FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1996

	OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from              to


Commission File Number:  0-11551



EXECUTONE Information Systems, Inc.
(Exact name of registrant as specified in its charter)


                 Virginia                        86-0449210
(State or other jurisdiction of          (I.R.S. Employeer
   incorporation or organization)            Identification No.)


478 Wheelers Farms Road, Milford, Connecticut                 06460
 (Address of principal executive offices)                   (Zip Code)


Registrant's telephone number, including area code:  (203)876-7600


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

Title of each class     Name of each exchange
                        on which registered
     N/A                      None

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

Common Stock, par value $.01 per share
72% Convertible Subordinated Debentures, Due March 15, 2011




(Title of Class)


<PAGE>


Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.    Yes  X               No ___

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  []

The aggregate market value of the common stock held by
non-affiliates of the registrant (assuming for this
purpose that all executive officers and directors of the registrant
are affiliates) as of March 24, 1997 was $117,323,737, based on the
last sale price for the common stock on that date.

The number of shares outstanding of the registrant's only class
of common stock, $.01 par value per share, as of March 24, 1996,
was 49,471,481.


DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference
into the Part of this Form 10-K indicated below:

Part II     1996 Annual Report to Shareholders
Part III    1997 Proxy Statement for Annual Meeting of
Shareholders scheduled to be held June 10, 1997.

<PAGE>


TABLE OF CONTENTS


Item                                                            Page


PART I


1. Business                                                       1
2. Properties                                                    11
3. Legal Proceedings                                             11
4. Submission of Matters to a Vote of Security Holders           12
   Executive Officers of the Registrant                          13


PART II

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


PART III

10. Directors and Executive Officers of the Registrant           17
11. Executive Compensation                                       17
12. Security Ownership of Certain Beneficial Owners
    and Management                                               17
13. Certain Relationships and Related Transactions               17


PART IV

14. Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                                          18


<PAGE>

PART I

ITEM 1.    BUSINESS

General

EXECUTONE Information Systems, Inc. ("EXECUTONE" or the
"Company") develops, markets and supports voice and data
communications systems.  Products and services include
telephone systems, voice mail systems, in-bound and out-bound
call center systems and specialized healthcare communications
systems.  The Company, through its Unistar Entertainment
subsidiary, also has the exclusive right to
design, develop and manage the National Indian Lottery
(the "NIL" or the "Lottery").    Products are sold under
the EXECUTONE'r', INFOSTAR'r', IDS'tm', LIFESAVER'tm',
INFOSTAR/ILS'tm' and UNISTAR'tm' brand names through a
worldwide network of direct sales and service employees
and independent distributors.

EXECUTONE's executive offices are located at
478 Wheelers Farms Road, Milford, Connecticut 06460,
telephone (203) 876-7600.  The Common Stock of EXECUTONE
is traded on the NASDAQ National Market System
under the symbol "XTON", and its Convertible Subordinated
Debentures due 2011 trade on the NASDAQ system under the
symbol "XTONG".


Recent Developments

In  1996, the Company sold its direct sales and service
organization, including its network services division and the
national service center, to Clarity Telecom Holdings, Inc.
d/b/a/ Executone Business Solutions ("Clarity") for consideration
valued at $69.6 million.  The Company and Clarity also entered
into a five-year exclusive distributor agreement pursuant to which
Clarity sells and services EXECUTONE'r' and INFOSTAR'r'
telephone products to business and commercial locations that
require up to 400 telephones.

The sale did not include the Pittsburgh direct sales and service
office, which the Company separately sold to one of its existing
independent distributors.

After the sale, the Computer Telephony business consists of
telephone products sales to independent distributors, of which
Clarity is the largest distributor, along with the National Accounts
and Federal Systems marketing groups.  The Company retains its
Healthcare Communications and Call Center Management businesses
and the Unistar business.

In April 1996, the Company rescinded its distribution
agreement with GPT Video Systems due to failures by GPT to
deliver properly functioning videoconferencing
products on a timely basis.  The Company has also
commenced a legal action against GPT to recover its
damages.  In June 1996, the Company completed the sale
of its videoconferencing division, including customer
service contracts and certain inventory.

On December 19, 1995, the Company acquired 100% of the
common stock of Unistar Gaming Corp., a Delaware
corporation ("Unistar Gaming").  Unistar Gaming, through
its subsidiary Unistar Entertainment, Inc. ("Unistar"), has
an exclusive five-year contract to design, develop, finance,
and manage the Lottery, a national lottery authorized by
federal law and by a compact between the State of Idaho and
the Coeur d'Alene Indian Tribe of Idaho ("Coeur d'Alene Tribe"
or the "Tribe").  In return for providing these management
services, Unistar will be paid a fee equal to 30% of the profits
of the Lottery.

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The Company acquired 100% of Unistar for 3.7 million
shares of Common Stock, 250,000 shares of its Cumulative
Convertible Preferred Stock, Series A ("Series A Preferred Stock")
and 100,000 shares of its Cumulative Contingently Convertible
Preferred Stock, Series B ("Series B Preferred Stock").

The telephone operations of the Lottery may not begin
until the resolution of a pending legal proceeding.
Certain states have attempted to block the NIL by
filing letters under 18 U.S.C. Section 1084 preventing
long-distance carriers from providing telephone service
to the NIL based on allegations that the NIL is not legal.
The Coeur d'Alene Tribe has initiated legal action to
argue that the Lottery is authorized by the Indian Gaming
Regulatory Act ("IGRA") passed in 1988, that IGRA preempts
state and federal statutes, and that the states lack
authority to issue the Section 1084 notification letters to any
carrier.  On February 28, 1996, the Coeur d'Alene Tribal
Court ruled that all requirements of IGRA have been satisfied,
that the Section 1084 letters are
invalid, and that the long distance carrier is obligated
to provide telephone service for the NIL.  This  ruling and a
related order dated May 1, 1996 are being appealed to the Tribal
Appellate  Court and probably will be appealed ultimately to
United States federal courts as well.  The Company has been
advised by its outside counsel, Hunton & Williams, that based upon
such firm's review of the applicable statutes, regulations and case
law, it believes that the National Indian Lottery is authorized under
IGRA and that the favorable rulings issued by the Coeur d'Alene Tribal
Court on February 28, and May 1, 1996 should be upheld on appeal.


Overview of Business

The Company's revenues are derived from both from product
sales to distributors, direct sales of healthcare
communications and call center products, and direct
sales to national accounts and federal government
customers, as well as installations, additions, changes,
upgrades or relocation of previously installed systems,
maintenance contracts, and service charges to the existing
base of healthcare, call center, national account and federal
government customers.  The Company's products and
services are marketed and sold through a national network
of Company direct sales and service employees and independent
distributors.

The Computer Telephony business offers value-added
products and services to the small to medium-sized
business customer.  The Company's integrated digital
telephone systems emphasize flexible software
applications, such as data switching and computer
telephone interface, designed to enhance the customer's
ability to communicate, obtain and manage information.
The Company's telephone systems provide the platform for
its other voice and data software applications, such as
automatic call distribution.

The Healthcare Communications business provides to its
healthcare facility customers integration of voice and
data between nurse and patient communication systems
and hospital information systems, resulting in increased
flexibility and efficiency in hospital operations, and
improved patient care.  EXECUTONE has been a recognized
name in this market for many years with its LIFESAVER'tm' and
CARE/COM'r'II-E nurse call systems.  The Company markets software
applications specific to hospital and nursing homes to help
resolve other labor intensive tasks.

The Healthcare Communications business also markets the
INFOSTAR/ILS'tm' locator system, which can improve
productivity, save time and expense for users and
eliminate overhead paging by instantly locating staff
and equipment in a facility.  Each person or piece of
equipment wears an individually coded badge that
transmits infrared signals to sensors placed throughout
the facility, which forward the location information to
a central processing unit.  The ILS system can be integrated

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with the Company's telephone systems and nurse call systems
to provide additional productivity improvements for hospital environments.

The Call Center Management business develops and sells
sophisticated telephony products that integrate a
computerized digital telephone system platform with high-volume
inbound, outbound and internal call processing systems.  Such
systems include automatic call distribution systems, predictive
dialing systems, and scripting software to assist agents
handling calls.  Certain of these systems also provide data interface
with host or mainframe computers.  These systems are sold to
call center customers that have a need for systems to efficiently
and cost-effectively receive or place their customer or prospect calls,
distribute those calls to available live operators, obtain information
from callers, record and distribute messages from callers,
and produce management reports on call activity.

In 1995, the Company acquired Unistar.  Unistar has an
exclusive five-year contract with the Coeur d'Alene Tribe
to design, develop, finance, and manage the Lottery, a national
lottery authorized by IGRA  and a compact between the State of Idaho
and the  Tribe. Unistar provides development and management of
the software, network design and call center applications for
the Lottery's operations.

The telephone operations of the Lottery may not begin
until resolution of a pending legal proceeding.  See
"Legal Proceedings."  Although the Unistar legal
situation is essentially unchanged, management is
hopeful that the Tribe will receive a positive decision
early this year in the Tribal Appellate Court, affirming
the Tribal Court's rulings last year on the legality of
the National Indian Lottery, and that such a decision will
accelerate a federal court decision.  In the meantime, Unistar
is developing the business and gaming systems needed to conduct
the Lottery, and plans to test these systems at an Internet test
site between April and June 1997.  Assuming the successful completion
of these tests, Unistar plans a controlled expanded test from July to
September, and assuming continued successful results, a
national launch over the Internet in the fourth quarter of 1997.

Computer Telephony Products

The Company develops and distributes a complete line of
applications-oriented computer telephony products that are
easy to install, easy to maintain and easy to use, and that
create visible value for our customers.  The Company's complete
portfolio of applications are built upon the Integrated Digital
System (IDS) family of digital telephone systems.  Products range
from PBXs to satisfy the basic voice communications needs of small-
to medium-sized businesses to standards-compliant CT applications,
standalone and LAN-based applications including voice mail, unified
messaging, Automatic Call Distribution (ACD) and wireless communications.

The Company's telephone systems are characterized by
flexible software and a hardware design that makes them
readily adaptable to evolving technology and customer requirements.
The Company attributes the market acceptance of its systems to
standards-based, cost-effective design and to the sophistication of its
software options.  The Company's systems include an
integrated automated attendant feature to answer and
transfer calls quickly and efficiently without operator
intervention. The Integrated Operator Terminal and management
reports capabilities permit the monitoring of calls and improve
the efficiency of directing calls to the appropriate extensions.
The Company's latest achievement in call processing, the Ultimate
Operator, takes the operator's console to a new level by delivering
superior call handling and reporting capabilities in a Windows
environment.  The IDS systems also support sophisticated call center
and healthcare applications in addition to the Company's Integrated
Locator System.  The recent introduction of the Company's LAN card

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allows users with access to their organization's network to manage
the IDS through their desktop PCs.

The Company has steadily introduced a portfolio of
products fully compliant with the latest industry
standards (TAPI, TSAPI, CSTA) and incorporating the
most advanced elements of computer telephony integration.
The TAPI telephones support any desktop application using
the TAPI standard for computer-telephone integration. Unified
Messaging and Voice Activated Speed Dial further increase
productivity by speeding the calling process.

The Company also offers a voice mail system that can be integrated
with the IDS telephone systems and with telephone systems
manufactured by others.  The INFOSTAR/VX2 voice mail system
receives, records, stores, distributes, transfers and replays
messages from both external and internal callers and can
supplement other call center systems.  In 1996 the Company
introduced the INFOSTAR/VXC Voice Exchange Card, a complete
voice processing system built on a card that integrates directly
into the IDS switch, eliminating the need for a standalone voice
mail system.  In 1997, the Company signed an agreement to distribute
the Active Voice line of voice processing and unified messaging products.

The Company develops its application-specific software
options using high-level programming languages to
facilitate further enhancements and portability.
enhancements and portability.
EXECUTONE's software includes remote capabilities built
into certain systems that enable the Company to customize
and update selected features continuously, which increases
the value of such systems and lengthens their useful lives.
Certain of the Company's systems are capable of having service
diagnostics, updates and modifications performed on a remote basis.
The ability to provide such off-site servicing increases the efficiency
of customer support and service.


Healthcare Communication Products

The Company develops, manufactures, markets and services
a line of specialized internal communications systems that
are used primarily in the healthcare industry.  These internal
ommunications systems are microprocessor-based patient to nurse
communication systems, intercoms, paging and sound equipment, and
room status indicators.

Platform Systems.  Released on January 17, 1997, the Healthcare
Communications Platform (HCP) is the communications solution dedicated to
a single platform technology for complete systems integration.  The
HCP exemplifies the Company's commitment to provide total communciation
capability.  With the HCP system, the nurse call function is now
integrated with an IDS phone system to provide the dual function at one master
control center.  Nurse call, locator, wireless phones, pocket pagers, patient
reports, and management reports can all integrate seamlessly using a single
platform fully utilizing all product benefits.

Nurse Call Systems.  The Company's LIFESAVER'tm' nurse call system is an
advanced system integrating voice and data communication between nurse and
patient and providing enhanced self-diagnostics.  The LIFESAVER system is
a state-of-the-art communications network that provides routine and
emergency signaling, voice communications and data transmission.  The
nurse console offers menu-driven functions and step-by-step user prompts.
The system is highly flexible, offering many programmable features that
allow customization of its operations to the hospital's needs.  A single
system can serve more than 300 patient beds (150 rooms) and up to eight
nurse control stations, and up to eight systems can be networked for
centralized operation.  The LIFESAVER integrates with the Company's
locator system.

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The CARE/COM II-E nurse call system represents the first step in
EXECUTONE's plan to bring the benefits of a totally integrated
communications system to the healthcare market on the Company's
IDS digital platform. The CARE/COM II-E system provides patient-to-staff
and staff-to-staff communication on an automatic three-level call
priority basis.  This new system can currently support 72 patient
stations per system, with the ability to integrate three systems
together and support 216 patient stations.  A five-line LCD
display Nurse Control Station allows simple call processing and system
operation.  The system is highly flexible to meet the individually
defined needs of today's hospitals and long-term care facilities.

Patient Reporting Systems.  The Healthcare Division also markets
the INFOSTAR /PRS patient reporting system, an automated voice
storage system that allows the efficient transfer of patient
information between nurses.  Patient reports are password-protected
for confidentiality and admission, and discharge and transfer
information are also supported.  The system uses standard telephone
instruments and provides full voice messaging capability.  The
INFOSTAR/PRS system reduces report time, provides continuity at shift
changes, and improves report quality.

Locator Systems.  The Company's INFOSTAR/ILS'tm' locator
system is an integrated system using infrared transmitter badges
to communicate location data to sensors installed throughout a
facility.  The badges transmit regularly at user-programmed intervals
and can be worn by staff personnel or attached to equipment.  The
location data is collected by the sensors and forwarded to a central
processing unit that organizes the data so it can be accessed at one
or more display stations.  The display of staff and equipment location
information can be in the form of a list or in the form of a map of
the facility using icons.  The display can be filtered to show only
particular staff members, groups of personnel,
particular pieces of equipment or groups of equipment.
The system can be integrated with either the IDS telephone systems,
allowing the activation of features and display of information on the
telephone set, or the Compaby's nurse call system, allowing the
activation of features and display of information at the nurse control
station and patient stations.  The INFOSTAR/VLS version of this product
allows outside callers using non-IDS based products to locate personnel
within a facility, find out who the person is with, complete the call,
or leave a voice message.  The ILS and VLS systems can also be integrated
to other manufacturers' PBXs.  Nortel has now made ILS available to its
dealer network for sale by its dealers in conjunction with Nortel PBXs.
The ILS system is also marketed by the Computer Telephony sales channels
for office environments.

The Events Processing System collects information from the ILS
system and associates the data to logical, workable and productive
real time data for a customer's employees and assets.  Specific
applications include: door monitoring, wandering patient alert,
staff presence indicators, badge button press (staff assist or
emergency assist), asset management and equipment tracking.  The
system allows a facility to program events that will trigger alarms,
lock doors, light lights, open elevator doors, and more.  The system
is completely programmable, which allows the customer to determine
which applications will best fit their needs.

Wireless Telephone Systems.  The Healthcare Communications group
also markets the Ericsson Freeset, an in-building wireless
communications system which operates on the 900MHz bandwidth.
Its low power output (.75mW) makes it ideal for the healthcare
environment, which is very sensitive to high power devices such
as cellular telephones and 2-way radios that may interfere with vital
telemetry equipment.  The Freeset system is extremely flexible in
providing complete coverage over a large area based on its ability
to add as many base stations as necessary to provide coverage.  The

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system can grow to support up to 600 handsets, making it the system
of choice for large installations.

The Company also markets the Monarch'tm' 1.9GHz Wireless Telephone
System, which is an in-building wireless communications tool that
provides cellular-like mobility to a facility without expensive
airtime charges.  The Monarch system operates on the 1.9GHz U-PCS
bandwidth set aside by the FCC strictly for personal communications
use which means the signal will not cause interference or be
interfered with by conventional telemetry equipment.  The Monarch
system can support up to 2 base stations per system, providing a
coverage area of over 250,000 sqare feet in a typical office
environment.  In an open warehouse environment, the coverage is
much greater.  Each base station allows for eight simultaneous
conversations and the Monarch system can support a maximum of up
to 32 handsets.

Other Communication Priducts.  The INFOSTAR'r'/StatLink'tm'
product is designed to provide call management and
integration of EXECUTONE nurse call systems to telephone
numbers, wireless telephones and pager devices.
INFOSTAR/StatLink has the flexibility to modify patient
call flow based on the specific requirements of the healthcare
facility.  Calls can be routed on a 4-level priority basis to
any extension, telephone or site pager configured in the database.
The system is a communications solution that can be integrated
with any PBX.   Patient priorities and requests can be managed
more efficiently and calls can be managed more efficiently
and calls can be completed on a more timely basis with less
strain on the staff and patients.

The INFOSTAR'r'/InfoSTAT'tm' product is a software package
intended for use in emergency departments to provide
complete communication of real time events and data.
Used as a daily operational tool, the InfoSTAT system
provides emergency staff with priority data and
conditions affecting the department.  Staff can check at a
glance the status of treatment rooms, room and bed assignments,
hospital staff assignment and location, and patient status and
location.  InfoSTAT is customized for each hospital and integrates
with a facility's existing administrative software such as ADT systems.

Call Center Management Products

 The Company's call center management products consist of the following
systems, which can be integrated with the Company's computer telephone
systems and with each other to provide large-volume inbound, outbound
and internal call management.  Computer-telephone integration ("CTI")
technology integrates the IDS'tm' call processing function with information
in a customer's computer database.  Primarily used by large incoming call
centers to automatically identify incoming callers and by outbound centers
to contact and provide records of contacts, CTI limits the amount of time
that an agent spends contacting or identifying the caller, thereby
providing better customer service, reducing the number of required
agents and reducing telephone line and transmission expense.

 Predictive Dialers and Scripting Products - The
INFOSTAR'r'/Predictive Dialer is an automated call system designed
to boost productivity in outbound call centers.  The system integrates
telephone, data collection and  transaction processing functions for those
customers who require high volume contact by telephone to transact
business, such as sales, credit and collections, blood banks and
fund-raising.  Working with the host computer and the IDS telephone
system platform, the dialer automatically dials telephone numbers
pulled from the host computer data "live" calls.  Available
representatives receive these calls and,
through CTI, can view screen information about the
customer from the database immediately after the customer
answers the phone.  The system predicts the availability of
agents in order to reduce abandoned calls and increase agent
productivity, and reduces agent contact with busy signals, no

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answers, wrong numbers and answering machines.  Management reports
provide instant and historical feedback on call distribution, list
management, data input integrity and file maintenance.  Scripting
software allows the call center to create a script to guide its agents
through various call scenarios and prompt the input of desired information.

Automatic Call Distribution ("ACD") - ACD systems are
designed to increase responsiveness to inbound callers
and increase agent productivity.  ACD systems provide the
capability to distribute or route incoming calls to available
agents based upon management's specifications,  and allow the
supervisor of the call processing group to monitor call traffic
on-line via a computer terminal.  The Company produces ACD software
for call centers of up to 500 agents in multiple shifts (225 in any
single shift), in five levels of sophistication, the highest of which
is "Custom Plus ACD."  Custom Plus ACD provides the capability to
monitor traffic with color screens and graphics, and
greatly enhance the ability to store and retrieve
historical call data.


Sales and Marketing

The Company's distribution network consists of (1)
domestic independent distributors with approximately
180 locations operating under exclusive and nonexclusive
agreements throughout the United States and Canada; (2)
138 direct healthcare and call center sales and service
employees in the United States; ; (3) a National Accounts
group that uses the sales, installation, service and support
capabilities of EXECUTONE's distribution network to serve multiple
offices and departments of companies; (4) a Government Systems
group that uses the distribution network to serve offices of
federal, state and local government agencies; and (5) 24 independent
distributors operating in 17 other foreign countries.

For those distributors that have exclusive distribution
rights for specified products, retention of such rights
is subject to satisfaction of established criteria for
sales and service to customers on an ongoing basis. The
divesting of or acquisition of customer bases to or from
distributors in specific geographic territories may occur
in the normal course of the Company's business.

EXECUTONE's National Accounts business provides
uniformity in pricing, coordination, installation,
billing and service for National Accounts customers
such as Electronic Data Systems, Airborne Express,
Paychex, Inc., W. W. Grainger, Home Quarters Warehouse,
Inc., Bridgestone/Firestone, Carlson Companies, PetsMart
and TCI Cable.  The National Accounts group coordinates the
sales, installation, service and support functions of independent
sales offices to serve the multiple offices and departments of
large companies.

The Company's Government Systems group addresses the
special procurement and administrative requirements of
federal, state and local government agencies.  Sales are
made through a combination of master contracts and
competitively solicited proposals for large or complex
telecommunications requirements.  Government Systems
coordinates the installation, service and support
activities of independent sales offices to provide
ongoing support to government agency offices nationwide.

Although the Company offers a broad range of products
through various sales channels nationwide, computer
telephony product purchases by Clarity, the purchaser
of the Company's direct sales and service organization
and the Company's largest distributor, represented a
significant portion of the Company's total revenues in
1996 and are expected to continue to represent a large
portion of the Company's revenues.  The loss of Clarity
as a customer could have a material adverse effect on the
Company, assuming the Company could not replace the shipments
with other alternative distribution.  The Company believes
that it has the means within a reasonable period of time to

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establish alternative distribution channels in most of EBS's
territory were that to become necessary.  However, the Company
does not currently believe there is any significant risk of
losing Clarity as a customer because Clarity is dependent upon a
continued supply of the Company's proprietary products to service
and upgrade its large existing customer base.

Backlog consists primarily of products that have
been ordered and that will be shipped or installed
within 30 to 60 days of the order (other than call center and
healthcare orders, which have a longer lead time), or
systems the installation of which is not yet required by
the customer.  Backlog as of December 31, 1996, was
$23,159,000 compared to $33,091,000 at December 31, 1995,
and the Company expects virtually all of such backlog to be
filled within the current fiscal year.


Product Maintenance

EXECUTONE warrants parts and labor on its systems,
typically for one year, and provides maintenance and
service after warranty expiration either on a contract
or time and materials basis.  Most of the Company's
products are repaired at its 56,000-square foot repair
facility located in Poway, California.


Product Development and Engineering

As of March 1, 1997, EXECUTONE employed approximately 100
individuals engaged in product design and development.
The Company's product development program is designed to
anticipate and respond to customer needs through development
of new products and enhancement of existing products.  During
1996, the Company's engineering efforts focused on
applications-oriented software products, including new releases
of computer telephone system, call center and healthcare
communications software.  EXECUTONE continually strives to reduce
production costs by incorporating new technology into its design
and manufacturing operations.  For the years ended December 31, 1996,
1995, and 1994, Company-sponsored product development and engineering
expenditures (including product management and testing) amounted to
approximately $13.8 million, $14.7 million, and $12.2 million,
respectively.


Manufacturing

Most of EXECUTONE's telephone products are manufactured
by Wong's Electronics Company, Ltd. ("Wong's") in
Malaysia, by Quality Telecommunication Products, also
referred to as Compania Dominicana de Telefonos
("Codetel"), in the Dominican Republic, and by the
Company directly in Poway, California.  Many of the
printed circuit boards for the Company's products are
manufactured, and many products are assembled into
systems and system components, in the United States.

The Company's Manufacturing Services Agreement with
Wong's currently expires in February 1998 but is
automatically extended each year for an additional
one-year term unless either party gives notice of
termination three months prior to expiration of the
current term.  The contract may be terminated earlier
by either party in the event of a material breach by the other party.

If the agreement between Wong's and EXECUTONE should be
terminated for any reason, or if  Wong's is unable to ship
or has to reduce shipments, or if restrictions are imposed
materially limiting the importation of products produced by
foreign manufacturers, the Company could be affected adversely
until satisfactory alternative sources are in place.  The
profitability of EXECUTONE's operations could be affected to
the extent it is unable to reflect the direct and indirect costs
of products purchased from Wong's in its pricing policies. The

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prices for products purchased by EXECUTONE from
its suppliers are payable in U.S. dollars.

The majority of EXECUTONE's specialized healthcare and
internal communication systems are produced in the United
States at the Company's facility in Poway, California or at
domestic subcontractors.  The functions of repair, warehousing
and distribution of the Company's products are performed at the
Company's facilities in Poway.


Trademarks, Patents and Copyrights

Management believes that the continued success of
EXECUTONE is dependent upon the ability to design,
develop and market new products and new or enhanced
applications.  The patentability of such new products or
applications is evaluated and patent applications are filed
where necessary to protect unique developments.  The Company
currently holds ten utility patents, expiring at various times
between 2007 and 2013, has six U.S. patent applications pending,
and six patent applications pending in several foreign countries.

The Company has registered or applied to register its
trademarks when it believes registration to be important
to its ongoing business operations.  The Company also generally
claims copyright protection for software, circuit designs, schematics
and technical documentation used in connection with its products,
and relies upon trade secret, contract and copyright laws to protect
its proprietary rights in its software, designs and documentation.

Certain of EXECUTONE's products incorporate technology
and software licensed from independent third parties.
Generally, these licenses require payment of a royalty
for each system sold that incorporates the licensed
technology or require that the Company purchase the
product from the licensor.


Government Regulation

Many of the Company's systems are designed to be
connected to the public telecommunications network
and as such are required to comply with certain rules
of the Federal Communications Commission ("FCC") pertaining
to telecommunications equipment. The Company has not
experienced any material adverse effect on its business or
operations as a result of such regulation and compliance.

Certain uses of outbound call processing systems are
regulated by federal and state law.  Among other things, the
FCC has adopted rules pursuant to the Federal Telephone Consumer
Protection Act to protect residential telephone subscribers' privacy
rights to avoid receiving telephone solicitations to which they object.
Certain states have enacted similar laws limiting access to
telephone subscribers who object to receiving solicitations.
Although compliance with these laws may limit the potential use of
the Company's predictive dialer systems in some respects, the Company's
systems can be programmed to operate automatically in full compliance
with these laws through the use of appropriate calling lists and
calling campaign time parameters.

To the extent the Company markets its products
internationally, it is required to comply with applicable
foreign law, including certification of its products by
appropriate government regulatory organizations.

9
<PAGE>


Competition

The market segments in which the Company offers its
products and services are highly competitive.  The under
400-desktop voice communications segment in the United
States, the primary market for the Company's Computer
Telephony sales channels, is served by many domestic and
foreign communications equipment and software
manufacturers and distributors, including Lucent
Technologies (the former equipment business of AT&T),
Nortel (formerly named Northern Telecom), Toshiba,
InterTel and Mitel, as well as numerous specialized
companies.  The Company believes that it may be fourth in
telephone system shipments to the under 400-desktop voice
communications market, after AT&T/Lucent, Nortel, and
Toshiba, based on industry surveys of 1996 data.
However, such information may not be sufficient to make
an exact assessment of the Company's competitive position
relative to its competitors.  Although the Company can be
competitive on price compared to several of these
companies, many of EXECUTONE's competitors have
substantially more capital, technology and marketing
resources than the Company.

The Company believes its call center products are in a
good competitive position although to date it has not
penetrated a significant portion of this market.
Principal competitors are EIS, Davox, Mosaix and Melita.

The Company's principal competitors in healthcare
communications are Hill-Rom Company, DuKane and Rauland-
Borg.  The Company believes it has a strong competitive
position in nurse call and locator products.

The Company competes by offering a full array of
integrated telecommunication products and services to its
customers.  The Company also competes on the basis of the
quality of its products, its customer service, nationwide
distribution and installation, and price.


Employees

As of March 1, 1997, EXECUTONE employed approximately 750
persons, directly and through its subsidiaries.  Less
than 3% of the employees of the Company and its
subsidiaries are represented by unions, all of which
employees are represented by the International
Brotherhood of Electrical Workers.  Management believes
that the Company's relations with its employees are good.

10
<PAGE>


ITEM 2.    PROPERTIES

EXECUTONE's principal offices are located in a leased
facility in Milford, Connecticut.  The Company has
warehouse, manufacturing and distribution facilities in
Poway, California.  As of December 31, 1996, the Company
utilized 4 facilities in the United States with an
aggregate of approximately 273,000 square feet for its
ongoing operations.

The Company's facilities are occupied under lease
agreements.  The current annual rent for the Company's
facilities is approximately $3 million.  The Company also
subleases from Clarity small areas of 30 former district
sales offices, aggregating approximately 23,000 square
feet, for use by sales and technical employees for
approximately $600,000 per year.  The Company has one
facility totaling approximately 14,000 square feet of
space that is no longer used in ongoing operations and is
subleased.

The Company believes its facilities are adequate and
generally suitable for its business requirements at the
present time and for the immediate future.  The following
is a brief description of the primary facilities of the
Company.

Use                           Location                      Approximate Size

Corporate Headquarters        Milford, Connecticut           150,000
and Research, Development                                    square feet
and Engineering Facility


Distribution, Production &   Poway, California               115,000
Repair Center and Warehouse                                  square feet


Other, including warehouses  Milford, Connecticut            30,800
and subleased offices space                                  square feet


ITEM 3.    LEGAL PROCEEDINGS


On October 16, 1996, the Coeur d'Alene Tribe filed an
action entitled Coeur d'Alene Tribe v.  AT&T Corp. in the
Tribal Court, located in Plummer, Idaho (Case No. C195-
097), requesting a ruling that the Lottery to be
developed and managed by the Company's Unistar
Entertainment subsidiary is legal under IGRA, that IGRA
preempts state laws on the subject of Indian gaming, and
the NIL cannot be blocked by state action, and an
injunction preventing AT&T from refusing to provide
telephone service to the NIL.   This action was necessary
because several network carriers have been sent Section
1084 letters under the Federal Communications Act by
states opposed to the NIL.  These letters state that the
NIL is illegal under state and federal laws and prohibit
the carriers from carrying network traffic for the NIL.
The telephone operations of the NIL may not begin until
resolution of this proceeding and agreement of a network
carrier to carry the network traffic of the NIL.  On
February 28, 1996, the Tribal Court ruled that all
requirements of IGRA have been satisfied,  that the
Section 1084 letters are invalid, and that AT&T is
obligated to provide telephone service for the NIL.  This
ruling and a related order dated May 1, 1996 are being
appealed to the Tribal Appellate Court and probably will
be appealed to the United States federal courts as well.


11
<PAGE>

 The Company has been advised by its outside counsel,
Hunton & Williams, that based upon such firm's review of
the applicable statutes, regulations and case law, it
believes that the Lottery is authorized under IGRA and
that the favorable rulings issued by the Coeur d'Alene
Tribal Court on February 28 and May 1, 1996 should be
upheld on appeal.  However, this litigation, as well as
other litigation which could be brought by states opposed
to the NIL, could delay commencement of operations, and
it is impossible at this time to predict when the NIL
will commence telephone operations.  The Company does not
believe the outcome of this litigation will have a
material adverse effect on the Company's consolidated
financial position, results of operations or liquidity.

The Company currently is a named defendant in a number of
lawsuits and is a party to a number of other proceedings
that have arisen in the normal course of its business.
Those lawsuits and proceedings relate primarily to the
collection of indebtedness owed to the Company, the
performance of products sold by the Company, and various
contract disputes.  In the opinion of the Company, these
proceedings are not expected to have a material adverse
effect on the consolidated financial position, results of
operations or liquidity of the Company and, to the extent
they are not covered by insurance, reserves adequate to
satisfy such liabilities have been established.


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

No matter was submitted to a vote of security holders in
the fourth quarter of the fiscal year covered by this
report.

12
<PAGE>


EXECUTIVE OFFICERS OF THE REGISTRANT


The executive officers of the Company are as follows:

Name                         Age               Position With Company

Alan Kessman                 50                Chairman of the Board,
                                               President and
                                               Cheif Executive Officer

Michael W. Yacenda           45                Executive Vice President and
                                               President, UniStar
                                               Entertainment

Barbara C. Anderson          45                Vice President, General
                                               Counsel and Secretary

James E. Cooke III           48                Vice President,
                                               National Accounts

Anthony R. Guarascio         43                Vice President, Finance  and
                                               Chief Financial Officer

Israel J. Hersh              43                Vice President,
                                               Software Engineering

Elizabeth Hinds              55                Vice President,
                                               Human Resources

Robert W. Hopwood            53                Vice President and Vice
                                               President-Operations,
                                               Unistar Entertainment

Andrew Kontomerkos           51                Senior Vice President,
                                               Hardware Engineering and
                                               Production

Vic Northrup                 40                Vice President,
                                               Computer Telephony


Frank J. Rotatori            54                Vice President, Healthcare
                                               Communications

Shlomo Shur                  47                Senior Vice President,
                                               Advanced Technology


Alan Kessman has served as Chairman and Chief Executive
Officer of the Company since 1988.  Prior to that, he had
served as President and Chief Executive Officer of
ISOETEC Communications, Inc., a predecessor of the
Company ("ISOETEC"), since 1983.  From 1978 to 1983, Mr.
Kessman served as President of three operating
subsidiaries of Rolm Corporation, and from 1981 to 1983,
he served as a Corporate Vice President of Rolm
Corporation, responsible for sales and service in the
eastern United States.

13
<PAGE>

Michael W. Yacenda has served as Executive Vice President
of EXECUTONE since January 1990.  Prior to that time, he
was Vice President, Finance and Chief Financial Officer
of the Company from July 1988 to January 1990.  He served
as a Vice President of ISOETEC from 1983 to 1988.  From
1974 to 1983, Mr. Yacenda was employed by Arthur Andersen
& Co., a public accounting firm.  Mr. Yacenda is a
certified public accountant.

Barbara C. Anderson has been Vice President, General
Counsel and Secretary since 1990.  From 1985 to 1989, she
was Corporate Counsel of United States Surgical
Corporation, a manufacturer of medical devices.

James E. Cooke III has served as Vice President, National
Accounts since February 1996.  Prior to that time, from
1992 until 1996, Mr. Cooke served as Division Manager of
Operations for the Company, and from 1988 through 1991,
Mr. Cooke was a District Manager for the Company.  From
1985 until 1988, Mr. Cooke was the President of an
interconnect company, and from 1981 to 1985, he was a
General Manager and a Regional Manager of the Jarvis
Corporation.  For eight years prior to that time, he
worked at Xerox Corporation in various sales and
management positions.

Anthony R. Guarascio has been Vice President, Finance and
Chief Financial Officer since January 1994, and prior
thereto was Vice President and Corporate Controller since
January 1990.  From 1984 until 1990, Mr. Guarascio was
the Corporate Controller of the Company and ISOETEC.

Israel J. Hersh has been Vice President, Software
Engineering since February 1996.  Mr. Hersh joined the
Company as Director of Software Development in 1984, and
was promoted to Senior Director of Software Engineering
in January 1994.   Prior to his employment with the
Company, Mr. Hersh was a manager of the software
development department for T-Bar, Inc.  Mr. Hersh has a
B.S. in Electrical Engineering from Tel Aviv University
and a MS in Electrical Engineering from Bridgeport
University.

Elizabeth Hinds has been Vice President, Human Resources
since January 1996.  Prior to joining the Company, Ms.
Hinds was Vice President, Human Resources of Chilton
Company, a wholly-owned subsidiary of Capital
Cities/American Broadcasting Company, Inc. ("CC/ABC"),
from February 1993 until January 1996.  Ms. Hinds was the
Director of Human Resources for CC/ABC from June 1987
until February 1993.

Robert W. Hopwood has been Vice President of the Company
and Vice President-Operations of its Unistar
Entertainment subsidiary since May 1996, and prior
thereto served as Vice President, Customer Care of the
Company from January 1990.  From 1983 until 1990, Mr.
Hopwood was the Director of Technical Operations of the
Company and ISOETEC.

Andrew Kontomerkos has been Senior Vice President,
Hardware Engineering and Production since January 1994,
and prior thereto was Vice President, Hardware
Engineering since 1988.  He served as a Vice President of
ISOETEC since 1983.  From 1982 to 1983, he was a Vice
President and founder of SAM Communications, Inc., a
telecommunications research and development company which
was one of the predecessors to ISOETEC; that corporation
was merged into ISOETEC in 1983.  From 1979 to 1982, Mr.
Kontomerkos was Director of Telecommunications Systems

14
<PAGE>


Development of TIE/communications, Inc., a manufacturer
of telecommunications systems.

	Vic Northrup has been Vice President of the Company
since February 1997, and President of the Computer
Telephony business since May 1996.  Prior thereto, he was
Senior Director of Sales and Operations and a district
general manager of the Company.

Frank J. Rotatori has been Vice President, Healthcare
Communications since February 1996.  Prior thereto he was
Vice President, European Operations since February 1994,
and prior thereto was Director of Call Center Management
Products during 1992 and 1993, Vice President-Direct
Sales from 1990 through 1991 and Vice President-Customer
Service of the Company from 1988 to 1990.  Mr. Rotatori
joined ISOETEC in 1986 as a regional manager.  From 1982
to 1986, he served as General Manager and Eastern
Regional Manager for Rolm Corporation.  For 13 years
prior to that time, he worked at Xerox Corporation in
various manufacturing, accounting, sales and service
management positions.

Shlomo Shur has been Senior Vice President, Advanced
Technology since January 1994, and prior thereto was Vice
President, Software Engineering since 1988.  He served as
a Vice President of ISOETEC from 1983 to 1988.  From 1982
to 1983, he was Vice President and a founder of SAM
Communications, Inc., a telecommunications research and
development company which was one of the predecessors to
ISOETEC; that corporation was merged into ISOETEC in
1983.  From 1978 to 1982, Mr. Shur was Manager, Software
Development for TIE/communications, Inc., a manufacturer
of telecommunications systems.

15
<PAGE>


PART II

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

Incorporated by reference to "Stock Data" in  the
Registrant's 1996 Annual Report to Shareholders.


ITEM 6.    SELECTED FINANCIAL DATA

Incorporated by reference to "Selected Financial Data" in
the Registrant's 1996 Annual Report to Shareholders.


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

Incorporated by reference to "Management's Discussion and
Analysis of Financial Condition and Results of
Operations" in the Registrant's 1996 Annual Report to
Shareholders.


ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements are incorporated by reference to
the Financial Statements in the Registrant's 1996 Annual
Report to Shareholders.  The Schedule appears at pages S-
1 through S-2 of this report.


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

Not applicable.


16
<PAGE>


PART III


ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT

The information regarding directors is incorporated by
reference to the Company's Proxy Statement for its Annual
Meeting of Shareholders scheduled to be held June 10,
1997.


ITEM 11.    EXECUTIVE COMPENSATION

The information required by this item is incorporated by
reference to the Company's Proxy Statement for its Annual
Meeting of Shareholders scheduled to be held June 10,
1997.


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The information required by this item is incorporated by
reference to the Company's Proxy Statement for its Annual
Meeting of Shareholders scheduled to be held June 10,
1997.


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

The information required by this item is incorporated by
reference to the Company's Proxy Statement for its Annual
Meeting of Shareholders scheduled to be held June 10,
1997.


17
<PAGE>


PART IV


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

(a)(1), (a)(2) and (d).  The financial statements
required by this item and incorporated herein by
reference are as follows:


Report of Independent Public Accountants

Consolidated Balance Sheets - December 31, 1996 and 1995

Consolidated Statements of Operations - Years ended
December 31, 1996, 1995 and 1994

Consolidated Statements of Changes in Stockholders'
Equity - Three years ended December 31, 1996

Consolidated Statements of Cash Flows - Years ended
December 31, 1996, 1995 and 1994

Notes to Consolidated Financial Statements


The schedules to consolidated financial statements
required by this item and included in this report are as
follows:

Report of Independent Public Accountants on Schedule

Schedule II - Valuation and Qualifying Accounts


(a)(3) and (c).  The exhibits required by this item and
included in this report or incorporated herein by
reference are as follows:


Exhibit No.


2-1        Agreement and Plan of Merger by and among
EXECUTONE Information Systems, Inc., Executone Newco,
Inc., and Unistar Gaming Corp., dated as of December 19,
1995.  Incorporated by reference to the Registrant's
Current Report on Form 8-K dated January 3, 1996.

2-2        Asset Purchase Agreement among V Technology
Acquisition Corporation, EXECUTONE Information Systems,
Inc. and Vodavi, Inc. dated November 5, 1993, and
Amendment dated February 18, 1994.  Incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993.

2-3        Asset Purchase Agreement by and among Tone
Holdings, Inc. and Tone Acquisition Corporation,
EXECUTONE Network Services, Inc. and EXECUTONE


18
<PAGE>

Information Systems, Inc. dated as of April 9, 1996, and
Amendment No. 1 to Asset Purchase Agreement dated as of
May 31, 1996, by and among Clarity Telecom Holdings, Inc.
(formerly known as Tone Holdings, Inc.), Clarity Telecom,
Inc. (formerly known as Tone Acquisition Corporation),
EXECUTONE Network Services, Inc. and EXECUTONE
Information Systems, Inc.  Incorporated by reference to
the Registrant's Annual Report on Form 10-K/A for the
year ended December 31, 1995 filed on June 4, 1996.

3-1        Articles of Incorporation, as amended through
December 18, 1995.  Incorporated by reference to the
Registrant's Annual Report on Form 10-K  for the year
ended December 31, 1995 filed on April 15, 1996.

3-2        Articles of Amendment dated and filed December
19, 1995, amending the Company's Articles of
Incorporation.  Incorporated by reference to the
Registrant's Current Report on Form 8-K dated January 3,
1996.

3-3        Bylaws, as amended.  Incorporated by reference
to the Registrant's Registration Statement on Form S-3
(File No. 33-62257) filed August 30, 1995.

4-1        Second Amended and Restated Loan and Security
Agreement dated as of August 30, 1994 and First Amendment
thereto dated January 1, 1995, between EXECUTONE
Information Systems, Inc., Continental Bank N.A. and the
other Lenders named therein.  Incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994.

4-2        Loan Agreement dated as of August 30, 1994,
between EXECUTONE Information Systems, Inc., certain
employees thereof, and the Lenders named therein.
Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.

4-3        First Amendment dated January 1, 1995, Second
Amendment dated September 29, 1995, and Third Amendment
dated December 29, 1995, to the Second Amended and
Restated Loan and Security Agreement by and among
EXECUTONE Information Systems, Inc., the Financial
Institutions Listed on the Signature Page Thereof, and
Bank of America Illinois.  Incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 filed on April 15, 1996.

4-10      Indenture dated March 1, 1986 with United
States Trust Company of New York relating to 7 1/2%
Convertible Subordinated Debentures of Vodavi Technology
Corporation due March 15, 2011.  Incorporated by
reference to Vodavi Technology Corporation's Registration
Statement on Form S-1 (as amended) (Registration No. 33-
3827) filed on March 9, 1986 and amended April 1, 1986.

4-11      First Supplemental Indenture dated August 4,
1989 with United States Trust Company of New York
relating to 7 1/2% Convertible Subordinated Debentures due
March 15, 2011.  Incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1989.

4-12     Specimen Certificate representing 7 1/2%
Convertible Subordinated Debentures.  Incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1989.

10-1      1984 Employee Stock Purchase Plan of EXECUTONE
Information Systems, Inc.  Incorporated by reference to
the Registrant's Registration Statement on Form S-8 (File
No. 33-23294) declared effective by the Commission on
August 23, 1988.

10-2      1986 Stock Option Plan of EXECUTONE Information
Systems, Inc.  Incorporated by reference to the
Registrant's Registration Statement on Form S-8 (File No.
33-23294) declared effective by the Commission on August
23, 1988.

19
<PAGE>


10-3      1984 Stock Option Plan of EXECUTONE Information
Systems, Inc.  Incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990, as amended by Form 8 filed on
August 20, 1991.

10-4      401(k) Savings Plan of Vodavi Technology
Corporation dated December 27, 1985.  Incorporated by
reference to the Registrant's Annual Report  on Form 10-K
for the year ended December 31, 1989.

10-5      Stock Option Bonus Credit Plan of EXECUTONE
Information Systems, Inc. dated December 31, 1988.
Incorporated by reference to the Registrant's Annual
Report  on Form 10-K for the year ended December 31,
1989.

10-6      1990 Directors' Stock Option Plan as amended
July 30, 1996.  Filed herewith.

10-7      1994 Executive Stock Incentive Plan.
Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.

10-9      Volume Purchase Agreement dated January 31,
1992,  between U. S. Sprint Communications Company
Limited Partnership and EXECUTONE Information Systems,
Inc.  Incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended December
31, 1991, as amended by Form 8 filed on June 12, 1992.

10-10     Amendments dated as of April 1, 1995, and 1993
to Volume Purchase Agreement dated January 31, 1992,
between U. S. Sprint Communications Company Limited
Partnership and EXECUTONE Information Systems, Inc.
Incorporated by reference to the Registrant's Annual
Report on Form 10-K/A for the year ended December 31,
1995 filed on August 29, 1996.

10-16    Manufacturing Services Agreement dated as of
January 10, 1995, between EXECUTONE Information Systems,
Inc. and Compania Dominicana de Telefonos, C por A
(Codetel).  Incorporated by reference to the Registrant's
Annual Report on Form 10-K  for the year ended December
31, 1995 filed on April 15, 1996.

10-17    Manufacturing Services Agreement dated February
9, 1990 between Wong's Electronics Co., Ltd. and
EXECUTONE Information Systems, Inc.  Incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990, as amended by Form
8 filed on August 20, 1991.

10-19    Warrant to Purchase 25,000 Shares of Common
Stock of EXECUTONE Information Systems, Inc. in favor of
Richard S. Rosenbloom dated June 23, 1992.  Incorporated
by reference to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1992.

10-21     Management Agreement for the National Indian
Lottery dated January 16,1995.  Incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed on April 15, 1996.

10-22    Distributor Agreement dated as of May 31, 1996,
between EXECUTONE Information Systems, Inc. and Clarity
Telecom, Inc.  Incorporated by reference to the
Registrant's Annual Report on Form 10-K/A for the year
ended December 31, 1995 filed on June 4, 1996.

20
<PAGE>


11    Statement regarding computation of per share
      earnings.  Filed herewith.

13    1996 Annual Report to Shareholders of
      EXECUTONE Information Systems, Inc.  Filed herewith.

21    Subsidiaries of EXECUTONE Information Systems,
      Inc.  Filed herewith.

23.1  Consent of Arthur Andersen LLP. Filed herewith.

23.2  Consent of Hunton & Williams.  Filed herewith.

27    Financial Data Schedule.  Filed herewith.


Undertakings


For the purposes of complying with the rules governing
Form S-8 under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows,
which undertaking shall be incorporated by reference into
registrant's Registration Statements on the following
Form S-8 filings:

S-8 Reg. No. 2-91008 filed May 9, 1984 on 1983 Employee
Stock Purchase Plan (650,000 shares)

S-8 Reg. No. 33-959 filed October 17, 1985 on 1984 Stock
Option Plan (390,000 shares)

S-8 Reg. No. 33-6604 filed June 19, 1986 on 1983 Stock
Option Plan (350,000 shares)

S-8 Reg. No. 33-16585 filed August 24, 1987 on 1986 and
1983 Stock Option Plans (800,000 shares)

S-8 Reg. No. 33-23294 filed August 3, 1988 on 1986 Stock
Option Plan (7,000,000 shares) and Employee Stock
Purchase Plan (500,000 shares)

S-8 Reg. No. 33-42561 filed September 4, 1991 on 1984
Employee Stock Purchase Plan (350,000 shares) and
Directors' Stock Option Plan (100,000 shares)

S-8 Reg. No. 33-45015 filed January 2, 1992 on 1984
Employee Stock Purchase Plan (400,000 shares)

S-8 Reg. No. 33-57519 filed January 31, 1995 on 1984
Employee Stock Purchase Plan (1,000,000 shares).

Insofar as indemnification arising under the Securities
Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable.  In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit

21
<PAGE>


to the court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed by
the final adjudication of such issue.

Reports on Form 8-K

The Registrant filed no reports on Form 8-K during the
quarter ended December 31, 1996.

22
<PAGE>


SIGNATURES


Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be
signed on its behalf by the undersigned thereunto
duly authorized.

EXECUTONE Information Systems, Inc.

By: _____________________________
      Alan Kessman, Chairman, President
      and Chief Executive Officer

March 28, 1997
Milford, Connecticut


Pursuant to the requirements of the Securities
and 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.


March 28, 1997
______________________________
Alan Kessman
Chairman, President and Chief
Executive Officer

(Principal Executive Officer)

March 28, 1997
______________________________
Stanley M. Blau
Director

March 28, 1997
______________________________
Anthony R. Guarascio
Vice President-Finance, and Chief
Financial Officer

(Principal Financial and Accounting Officer)


March 28, 1997
______________________________
Thurston R. Moore
Director

March 28, 1997
______________________________
Richard S. Rosenbloom

Director

March 28, 1997
______________________________
Jerry M. Seslowe
Director

23
<PAGE>


	REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Stockholders of
EXECUTONE Information Systems, Inc.:



We have audited in accordance with generally
accepted auditing standards, the financial
statements included in EXECUTONE Information
Systems, Inc. and subsidiaries' annual report to
stockholders incorporated by reference in this
Form 10-K, and have issued our report thereon
dated January 31, 1997.  Our audit was made for
the purpose of forming an opinion on those
statements taken as a whole.  The schedule listed
in Item 14 is the responsibility of the Company's
management and is presented for purposes of
complying with the Securities and Exchange
Commission's rules and are not part of the basic
financial statements.  This schedule has been
subjected to the auditing procedures applied in
the audit of the basic financial statements and,
in our opinion, fairly states in all material
respects the financial data required to be set
forth therein in relation to the basic financial
statements taken as a whole.



ARTHUR ANDERSEN LLP



Stamford, Connecticut
January 31, 1997




S-1
<PAGE>



SCHEDULE II

<TABLE>
<CAPTION>
VALUATION AND QUALIFYING ACCOUNTS
(Amounts in Thousands)


             					          Additions                         Deductions

	     		                             Charged    Charged    Net
                        Balance at  (Credited) (Credited)  Writeoffs   Balance at
                        Beginning    to Costs   to         of          End
                        of           and        Other      Uncollect.  of
Description	            Period       Expenses   Accounts   Accounts    Period
<S>                     <C>           <C>        <C>       <C>         <C>
Year ended December 31, 1996
  Deducted from asset accounts:
  Allowance for doubtful
     accounts	             $1,715 	  $1,921	     $(551)*	   $(979)     $2,106
  Allowance for uncollectible
     notes receivable	        259	     (82)	      2,039*	     ---	      2,216

Year ended December 31, 1995
  Deducted from asset accounts:
  Allowance for doubtful
    accounts	               1,335	    1,872	       ---	     (1,492)     1,715
  Allowance for uncollectible
    notes receivable	         691 	    (432)	      ---	       ---         259

Year ended December 31, 1994
  Deducted from asset accounts:
  Allowance for doubtful
     accounts	              1,017     1,381        ---      (1,063)     1,335
  Allowance for uncollectible
     notes receivable       1,084     (393)        ---         ---        691



*	Adjustments related to sale of direct sales
organization
</TABLE>










S-2
<PAGE>



             EXECUTONE INFORMATION SYSTEMS, INC.
          EXHIBITS TO 1996 ANNUAL REPORT ON FORM 10-K


Exhibit No.


2-1    Agreement and Plan of Merger by and among
EXECUTONE Information Systems, Inc., Executone Newco,
Inc., and Unistar Gaming Corp., dated as of December 19,
1995.  Incorporated by reference to the Registrant's
Current Report on Form 8-K dated January 3, 1996.

2-2    Asset Purchase Agreement among V Technology
Acquisition Corporation, EXECUTONE Information Systems,
Inc. and Vodavi, Inc. dated November 5, 1993, and
Amendment dated February 18, 1994.  Incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993.

2-3        Asset Purchase Agreement by and among Tone
Holdings, Inc. and Tone Acquisition Corporation,
EXECUTONE Network Services, Inc. and EXECUTONE
Information Systems, Inc. dated as of April 9, 1996, and
Amendment No. 1 to Asset Purchase Agreement dated as of
May 31, 1996, by and among Clarity Telecom Holdings, Inc.
(formerly known as Tone Holdings, Inc.), Clarity Telecom,
Inc. (formerly known as Tone Acquisition Corporation),
EXECUTONE Network Services, Inc. and EXECUTONE
Information Systems, Inc.  Incorporated by reference to
the Registrant's Annual Report on Form 10-K/A for the
year ended December 31, 1995 filed on June 4, 1996.

3-1        Articles of Incorporation, as amended through
December 18, 1995.  Incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 filed on April 15, 1996.


3-2         Articles of Amendment dated and filed
December 19, 1995, amending the Company's Articles of
Incorporation.  Incorporated by reference to the
Registrant's Current Report on Form 8-K dated January 3,
1996.

3-3        Bylaws, as amended.  Incorporated by reference
to the Registrant's Registration Statement on Form S-3
(File No. 33-62257) filed August 30, 1995.

4-1        Second Amended and Restated Loan and Security
Agreement dated as of August 30, 1994 and First Amendment
thereto dated January 1, 1995, between EXECUTONE
Information Systems, Inc., Continental Bank N.A. and the
other Lenders named therein.  Incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994.

4-2        Loan Agreement dated as of August 30, 1994,
between EXECUTONE Information Systems, Inc., certain
employees thereof, and the Lenders named therein.
Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.

4-3        First Amendment dated January 1, 1995, Second
Amendment dated September 29, 1995, and Third Amendment
dated December 29, 1995, to the Second Amended and
Restated Loan and Security Agreement by and among
EXECUTONE Information Systems, Inc., the Financial
Institutions Listed on the Signature Page Thereof, and
Bank of America Illinois. Incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 filed on April 15, 1996.

E-1
<PAGE>


4-10      Indenture dated March 1, 1986 with United
States Trust Company of New York relating to 7 1/2%
Convertible Subordinated Debentures of Vodavi Technology
Corporation due March 15, 2011.   Incorporated by
reference to Vodavi Technology Corporation's Registration
Statement on Form S-1 (as amended) (Registration No. 33-
3827) filed on March 9, 1986 and amended April 1, 1986.

4-11      First Supplemental Indenture dated August 4,
1989 with United States Trust Company of New York
relating to 7 1/2% Convertible Subordinated Debentures due
March 15, 2011.   Incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1989.

4-12      Specimen Certificate representing 7 1/2%
Convertible Subordinated Debentures.  Incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1989.

10-1      1984 Employee Stock Purchase Plan of EXECUTONE
Information Systems, Inc.  Incorporated by reference to
the Registrant's Registration Statement on Form S-8 (File
No. 33-23294) declared effective by the Commission on
August 23, 1988.

10-2      1986 Stock Option Plan of EXECUTONE Information
Systems, Inc.   Incorporated by reference to the
Registrant's Registration Statement on Form S-8 (File No.
33-23294) declared effective by the Commission on August
23, 1988.

10-3      1984 Stock Option Plan of EXECUTONE Information
Systems, Inc.  Incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990, as amended by Form 8 filed on
August 20, 1991.

10-4     401(k) Savings Plan of Vodavi Technology
Corporation dated December 27, 1985.  Incorporated by
reference to the Registrant's Annual Report  on Form 10-K
for the year ended December 31, 1989.

10-5     Stock Option Bonus Credit Plan of EXECUTONE
Information Systems, Inc. dated December 31, 1988.
Incorporated by reference to the Registrant's Annual
Report  on Form 10-K for the year ended December 31,
1989.

10-6      1990 Directors' Stock Option Plan as amended on
July 30, 1996.  Filed herewith.

10-7      1994 Executive Stock Incentive Plan.
Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.

10-9     Volume Purchase Agreement dated January 31,
1992,  between U. S. Sprint Communications Company
Limited Partnership and EXECUTONE Information Systems,
Inc.  Incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended December
31, 1991, as amended by Form 8 filed on June 12, 1992.

10-10    Amendments dated as of April 1, 1995, and 1993
to Volume Purchase Agreement dated January 31, 1992,
between U. S. Sprint Communications Company Limited
Partnership and EXECUTONE Information Systems, Inc.
Incorporated by reference to the Registrant's Annual
Report on Form 10-K/A for the year ended December 31,
1995 filed on August 29, 1996.

E-2
<PAGE>

10-16    Manufacturing Services Agreement dated as of
January 10, 1996, between EXECUTONE Information Systems,
Inc. and Compania Dominicana de Telefonos, C por A
(Codetel).  Incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 filed on April 15, 1996.

10-17    Manufacturing Services Agreement dated February
9, 1990 between Wong's Electronics Co., Ltd. and
EXECUTONE Information Systems, Inc.  Incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990, as amended by Form
8 filed on August 20, 1991.

10-19    Warrant to Purchase 25,000 Shares of Common
Stock of EXECUTONE Information Systems, Inc. in favor of
Richard S. Rosenbloom dated June 23, 1992.  Incorporated
by reference to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1992.

10-21    Management Agreement for the National Indian
Lottery dated January 16,1995.  Incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 filed on April 15, 1996.

10-22    Distributor Agreement dated as of May 31, 1996,
between EXECUTONE Information Systems, Inc. and Clarity
Telecom, Inc.  Incorporated by reference to the
Registrant's Annual Report on Form 10-K/A for the year
ended December 31, 1995 filed on June 4, 1996.

11         Statement regarding computation of per share
earnings.  Filed herewith.

13         1996 Annual Report to Shareholders of
EXECUTONE Information Systems, Inc.  Filed herewith.

21         Subsidiaries of EXECUTONE Information Systems,
Inc.  Filed herewith.

23.1      Consent of Arthur Andersen LLP.  Filed
herewith.

23.2      Consent of Hunton & Williams.  Filed herewith.

27         Financial Data Schedule.  Filed herewith.

E-3
<PAGE>