
critical to customers that run mission-critical applications
over their networks.

ATM Market

Background. Improvements in microprocessor technology over the
past several years have significantly changed the way users
design and build communications networks. Corporations are
migrating away from mainframe centric computer networks and
moving to client/server architectures in which increasing
processing power is located on the desktop. Personal computers
("PCs") and workstations are connected together to form LANs,
and large corporations today may have up to several hundred LANs
within their enterprise. LANs typically use shared medium
technologies like Ethernet, Token Ring and Fiber Distributed
Data Interface. These LAN technologies require that all users
contend for the available bandwidth and consequently, as the
number of users increases, throughput decreases. In addition,
users find that shared medium LANs cannot provide the bandwidth
necessary to support today's powerful PCs running
communication-intensive applications. As a result,
switched-connection architecture is now being implemented in the
LAN with several competing technologies, including ATM, vying
for the business.

WANs present an additional bottleneck constraining greater
deployment of enterprise-wide networks. The underlying WAN
architecture of the telephone companies is optimized for low
speed, constant bit-rate voice communications. It does not
scale well to accommodate high-speed, burst-oriented data
communications typical of a LAN. To address this problem,
telecommunications carriers have

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deployed fiber optic transmission facilities in their networks
over the past decade and are beginning to, or have announced
their intention to, test and deploy ATM switches as the platform
of choice for offering new, value-added services to their
customers. The need for more bandwidth in both the LAN and WAN
environments to support current data processing and networking
applications is a key factor driving demand for ATM products.
Increasing numbers of applications combining voice, video and
data will demand even more bandwidth than current applications

ATM Segments. Although currently in the early stages of
development, ATM is expected to become a leading transmission
switch technology for communications networks. Within the broader ATM
market, the Corporation has identified the four distinct segments
described below and has chosen to pursue the enterprise and edge
switch segments.

Workgroup Hub. ATM workgroup hubs are devices used to connect
high-speed workstations and servers to form a high performance,
local computing environment. The Corporation expects switched
Ethernet and virtual LAN architectures to be the dominant
approaches to creating this high-performance local computing
environment and anticipates a gradual migration to ATM desktop
connectivity. GDC intends to address this market segment
through partnerships or potential acquisitions in order to
provide a timely entrance into this market.

Enterprise Switch. Enterprise switches are used to interconnect
a broad range of customer premise equipment, including LAN hubs,
routers, multiplexers, PBXs and video codecs, across a campus or
a more geographically dispersed area to create high-speed
backbone networks linking major corporate locations. Key market
requirements include a fault tolerant architecture and the
ability to support a broad range of interfaces and adaptation
capabilities for new, as well as legacy, technologies.

Edge Switch. The telecommunications carrier edge switch is
typically located in the central office of a Local Exchange
Carrier, an Interexchange Carrier, a Competitive Access Provider
or a Cable TV Operator. Switches are used as platforms to
provide services to a number of end user locations. Common
carriers also utilize these switches in the basements of
buildings to offer new services to multiple customers. As with
the enterprise switch market, fault tolerance and the ability to
support a broad range of interfaces and adaptation capabilities
are key requirements because carriers need maximum flexibility.
In addition, the unique packaging and environmental requirements
of telecommunications carriers must be met.

Central Office Switch. At large central offices, all traffic in
the network hierarchy has been converted into ATM cells and the
required switches must provide up to hundreds of gigabits of
throughput. GDC does not intend to address this market directly
as the Corporation views the development costs of these switches
to be high and believes this market is currently served by
established central office switching providers. Rather, the
Corporation has developed strategic partnerships with
participants in this market, such as Siemens, Ericcson and DSC
Communications Corporation, as a vehicle for enhancing its
position in the edge and enterprise switch markets.

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GDC's Target ATM Segments. The enterprise and edge switch
markets, which the Corporation is pursuing, address the points
in a network where LAN, voice, video and other data applications
converge with WANs and the greatest bandwidth bottlenecks exist.
The Corporation also believes that, at present, these two
segments are not adequately served by any established vendors.

Products

In fiscal 1995, sales and leases of products represented
approximately 83% of revenues while service revenues
represented about 17% of revenues. GDC's line of products
includes:

Multiplexers/Internetworking Products. GDC's multiplexer and
internetworking products family includes systems for both branch
office and corporate backbone locations which integrate voice,
traditional data, video and LAN traffic over narrowband (56/64
Kbps) or wideband (fractional T1/E1 and T1/E1) digital services.
By consolidating multiple forms of traffic over a single
transmission line, these products dramatically decrease an end
user's network costs. The Corporation's products integrate both
time division multiplexing and packet switching (LAN routing and
frame relay switching), thereby providing a flexible networking
platform.

For the corporate backbone locations, the Corporation offers the
TMS 3000 which supports a wide range of voice, facsimile, LAN,
traditional data and video applications. In April 1993, GDC
introduced the Office Communications Manager ("OCM"), a
cost-effective networking solution for the branch office
location, which offers the integration of voice, LAN routing,
frame relay and traditional data at speeds ranging from 9.6 Kbps
to T1/E1.

In corporate backbone environments requiring broadband speeds
and services, the Corporation's APEX ATM switches can be used.
The TMS 3000 and OCM can feed into the APEX switch enabling the
Corporation to offer an integrated networking solution that
scales from small remote or branch locations into regional
wideband backbones and ultimately into ATM-based broadband
backbones. Selling prices vary widely depending upon the size
and complexity of the system being ordered.

Digital Data Sets. Digital data sets are used to convert and
interpret signals from computers and communications equipment
into a form that is acceptable for transmission over
telecommunications facilities. The Corporation offers a broad
set of narrowband digital data sets that run at various speeds
up to 64 Kbps and wideband digital data sets operating at
fractional T1 and T1 speeds. GDC recently introduced broadband
data sets running at T3 rates. GDC supplies its digital data
sets to the major North American telephone companies and various
end users. GDC continues to enhance its digital transmission
product line by combining higher transmission speeds with
value-added capabilities including data compression,
concentration, protocol adaptation/conversion and network
management. This enables the Corporation to offer
differentiated, and, in some cases, unique transmission
solutions.

The Corporation is leveraging its digital transmission expertise
by pursuing international markets. In China and in developing
countries in Latin America and the Pacific Rim, there is
insufficient copper wire installed to support the growing demand
for communications services. The Corporation believes it is
responding to these needs by offering new products utilizing
transmission technologies like 2B1Q

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(Two Binary One Quarternary) and HDSL (High Speed Digital
Subscriber Line). These products offer much higher transmission
speeds while using half of the copper wire pairs normally needed
to provision private line services.

Analog Modems. Analog modems convert digital computer signals
to a format that can be transmitted over telephone lines. The
market for private line modems has been shrinking as telephone
networks move from an analog to a digital format. However, with
the growth of telecommuting and Internet access, the market for
dial-up modems is continuing to grow. The Corporation offers a
broad range of private line and dial-up analog modems operating
at all standard speeds up to 28.8 Kbps.

GDC began shipments of its new modem family, known as the V.F.
28.8 family, in the first quarter of fiscal 1994. These modems,
which are compliant with the global transmission standard V.34,
offer transmission speeds twice as fast as modems conforming to
any pre-V.34 standards with throughputs of up to 115 Kbps over
basic analog dial-up facilities or over two-wire analog private
line circuits. The V.F. 28.8 enables faster transmission speeds
on a single pair of wires whereas traditional analog
provisioning requires two pairs. In fiscal 1995, the
Corporation added standards-based SNMP (Simple Network
Management Protocol) network management capability to its V.34
modems. These modems are sold through direct and indirect sales
channels throughout the world. V.34 modem sales doubled in
fiscal 1995 versus fiscal 1994 but are still not a significant
part of the Corporation's aggregate product revenues.

In fiscal 1995, the Corporation entered into a licensing
agreement with a semiconductor manufacturer which will produce
V.34 modem-integrated circuit chips for the mass modem market.
The Corporation will receive royalties from the sale of such
chips.

ATM Switches and Network Management Systems. The Corporation
currently offers a family of ATM switches and access products
for both public and private networks under the GDC APEX name.

The APEX product line consists of the APEX-DV2, the APEX-NPX,
the APEX-MAC and the APEX-MAC1.

Switch Specifications Targeted Segment

APEX-DV2 Provides up to 6.4 Gbps Enterprise switch for
of capacity and support for corporate and government
up to 64 ports within a single users.
shelf, utilizing AC power supplies.

APEX-NPX Provides up to 6.4 Gbps of Edge switch for common
capacity and support for up carriers,
to 64 ports within a single including telephone
shelf, utilizing DC power and cable television
DC power supplies. companies.

APEX-MAC Provides up to 2.8 Gbps of Lower capacity enterprise
capacity and support for 14 to switch for corporate and
28 ports within a single shelf. government users and
common carriers.

APEX-MAC1 Provides up to 1.6 Gbps of Access concentrator for
capacity and support for 8 to 16 corporate and government
ports within a single enclosure. users and common carriers.

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GDC's APEX-NMS 3000 Network Management System supports the
Corporation's APEX-ATM switches. The network management
platform offers a powerful UNIX-based, object-oriented system
employing a graphical user interface for ATM network management
via the industry-standard Simple Network Management Protocol.
The APEX-NMS 3000 enables a network manager to configure
APEX switches and monitor the ATM switch network, the capacity
and utilization of each ATM node and the status of each other
component of the network.

Several major carriers have begun deploying GDC-APEX ATM
switches as their platform for provisioning new data
communications services. A number of corporate customers also
have purchased APEX switches. The Corporation believes its
family of APEX switches have the following competitive features:

Scalability, allowing a customer to construct a multitiered
switch network that scales in price and performance.

Flexibility, providing the customer with comprehensive
interfaces and adaptation capabilities.

Traffic management architecture, providing networks with
traffic policing, traffic prioritization and buffer management
capabilities.

Switched virtual circuits, dynamically establishing connections
on an end-to-end basis.

Selling prices vary directly with the size and complexity of the
systems being ordered.

Acquisition Strategy

As part of its business strategy, the Corporation actively
reviews acquisition opportunities, including those which may
complement its product lines, provide access to emerging
technologies or enhance market penetration. In November 1993,
the Corporation acquired Netcomm for $5.5 million in cash and
$1.8 million in Common Stock. Future acquisitions could be for
stock or cash or a combination thereof and could be
substantially larger than past acquisitions. The Corporation at
this time has no understandings or commitments to make any
acquisitions and there can be no assurances that any
acquisitions will be made.

Marketing, Sales and Customers

The Corporation's products and networks are marketed throughout
the world. GDC's sales and marketing organization, which, at
September 30, 1995, consisted of approximately 451 employees, is
organized on a worldwide basis to address three market segments:
(1) corporate and government end users; (2) common carriers; and
(3) indirect sales through value-added resellers and distributors.
In the United States, the Corporation sells, leases and services its
equipment primarily through its own sales and service groups,
which include separate geographic sales and technical support
organizations for corporate and government end users and common
carrier markets. In fiscal 1995, a National Resellers Division
was established as part of the U.S. Sales organization to more
aggressively pursue distributors, value-added resellers and
system integrators as channels to market. No customer accounted
for 10% or more of the Corporation's revenues during any of the
past three fiscal years.

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Internationally, GDC maintains full subsidiary operations in
Canada (sales and service), the United Kingdom (sales and
service), Mexico (sales and service), France (sales and
service), Germany (sales and service), Australia (sales),
Singapore (sales) and Russia (sales), and sales and technical
support offices in Japan, Hong Kong, China, Brazil and Spain.
These sales offices manage a worldwide distribution network with
representatives in more than 60 countries. International
operations represented approximately 40% of the Corporation's
revenues in fiscal 1995. GDC's foreign operations are subject
to all the various risks inherent in operating outside the U.S.
and Canada.

Selected users of the Corporation's products include:

Telecommunications Commercial Financial Services

Alascom American Airlines Boatmen's Bancshares
Ameritech EDS Cecoban (Mexico)
AT&T Harris Citicorp
Bell Atlantic Hitachi Fiserv
Bell Canada Lockheed Hong Kong & Shanghai Bank
BellSouth Loral Key Services
British Telecom TRW Quotron Systems
Netherlands PTT Shawmut Bank
GTE Government Telerate Systems
Guangdong PTA (China) British Ministry of Wheat First
Sprint Defence Butcher & Singer
Impsat (Agrentina, French Ministry of Securities
Columbia) State
MCI NASA
MFS Datanet Los Angeles, City and
NYNEX County
Pacific Bell New York City Transit
SNET Authority
Southwestern Bell U.S. State Department
Telefonos de Mexico Various state governments,
US West including: California,
France Telecom Florida, Michigan, Ohio
Deutsche Telekom and Texas

While the majority of the Corporation's products are sold on an
outright basis, the Corporation also leases its equipment
through a wholly-owned consolidated subsidiary under a versatile
selection of leasing programs designed to meet the specific
needs and objectives of its customers. At September 30, 1995,
the Corporation's leasing subsidiary had agreements in place
with financial institutions whereby certain finance lease
receivables can be transferred with full recourse. Each request
for financing is subject to the approval of the financing
institution.

The Corporation's order backlog, while one of several useful
financial statistics, is, however, a limited indicator of the
Corporation's future revenues. Because of normally short
delivery requirements, the Corporation's sales in each quarter
primarily depend upon orders received and shipped in that same
quarter. In addition, since product shipments are historically
heavier in the last month of each quarter, quarterly revenues
can be adversely or beneficially impacted by several events:
unforeseen delays in product shipments; large sales that close
at the end of the quarter; sales order changes or cancellations;

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changes in product mix; new product announcements by the
Corporation or its competitors; and the capital spending trends
of customers.

Industry and geographic area information is hereby included in
Note 9 of "Notes to Consolidated Financial Statements." See
"Index to Financial Statements and Schedules" on page F-1 in
this report.

Customer Service and Support

GDC provides comprehensive technical support crucial for its
telecommunications carrier, corporate and government customers
that run mission-critical applications over their networks.
Each of the Corporation's sales subsidiaries directly provides
its own support capabilities, augmented by third party service
providers when necessary. Authorized distributors provide their
own support services and participate in service certification
programs administered by the Corporation's service division.

The Corporation's service and support programs include product
repair, logistics support, installation, maintenance,
educational services and on-line network management services.
Services are supported by field service engineers, technical
support staff and Technical Operations and Assistance Centers
("TOAC") located in the U.S., Canada and the United Kingdom.
TOACs in the U.S. and United Kingdom are staffed 24 hours a day,
365 days a year. The Corporation offers various value added
services, including First ResponseTM, an outsourcing service by
which TOAC Technicians monitor and manage customer networks on a
remote basis. Customers of GDC's service and support programs
include Bell South Mobility, New York City Transit Authority,
the State of Michigan and Volvo. At September 30, 1995, GDC had
306 people engaged in services and support activities.

Research, Engineering and Product Development

In order to develop and implement new technology in the data,
voice and video communications industry and to broaden the
applications for its products, the Corporation has significant
ongoing engineering programs for product improvement and new
product development. At September 30, 1995, 369 people were
engaged in research and development activities. The Corporation
conducts research and development activities in three locations.
Development for all transmission products, multiplexer and
internetworking products, enhancements to the APEX-ATM switch
products and continuation engineering activities occur in the
Technology Research Center in Middlebury, Connecticut. The
Multimedia Research Center in Montreal, Quebec, focuses on
ATM-based applications and solutions, and the Advanced Research
Centre in Basildon, England, focuses on next-generation ATM
hardware and software.

The combination of research, development and capitalized
software spending amounted to 18.3%, 15.7% and 14.1% of revenues
in fiscal 1995, 1994 and 1993, respectively. In order to
support its commitment to new products and technologies, the
Corporation expects to continue or to increase these levels of
spending on research and product and software development.

Manufacturing

GDC's principal assembly plant is a Corporation-owned, 360,000
square foot facility located in Naugatuck, Connecticut, of which
approximately 210,000 square feet are currently being utilized.
The Corporation also outsources the manufacturing and assembly
of certain subassemblies, generally high volume and power and
packaging items. Outsourced products represented approximately
26% of the manufacturing assembly during the 1995 fiscal year.

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GDC's Connecticut facilities are ISO 9001 certified. ISO 9001 is
a comprehensive model for quality assurance in
design/development, production, installation and servicing. It
was developed by a technical committee comprised of
representatives from over 90 countries under the direction of the
Geneva-based International Organization for Standardization. GDC's
United Kingdom facilities are BS 5750 certified. Awarded by the British
Standards Institute, BS 5750 also is a comprehensive quality
assurance model. The Corporation's Montreal, Canada sales and
service facility received ISO 9002 certification in October 1995.
ISO 9002 covers quality assurance in production, installation and
servicing; it does not not cover design and development.

Competition

Each of the segments of the telecommunications and networking
industries is intensely competitive. Many of the Corporation's
current and prospective competitors have greater name
recognition, a larger installed base of networking products,
more extensive engineering, manufacturing, marketing,
distribution and support capabilities and greater financial,
technological and personnel resources.

Many of the participants in the networking industry, including,
among others, ADC Telecommunications, Bay Networks, Cascade
Communications, Cisco, ECI Telecom, FORE Systems, Newbridge Networks
and StrataCom, and certain participants in the computer industry,
including among others, DEC and IBM, have introduced, or announced their
intention to develop, ATM networking products. Other companies are
expected to follow. In addition, traditional suppliers of central office
switching equipment such as Alcatel, AT&T Network Systems, DSC
Communications Corporation, Fujitsu, Hitachi, LM Ericsson,
Northern Telecom and Siemens, are expected to offer ATM-based
switches for central offices. Companies may also develop
alternative network solutions to ATM. Even though certain of
these ATM competitors currently offer or plan to offer ATM
products in markets in which the Corporation does not plan to
compete, it is possible that such competitors will develop ATM
technology that does compete with the Corporation's products.
This competition could result in the same intense price
competition that is present in the broader networking market.

Patents and Related Rights

The Corporation presently owns approximately 61 domestic
patents and has approximately 9 additional applications pending.
In addition, all of these patents and applications have been
filed in Canada; most also have been filed in other various
foreign countries. Most of those filed outside the United
States have been allowed while the remainder are pending. The
Corporation believes that certain features relating to its
equipment for which it has obtained patents or for which patent
applications have been filed are important to its business, but
does not believe that its success is dependent upon its ability
to obtain and defend such patents. Because of the extensive
patent coverage in the data communications industry and the
rapid issuance of new patents, certain equipment of the
Corporation may involve infringement of existing patents not
known to the Corporation.

Employee Relations

At September 30, 1995, the Corporation employed 1,781 persons,
of whom 369 were research and development personnel, 509 were
manufacturing personnel, 451 were employed in various selling
and marketing activities, 306 were in field services and 146
were in general and administrative activities. No Corporation
employees are covered by collective bargaining agreements. The
Corporation has never experienced a work stoppage and considers
its relations with its employees to be good.

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Reliance on Key Components

The Corporation's products use certain components, such as
microprocessors, memory chips and pre-formed enclosures that are
acquired or available from one or a limited number of sources. The
Corporation has generally been able to procure adequate supplies of
these components in a timely manner from existing sources. While
most components are standard items, certain application-specific
integrated circuit chips, used in many of the Corporation's products, are
customized to the Corporation's specifications. The suppliers
of components do not operate under contract. The Corporation's
inability to obtain a sufficient quantity of components as
required, or to develop alternative sources at acceptable prices
and within a reasonable time, could result in delays or
reductions in product shipments which could materially affect
the Corporation's operating results in any given period.

ITEM 2. PROPERTIES

The principal facilities of the Corporation are as follows:

Middlebury, Connecticut -- executive offices of the Corporation
and of Data Comm Leasing Corporation located in a 120,000
square foot facility owned by the Corporation

Naugatuck, Connecticut -- principal assembly, test and systems
integration operations and service division located in a 360,000 square
foot facility owned by the Corporation

Middlebury, Connecticut -- engineering organization located in a
275,000 square foot facility leased through 2003 by the Corporation;
approximately 80,000 square feet are sub-leased to a third party through
December 1999

Wokingham, England -- sales, service, systems integration and
administrative offices (including a parking garage) located in a
36,000 square foot facility owned by General DataComm Limited

Toronto, Canada -- sales and administrative offices located in a
12,000 square foot facility leased through November 2004 by General
DataComm Ltd.

Montreal, Canada -- a 20,000 square foot research, sales and
service facility leased through February 2000 by General DataComm Ltd.

Paris, France -- sales and administrative offices located in a 10,000
square foot facility leased through April 1997 by General DataComm France
SARL

Mexico City, Mexico -- sales, service and administrative offices
located in a 4,400 square foot facility leased through August 14,
1997 by General DataComm de Mexico S.A. de C.V.

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Basildon, England -- engineering organization located in 8,500
square foot facility owned by General DataComm Advanced Research Centre
Limited

In addition, the Corporation leases sales, service and engineering offices
throughout the United States and in international locations.

Approximately sixty (60) percent of the 360,000 square-foot
Naugatuck, Connecticut, facility is being utilized by the
Corporation's manufacturing (assembly, test and systems
integration) operations. The plant is currently operating at
37% utilization by running partial first and second shifts. With
two full shifts, the aggregate productive
capacity would be approximately 565,000 printed circuit boards
per year. The Corporation has the capability of adding a third
shift should product demand require it.

ITEM 3. LEGAL PROCEEDINGS

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

- 13 -

14
PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

Common Stock Prices

General DataComm Industries, Inc.'s Common Stock is listed on
the New York Stock Exchange and trades under the symbol "GDC."
The table below shows the intra-day high and low and closing
sales prices as reported during each quarter of the last two
fiscal years.

1995 1994

Quarter High Low Closing High Low Closing

First 34 7/8 23 3/8 32 3/8 11 7/8 8 5/8 10 3/8
Second 35 7/8 12 7/8 14 3/4 17 5/8 8 1/4 13 1/8
Third 14 7/8 9 3/8 12 1/2 16 3/4 10 16
Fourth 15 3/8 11 5/8 14 3/4 30 1/4 15 1/4 28 1/4

No cash dividends have ever been paid on the Common or Class B
Stock. The Corporation's principal loan agreement does not
allow payment of cash dividends. In the event this would
change, it is still management's intention to reinvest future
earnings in the business to support growth plans.

The Corporation had approximately 1,797 shareholders of record
at November 30, 1995.
-14-
15

ITEM 6. SELECTED FINANCIAL DATA

Five-Year Selected Financial Data
In thousands except per share, ratio and employee data

Years ended September 30, 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------

Operations
Revenues $221,193 $210,990 $211,847 $197,858 $191,686
Inventory write-down
and other items (7,600) - - - (1,100)****
Operating income(loss) (24,618) 661 8,997 5,549 4,405
- -----------------------------------------------------------------------------
Income (loss) before
cumulative effect
of accounting changes ($27,630) ($1,895) $6,116 $2,643 $598
Net income (loss) (27,630) (2,328)* 6,116 2,643 598
Earnings (loss) per
share before cumulative
effect of accounting
changes ($1.40) ($0.11) $0.36 $0.17 $0.04
Earnings (loss) per
share (1.40) (0.14) 0.36 0.17 0.04
- -----------------------------------------------------------------------------
Financial Position
Working capital $63,287 $56,413 $38,245 $43,467 $36,937
Current ratio 2.2:1 2.2:1 1.9:1 2.1:1 1.7:1
Total assets 198,388 180,264 141,676 127,654 134,945
Long-term debt, less
current 23,435 42,118 28,402 23,711 14,973
Stockholders'
equity*** 117,085 84,487 67,028 60,290 57,948
- -----------------------------------------------------------------------------
General
Research and product
development:
Gross spending
(before software
capitalization) $40,439 $33,189 $29,829 $25,184 $24,623
Net expense 28,244 20,076 19,279 15,910 15,610
Depreciation 10,530 8,776 7,985 8,686 10,251
Investments in
property, plant
and equipment 16,398 11,534 22,378 ** 7,157 5,920
Cash flows provided
(used) by (5,553) (3,521) 27,406 25,738 17,546
- -----------------------------------------------------------------------------
Average number of
common and common
equivalent shares
outstanding 19,772 16,659 16,874 15,505 15,409
Average number of
employees 1,849 1,823 1,805 1,764 1,899
- -----------------------------------------------------------------------------

(* - Fiscal 1994 net (loss) includes: (i) after-tax charges
totaling $(433), or ($0.03) per share, resulting from the
adoption of Financial Accounting Standards Nos. 106 and 112
effective October 1, 1993, and (ii) an income tax benefit of $1,700,
or $0.10 per share, relating to the resolution of a foreign tax issue.

(** - Fiscal 1993 includes the purchase of the Corporation's
principal manufacturing facility and corporate headquarters for
$14,473.

(***-The Corporation has never paid cash dividends, and
dividends are not permitted by the Corporation's prinicpal loan
agreement.

(**** -In fiscal 1991, restructuring charges of $1,100 were
incurred for severance and other costs related to a work force
reduction.

-15-
16

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

General Summary Discussion

This was a year of transition for the Corporation as its focus
shifted heavily toward the development and introduction of new
products and features in its line of ATM (Asynchronous Transfer
Mode) products. The complexity of this technology required
large investments in research and development and in retooling
of manufacturing operations. Although ATM product revenues more
than doubled to almost $28.0 million for the fiscal year, time
taken to resolve technical issues with vendor-supplied parts
delayed achievement of a potentially higher shipment level.

Due to the general emergence of digital technology, the
Corporation continued to experience a decline in its private
line analog product family, which was down 35% for the fiscal
year. Investments in this area have been held to a minimum to
maximize profits on these sales, which now account for
approximately 11% of total product sales.

Overall, revenues for fiscal 1995 increased $10.2 million, or
4.8%, to $221.2 million from $211.0 million in fiscal 1994.
However, revenues fell below planned levels, contributing to a
net loss of $(27.6) million, or $(1.40) per share, including a
$(7.6) million, or $(0.38) per share, charge principally for
inventory write-downs. This compares to a net loss of $(2.3)
million, or $(0.14) per share, in fiscal 1994.

Growth in costs and operating expenses were due to the
Corporation's decision to continue its investments despite the
revenue shortfall. These investments included engineering
development, marketing and manufacturing programs associated
with the ATM products. In addition, strategic investments in
expansion of international sales and support operations also
contributed to higher expense levels.

To help fund these investments and to support growth plans,
the Corporation completed the sale of 2,070,000 shares of Common
Stock pursuant to an underwritten public offering in the first
quarter of fiscal 1995. The net proceeds of approximately $58.1
million were used to reduce debt and to provide additional
working capital.

Results of Operations

The following table sets forth selected consolidated financial
data stated as a percentage of total revenues:

Years Ended September 30, 1995 1994 1993
- -----------------------------------------------------------------------------

Revenues:
Net product sales 80.5% 80.6% 80.9%
Service revenue 16.8 16.2 15.5
Leasing revenue 2.7 3.2 3.6
- -----------------------------------------------------------------------------
100.0 100.0 100.0
- -----------------------------------------------------------------------------
Costs and expenses:
Cost of revenues 49.8 47.7 48.2
Inventory write-down and
other items 3.4 - -
Amortization of capitalized
software development costs 5.2 4.6 3.9
Selling, general and
administrative 39.9 37.9 34.6
Research and product development 12.8 9.5 9.1
- --------------------------------------------------------------------------
Operating income (loss) (11.1) 0.3 4.2
- --------------------------------------------------------------------------
Net income (loss) (12.5)% (1.1)% 2.9%
==========================================================================

-16-
17

1995 Compared with 1994

For the 1995 fiscal year, net product sales increased $8.1
million, or 4.8%, service revenue was up $2.9 million, or 8.3%,
and leasing revenue was down $796,000, or 11.7%. International
product revenues grew $8.6 million and service revenues grew
$1.5 million, with increased business in Europe, as well as in
emerging Asian markets. Domestic product revenues were
maintained at about the same level as in fiscal 1994 and were
impacted by the decline in private line analog business which
offset growth in the ATM business. Also, domestic product
revenues from telephone companies grew while direct end user
sales declined.. Domestic service revenues increased $1.3
million, due to new types of service offerings.

Gross margin (excluding inventory write-down and other items,
and amortization of capitalized software development costs) as a
percent of revenues declined 2.1%, to 50.2% in fiscal 1995 from
52.3% in fiscal 1994. The reduction was attributable to high
startup costs associated with the APEX ATM product family and
reduced sales prices, particularly on certain analog products.
Inventory write-down and other items totaled $7.6 million in
fiscal 1995. These charges primarily related to both rapid
technological improvements which served to devalue earlier
generations of the APEX ATM product line and to performance
issues in vendor-supplied component parts. Amortization of
capitalized software development costs increased to $11.5
million in fiscal 1995 from $9.7 million in fiscal 1994. High
technology products, in particular, are subject to sales price
pressures as competition grows and sales cycles reach maturity.
The Corporation works to offset the effect of price pressures by
negotiating lower material component prices, improving
manufacturing costs and efficiencies and introducing new
generation products.

Selling, general and administrative expenses increased $8.3
million, or 10.4%, in fiscal 1995, principally due to a growing
APEX ATM marketing organization and related product launch
expenses (an increase of $1.8 million), expansion of
international selling organizations (an increase of $4.0
million) and the remainder (an increase of $2.5 million), due to
higher costs of medical insurance, salary increases, employee
hiring and relocation, among others As a percent of revenue,
selling, general and administrative expenses rose to 39.9% of
revenues in fiscal 1995 from 37.9% in fiscal 1994.

In fiscal 1995, research and product development spending,
before considering the reduction for capitalized software
development costs, increased to $40.4 million, or 18.3% of
revenues, from $33.2 million, or 15.7% of revenues, in fiscal
1994. This increase, 21.8% year-over-year, reflects continued
investment (an increase of $12.7 million) in ATM development in
three research centers: the Montreal Research Center (Canada);
Advanced Research Centre (UK); and the domestic ATM Product
Development Group (CT, USA), which was offset by reduced
investments in other product lines. The timing , technical
complexity and nature of ATM software development projects
contributed to a reduction in the capitalization of software
development costs to $12.2 million in fiscal 1995 from $13.1
million in fiscal 1994, and, as a percent of total research and
development spending, such capitalized costs fell to 30.2% in
fiscal 1995 from 39.5% of total spending in fiscal 1994.

Net interest expense in fiscal 1995 decreased $1.4 million, or
37.7%, compared to fiscal 1994. This reduction reflected the
impact of the cash proceeds received from an equity offering
and the related favorable impact of interest income earned on
short-term investments and reduced borrowing levels.

-17-
18

The fiscal 1995 income tax provision of $1,150,000 consists
primarily of foreign income taxes. This compares to an income
tax benefit of $975,000 in fiscal 1994, which resulted from the
resolution of a foreign tax issue in the amount of $1.7 million
offset by provisions for foreign and state income taxes. The
Corporation has significant net operating loss carryforwards
(approximately $52 million at September 30, 1995) available to
offset future federal income taxes. These net operating losses
begin to expire in the year 2003.

1994 Compared with 1993

Revenues for fiscal 1994 were slightly lower (0.4%) than fiscal
1993. However, fiscal 1994 fourth quarter revenues rose $8.0
million, or 15.4%, over the fourth quarter of fiscal 1993.
Growth markets in the fiscal 1994 fourth quarter included both
the domestic carriers, which increased by $1.3 million, or
10.3%, and many international areas, which increased by $6.8
million, or 39.4%. New products, such as ATM cell switches, V.F
28.8 modems and additions to digital data set and multiplexer
product lines, sold higher volumes compared to the prior
quarters of fiscal 1994, offset in part by a reduction in
traditional analog modem shipments. For the 1994 fiscal year,
net product sales were down $1.5 million, or 0.1%, service
revenue was up $1.4 million, or 4.2%, and leasing revenue
was down $737,000, or 9.8%.

Gross margin (excluding amortization of capitalized software
development costs) as a percent of revenues improved slightly
(0.5%) to 52.3% in fiscal 1994 from 51.8% in fiscal 1993.
However, amortization of capitalized software development costs
charged to cost of product sales increased to $9.7 million in
fiscal 1994 from $8.3 million in fiscal 1993 and had the effect
of reducing gross margins by 0.7%.

Selling, general and administrative expenses increased $6.8
million, or 9.2%, in fiscal 1994, principally due to strategic
investments made in ATM marketing operations (an increase of
$1.1 million) and in international selling organizations (an
increase of $4.3 million). Since there was no corresponding
growth in revenue until the second half of the fiscal year,
selling, general and administrative expenses rose to 37.9% of
revenues from 34.6% in fiscal 1993.

Research and product development spending, before considering
the reduction for capitalized software development costs,
increased to $33.2 million, or 15.7% of revenues, from $29.8
million, or 14.1% of revenues, in fiscal 1993. This increase,
11.3% year-over-year, reflects the acquisition of Netcomm and
its subsequent conversion to a dedicated ATM research facility
($947,000), the start-up of a new ATM product development
facility in Quebec, Canada ($395,000), and the strategic
repositioning of the domestic product development organization
($2.0 million). The increase in capitalized software
development costs to $13.1 million, or 39.5% of total spending,
in fiscal 1994, from $10.6 million or 35.4% of totaling spending
in fiscal 1993, is directly related to the increasing software
content within the Corporation's products.

Interest expense in fiscal 1994 increased $1.8 million, nearly
double the fiscal 1993 level. The Corporation purchased and
concurrently mortgaged two of its principal facilities in
September 1993, adding $630,000 to interest expense, which was
offset by lower rent expense. Also, the higher interest levels
reflected an increase in borrowing levels attributable to the
acquisition cost of Netcomm in November 1993 (approximately
$400,000 in interest), the related investments since made to
support the ATM product line and investments in international
sales organizations.

The fiscal 1994 income tax benefit of $975,000 is comprised of
a $1.7 million favorable resolution of a foreign tax issue
offset by $725,000 in provisions for state and foreign income
taxes. The Corporation has significant net operating loss
carryforwards (approximately $35 million at September 30, 1994)
available to offset future federal income taxes.

-18-
19

Financial Condition and Liquidity

The Corporation's cash and cash equivalents improved to $18.4
million at September 30, 1995, as compared to $2.9 million at
September 30, 1994. Bank debt was reduced to $36.0 million at
September 30, 1995, as compared to $47.4 million at September
30, 1994. Also, the Corporation has accumulated $2.9 million of
cash on deposit in an escrow account, which is available to pay
certain real estate lease obligations beginning in March 1996.

Operating

Non-debt working capital, excluding cash and cash equivalents,
decreased $1.3 million in fiscal 1995 to $57.4 million at
September 30, 1995. The decrease resulted primarily from a
decrease in accounts receivable, which was partially offset by
an increase in net inventories and a decrease in current
liabilities. Accounts receivable decreased $6.6 million in
fiscal 1995 to $43.0 million at September 30, 1995, due to the
level and timing of revenues in the fourth quarter of fiscal
1995 and to more favorable collection activities. Inventory
grew $8.6 million, but was offset by a provision for a
write-down of ATM inventory so that the net increase was only
$2.8 million. The increase in gross inventories, before
write-downs, the net loss in fiscal 1995 and other items,
contributed to the $5.6 million net cash used by operating
activities in fiscal 1995 compared to the $3.5 million net cash
used in fiscal 1994 and to the $27.4 million net cash provided
in fiscal 1993.

Investing

Investing activities during fiscal 1995 were comprised of net
additions to property, plant and equipment of $16.3 million,
including new surface-mount equipment, ATM test equipment and
improvements related to the relocation of the service
organization, and additions to capitalized software development
costs of $12.2 million. Any future product growth will increase
capital requirements for manufacturing and development
equipment. However, due to the completion of certain large
capital projects in fiscal 1995, the Corporation anticipates
that fiscal 1996 net additions to property, plant and equipment
may be lower than fiscal 1995 expenditures. Cash used for
investing activities decreased $1.8 million in fiscal 1995
versus fiscal 1994. This was attributable to $5.9 million
relating to the acquisition of Netcomm in fiscal 1994 and a
decline in capitalized software of $0.9 million in fiscal 1995,
offset by an increase in additions to property, plant and
equipment of $5.0 million in fiscal 1995. Cash used for
investing activities grew $10.2 million in fiscal 1994 versus
fiscal 1993, $5.9 million of which related to the acquisition of
Netcomm. The balance of the increase, $4.3 million, related to
additions to property, plant and equipment and capitalized
software.

Financing

Financing activities during fiscal 1995 added $49.9 million in
cash, representing $58.1 million from the sale of common stock,
as described below, $3.2 million from the issuance of common
stock pursuant to employee stock programs and $4.8 million from
long-term borrowings, partially offset by the net repayment of
the Corporation's revolving credit loan of $16.2 million.

On December 22, 1994, the Corporation completed the
sale of 2,070,000 shares of Common Stock pursuant to an
underwritten public offering. The sales price was $29.875 per
share before offering costs and commissions. The net proceeds
of approximately $58.1 million were used to reduce debt and to
provide additional working capital for general corporate
purposes, including development and expansion of the APEX ATM
product family.

-19-
20

In November 1995, the Corporation entered into an amended
revolving credit agreement maturing in November 1998 that
provides for borrowings of up to $25.0 million, reduced by the
value of outstanding letters of credit issued by the lenders on
behalf of the Corporation of up to $5.0 million. Interest is
charged at the higher of either (1) the prime rate plus 3/4 of
1%, or (2) the federal funds rate plus 1.25%. Alternatively,
the Corporation may elect to borrow at 2.75% over LIBOR for
terms of 1, 2, 3 or 6 months. The agreement imposes various
financial covenants, requires that most accounts receivable and
inventories be pledged as collateral and limits the permitted
amount of borrowing through an asset-based formula. This
amended agreement replaced the prior revolving credit agreement
that also provided for borrowings of up to $25.0 million. There
was no balance outstanding under the prior revolving credit
agreement as of September 30, 1995.

In September 1993, the Corporation purchased its corporate
headquarters and manufacturing facilities and concurrently
entered into mortgages to partially finance these purchases.
The mortgage balances outstanding at September 30, 1995 totaled
$11.0 million. Interest is charged at LIBOR (90-day) plus 2%.
The principal payments are $100,000 per quarter and the
mortgages mature in the year 2003.

Notes payable at September 30, 1995 includes a term loan in the
amount of $6.6 million, which was paid in its entirety in
November 1995 in conjunction with the amended revolving credit
agreement mentioned above. Therefore, such note payable was as
a current liability at September 30, 1995. Other notes payable
and capitalized lease obligations, both used to finance capital
equipment purchased, totaled $15.6 million at September 30, 1995
and have four or five-year maturities.

Cash provided by financing activities of $49.9 million in
fiscal 1995 was required to fund the operating and investing
requirements previously described. This compares to cash
provided by financing activities of $34.2 million in fiscal 1994
and cash used by financing activities of $6.4 million in fiscal
1993.

The Corporation believes that its existing cash balances and
future cash flow from operations, combined with available funds
under its revolving credit facility will be adequate to support
the Corporation's growth for the foreseeable future. The
Corporation also considers its ability to offer for sale its
Common Stock as a viable alternative source of financing.

Lease Financing Agreements

The Corporation's principal leasing subsidiary has agreements in
place with financial institutions whereby lease receivables can
be transferred with full recourse. Each request for financing
is subject to the approval of the financing institution.

Operating Lease Obligations

See Note 7 of the "Notes to Consolidated Financial Statements"
for discussion of the Corporation's operating lease obligations.

Concentrations of Credit

Financial instruments which potentially subject the Corporation
to concentrations of credit risk consist principally of cash
instruments and accounts receivable. The Corporation places its
cash investments with high-quality financial institutions and,
as of September 30, 1995, maintained balances of approximately
$14,000,000 with one such institution.

Approximately $18.6 million, or 38.7%, of
consolidated accounts receivable at September 30, 1995 ($15.2
million, or 28.5%, at September 30, 1994) were concentrated in
telephone companies in North America and Europe. These
receivables are not collateralized due to the high credit
ratings and the extensive financial resources available to such
telephone companies.

-20-
21

Impact of Inflation and Changing Prices

In management's opinion, the impact of inflation and changing
prices for the three most recent fiscal years is not significant
to the financial statements as reported.

Adoption of Financial Accounting Standards Nos. 106, 109, 112
and 123 Effective October 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Post-Retirement Benefits Other
Than Pensions," requiring the use of an accrual method of
accounting for post-retirement benefits. The Corporation
elected to recognize the transition obligation as a one-time
cumulative after-tax charge to income of $(117,000), or $(0.01)
per share. The increase in annual expense for retiree health
care is not material.

Effective October 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
109 (SFAS 109), "Accounting for Income Taxes". SFAS 109 is an
asset and liability approach that requires recognition of
deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the
Corporation's financial statements or tax returns. In
estimating future tax consequences, SFAS 109 generally considers
all expected future events other than enactments of changes in
the tax law or rates. Previously, the Corporation used the SFAS
96 asset and liability approach that gave no recognition to
future events other than the recovery of assets and settlement
of liabilities at their carrying amounts. The effect of
adoption was not material to the Corporation's results of
operations.

Effective October 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Post-Employment Benefits,"
requiring the use of an accrual method of accounting for
post-employment benefits. The Corporation elected to recognize
the transition obligation as a one-time cumulative after-tax
charge to income of $(316,000), or $(0.02) per share. The
increase in annual expense for post-employment costs is not
material.

In October 1995, Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" was issued,
which establishes financial accounting and reporting standards
for stock-based employee compensation plans and for certain
other issues of equity instruments. As permitted by this
standard, the Corporation expects to continue to measure costs
for its employee stock compensation plans by using the
accounting prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees". Accordingly,
the issuance of this standard will have no impact on the
Corporation's financial position or results of operations when
the disclosure provisions are adopted, as required, in fiscal
1997.

-21-
22

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
General DataComm Industries, Inc. and Subsidiaries

Consolidated Balance Sheets

In thousands except shares
September 30, 1995 1994
- -----------------------------------------------------------------------------

Assets:
Current assets:
Cash and cash equivalents $18,443 $2,939
Accounts receivable, less allowance
for doubtful receivables of $1,704
in 1995 and $1,618 in 1994 43,033 49,581
Inventories 44,958 42,162
Deferred income taxes 3,612 4,062
Other current assets 6,054 5,288
- -----------------------------------------------------------------------------
Total current assets 116,100 104,032
- -----------------------------------------------------------------------------
Property, plant and equipment:
Land 1,764 1,764
Buildings and improvements 27,894 27,058
Test equipment, fixtures and field spares 50,632 47,012
Machinery and equipment 46,669 38,522
- ----------------------------------------------------------------------------
126,959 114,356
Less: accumulated depreciation and
amortization 80,237 73,248
- ----------------------------------------------------------------------------
46,722 41,108

Capitalized software development costs, net
of accumulated amortization of $13,577 in
1995 and $14,008 in 1994 23,407 22,712
Other assets 12,159 12,412
- ----------------------------------------------------------------------------
$198,388 $180,264
- ----------------------------------------------------------------------------
Liabilities and Stockholders' Equity:
Current liabilities:
Current portion of long-term debt $12,598 $5,238
Accounts payable, trade 11,023 15,317
Accrued payroll and payroll-related costs 6,173 5,415
Deferred income 6,495 6,548
Other current liabilities 16,524 15,101
- -----------------------------------------------------------------------------
Total current liabilities 52,813 47,619
- -----------------------------------------------------------------------------
Long-term debt, less current portion 23,435 42,118
Deferred income taxes 4,469 4,997
Other liabilities 586 1,043
- -----------------------------------------------------------------------------
Total liabilities 81,303 95,777
- -----------------------------------------------------------------------------
Commitments and contingent liabilities - -
Stockholders' equity:
Capital stock, par value $.10 per
share, issued: 21,122,209 in 1995 and
18,733,739 in 1994 2,112 1,873
Capital in excess of par value 128,076 68,027
Earnings reinvested (deficit) (6,153) 21,477
Cumulative foreign currency translation
adjustment (2,026) (901)
Common stock held in treasury, at cost:
673,674 shares in 1995 and 841,773 in 1994 (4,924) (5,989)
- -----------------------------------------------------------------------------
Total stockholders' equity 117,085 84,487
- -----------------------------------------------------------------------------
$198,388 $180,264
- ----------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated financial
statements.

-22-

23
General DataComm Industries, Inc. and Subsidiaries

Consolidated Statements of Operations and Earnings Reinvested (Deficit)

In thousands except per share data
Years ended September 30, 1995 1994 1993
- ----------------------------------------------------------------------------

Revenues:
Net product sales $178,092 $169,958 $171,468
Service revenue 37,110 34,245 32,855
Lease revenue 5,991 6,787 7,524
- -----------------------------------------------------------------------------
221,193 210,990 211,847
- -----------------------------------------------------------------------------
Costs and expenses:
Cost of product sales 85,406 76,854 78,622
Inventory write-down and other items 7,600 - -
Amortization of capitalized software
development costs 11,500 9,735 8,300
Cost of services 23,993 22,861 22,493
Cost of lease revenue 836 882 990
Selling, general and administrative 88,232 79,921 73,166
Research and product development 28,244 20,076 19,279
- -----------------------------------------------------------------------------
245,811 210,329 202,850
- -----------------------------------------------------------------------------
Operating income (loss) (24,618) 661 8,997
- -----------------------------------------------------------------------------
Other income (expense):
Interest (2,355) (3,780) (1,982)
Other, net 493 249 126
- -----------------------------------------------------------------------------
(1,862) (3,531) (1,856)
- -----------------------------------------------------------------------------
Income (loss) before income taxes
and cumulative effect of
accounting changes (26,480) (2,870) 7,141

Income tax provision (benefit) 1,150 (975) 1,025
- -----------------------------------------------------------------------------
Income (loss) before cumulative
effect of accounting changes (27,630) (1,895) 6,116
Cumulative effect of changes in accounting
for post-retirement and post-employment
benefits - (433) -

Net income (loss) (27,630) (2,328) 6,116
Earnings reinvested at beginning of year 21,477 23,805 17,689
- -----------------------------------------------------------------------------
Earnings reinvested (deficit) at end of year ($6,153) $21,477 $23,805
- -----------------------------------------------------------------------------
Earnings (loss) per share:
Income (loss) before cumulative effect
of accounting changes ($1.40) ($0.11) $0.36
Cumulative effect of changes in accounting
for post-retirement and
post-employment benefits - (0.03) -
- -----------------------------------------------------------------------------
Earnings (loss) per share ($1.40) ($0.14) $0.36
- -----------------------------------------------------------------------------
Average number of common and common
equivalent shares outstanding 19,772 16,659 16,874
=============================================================================

The accompanying notes are an integral part of these consolidated financial
statements.
-23-

24
General DataComm Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Increase(Decrease) in Cash and Cash Equivalents
In thousands
Years ended September 30, 1995 1994 1993
- -----------------------------------------------------------------------------

Cash flows from operating activities:
Income (loss) before cumulative effect
of accounting changes ($27,630) ($1,895) $6,116
Adjustments to reconcile income
(loss) to net cash provided (used)
by operating activities:
Depreciation and amortization 24,097 20,504 17,072
Inventory write-down and other items 7,600 - -
Deferred income amortization - - (1,963)
Deferred income taxes (21) 132 (107)
(Increase) decrease in accounts
receivable 5,750 (13,206) 1,096
(Increase) decrease in inventories (8,659) (6,594) 2,086
Increase (decrease) in accounts
payable and accrued expenses (2,062) 2,268 1,123
(Increase) in other net current assets (2,685) (1,787) (36)
(Increase) decrease in other net
long-term assets (1,943) (2,943) 2,019
- ----------------------------------------------------------------------------
Net cash provided (used) by operating
activities (5,553) (3,521) 27,406
- -----------------------------------------------------------------------------
Cash flows from investing activities:-1)
Acquisition of property, plant
and equipment (16,283) (11,344) (9,537)
Capitalized software development costs (12,195) (13,113) (10,550)
Purchase price of companies acquired - (5,852) (24)
- -----------------------------------------------------------------------------
Net cash (used for) investing activities (28,478) (30,309) (20,111)
- -----------------------------------------------------------------------------
Cash flows from financing activities:-1)
Revolver borrowings 21,400 135,333 274,683
Revolver repayments (37,600) (119,583) (281,674)
Proceeds from notes and mortgages 11,511 13,432 2,639
Principal payments on notes and mortgages (6,649) (12,208) (3,192)
Proceeds from issuing common stock 61,252 17,676 2,135
Payment of escrow deposits - (500) (1,000)
- -----------------------------------------------------------------------------
Net cash provided (used) by financing
activities 49,914 34,150 (6,409)
- -----------------------------------------------------------------------------
Effect of exchange rates on cash (379) 25 (310)
- -----------------------------------------------------------------------------
Net increase in cash and cash equivalents 15,504 345 576
Cash and cash equivalents at beginning
of year-2) 2,939 2,594 2,018
- -----------------------------------------------------------------------------
Cash and cash equivalents at end of
year-2) $18,443 $2,939 $2,594
- -----------------------------------------------------------------------------
Supplemental disclosures of cash flow
information:
Cash paid (received) during the
year for:
Interest $1,884 $2,979 $1,202
Income taxes, net $ 675 ($55) ($1,152)
- -----------------------------------------------------------------------------

(1 - Excluded from the fiscal 1994 Consolidated Statements of
Cash Flows is the issuance of common stock with a fair market
value of $1,846 related to the acquisition of a company. Excluded
from the fiscal 1993 cash flows are: (1) the acquisitions of capital
equipment in the amount of $701 financed in their entirety with capital
leases; and (2) the acquiisiton of property financed with mortgages
in the amount of $11,925.
(2 - The Corporation considers all highly liquid investments
purchased with a maturity of three months or less to be cash
equivalents.

The accompanying notes are an integral part of these consolidated financial
statements.
-24-
25

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of
the Corporation and its majority-owned subsidiary companies.
Intercompany accounts, transactions and profits have been appropriately
eliminated in consolidation.

Inventories

Inventories are stated at the lower of cost or market, using a
first-in, first-out method.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and depreciated
or amortized using the straight-line method over their estimated
useful lives. The cost of internally constructed assets
includes manufacturing labor and related overhead costs.
Depreciation expense amounted to $10,530,000, $8,776,000 and
$7,985,000 in fiscal 1995, 1994 and 1993, respectively.

Capitalized Software Development Costs

Software development costs are capitalized for those products
that have met the requirements of technological feasibility.
These costs are amortized on a product-by-product basis using a
straight-line method over the estimated economic life of the
product, not to exceed three years.

Revenue Recognition

Revenue from equipment sales is generally recognized at the date
of shipment unless the terms and conditions of the sale dictate
recognition at a later date. Service revenue is recognized when
the service is performed or, in the case of maintenance
contracts, on a straight-line basis over the term of the
contract.

Revenue from sales-type leases is recognized at the date of
shipment. Revenue from operating leases is recognized ratably
over the lease term, and the related equipment is depreciated
using the straight-line method over its estimated useful life
which approximates four years. The average length of initial
lease terms in fiscal 1995 was approximately 30 months. Leasing
revenue includes income from the transfer of certain finance
lease receivables with full recourse. Such income amounted to
$518,000, $842,000 and $1,354,000 in fiscal 1995, 1994 and 1993,
respectively.

Promotion and Advertising Costs

All promotion and advertising costs are charged to results of
operations during the fiscal year in which they are incurred.
Promotion and advertising costs amounted to $5,828,000,
$4,524,000 and $3,510,000 in fiscal 1995, 1994 and 1993,
respectively.

Income Taxes

The Corporation adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires
the use of the liability method of accounting for deferred
income taxes effective October 1, 1993. The financial effect of
adoption on the results of operations was not material.
However, adoption changed the classification of deferred income
tax accounts on the balance sheet.

-25-
26

The provision for income taxes includes federal, foreign, state
and local income taxes currently payable and deferred taxes
resulting from temporary differences between the financial
statement and tax basis of assets and liabilities. The
Corporation intends to permanently reinvest the undistributed
earnings of foreign subsidiaries ($3,129,000). Accordingly, no
federal income taxes have been provided on such earnings.

Earnings Per Share

Earnings per share are computed using the weighted average
number of common (including Class B Stock) and common
equivalent shares outstanding. Common equivalent shares consist
of dilutive stock options and warrants.

Concentrations of Credit

Financial instruments which potentially subject the Corporation
to concentrations of credit risk consist principally of cash
instruments and accounts receivable. The Corporation places its
cash investments with high-quality financial institutions and,
as of September 30, 1995, maintained balances of approximately
$14,000,000 with one such institution.

Approximately $18.6 million, or 38.7%, of consolidated accounts receivable
at September 30, 1995 ($15.2 million, or 28.5%, at September 30, 1994)
were concentrated in telephone companies in North America and Europe.
These receivables are not collateralized due to the high credit
ratings and the extensive financial resources available to such
telephone companies.

Foreign Currency

Assets and liabilities of the Corporation's foreign subsidiaries
are translated using fiscal year-end exchange rates, and revenue
and expenses are translated using average exchange rates
prevailing during the year. The effects of translating foreign
subsidiaries' financial statements are recorded as a separate
component of stockholders' equity.

In addition, included in other income are net realized foreign
currency exchange gains (losses) of $(323,000), $(188,000) and
$54,000 for fiscal 1995, 1994 and 1993, respectively.

Post-Retirement Benefits

Effective October 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Post-Retirement Benefits Other
Than Pensions," requiring the use of an accrual method of
accounting for post-retirement benefits. The Corporation
elected to recognize the transition obligation as a one-time
cumulative after-tax charge to income of $(117,000), or $(0.01)
per share. The increase in annual expense for retiree health
care is not material.

Post-Employment Benefits

Effective October 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Post-Employment Benefits,"
requiring the use of an accrual method of accounting for
post-employment benefits. The Corporation elected to recognize
the transition obligation as a one-time cumulative after-tax
charge to income of $(316,000), or $(0.02) per share. The
increase in annual expense for post-employment costs is not
material.

-26-
27

Accounting for Stock-Based Compensation

In October 1995, Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" was issued, which
establishes financial accounting and reporting standards for
stock-based employee compensation plans and for certain other
issues of equity instruments. As permitted by this standard,
the Corporation expects to continue to measure costs for its
employee stock compensation plans by using the accounting
prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". Accordingly, the
issuance of this standard will have no impact on the
Corporation's financial position or results of operations when
the disclosure provisions are adopted, as required, in fiscal
1997.

Fair Values of Financial Instruments

Cash and cash equivalents - The carrying amount reported in the
consolidated balance sheet for cash and cash equivalents approximates
its fair value due to their short-term nature.

Long-term debt - The carrying amounts of the Corporation's
long-term borrowings, including current maturities, approximate
fair value based on current rates available to the Corporation
for debt of the same remaining maturities.

Reclassifications

Certain reclassifications were made to prior years' financial
statements to conform to the current year's presentation.

2. Business Acquisition

Effective November 24, 1993, the Corporation acquired Netcomm
Limited ("Netcomm"), a leader in Asynchronous Transfer Mode
(ATM) technology, located in England. Under the terms of the
acquisition, the Corporation issued 184,647 shares of common
stock valued at $1.8 million and paid cash of $5.5 million in
return for all the outstanding common stock of Netcomm. The
acquisition was accounted for as a purchase and, accordingly,
the results of operations of the acquired business have been
included in the Corporation's consolidated financial statements
commencing on November 24, 1993. Approximately $6.5 million of
the purchase price was allocated to goodwill, which is being
amortized on a straight-line basis over fifteen years.

3. Product Development and Purchase Agreements

Quebec R&D Project

In fiscal 1993, the Corporation's Canadian subsidiary entered
into an agreement with the Quebec, Canada, government to
establish a research and development facility in Quebec for the
development of an ATM hub product. The Corporation has
committed to spend approximately $9.0 million over a three-year
period. Up to 50% of the costs of this facility will be
reimbursed through tax credits and grants from the Quebec
government. Such tax credits and grants, which amounted to
$893,000 and $308,000, respectively, for the year ended
September 30, 1995 ($320,000 and $355,000, respectively, for the
year ended September 30, 1994), are recorded as a reduction to
research and product development expense. As of September 30,
1995, the Corporation's remaining commitment on this project
amounted to approximately $3.3 million.

-27-
28
CrossComm

In 1992, the Corporation entered into a joint development
agreement with CrossComm Corporation ("CrossComm") pursuant to
which the Corporation and CrossComm will jointly develop certain
new products that will integrate CrossComm's Token Ring Local
Area Network (LAN) technology into the Corporation's Wide Area
Network (WAN) products. CrossComm will receive royalties based
upon sales of the new products, including up to $1,250,000 in
payments for software license fees. However, the Corporation
expects such fees to be renegotiated.

4. Inventories

Inventories consist of (in thousands)

September 30, 1995 1994

Raw materials $19,466 $18,313
Work-in-process 5,801 7,249
Finished goods 19,691 16,600
-------- -------
$44,958 $42,162
======== ========

Fiscal 1995 included a $(7.6) million, or $(0.38) per share,
charge for an inventory write-down and other items primarily
related to: (1) rapid technological improvements which served to
devalue earlier generations of the APEX ATM product line; and
(2) performance issues in vendor-supplied component parts.

5. Long-Term Debt

Long-term debt consists of the following (in thousands):

September 30, 1995 1994

Revolving credit loan $ - $16,200
Notes payable 22,179 18,318
Mortgages payable 13,018 11,809
Capital lease obligations 836 1,029
------- -------
36,033 47,356
Less: current portion 12,598 5,238
------- --------
$23,435 $42,118
====== =========

The following is a schedule of the future minimum payments of
long-term debt at September 30, 1995 (in thousands):

Y/E Sept. 30, 1996 1997 1998 1999 2000 2001 and Thereafter

$12,598 $5,037 $4,342 $3,528 $ 928 $ 9,600

Total future
minimum
payments $36,033

-28-
29

Revolving Credit Loan

On November 30, 1995, the Corporation entered into an amended
agreement with The Bank of New York Commercial Corporation to
provide a revolving credit facility maturing in November 1998 in
the amount of $25,000,000, with availability subject to a
borrowing base formula. The facility provides for a sub-limit
of $5,000,000 for letters of credit. The amended agreement
provides for interest on outstanding borrowings to be charged at
the higher of either (1) the prime rate plus 3/4 of 1%, or (2)
the federal funds rate plus 1.25% (on September 30, 1995, the
prime rate was 8.75% and the federal funds rate was 6.20%).
Alternately, the Corporation may elect to borrow at 2.75% over
LIBOR for terms of 1, 2, 3 or 6 months (on September 30, 1995,
these LIBOR rates ranged from 5.75% to 5.88%).

The agreement also requires conformity with various
financial covenants, the most restrictive of which include
minimum tangible net worth and a fixed charge coverage ratio.
Certain assets of the Corporation, including most accounts
receivable and inventories, are pledged as collateral. The
amount of borrowing is predicated on satisfying a borrowing base
formula related to levels of certain accounts receivable and
inventories. This amended agreement replaced the prior
revolving credit agreement that also provided for borrowings of
up to $25,000,000 and a sub-limit of $5,000,000 for letters of
credit. Although there were no borrowings outstanding, there
were $707,000 of letters of credit outstanding under the prior
revolving credit agreement as of September 30, 1995.

Notes Payable

The Corporation has entered into four and five-year note and
installment purchase agreements collateralized by certain
machinery, test equipment and furniture and fixtures. The
outstanding balance of $15,554,000 at September 30, 1995, which
approximates the net book value of the underlying equipment,
bears interest depending upon the agreement, either at fixed
rates ranging from 6.50% to 10.84%, at prime rate, at prime plus
1% or at the 30-day commercial paper rate plus 3.75%.
Individual notes mature between fiscal 1996 and fiscal 2000.

On June 1, 1994, the Corporation refinanced $8,000,000
of a note payable, previously maturing January 2, 1995, with The
Bank of New York as lender and agent for other institutions by
incorporating term loan provisions and additional collateral
into the previous revolving credit agreement. Interest is
payable either at 2.00% over LIBOR for terms of 1, 2, 3 or 6
months or at the prime rate, at the Corporation's election. In
conjunction with the amended revolving credit loan mentioned
above, this note, in the amount of $6,625,000, was paid in its
entirety on November 30, 1995. Therefore, such note payable was
classified as a current liability at September 30, 1995.

Mortgages Payable

In September 1993, the Corporation purchased its corporate
headquarters and manufacturing facilities with financing
provided by the seller's banks. Interest is payable at 90-day
LIBOR (5.88% at 9/30/95) plus 2%, and quarterly principal
payments of $100,000 are required until these mortgages mature
in the year 2003.

Capital Lease Obligations

The Corporation has acquired the use of certain machinery and
equipment by entering into capital leases. The outstanding
balance of $836,000 at September 30, 1995 bears interest,
depending upon the agreement, at fixed rates ranging from 6.66%
to 10.75%.

-29-
30

6. Income Taxes

Income (loss) before income taxes and cumulative effect of
accounting changes consists of both domestic and foreign income
(loss) as follows (in thousands):

Years ended September 30, 1995 1994 1993

United States $(22,452) $(1,703) $5,391
Foreign (4,028) (1,167) 1,750
- -----------------------------------------------------------------------------
$(26,480) $(2,870) $7,141
- ----------------------------------------------------------------------------

The provision for (benefit from) income taxes consists of the
following amounts (in thousands):

Years ended September 30, 1995 1994 1993

Current:
State $ 600 $ 500 $ 400
Foreign 571 (1,607) 732
- ----------------------------------------------------------------------------
$1,171 $(1,107) $1,132
- --------------------------------------------------------------------------
Deferred:
Federal $ (80) $ (100) $ (91)
Foreign 59 232 (16)
- ---------------------------------------------------------------------------
$ (21) $ 132 $ (107)

Due to the Corporation's net operating loss carryforward
position, no tax benefit was recorded for the cumulative effect
of adopting SFAS Nos. 106 and 112 (see Note 1).

The following reconciles the U.S. statutory income tax rate to
the Corporation's effective rate:

Years ended September 30, 1995 1994 1993

Federal statutory rate (34.0)% (34.0)% 34.0%
No benefit recognized for
domestic net operating loss 27.5 12.8 -
Benefit recognized for domestic
net operating loss carryforward - - (24.6)
Effect of foreign income taxes 7.5 29.8 1.7
Reversal of excess reserves for
tax audits - (67.4) (1.3)
State and local income taxes 2.3 17.4 3.7
Non-deductible expenditures 1.0 7.4 0.8
- ---------------------------------------------------------------------------
4.3% (34.0)% 14.3%
- -----------------------------------------------------------------------------

For regular tax reporting purposes at September 30, 1995, tax
credit and net operating loss carryforwards amounted to
$6,029,000 and $59,000,000, respectively. Domestic federal loss
carryforwards of $52,200,000 expire between 2003 and 2010, of
which approximately $8,800,000 relate to items which will be
credited to stockholders' equity when applied; state loss
carryforwards of $25,344,000 expire between 1996 and 2010.
Foreign loss carryforwards of $6,800,000 expire beginning in
1997. Tax credit carryforwards expire between 1996 and 2010.

For federal alternative minimum tax purposes at September 30,
1995, net operating loss carryforwards amounted to $45,700,000.

-30-
31

The tax effects of the significant temporary differences
comprising the deferred tax assets and liabilities at September
30, 1995 and 1994 are as follows (in thousands):

1995 1994

Deferred Tax Assets:
Receivable reserve $ 1,600 $ 1,429
Inventory reserve 5,862 3,721
Deferred income 1,420 1,419
Restructuring and other accruals 286 1,116
Loss carryforwards 22,093 14,793
Tax credits 6,100 4,118
--------- ---------
Valuation allowance (23,211) (12,956)
--------- ---------
Net deferred tax assets $14,150 $13,640
========= ========

Deferred Tax Liabilities

Depreciation $ 2,471 $ 1,735
Deferred income 1,496 1,527
Capitalized software 7,958 7,722
Operating leases 925 1,027
Capital leases 1,632 2,041
Other 525 523
-------- ---------
Gross deferred tax liability $15,007 $14,575
======= ========

During fiscal 1995 and 1994, the valuation allowance increased
by $10,255,000 and $754,000, respectively.

7. Operating Leases

The Corporation has certain non-cancelable operating leases on
automobiles, subsidiary locations, sales offices and service
facilities, which expire within one to five years. These leases
generally contain renewal options and provisions for payment by
the lessee of executory costs (taxes, maintenance and
insurance). In addition, the Corporation has a non-cancelable
operating lease with scheduled rent increases for its
engineering facility which expires in the year 2003. Included in
selling, general and administrative expenses for fiscal 1995 is
a gain of $650,000 resulting from the early termination of a
lease obligation for an industrial facility which had been
vacated in 1988 as part of a cost reduction program.

The following is a schedule of the future minimum payments on
such leases at September 30, 1995 (in thousands):

1996 1997 1998 1999 2000 2001 and Thereafter
- ----------------------------------------------------------------------------

$5,195 $3,777 $2,957 $2,586 $2,327 $ 4,752
- ----------------------------------------------------------------------------
Total future minimum lease
payments $21,594
Less: future sublease income, non-cancelable through 2000 5,750
- ----------------------------------------------------------------------------
Net future rental expense $15,844
- ----------------------------------------------------------------------------

-31-
32

Net rental expense for the three most recent fiscal years was
(in thousands):

Deferred
Rental Sublease Income
Expense Income Amortization Net
- --------------------------------------------------------------------------

1995 $ 8,406 $1,981 $ - $6,425
1994 7,650 1,538 - 6,112
1993 10,236 1,952 814 7,470
___________________________________________________________________________

8. Stockholders' Equity

Authorized: 35,000,000 shares of Common Stock - par value $.10
per share; 35,000,000 shares of Class B Stock - par value
$.10 per share; 3,000,000 shares of Preferred Stock - par value
$.10 per share (of which no shares have been issued):

Transactions in capital stock during fiscal 1993, 1994 and 1995
were as follows (in thousands except share amounts):

Balance, 9/30/92 16,480,617 $1,648 $47,704 1,058,107 ($7,203) $452
Exercise of stock
options 444,561 44 1,995 23,951 (259) -
Employee stock
purchase plan 55,403 6 365 - - -
Foreign currency
translation
adjustment - - - - - (1,529)
- -----------------------------------------------------------------------------
Balance, 9/30/93 16,980,581 1,698 50,064 1,082,058 (7,462) (1,077)
Exercise of stock
options 448,617 45 2,122 (11,559) (106) -
Employee stock
purchase plan 54,541 5 806 (44,079) 306 -
Business acquisition - - 573 (184,647) 1,273 -
Private placement
offering 1,250,000 125 14,462 - - -
Foreign currency
translation
adjustment - - - - - 176
- -----------------------------------------------------------------------------
Balance, 9/30/94 18,733,739 1,873 68,027 841,773 (5,989) (901)
Exercise of stock
options 318,470 32 1,370 (61,151) 285 -
Employee stock
purchase plan - - 612 (106,948) 780 -
Underwritten public
offering 2,070,000 207 58,067 - - -
Foreign currency
translation
adjustment - - - - - (1,125)
- -----------------------------------------------------------------------------
Balance, 9/30/95 21,122,209 $2,112 $128,076 673,674 ($4,924) ($2,026)
- -----------------------------------------------------------------------------

Class B Stock, under certain circumstances, has greater voting
power in the election of directors. However, Common Stock
is entitled to cash dividends, if and when paid, 11.11% higher
per share than Class B Stock. The Corporation has never paid
cash dividends, and dividends are not permitted by the
Corporation's principal loan agreement. Class B
Stock has limited transferability and is convertible into Common
Stock at any time on a share-for-share basis. At
September 30, 1995, 1994 and 1993, 2,217,836, 2,271,780 and
2,466,231 shares, respectively, of Class B Stock were
outstanding.

On December 22, 1994, the Corporation completed the sale
of 2,070,000 shares of common stock pursuant to an
underwritten public offering. The sales price was $29.875 per
common share before offering costs and commissions.

Net proceeds of approximately $58.1 million have been used to
reduce debt and to provide additional working capital for general
corporate purposes.

On May 27, 1994, the Corporation completed the sale of
1,250,000 shares of common stock through a private
placement offering. The sales price was $12.375 per common
share. Net proceeds of $14.6 million were used to reduce
debt and to provide additional working capital.

-32-
33

9. Industry and Geographic Area Information

The Corporation operates solely in the data communications
industry, where it designs, assembles, markets, installs and
services products that enable users to build global, multimedia
communications networks. These products include network
management systems, multiplexers and data sets for a wide range
of industrial, commercial and service corporations, government
agencies, and domestic and international communications common
carriers.

Geographic area information for 1995, 1994 and 1993 is presented
below (in thousands):

Western
Hemisphere
1995 United States (except U.S.) Europe Eliminations Consolidated
- -----------------------------------------------------------------------------

Revenues $172,994-1 $21,035 $27,164 $ - $221,193
Transfers
between
geographic
areas 38,491 - 886 (39,377) -
- -----------------------------------------------------------------------------
Total revenues $211,485 $21,035 $28,050 $(39,377) $221,193
- -----------------------------------------------------------------------------
Operating
(loss) $(14,647) $(2,507) $ (980) $ - $(18,134)
- -----------------------------------------------------------------------------
General
corporate
expenses,
net (5,991)
- -----------------------------------------------------------------------------
Interest
expense (2,355)
- -----------------------------------------------------------------------------
Loss before
income taxes
and
accounting
changes $ (26,480)
- -----------------------------------------------------------------------------
Total assets $167,781 $ 8,944 $21,663 $ - $ 198,388
=============================================================================

Western
Hemisphere
1994 United States (except U.S.) Europe Eliminations Consolidated
- -----------------------------------------------------------------------------

Revenues $157,685-1 $27,860 $25,445 $ - $210,990
Transfers
between
geographic
areas 36,726 - 2,515 (39,241) -
- ----------------------------------------------------------------------------
Total revenues $194,411 $27,860 $27,960 $(39,241) $210,990
- ----------------------------------------------------------------------------
Operating
profit(loss) $ 6,242 $ (513) $ (30) $ - $ 5,699
- -----------------------------------------------------------------------------
General
corporate
expenses,
net (4,789)
Interest expense (3,780)
- -----------------------------------------------------------------------------
Loss before
income taxes
and
accounting
changes $ (2,870)
- -----------------------------------------------------------------------------
Total assets $149,983 $14,621 $15,660 $ - $ 180,264
=============================================================================

Western
Hemisphere
1993 United States (except U.S.) Europe Eliminations Consolidated
- ------------------------------------------------------------------------------

Revenues $160,508-1 $28,778 $22,561 $ - $211,847

Transfers
between
geographic
areas 28,882 - - (28,882) -
- -----------------------------------------------------------------------------
Total revenues $189,390 $28,778 $22,561 $(28,882) $211,847
- ----------------------------------------------------------------------------
Operating
profit(loss) $ 13,180 $ ( 25) $ 1,364 $ - $ 14,519
General
corporate
expenses,
net (5,396)
Interest expense (1,982)
- ---------------------------------------------------------------------------
Income
before
income
taxes $ 7,141
- -------------------------------------------------------------------------
Total assets $121,208 $ 8,018 $12,450 $ - $141,676
==========================================================================

1 Includes export sales by domestic operations of $37,952,
$25,126 and $21,793 for fiscal 1995, 1994 and 1993, respectively.

-33-
34

10. Employee Incentive Plans

Stock Option Plans

Officers and key employees may be granted incentive stock
options at an exercise price equal to or greater than the market
price on the date of grant and non-incentive stock options at an
exercise price equal to or less than the market price on the
date of grant. Once granted, options become exercisable in
whole or in part after the first year and generally expire
within ten years. Under the terms of these stock option plans,
the Corporation has reserved a total of 3,084,137 shares of
Common Stock in 1995 (2,997,837 in 1994).

The following summarizes activity in fiscal 1993, 1994 and 1995
under these stock option plans:

Shares Option Price

Options outstanding, September 30, 1992
(909,236 exercisable) 2,136,180 $2.00 to $8.00
Options granted 824,200 3.62 to 14.50
Options exercised (444,561) 2.00 to 5.75
Options canceled or expired (70,802) 3.81 to 8.00
__________________________________________________________________________

Options outstanding, September 30, 1993
(873,394 exercisable) 2,445,017 $2.00 to $14.50
Options granted 660,097 8.63 to 19.94
Options exercised (473,992) 2.00 to 11.63
Options canceled or expired (84,925) 3.62 to 15.50
_________________________________________________________________________

Options outstanding, September 30, 1994
(871,075 exercisable) 2,546,197 $2.00 to $19.94
Options granted 254,100 9.94 to 30.13
Options exercised (387,695) 2.00 to 11.75
Options canceled or expired (283,868) 3.00 to 30.13
__________________________________________________________________________
Options outstanding, September 30, 1995
(809,511 exercisable) 2,128,734 $2.00 to $15.50
_________________________________________________________________________

Stock Purchase Plan

The Corporation has a stock purchase plan to encourage employees
to participate in the Corporation's future growth. At September
30, 1995, 446,743 shares were reserved for purchase by employees
through payroll deductions regularly accumulated over six-month
payment periods. At the end of each payment period, Common
Stock is purchased at 85% of the market value of the stock on
the first or last day of the payment periods, whichever is
lower. However, the purchase of Common Stock under this plan is
prohibited if 85% of the market value of the Common Stock is
less than the book value per share. Note 8, "Stockholders'
Equity," presents the historical activity under this plan.

No charges are made to income for stock purchases or incentive
stock options granted or exercised under the stock purchase and
stock option plans. When shares are purchased under the stock
purchase plan or issued upon exercise of incentive stock
options, the excess of amounts paid over par value is credited
to capital in excess of par value.

Employee Retirement Savings and Deferred Profit Sharing Plan

Under the retirement savings provisions of the Corporation's
retirement plan, established under Section 401(k) of the
Internal Revenue Code, employees are generally eligible to
contribute to the
-34-
35

plan after six months of continuous service, in amounts
determined by the plan. The Corporation contributes an
additional 50% of the employee contribution up to certain limits
(not to exceed 1.5% of total eligible compensation). Employees
become fully vested in the Corporation's contributions after
five years of continuous service, death, disability or upon
reaching age 65. The amounts charged to expense for the years
ended September 30, 1995, 1994 and 1993 were $866,300, $838,800
and $808,800, respectively.

The deferred profit sharing provisions of the plan include
retirement and other related benefits for substantially all of
the Corporation's full-time employees. Contributions under the
plan are funded annually and are based, at a minimum, upon a
formula measuring profitability in relation to revenues.
Additional amounts may be contributed at the discretion of the
Corporation. There were no contributions for either fiscal 1995
or fiscal 1994. The Corporation's contribution for fiscal 1993
was $357,050.

11. Leasing Subsidiary

The Corporation's consolidated financial statements include the
accounts of its wholly-owned leasing subsidiary, DataComm
Leasing Corporation. The leasing subsidiary purchases equipment
for lease to others from General DataComm, Inc., its sole
supplier.

The following represents the condensed financial information of
DataComm Leasing Corporation (in thousands):

Financial Condition
September 30, 1995 1994
- --------------------------------------------------------------------

Current assets $ 1,900 $ 2,276
Noncurrent assets 2,567 2,637
Due from General DataComm, Inc. 30,408 27,443
- ---------------------------------------------------------------------
Total assets $34,875 $32,356
- ---------------------------------------------------------------------
Current liabilities $ 1,168 $ 876
Noncurrent liabilities 173 23
Stockholder's equity 33,534 31,457
- ---------------------------------------------------------------------
Total liabilities and
stockholder's equity $34,875 $32,356
=====================================================================

Results of Operations
Years ended September 30, 1995 1994 1993
- -------------------------------------------------------------------------

Net revenues $5,807 $6,713 $ 7,524
- -------------------------------------------------------------------------
Income before income taxes $2,371 $3,192 $ 5,206
=========================================================================

Lease Financing Programs

DataComm Leasing Corporation maintains agreements with financial
institutions whereby certain finance lease receivables are
transferred with full recourse. The underlying equipment is
retained as collateral by DataComm Leasing Corporation.
Proceeds received by the leasing subsidiary from the transfer of
such receivables amounted to $2,613,000, $3,618,000 and
$4,193,000 for fiscal 1995, 1994 and 1993, respectively. The
balance of all transferred receivables which were due to be paid
by the original lessees under the remaining lease terms as of
September 30, 1995 and 1994 amounted to $5,208,000 and
$6,836,000, respectively.

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36

12. Quarterly Financial Data (unaudited)

In thousands except per share data

Fiscal 1995 First Second Third Fourth
- ---------------------------------------------------------------------------

Revenues $58,222 $56,531 $ 48,092 $58,348
Inventory write-down and
other items - - 6,500 1,100
Gross profit 27,189 25,435 13,821 25,413
Operating income (loss) 719 (4,214) (16,480) (4,643)
Net income (loss) $ (805) $(5,033) $(16,598) $(5,194)
Earnings (loss) per
share-2 $ (0.04) $ (0.25) $(0.82) $ (0.25)
________________________________________________________________________
Fiscal 1994 First Second Third Fourth
- ------------------------------------------------------------------------
Revenues $48,050 $48,032 $54,903 $60,005
Gross profit 22,806 22,802 25,563 29,487
Operating income (loss) (851) (1,602) 575 2,539
Income (loss) before
cumulative effect
of accounting
changes (1,876) (810) (502) 1,293

Net income(loss)-1 $(2,309) $ (810) $ (502) $ 1,293
Earnings (loss) per
share before
before cumulative
effect
of accounting changes-2 $ (0.11) $ (0.05) $ (0.03) $ 0.07

Earnings (loss) per
share-2 $ (0.14) $ (0.05) $ (0.03) $ 0.07
===========================================================================

1- First quarter 1994 net loss includes charges totaling
$(433), resulting from the adoption of Financial Accounting
Standards Nos. 106 and 112, effective October 1, 1993. As
originally reported, net loss for the first quarter was $(1,993),
or $(0.12) per share.

2- Earnings (loss) per share amounts for each quarter are
required to be computed independently and, in 1995 and
1994, did not equal the full-year loss-per-share amounts.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

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37

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to directors is incorporated by
reference from the section entitled "ELECTION OF DIRECTORS" in
the Corporation's Proxy Statement for 1996 Annual Meeting of
Stockholders, which Proxy Statement will be filed within 120
days after the end of the Corporation's fiscal year ended
September 30, 1995.

Name Position Age

Charles P. Johnson Chairman of the Board of Directors 68
and Chief Executive Officer

Ross A. Belson President and Chief Operating Officer 59

Frederick R. Cronin Vice President, Technology and a Director 64

Robert S. Smith Vice President, Business Development 62

William S. Lawrence Vice President, Finance and Chief Financial
Officer 52

James R. Arcara Vice President, Corporate Operations 60

Dennis J. Nesler Vice President and Treasurer 52

Michael C. Thurk Senior Vice President, Marketing 43

Robert H. Dorion, Jr. Vice President, Human Resources 41

William G. Henry Corporate Controller 46

August J. Hof Vice President, Manufacturing Operations 45

V. Jay Damiano Senior Vice President, U.S. Sales 50

Howard S. Modlin Secretary and a Director 63

Mr. Charles P. Johnson, Chairman of the Board and Chief
Executive Officer, founded the Corporation in 1969.

Mr. Ross A. Belson, President and Chief Operating Officer, has
served in his present capacity since joining the Corporation in
August 1987. Before joining the Corporation, Mr. Belson held
executive positions at Adage and Lexidata.

Mr. Frederick R. Cronin, Vice President, Technology, has served
in executive capacities since the founding of the Corporation.

- 37 -
38

Mr. Robert S. Smith, Vice President, Business Development, has
held positions of major responsibility within the Corporation
since its formation and has served in executive capacities since
February 1973.

Mr. William S. Lawrence, Vice President, Finance and Chief
Financial Officer, has served in his present capacity since
joining the Corporation in April 1977.

Mr. James R. Arcara, Vice President, Corporate Operations, has
held positions of major responsibility within the Corporation
since its formation and has served in executive capacities since
September 1978.

Mr. Dennis J. Nesler, Vice President and Treasurer since May
1987 and Treasurer since July 1981, joined the Corporation in
1979 as Vice President of the Corporation's wholly owned leasing
subsidiary, a capacity in which he still serves.

Mr. Michael C. Thurk, Senior Vice President, Marketing, joined
the Corporation in January 1994. Before that time, Mr. Thurk
held various positions within the networking business of Digital
Equipment Corporation, most recently as Vice President of the
Telecommunications Business segment.

Mr. Robert H. Dorion, Jr., Vice President, Human Resources,
joined the Corporation in May 1995 and was elected an officer of
the Corporation in June 1995. Before that time, Mr. Dorion held
progressively responsible human resource management roles with
Wang Laboratories and Morton International.

Mr. William G. Henry, Corporate Controller, has served in this
capacity since joining the Corporation in January 1984, and was
elected an officer in the Corporation in June 1989.

Mr. August J. Hof, Vice President, Manufacturing Operations
since June 1989, joined the Corporation in 1985 as Printed
Circuit Board Plant Manager.

Mr. V. Jay Damiano, Senior Vice President, U.S. Sales, was
elected an officer of the Corporation in August 1993. He joined
the Corporation in the sales organization in 1984 and has held
positions of increasing responsibility since that time.

Mr. Howard S. Modlin, Secretary, an attorney and partner of the
firm of Weisman, Celler, Spett & Modlin, has been Secretary and
counsel to the Corporation since its formation.

- 38 -
39

ITEM 11. EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS WITH
MANAGEMENT

To be filed by amendment.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

To be filed by amendment.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

To be filed by amendment.

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40

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a)(1) Financial statements and schedules of the registrant and
its subsidiaries are listed in the accompanying "Index to Financial
Statements and Schedules" on page F-1 hereof and are filed as part of
this Report.
(2) All Exhibits.
3.1 Restated Certificate of Incorporation of the Corporation.1
3.2 Amended and Restated By-Laws of the Corporation.2
10.1 Transfer of Receivables Agreement between DataComm Leasing Corporation
and Sanwa Business Credit Corporation.3
10.2 1979 Employee Stock Purchase Plan.4
10.3 1983 Stock Option Plan.5
10.4 1984 Incentive Stock Option Plan.6
10.5 1985 Stock Option Plan.7
10.6 Amendment to the 1984 Incentive Stock Option Plan.8
10.7 Amendments to the 1984 Incentive Stock Option Plan.9
10.8 Retirement Savings and Deferred Profit Sharing Plan.10
10.9 Capital Equipment Financing Agreement between General DataComm, Inc.
and Center Capital Corporation.11
10.10 Capital Equipment Financing Agreement between General DataComm
Industries, Inc. and Hewlett Packard Company.12
10.11 Capital Equipment Financing Agreement between General
DataComm Industries, Inc. and General Electric Capital Corporation.13
10.12 1991 Stock Option Plan.14
10.13 Credit Agreement between General DataComm Industries, Inc. and The
Chase Manhattan Bank.15
10.14 Third Amended and Restated Revolving Credit and Security Agreement
between General DataComm Industries, Inc. et al. and The Bank of New
York Commercial Corporation et al.
11. Calculation of Earnings Per Share for the fiscal years ended September
30, 1993 through 1995, inclusive.
12. Calculation of Current Ratio.
13. Annual Report to Stockholders for the year ended September 30, 1995.
The 1995 Annual Report to Stockholders will be furnished for
the information of the Commission and is not deemed "filed."
(To be filed by amendment.)
21. List of subsidiaries.

1 Incorporated by reference from Form 10-Q for quarter ended June 30, 1988,
Exhibit 3.1.
Amendments thereto are filed as Exhibit 3.1 to Form 10-Q for quarter
ended March 31, 1990.
2 Incorporated by reference from Exhibit 3.2 to Form 10-K for year ended
September 30, 1987.
3 Incorporated by reference from Exhibit 10.1 to Form 10-Q for quarter
ended June 30, 1989.

-40-
41

4 1979 Employee Stock Purchase Plan is incorporated by reference
from Part II of prospectus dated September 30, 1991, contained in
Form S-8, Registration Statement No. 33-43050.

5 Incorporated by reference from Exhibit 1(c) to Form S-8,Registration
Statement No. 2-92929. Amendments thereto are filed as Exhibit 10.3
to Form 10-Q for quarter ended December 31, 1987 and as Exhibit 10.3.1
to Form 10-Q for quarter ended June 30, 1991.

6 Incorporated by reference from Exhibit 1(a), Form S-8, Registration
Statement No. 2-92929. Amendment thereto is filed as Exhibit 10.2 to
Form 10-Q for quarter ended June 30, 1991.

7 Incorporated by reference from Exhibit 10a, Form S-8, Registration
Statement No. 33-21027.
Amendments thereto are incorporated by reference from Part II
of prospectus dated August 21, 1990, contained in Form S-8, Registration
Statement No. 33-36351 and as Exhibit 10.3.2 to Form 10-Q for quarter
ended June 30, 1991.
8 Incorporated by reference from Exhibit 10.19 to Form 10-K for year ended
September 30, 1987.

9 Incorporated by reference from Exhibit 10.2 to Form 10-Q for quarter
ended December 31, 1987.

10 Incorporated by reference from Form S-8, Registration Statement No.
33-37266.

11 Incorporated by reference from Exhibit 10.2 to Form 10-Q for quarter
ended December 31, 1991 and Exhibit 28.2 to Form 10-Q for quarter ended
March 31, 1992.

12 Incorporated by reference from Exhibit 28.3 to Form 10-Q for quarter
ended March 31, 1992 and from Exhibit 28.3 to Form 10-Q for quarter
ended June 30, 1992.

13 Incorporated by reference from Exhibit 28.4 to Form 10-Q for quarter
ended June 30, 1992 and from Exhibit 28.4 to Form 10-Q for quarter
ended December 31, 1992.

14 Incorporated by reference from Form S-8, Registration Statement No.
33-53150, from Form S-8, Registration Statement No. 33-62716, from Form
S-8, Registration Statement No. 33-53201 and from Form S-8, Registration
Statement No. 33-59573.

15 Incorporated by reference from Exhibit 10.21 to Form 10-K for the year
ended September 30, 1993.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the last quarter of the period
covered by this report.

- 41-
42
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.

GENERAL DATACOMM INDUSTRIES, INC.

By: __________________________________
William S. Lawrence
Vice President, Finance and Principal
Financial Officer

Dated: December 14, 1995

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43

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

__________________________ Chairman of the Board December 14, 1995
CHARLES P. JOHNSON and Chief Executive Officer

__________________________ Vice President, Finance December 14, 1995
WILLIAM S. LAWRENCE and Principal Financial
Officer

_________________________ Corporate Controller December 14, 1995
WILLIAM G. HENRY

__________________________ Director and Secretary December 14, 1995
HOWARD S. MODLIN

__________________________ Director December 14, 1995
LEE M. PASCHALL

__________________________ Director and December 14, 1995
FREDERICK R. CRONIN Vice President, Technology

__________________________ Director December 14, 1995
JOHN L. SEGALL

-43-
44

General DataComm Industries, Inc.
and Subsidiaries
Index to Financial Statements and Schedules
Item 14(a)

Financial Statements and Schedules Included Page

Consolidated Balance Sheets at September 30,
1995 and 1994. 22

Consolidated Statements of Operations and Earnings Reinvested
(Deficit) for the Years Ended September 30, 1995, 1994 and 1993. 23

Consolidated Statements of Cash Flows for the Years
Ended September 30, 1995, 1994 and 1993. 24

Notes to Consolidated Financial Statements 25

Report of Independent Accountants F-2

Consent of Independent Accountants F-3

Consolidated Financial Statement Schedules:

II.Valuation and qualifying accounts for the years
ended September 30, 1995, 1994 and 1993. F-4

Financial Statements and Scheduled Omitted

Financial statements and schedules other than those included
herein are omitted because they are not required or because the
required information is presented elsewhere in the financial
statements or notes thereto.

F-1
45

Report of Independent Accountants

To the Stockholders and Board of Directors of General DataComm
Industries, Inc.

We have audited the consolidated financial statements and financial
statement schedule of General DataComm Industries, Inc. and Subsidiaries
listed in Intem 14(a) of this Form 10-K. These financial statements
and financial statement schedule are the responsibility of the
Corporation's management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based upon our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of General DataComm Industries,
Inc. and Subsidiaries as of September 30, 1995 and 1994, and the
consolidated results of their operations and their cash flows
for the years ended September 30, 1995, 1994 and 1993, in
conformity with generally accepted accounting principles. In addition, in
our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information required
to be included therein.

As discussed in Notes 1 and 6 to the consolidated financial
statements, effective October 1, 1993, the Corporation changed
its methods of accounting for income taxes, post-employment
benefits and post-retirement benefits other than pensions.

Coopers & Lybrand L.L.P.
Stamford, Connecticut
October 19, 1995, except for Note 5,
as to which the date is November 30, 1995.

46
CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration
Statements of General Datacomm Industries, Inc. and Subsidiaries
on Form S-8 (File Nos. 2-92929, 33-21027, 33-36351, 33-37266,
33-43050, 33-53150, 33-62716, 33-53201 and 33-59573) and on Form
S-3 (File No. 33-54417) of our report, which includes an
explanatory paragraph for certain accounting changes, dated
October 19, 1995, except for Note 5, as to which the date is November
30, 1995, on our audits of the consolidated financial
statements and financial statement schedule of General Datacomm
Industries, Inc. and Subsidiaries as of September 30, 1995 and
1994 and for the years ended September 30, 1995, 1994 and 1993,
which report is included in this Annual Report on Form 10-K.

Coopers & Lybrand L.L.P.
Stamford, Connecticut
December 14, 1995

F-3
47

General DataComm Industries, Inc. and Subsidiaries

Schedule II -- Valuation and Qualifying Accounts for the Years
ended September 30, 1995, 1994 and 1993
(In Thousands)

Additions
Balance at Charged to Balance
Beginning Costs an at End
of Period Expenses Deductions (b) of Period

1995
Allowance for
doubtful
receivables (a) $1,618 $ 252 $ 166 $1,704

1994
Allowance for
doubtful
receivables (a) $1,575 $ 339 $ 296 $1,618

1993
Allowance for
doubtful
receivables (a) $1,597 $ 504 $ 526 $1,575

____________________

(a) Deducted from asset accounts.
(b) Uncollectible accounts written off, net of recoveries.

F-4

48