UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                          Washington, D. C. 20549

                                 FORM 10-K

     (Mark One)
(X)  Annual Report Pursuant to Section 13 or 15(d) of The Securities
     Exchange Act of 1934 For the Fiscal Year Ended December 31, 1997

                                   OR

( )  Transition Report Pursuant to Section 13 or 15(d) of The
     Securities Exchange Act of 1934

                       Commission File Number 0-275

                           Allen Organ Company
          (Exact name of registrant as specified in its charter)

     Pennsylvania                       23-1263194
(State of Incorporation)      (IRS Employer Identification No.)

 150 Locust Street, P. O. Box 36, Macungie, Pennsylvania      18062-0036
  (Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code           610-966-2200

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

               Class B Common Shares, par value $1 per share
                             (Title of Class)

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 of this Form 10-K.  (  X  )

The  Class  A voting stock of the registrant is not registered pursuant  to
the  Securities  Exchange  Act  of  1934,  is  not  publicly  traded,  and,
therefore, no market value information exists for such stock held  by  non-
affiliates.

The number of shares outstanding of each of the Registrant's classes of
common stock, as of the close of business on March 23, 1998:

Class A - Voting     84,112                Class B - Non-voting   1,096,606
<PAGE>
                            ALLEN ORGAN COMPANY
                                     
                                   INDEX
                                                                        

                                     
                                  PART I

1.    Business
         - General developments of business                         
         - Industry Segments                                        
         - Description of business                                  
         - Financial information about foreign operations and export sales
2.    Properties                                                    
3.    Legal Proceedings                                             
4.    Submission of Matters to a Vote of Security Holders           

                                     
                                  PART II

5.    Market for the Registrants Common Stock and
      Related Security Holder Matters                            
6.    Selected Financial Data                                       
7.    Management's Discussion and Analysis of Financial Condition and
      Results of Operations                                     
8.    Financial Statements                                         
9.    Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure                                   

                                     
                                  PART III

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

                                     
                                  PART IV

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

Signatures

Exhibit
<PAGE>
                                  PART I
Item 1.    Business

           General developments of business.

                Incorporated  in Pennsylvania in 1945, Allen Organ  Company
           and  Subsidiaries ("Company") operate in four industry segments:
           musical    instruments,    data    communications,    electronic
           assemblies, and audio equipment.

           Industry segments.

                The  Company  operates in four industry  segments:  musical
           instruments,  data  communications, electronic  assemblies,  and
           audio  equipment.   For  financial  information  concerning  the
           segments, see Note 14 to the financial statements.

           Description of business.

               Musical Instruments.

                Allen Organ Company, and its wholly owned subsidiary  Rocky
           Mount  Instruments,  is  a  leading manufacturer  of  electronic
           keyboard   musical  instruments,  primarily  digital  electronic
           church organs and accessories.  This segment accounted for  58%,
           69% and 81% of revenue in 1997, 1996 and 1995 respectively.
                The  principal  market for the musical instruments  segment
           are  institutions, primarily churches.  Sales to the home market
           make  up a smaller portion of the segment's sales. The segment's
           musical  instruments  are  distributed mostly  through  dealers,
           primarily independent retail music stores throughout the  United
           States,  with  a  lesser percentage distributed through  dealers
           internationally.  The segment's business is not seasonal.
                The  principal raw materials used in the segment's products
           are  electronic  components and wood, all of which  are  readily
           available from various sources without undue difficulty.
                  The segment does not engage in any significant amounts of
           consignments, extended payment terms, or lease guarantees.   The
           Company  is  contingently liable in connection  with certain  
           customers' financing arrangements.  See Note 9 to the  financial
           statements.  The dollar amounts and number of times the  Company
           has had to honor these repurchase agreements are negligible.
                The  musical  instruments segment is not dependent  on  any
           single  or  small group of customers, the loss  of  which  would
           have  a  material  adverse effect on the business.   The  dollar
           amount  of the segment's unshipped order backlog at the  end  of
           February  1998  and 1997 was $4.4     million and  $2.9  million
           respectively.   Approximately $4.0  million of these orders will 
           be  filled in the  current  year  with  the  remaining $400,000
           to be filled in the following year.
                The  electronic organ industry is competitive involving  at
           least  five  (5) domestic and foreign companies.   In  addition,
           there  are  many small pipe organ companies in the institutional
           organ   market.   The  organ  market  consists  of   two   basic
           divisions,  institutional  (primarily  churches)  and  home   or
           entertainment.  The Company believes it has a major position  in
           the  institutional  market because of  product  performance  and
           competitive  prices, and a smaller percentage  of  the  home  or
           entertainment market.

               Data Communications.

                The data communications segment began during 1995 with  the
           acquisition  discussed  in Note 2 to the  financial  statements.
           This  segment accounted for 22%, 21% and 9% of revenues in 1997,
           1996  and  for  the  5  month  period from  acquisition  through
           December 31, 1995 respectively.
                 Data   communications  products  are  sold  primarily   to
           wholesale  and  retail  distributors  worldwide.   The   segment
           maintains  an  inventory of in-process  and  finished  goods  to
           allow  for  rapid  fulfillment  of  customer  orders  which   is
           expected in the industry.
                The  principal raw material used in the data communications
           products  are electronic components, which are readily available
           from various sources without undue difficulty.
                The data communications segment derived 12% and 14% of  its
           1997 and 1996 revenue from one customer.
                 The   segment   operates  through  three  majority   owned
            subsidiaries:

                VIR, Inc. (VIR) and Linear Switch Corporation (LSC)  During
            1997,   these  two  companies  combined  their  marketing   and
            research & development functions under the name of "VIR  Linear
            Switch".   The  companies  design, manufacture,  and  market  a
            number  of  data  communication products  including  patch  and
            testing  equipment, often referred to as tech control products,
            test  access equipment and a matrix switch which can  transport
            high-speed  digital signals and allow "any-to-any" connectivity
            between  and  among connections.  The products are  of  varying
            complexity  and are used to connect, switch, test  and  trouble
            shoot data lines in large computer installations.
                 The   companies  compete  in  a  relatively  mature  field
            producing  high  quality products at competitive  prices.   The
            companies  have  approximately four major  competitors  all  of
            which   are   larger  than  VIR/LSC.   Since  the  acquisition,
            management  has  been  implementing more aggressive  sales  and
            marketing programs.
                 With   the  need  for  higher  speed  and  more   reliable
            communications  circuits increasing, VIR/LSC has  introduced  a
            new  family  of products to provide the ability to  access  and
            configure  these  circuits  for various  test  procedures.   In
            April  of  1997,  Thomas  Infantino  was  named  President   of
            VIR/LSC.   Tom  brings over 25-years experience  in  the  field
            including  positions  at T-Bar, Inc., Dynatech  Communications,
            and Hadax Electronics, Inc.
                The dollar amount of unshipped order backlog at the end  of
            February, 1998 and 1997 was $555,000 and $234,000 respectively.
            All orders are expected to  be  filled in the current year.

                Eastern  Research,  Inc. (ERI)  Designs  and  markets  data
            inter-networking  products.   These  products  include   direct
            access  equipment that allow users to utilize a broad range  of
            services offered by the telephone companies.
                The  company competes in a market that is in excess of  $20
            billion.  However, the company's current and projected  product
            lines  and  sales programs are targeted at only a  fraction  of
            that  market.  There are many competitors in this  market  that
            is  dominated  by several large data communications  companies,
            such  as  Cisco Systems, Inc., Paradyne and ADC  Kentrox.   The
            company's  strategy  has  been to target  existing,  yet  still
            growing,  markets with products that provide new  features  and
            packaging with attractive pricing.
                The  company  initially built its business in  the  CSU/DSU
            market  and  has  also  developed router  technology  products,
            sometimes  referred to as "box" products.  These  products  are
            relatively inexpensive and easy to manufacture, thus this is  a
            competitive  field  where margins can  erode  as  new  products
            emerge.   More recently this company has introduced  a  Digital
            Access  Cross-connect Switch (DACS), a systems  product  called
            DNX  (Digital  Exchange  Network).  The  DNX  is  beginning  to
            contribute  to  revenues  and  is  expected  to  become   ERI's
            flagship   product.   The  company  is  integrating  additional
            technologies including its router technology, along  with  xDSL
            (Digital  Subscriber Line) technology, into the DNX.  In  order
            to  properly capitalize on this market's opportunities, ERI  is
            implementing a more aggressive marketing strategy and  is  also
            increasing   product  development  work.   This  will   require
            further  investment  through the coming  year.   In  May  1997,
            Michael  Doyle became ERI's President.  Michael Doyle  has  20-
            years  experience  in  the  industry  including  positions   at
            Infotron  Systems  Inc.,  Dowty  Communications,  Inc.,  Teleos
            Communications, Inc., and Madge Networks, Inc.
                The dollar amount of unshipped order backlog at the end  of
            February,   1998   and  1997  was   $1.2  million  and $376,000
            respectively.  All  orders are expected to  be  filled  in  the
            current year.

               Electronic Assemblies.

                Allen Integrated Assemblies (AIA), a division of the  Allen
           Organ  Company, provides subcontract manufacture  of  electronic
           assemblies  for  outside customers.  The  electronic  assemblies
           segment   is   an   outgrowth  of  the  technical   skills   and
           manufacturing  capabilities developed  by  the  Company  in  its
           musical  instruments business. This segment accounted  for  15%,
           10%  and  10%  of revenue in 1997, 1996, and 1995  respectively.
           AIA  derived 55%, 85% and 90% of its revenues from one  customer
           in 1997, 1996 and 1995 respectively.
                The  electronic assemblies segment is very competitive with
           numerous  manufacturers  capable  of  producing  such  products.
           Customers  are generally obtained from a geographic  area  close
           to the manufacturer.
                The  dollar amount of the segment's unshipped order backlog
           at   the  end  of  February  1998  and  1997  was  $3.0  million
           and  $764,000  respectively.  All  orders  are  expected  to  be
           filled in the current year.

               Audio Equipment.

                The Audio Equipment segment began on April 1, 1997 with the
           acquisition of Legacy Audio, Inc. (LAI) discussed in Note  2  of
           the   Financial  Statements.   LAI  designs,  manufactures   and
           markets  high-quality audio speaker cabinets  for  hi-fi  stereo
           and  home  theater  applications.  It  also  markets  electronic
           audio   equipment  amplifiers  that  are  manufactured  to   its
           specifications   by   third  party  suppliers.    This   segment
           accounted  for  5%  of  revenues for the  9  month  period  from
           acquisition to December 31, 1997.
                The  principal  market for the audio equipment  segment  is
           individual  consumers for home use.  The segment's products  are
           primarily  distributed directly to the customer  with  a  lesser
           percentage  distributed  through dealer  audition  sites.   This
           segment's business is not seasonal.
                LAI's  manufacturing facility is currently  operating  near
           its  full  capacity.   Many  of their  manufacturing  needs  are
           similar  to  those required in the musical instruments  segment.
           The  Company  has begun building some of LAI's speaker  cabinets
           at its Macungie, PA facility.
                The  principal raw materials used in the segment's products
           are  audio  speakers, electronic components  and  wood,  all  of
           which  are readily available from various sources without  undue
           difficulty.
                The  company  competes with several  other  high-end  audio
           speaker  cabinet  manufacturers including  Martin-Logan,  Thiel,
           B&W, Celestion, and others.
                LAI  is  not  dependent on any single, or small  group,  of
           customers.   The dollar amount of the segment's unshipped  order
           backlog   at   the   end   of   February   1998   was  $579,000.
           All orders are expected to be filled in the current year.

               General.

                The  Company's working capital is sufficient  to  meet  the
           normal expansion of inventory and receivables.
                The  Company  spent $2,654,662, $2,786,390, and  $1,307,691
           annually  in  1997, 1996, and 1995 respectively on research  and
           development.    The  decrease  in  the  1997   expense   relates
           primarily  to  the  combining of the  research  and  development
           efforts  of  VIR and LSC.  The majority of the 1996 increase  in
           research   and  development  expense  relates  to  the   amounts
           expended by the data communications segment acquired in 1995.
                The  Company and its subsidiaries employ approximately  580
           persons.
                The  Company is not aware of any problem in complying  with
           applicable  federal, state, or local provisions with  regard  to
           the  environment. The manufacturing requirements do not  require
           any special expenditures to meet environmental compliance.


           Financial information about foreign operations and export sales.
          
                The  Company does not own manufacturing or sales facilities
           in  any  foreign  countries.   See  Note  13  to  the  financial
           statements, for additional information on export sales.
                Export  sales are all made in US dollars and for  the  most
           part are made under Letter of Credit or on a prepaid basis.
                The  Company  has  established a Foreign Sales  Corporation
           within  the meaning of the Internal Revenue Code of 1986.   This
           wholly-owned  subsidiary is Allen Organ International,  Inc.,  a
           Virgin Islands corporation.

Item 2.    Properties

                  The following sets forth the location, approximate square
            footage and use of the Company's operating locations segregated
            by  segment.   The  Company believes that  its  facilities  are
            generally suitable and adequate for its needs.

                                    Approximate
                Location           Square Footage             Use

            Musical Instruments and Electronic Assemblies:
             Macungie, Pennsylvania     242,000   Administrative, research and
                                                  manufacturing facility. 
                                                  Owned by Allen Organ Company.
                                                  Operating at approximately 
                                                  90% capacity.

             Macungie, Pennsylvania      27,000   International sales,
                                                  exhibition  center,  museum
                                                  and teaching facility.
                                                  Owned by Allen Organ Company.

             Rocky Mount, North Carolina 70,000   Manufacturing and  sales
                                                  facility. Owned by Rocky
                                                  Mount Instruments. Operating
                                                  at approximately 85% 
                                                  capacity.
            Data Communications:
             Southampton, Pennsylvania   22,000   Administrative, research
                                                  and manufacturing facility.
                                                  Leased until July, 2000.
                                                  Operating at approximately
                                                  80% capacity.

             Moorestown, New Jersey      16,800   Administrative, sales and
                                                  research facility. Leased
                                                  until February, 2001.

            Audio Equipment:
             Springfield,  Illinois      15,000   Administrative, research
                                                  and manufacturing facility.
                                                  Owned by Legacy Audio, Inc.
                                                  Operating at approximately
                                                  95% capacity.

Item 3.     Legal Proceedings

                There  is  no litigation requiring disclosure  pursuant  to
           Item 103 of regulation S-K.

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

                No  matters  were  submitted to a vote of security  holders
           during the fourth quarter of fiscal year 1997.

                                  PART II

Item 5.    Market  for the Registrant's Common Stock and Related  Security
           Holder Matters

                The Company's Class A voting  shares  are  not   registered
           pursuant to the Securities Exchange  Act  of 1934  and  are  not 
           publicly traded.  The Company's Class B  non-voting stock trades 
           on the NASDAQ  National  Market tier of The NASDAQ Stock  Market 
           under the symbol AORGB.

                The high and low bid quotations for each quarter during the
           last  two years as reported by NASDAQ Market Information  System
           is as follows:

                  1997             High           Low

                  First Quarter    41             38 1/2
                  Second Quarter   41 1/4         39
                  Third Quarter    40 1/2         38 7/8
                  Fourth Quarter   44 3/4         39 3/4

                  1996             High           Low

                  First Quarter    43 1/2         35 1/2
                  Second Quarter   40 1/2         35 3/4
                  Third Quarter    40 1/8         37 3/4
                  Fourth Quarter   39 15/16       38 1/2

           The  Company  has  9  Class  A  Shareholders  and  362  Class  B
           Shareholders of record as of March 23, 1998.

           During  the  past  two  fiscal years, the Company  has  declared
           dividends on both it's class A and B shares as follows:

                  Record of Quarterly Dividends Paid in 1997

                  Record Date      Payable        Amount

                  Cash  2/21/97    3/7/97          $.14
                  Cash  5/23/97    6/6/97          $.14
                  Cash  8/22/97    9/5/97          $.14
                  Cash 11/21/97   12/5/97          $.14

                  Record of Quarterly Dividends Paid in 1996

                  Record Date      Payable        Amount

                  Cash  2/16/96    3/1/96          $.13
                  Cash  5/17/96   5/31/96          $.13
                  Cash  8/16/96   8/30/96          $.13
                  Cash 11/15/96  11/29/96          $.16

Item 6.   Selected Financial Data

                                 Years Ended December 31,
                      1997        1996        1995       1994         1993

Net Sales         $40,348,084  $36,715,128 $30,024,761 $28,842,789  $26,477,983

Net Income        $ 3,512,142  $ 3,865,876 $ 4,015,105 $ 4,449,703  $ 3,456,154

Earnings per share$      2.79  $      2.88 $      2.94 $      3.25  $      2.48

Cash dividends
per share         $       .56  $       .55 $       .55 $       .55  $       .50

At Year End

  Total Assets    $62,562,004  $63,966,646 $65,299,426 $58,464,695  $55,752,570

  Long-Term Debt,
   net of current
   portion        $         0  $         0 $ 1,388,000 $         0  $         0


The 1997 results of operations include the audio equipment segment acquired
April 1, 1997.  The 1997, 1996 and 1995 results of operations include the
data communications segment acquired August 1, 1995.  See Note 2 of the
financial statements for additional information.

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

     Liquidity and Capital Resources:
        The  Company  continues to maintain a strong financial position and
     high  level of liquidity which enables it to generate funds internally
     to   meet   operating  needs,  capital  expenditures  and   short-term
     obligations.  Key indicators of the Company's liquidity are  presented
     below:
                                                       December 31,
                                               1997                 1996
           Working Capital                 $42,445,212          $47,511,096
           Current Ratio                     15 to 1              29 to 1
           Debt to Equity Ratio             .06 to 1             .04 to 1

        The  Company's  ratio  of  debt to equity  has  remained  very  low
     because of management's continuing policy of financing expansion  with
     internally  generated funds.  This policy has enabled the  Company  to
     maintain  its  competitive  advantage  without  incurring  the   costs
     associated with borrowed funds.
        Cash  flows  provided by operating activities declined during  1997
     compared   to   1996  primarily  due  to  increased  working   capital
     requirements,  particularly accounts receivable and inventory.   These
     increases  are due primarily to new product introductions  and  higher
     order   volumes  in  most  segments.   Accounts  receivable  increased
     approximately  $500,000  and $400,000 in the Data  Communications  and
     Electronic  Assemblies  segments  respectively.  Inventory   increased
     approximately  $900,000, $800,000 and $1,500,000 respectively  in  the
     Musical  Instruments,  Data Communications and  Electronic  Assemblies
     segments  during  1997.  Cash flows provided by  operating  activities
     increased  during  1996  when  compared  to  1995  primarily  from  an
     approximately  $1,000,000 contribution to the  company  pension  plans
     made in 1995.
        During  1997  and  1996, cash flows from investing activities  were
     used  primarily to fund the purchase of treasury shares.   Cash  flows
     from  investing  activities were also used to fund the acquisition  of
     Legacy Audio, Inc. in April, 1997.  During 1997, the company increased
     its  expenditures  for property and equipment including  approximately
     $700,000  additional automated equipment and building improvements  to
     enhance its electronics manufacturing capabilities used in the musical
     instruments and electronic assemblies segments.
        During  1997 the Company began implementing new information systems
     and has invested nearly $500,000 in software and computer equipment as
     part  of this project which the Company estimates will require another
     $300,000  to complete.  The Company has undertaken this implementation
     as  part  of  a  business  improvement program initiated  to  up-grade
     production  and  product  planning processes.   While  these  business
     improvement  programs  have and will continue  to  involve  additional
     expense  through 1998, it is anticipated that these improvements  will
     provide long-term benefits in all areas of the Company.
        See  Note 1 to the consolidated financial statements regarding  new
     accounting standards.

     Results of Operations:

     Sales and Operating Income
        Consolidated  net sales increased $3,632,956 (10%)  during  1997
     as  compared to 1996 primarily due to sales from the audio equipment
     segment  which  was acquired in April, 1997 and increased  sales  in
     the  data communications segment resulting from additional sales and
     marketing  efforts initiated since the acquisition.  In 1996,  sales
     increased  $6,690,367  (22%) as compared to 1995  primarily  due  to
     sales  from  the data communications segment which was  acquired  in
     August, 1995.
           
                                          December 31,
                                  1997         1996          1995

       Net Sales
       Musical Instruments
        Domestic               $18,918,509  $19,824,334   $18,913,194
        Export                   4,432,974    5,594,286     5,408,720
         Total                  23,351,483   25,418,620    24,321,914
       Data communications
        Domestic                 6,933,787    6,229,961     1,634,036
        Export                   2,103,734    1,417,636     1,027,826
         Total                   9,037,521    7,647,597     2,661,862
       Electronic Assemblies
        Domestic                 5,935,381    3,648,911     3,040,985

       Audio Equipment
        Domestic                 1,812,138           --            --
        Export                     211,561           --            --
         Total                   2,023,699           --            --

       Total                   $40,348,084  $36,715,128   $30,024,761


       Income (Loss) from Operations
       Musical instruments     $ 2,718,085  $ 3,634,901   $ 3,332,103
       Data communications      (1,069,165)    (349,785)      122,417
       Electronic assemblies       631,521      520,602       457,167
       Audio Equipment             337,495           --            --
        Total                  $ 2,617,936  $ 3,805,718   $ 3,911,687

     Musical Instruments Segment

        The  1997 decrease in domestic sales reflects lower order  rates
     during  the  early  part  of the year.  New  orders  in  the  fourth
     quarter  of  1997  were approximately $500,000  ahead  of  the  same
     period  in 1996.  However, the product mix of these orders  required
     production  lead  times  beyond year end  and  increased  the  order
     backlog  at  year  end by approximately $900,000  when  compared  to
     1996.
        The  1996  increase in domestic sales reflected slight increases
     in  selling prices and product mix changes.  Sales in 1996  included
     more  larger  models and custom organs.  These types of  variations,
     to a large extent, are unpredictable from one year to the next.
        Export  sales  decreased  in  1997  primarily  from  changes  in
     economic conditions in certain world markets, particularly Far  East
     countries.   Export  sales increased in 1996  due  to  the  relative
     weakness  of  the  US  dollar  in relation  to  foreign  currencies.
     Economic  changes  in foreign countries and foreign  exchange  rates
     may affect future export sales.
        Gross  profit margins on sales were 28.1%, 31.8% and  32.8%  for
     the  three years ended December 31, 1997.  The decrease in the  1997
     gross  profit margin is a result of start-up expenses of  new  organ
     models  introduced  in May, 1997, increases in  overhead  costs  and
     lower  sales over which to absorb fixed costs.  The decrease in  the
     1996  gross  profit margin reflects slight increases in  the  direct
     material and labor costs used in the company's products.
        Selling,    administrative   and   other   expenses    increased
     approximately  $200,000  in  1997  as  a  result  of  marketing  and
     advertising  of  new  products.  1996  expenses  were  approximately
     equal to 1995.
        Research   and   development  expenses  increased  approximately
     $40,000  in  1997  related  to the new organ  models  introduced  in
     during 1997.

     Data Communications Segment

        Domestic  sales in each of the last two years have increased  as
     a  result of additional sales and marketing efforts initiated  since
     the acquisition.
        International  sales  for 1997 increased  as  compared  to  1996
     primarily  due  to additional sales and marketing efforts  in  those
     markets.   International sales for 1996 decreased when  compared  to
     1995  primarily due to a large order in 1995 which was not  repeated
     in 1996.
        Each  of  the  companies  increased their  sales  and  marketing
     efforts  throughout 1997 and 1996 and expects to continue to  do  so
     throughout 1998, which management believes should positively  affect
     future sales and operating results.
        Gross  profit margins were 46% in 1997 compared to 52%  in  1996
     from  competitive  pressures on selling  prices  and  variations  in
     product  mix.  While the companies strive to maintain profit margins
     by   trying  to  develop  products  which  offer  more  features  at
     competitive prices, the industry is competitive which often  results
     in pricing changes to obtain and maintain market share.
        Selling  expenses increased approximately $500,000 and  $600,000
     in  1997 and 1996 respectively, reflecting the additional sales  and
     marketing  efforts.  Selling expenses will continue to  increase  in
     the  future as sales and marketing programs and personnel are  added
     to  further  promote  the segment's products and  obtain  additional
     market share.
        Administrative  expenses  increased approximately  $550,000  and
     $650,000  in  1997 and 1996 respectively, resulting from  additional
     management  and support personnel added to promote and  oversee  the
     segment.
        Research   and   development  expenses   were   $1,799,665   and
     $1,972,167  for  the  years  ended  December  31,  1997  and   1996,
     respectively  and  $637,468 for the five months ended  December  31,
     1995.   The  1997  decrease is attributed to the  combining  of  the
     research  and  development efforts of VIR, Inc.  and  Linear  Switch
     Corporation.  The  segment is committed to new  product  development
     and  support and expects to increase these expenditures  by  30%  to
     50% during 1998.

     Electronic Assemblies Segment

        Sales  increased during 1997 and 1996 from higher  order  volume
     from  existing  customers  and  orders  received  from  several  new
     customers.
        Gross  profit margins were 14.5%, 20.0% and 21.0% for the  three
     years  ended  December  31,  1997.   The  decrease  is  related   to
     competitive  pressures common in the industry and higher  production
     costs  related to inefficiencies in production scheduling caused  by
     rapid growth in sales.
        Selling,  general  and  administrative  expenses  have  remained
     approximately the same in each of the last three year periods.   The
     segment  continues its marketing efforts and has begun to  diversify
     its  customer base.  The Company continues to improve its production
     capabilities  to  offer state of the art manufacturing  services  to
     its customers.

     Audio Equipment Segment

        Sales  for  the  nine months ended December 31,  1997  increased
     approximately 40% when compared to the same period in 1996 on a  pro
     forma  basis.   This increase is a result of increased awareness  of
     the  Company through both increased marketing and sales efforts, and
     positive  product reviews in several trade publications  during  the
     year.   The  Company  will  continue to  promote  awareness  of  its
     products   through  increased  marketing  efforts  which  management
     believes will continue to positively affect future sales.
        Gross profit margins were 48.3% in 1997.
        Selling,    general   and   administrative    costs    increased
     approximately  $300,000 during 1997 as compared to the  same  period
     in  1996  resulting from increased sales and marketing  efforts  and
     additional  administrative personnel added to support the  company's
     growth.

     Other Income (Expense)

        The  variations in interest income in 1997, 1996, and  1995  are
     primarily   attributable  to  the  yields  available  on  short-term
     investments, realized gains, and the amounts of principal  invested.
     The  1997,  1996,  and 1995 amounts include $765,109,  $287,982  and
     $295,560 of realized capital gains respectively.
        Interest  expense  represents  interest  on  the  notes  payable
     issued  in  connection with the acquisition discussed in Note  2  to
     the financial statements.

     Income Taxes

        The  decrease  in  the 1997 tax provision is attributable  to  a
     decrease  in  the estimated effective tax rate for the  current  and
     prior   tax   year  resulting  from  a  change  in   state   revenue
     allocations.   The effective tax rate increased in  1996  due  to  a
     lower amount of tax-free non-operating investment income.

     Factors that May Affect Operating Results

        The  statements contained in this report on Form 10-K  that  are
     not  purely  historical  are forward looking statements  within  the
     meaning  of  Section 27A of the Securities Act of 1933  and  Section
     21E  of  the  Securities Exchange Act of 1934, including  statements
     regarding   the   Company's  expectations,  hopes,   intentions   or
     strategies   regarding  the  future.   Forward  looking   statements
     include:    statements   regarding  future   products   or   product
     development;  statements regarding future research  and  development
     spending   and  the  Company's  marketing  and  product  development
     strategy,  statements  regarding future  production  capacity.   All
     forward  looking statements included in this document are  based  on
     information  available to the Company on the date  hereof,  and  the
     Company  assumes  no obligation to update any such  forward  looking
     statements.   Readers are cautioned not to place undue  reliance  on
     these   forward looking  statements,  which   reflect   management's
     opinions  only  as  of  the date hereof.  Readers  should  carefully
     review  the  risk factors described in other documents  the  Company
     files   from   time  to  time  with  the  Securities  and   Exchange
     Commission,  including the Quarterly Reports  on  Form  10-Q  to  be
     filed  by the Company in fiscal year 1998.  It is important to  note
     that  the  Company's  actual results could  differ  materially  from
     those in such forward looking statements.  Some of the factors  that
     could  cause  actual  results to differ  materially  are  set  forth
     below.
        The   Company  has  experienced  and  expects  to  continue   to
     experience fluctuations in its results of operations.  Factors  that
     affect  the  Company's results of operations include the volume  and
     timing  of  orders  received, changes in the mix of  products  sold,
     market  acceptance  of  the Company's and its  customer's  products,
     competitive  pricing  pressures,  global  currency  valuations,  the
     Company's  ability to meet increasing demand, the Company's  ability
     to  introduce  new  products on a timely basis, the  timing  of  new
     product  announcements  and introductions  by  the  Company  or  its
     competitors, changing customer requirements, delays in  new  product
     qualifications,  the timing and extent of research  and  development
     expenses  and fluctuations in manufacturing yields.  As a result  of
     the  foregoing or other factors, there can be no assurance that  the
     Company   will  not  experience  material  fluctuations  in   future
     operating  results  on  a  quarterly or annual  basis,  which  would
     materially  and  adversely affect the Company's business,  financial
     condition and results of operations.
        See   Note   1  to  the  financial  statements  for  information
     concerning  the effects of new accounting standards  and  Year  2000
     issues.
           

Item 8. Financial Statements
           See Item 14 for index.


Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure
           The  information required by Item 304(a) of Regulation  S-K  was
       previously reported in a Current Report on Form 8-K (items 4 and  7)
       dated  July 31, 1997 to report a change in the Company's independent
       accountants.
           There  were  no  reportable  events  as  described  in   Item
       304(b).
<PAGE>                                     
    KPMG Peat Marwick LLP

    4905 Tilghman Street
    Allentown, PA 18104

Independent Auditors' Report


The Board of Directors
Allen Organ Company:


We  have audited the accompanying consolidated balance sheet of Allen Organ
Company and Subsidiaries as of December 31, 1997, and the related consolidated
statements of income, stockholders' equity and cash flows for the year then  
ended.  These  financial statements are the responsibility of the Company's   
management.  Our responsibility is to express an opinion on these financial 
statements based on our audit.

We conducted our audit 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  audit
provides 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 Allen Organ Company and Subsidiaries as of December 31,  1997,
and  the consolidated results of their operations and their cash flows  for
the  year  then  ended  in  conformity with generally  accepted  accounting
principles.



KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP

Allentown, PA
January 30, 1998
<PAGE>
               CONCANNON, GALLAGHER, MILLER & COMPANY, P.C.
                    CERTIFIED PUBLIC ACCOUNTANTS
                       AND BUSINESS CONSULTANTS
Michael J. Gallagher, CPA
Michael R. Miller, CPA
William C. Mason, CPA
E. Barry Hetzel, CPA
Edward J. Quigley, Jr., CPA
John G. Estock, CPA
Howard D. Gneiding, CPA
Robert A. Oster, CPA
Robert E. Vitale, CPA
John F. Sharkey, Jr., CPA
Victor J. Meyer, CPA
David C. Gehringer, CPA
Gerard D. Stanus, CPA
Robert M. Caster, CPA
Anthony M. Bragano, CPA
                       INDEPENDENT AUDITORS' REPORT

The Board of Directors
 and Shareholders
Allen Organ Company

      We have audited the accompanying consolidated balance sheet of Allen
Organ  Company and Subsidiaries as of December 31, 1996  and  the  related
consolidated statements of income and retained earnings, and  cash flows
for  each  of  the two years in the period ended December 31, 1996.  These
consolidated financial statements are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on 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 Allen Organ Company and Subsidiaries at December 31, 1996  and
the consolidated results of their operations and their cash flows for  each
of the two years in the period ended December 31, 1996,  in conformity with
generally accepted accounting principles.



CONCANNON, GALLAGHER, MILLER AND COMPANY, P.C.

Allentown, PA
January 30, 1997

Member of AICPA Division for CPA Firms  SEC and Private Companies Practice
                                 Sections
<PAGE>                                    
                      ALLEN ORGAN COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                        
                                        
                                                      December 31,
                     ASSETS                         1997          1996
CURRENT ASSETS                                                
  Cash                                           $ 1,020,348  $   781,202
  Investments including accrued interest          20,040,334   29,016,935
  Accounts receivable                              5,732,432    4,817,939
  Inventories                                     17,923,387   14,072,147
  Prepaid income taxes                               232,895      397,404
  Prepaid expenses                                   483,300      142,769
     Total Current Assets                         45,432,696   49,228,396
                                                              
PROPERTY, PLANT AND EQUIPMENT, NET                 9,515,012    7,847,515
                                                              
OTHER ASSETS                                                  
  Prepaid pension costs                              795,107      889,206
  Inventory held for future service                1,260,346    1,237,986
  Note receivable                                    203,557      163,148
  Cash value of life insurance                     1,122,495      858,217
  Goodwill, net                                    3,755,483    3,278,114
  Intangible and other assets, net                   477,308      464,064
     Total Other Assets                            7,614,296    6,890,735
     Total Assets                                $62,562,004  $63,966,646

  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES                                           
  Accounts payable                               $   913,110  $   396,173
  Deferred income taxes                               74,091       60,033
  Other accrued expenses                             692,282      499,355
  Customer deposits                                1,308,001      761,739
     Total Current Liabilities                     2,987,484    1,717,300
NONCURRENT LIABILITIES                                        
  Deferred liabilities                               721,264      782,189
     Total Liabilities                             3,708,748    2,499,489
                                                              
MINORITY INTERESTS                                   321,424      157,826
                                                              
COMMITMENTS AND CONTINGENCIES                                 
STOCKHOLDERS' EQUITY                                          
  Common stock, par value $1 per share                        
  Authorized                                                  
     Class A Shares - 400,000 in 1997 and 1996                
     Class B Shares - 3,600,000 in 1997 and 1996              
  Issued
  Common Stock   1997           1996
     Class A   127,232 shares;   128,104  shares      127,232     128,104
     Class B 1,410,761 shares; 1,409,889 shares     1,410,761   1,409,889
      Total Common Stock                            1,537,993   1,537,993
  Capital in excess of par value                   12,758,610  12,758,610
  Retained earnings                                55,725,180  52,915,056
  Unrealized gain on investments, net                 128,474      89,380
    Sub-total                                      70,150,257  67,458,865
  Less cost of common shares in treasury                      
     1997 - 43,120 Class A shares and
            314,155 Class B shares                (11,618,425)     --
     1996 - 43,120 Class A shares and
            170,636 Class B shares                     --      (5,991,708)
  Total Stockholders' Equity                       58,531,832  61,309,331
  Total Liabilities and Stockholders' Equity      $62,562,004 $63,966,646
                                        
          See accompanying notes to Consolidated Financial Statements.
<PAGE>                                        
              ALLEN ORGAN COMPANY AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF INCOME
                                
                                
                                
                                
                                       Years Ended December 31,
                                     1997          1996          1995
                                                           
NET SALES                         $40,348,084  $36,715,128  $30,024,761
                                  
COSTS AND EXPENSES                                         
  Cost of sales                    26,785,916   23,789,872   20,109,427
  Selling, administrative and       8,289,570    6,333,148    4,695,956
    other expenses                                          
  Research and development          2,654,662    2,786,390    1,307,691
    Total Costs and Expenses       37,730,148   32,909,410   26,113,074
                                                           
INCOME FROM OPERATIONS              2,617,936    3,805,718    3,911,687
                                
OTHER INCOME (EXPENSE)                                     
  Investment income                 2,114,722    2,025,024    2,115,551
  Other income, net                    14,443       24,621       26,810
  Interest expense                       --        (10,309)     (42,856)
  Minority interests in           
   consolidated subsidiaries            6,041       55,822       23,913
    Total Other Income (Expense)    2,135,206    2,095,158    2,123,418
                                                                     
INCOME BEFORE TAXES ON INCOME       4,753,142    5,900,876    6,035,105

TAXES ON INCOME                                            
  Current                           1,296,000    2,087,000    1,559,000
  Deferred                            (55,000)     (52,000)     461,000
    Total Taxes on Income           1,241,000    2,035,000    2,020,000

NET INCOME                        $ 3,512,142  $ 3,865,876  $ 4,015,105
                                                                     
BASIC AND DILUTED EARNINGS
  PER SHARE                       $      2.79  $      2.88  $      2.94
                                                                              
         See accompanying notes to Consolidated Financial Statements.
<PAGE>                                
                   ALLEN ORGAN COMPANY AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                     
                                      Common Stock                   Capital
                                                                        in
                              Class A              Class B           Excess of
                            Shares   Amount    Shares    Amount      Par Value
                                                                       
Balance-December 31,1994    128,104  $128,104  1,409,889 $1,409,889 $12,610,377
                                                                      
Reissued Class B Shares                                                 148,233
                                                                      
Balance-December 31,1995    128,104  $128,104  1,409,889 $1,409,889 $12,758,610
                                                                      
Balance-December 31,1996    128,104  $128,104  1,409,889 $1,409,889 $12,758,610
                                                                      
Exchange Class A Shares                                               
 for Class B Shares            (872)     (872)       872        872    
                                                                      
Balance-December 31,1997    127,232  $127,232  1,410,761 $1,410,761 $12,758,610
                                                                      
                                      Unrealized    Pension     
                           Retained  Gain(Loss)on  Liability   Treasury Stock
                           Earnings  Investments  Adjustment  Shares   Amount

Balance-December 31,1994 $46,524,142 $(98,399)  $(489,823)  173,456 $4,313,067
                                                                      
Net Income                 4,015,105                                     
Reacquired Class B Shares                                    25,889  1,060,749
Reissued Class B Shares                                     (24,390)  (851,767)
Change in unrealized gain                                                
 on securities available                                         
 for sale                             192,535
Pension liability                                              
 adjustment                                       489,823
Cash dividend paid                                           
($.55 per share)            (753,084)
                                                                      
Balance-December 31,1995 $49,786,163 $ 94,136   $      --   174,955 $4,522,049
                                                                      
Net Income                 3,865,876                                     
Reacquired Class B Shares                                    38,801  1,469,659
Change in unrealized gain                                                 
 on securities available
 for sale                              (4,756)                           
Cash dividend paid                                           
($.55 per share)            (736,983)
                                                                      
Balance-December 31,1996 $52,915,056 $ 89,380   $      --   213,756 $5,991,708

Net Income                 3,512,142
Reacquired Class B Shares                                   143,519  5,626,717
Change in unrealized gain                                                 
 on securities available
 for sale                              39,094                           
Cash dividend paid                                          
($.56 per share)            (702,018)
                                                                      
Balance-December 31,1997 $55,725,180 $128,474   $      --   357,275$11,618,425
                                     
         See accompanying notes to Consolidated Financial Statements.
<PAGE>
                   ALLEN ORGAN COMPANY AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 Years Ended December 31,
                                             1997         1996           1995
CASH FLOWS FROM OPERATING ACTIVITIES                             
 Net income                           $  3,512,142  $  3,865,876  $  4,015,105
 Adjustments to reconcile net income                           
  to net cash provided by operating
  activities                          
  Depreciation and amortization          1,114,639       815,277       636,777
  Minority interest in consolidated     
   subsidiaries                             (6,041)      (55,822)      (23,913)
  Amortization of bond premiums                 --         4,349        58,918
  Gain (Loss) on sale of property,       
   plant and equipment                      (3,984)        5,692          (437)
  Gain on sale of investments             (765,110)     (287,982)     (295,560)
  Change in assets and liabilities (net
    of acquisition effects)
   Accounts receivable                    (914,493)     (386,440)      120,141 
   Inventories                          (3,188,750)   (1,292,561)   (2,014,580)
   Prepaid income taxes                    164,509       459,226      (580,050)
   Prepaid expenses                       (328,631)      (39,349)       (4,517)
   Deferred income tax benefits                 --            --       110,536
   Prepaid pension costs                    94,099       132,311    (1,109,038)
   Accounts payable                        498,632      (139,103)     (267,387)
   Other accrued expenses                  192,927    (1,518,438)     (325,032)
   Customer deposits                       546,262       298,720        16,362
   Deferred liabilities                    (32,217)      (59,500)      474,702
     Net Cash Provided by Operating    
      Activities                           883,984     1,802,256       812,027

CASH FLOWS FROM INVESTING ACTIVITIES                             
 Cash proceeds from maturity of investments             
  classified as held to maturity                --            --    54,960,373
 Cash paid for purchase of investments      
  classified as held to maturity                --            --   (21,631,598)
 Cash proceeds from sale of investments 
  classified as available for sale      30,263,188    38,938,452     3,520,772 
 Cash paid for purchase of investments   
  classified as available for sale     (20,497,033)  (36,914,531)  (30,402,728)
 Increase in cash value of life insurance (264,278)     (228,736)     (221,343)
 Increase in note receivable               (40,409)      (40,562)      (40,731)
 Payment for acquisition, net of cash    
  acquired                              (1,512,000)           --    (3,639,338)
 Additions to intangible and other assets (211,690)           --      (533,084)
 Purchase of minority stockholders'        
  interest in subsidiary                        --       (20,000)           --
 Cash proceeds from sale of property,     
  plant and equipment                        7,841        10,000           500
 Cash paid for purchase of property,     
  plant and equipment                   (2,046,097)     (761,483)     (940,689)
   Net Cash Provided by       
    Investing Activities                 5,699,522       983,140     1,072,134

CASH FLOWS FROM FINANCING ACTIVITIES                             
 Dividends paid in cash                   (702,018)     (736,983)     (753,084)
 Reacquired Class B common shares       (5,626,717)   (1,469,659)   (1,060,749)
 Subsidiary company stock reacquired     
  from minority stockholders               (15,625)       (3,572)           --
 Subsidiary company stock issued to       
  minority stockholders                         --         9,920        20,705
  Net Cash Used in Financing Activities (6,344,360)   (2,200,294)   (1,793,128)

NET INCREASE IN CASH                       239,146       585,102        91,033

CASH, JANUARY 1                            781,202       196,100       105,067

CASH, DECEMBER 31                     $  1,020,348  $    781,202  $    196,100
                                         
           SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
  Cash paid for income taxes          $  1,758,833  $  1,793,338  $  2,142,682 
  Cash paid for interest              $         --  $     53,322  $         --
                                                                 
 SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
 Liability incurred to purchase         
  inventory in connection with                                     
  acquisition                         $         --  $         --  $  1,243,601
 Long term debt incurred in connection  
  with asset acquisition              $         --  $         --  $  1,735,000
 Purchase price adjustment of                           
  August 1,1995 acquisition
 Decrease of accrued liability to    
  purchase inventory                  $         --  $    630,885  $         --
 Decrease in long term debt                     --     1,735,000            -- 
 Decrease in minority interest                  --        86,641            --
 Decrease in inventory                          --      (630,885)           --
 Decrease in intangible assets (Goodwill)       --      (864,291)           --
 Increase in current accrued liabilities        --      (957,350)           --
    Total                             $         --  $         --  $         --
                                                                 
                                     
       See accompanying notes to Consolidated Financial Statements.
<PAGE>
                     ALLEN ORGAN COMPANY AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 Significant Accounting Policies
     Background:
        Allen   Organ  Company  and  Subsidiaries  operate  in  four   industry
     segments:     musical   instruments,   data   communications,   electronic
     assemblies,  and audio equipment.  See note 14 for additional  information
     on the operating activities of each segment.

     Principles of Consolidation:
        The  consolidated  financial statements include  the  accounts  of  the
     Allen   Organ  Company  and  the  following  subsidiaries.   All  material
     intercompany transactions have been eliminated.
            Subsidiary Name                 Ownership %
         Rocky Mount Instruments, Inc.        100.00%
         Allen Organ International, Inc.      100.00%
         VIR, Inc.                             98.09%
         Eastern Research, Inc.                92.52%
         Linear Switch Corporation             92.20%
         Legacy Audio, Inc.                    75.00%

     Reclassifications:
        Certain  amounts  in the 1996 and 1995 financial statements  have  been
     reclassified to conform to the 1997 presentation.

     Off-Balance Sheet Risk:
        Financial  instruments that potentially subject the Company  to  credit
     risk  consist principally of short-term investments and trade receivables.
     The  Company  places substantially all of its investments in mutual  funds
     holding  federal, state and local government obligations and,  by  policy,
     limits  the amount of credit exposure in any one investment.  The  Company
     sells  most  of  its  products through established dealer  networks.   The
     credit  risk  associated with related receivables is limited  due  to  the
     large number of dealers and their geographic dispersion.

     Use of Estimates:
        The  preparation of financial statements in conformity  with  generally
     accepted  accounting principles requires management to make estimates  and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets and liabilities  at  the  date  of  the
     financial  statements  and the reported amounts of revenues  and  expenses
     during  the  reported  period.  Actual results  could  differ  from  those
     estimates.

     Investments:
        The  Company accounts for its short-term investments in accordance with
     Statement  of  Financial  Accounting Standards No.  115,  "Accounting  for
     Certain Investments in Debt and Equity Securities".  Management determines
     the  appropriate  classification of its investments  in  debt  and  equity
     securities  at the time of purchase and reevaluates such determination  at
     each balance sheet date.

     Inventories:
        Inventories  are  valued  at the lower of  cost  or  market.   Cost  is
     determined  using the first-in, first- out (FIFO) method for substantially
     all inventories.

     Property, Plant and Equipment:
        Property,  plant  and  equipment are stated at cost.   Depreciation  is
     computed  over  estimated useful asset lives using both straight-line  and
     accelerated  methods for financial reporting and accelerated  methods  for
     tax reporting.

     Goodwill and Intangibles:
        Goodwill  represents the excess of cost over the net assets of acquired
     subsidiaries.  Goodwill is amortized on a straight-line basis over various
     periods from 3 - 20 years and is presented net of accumulated amortization
     of  $348,862 and $129,696 at December 31, 1997 and 1996 respectively.  The
     carrying  value of goodwill for each business is continually  reviewed  to
     assess   its  recoverability  from  future  operations  of  the   acquired
     subsidiaries,  based on future cash flows (undiscounted)  expected  to  be
     generated  by such operations.  Any impairment in value indicated  by  the
     assessment would be charged against current operations.
        During  1997  the  Company  re-evaluated the useful  life  of  goodwill
     acquired  through business acquisitions and began amortizing the  goodwill
     associated  with  acquisitions  over  useful  lives  of  3  -  20   years.
     Previously,  goodwill was being amortized over 40 years.  This  change  in
     the estimated life of the goodwill had the effect of decreasing net income
     for 1997 by approximately $60,000 ($0.05 per share).
        Intangible  assets consist of organization costs which  are  stated  at
     cost  and  amortized  using  the  straight-line  method  over  ten  years.
     Intangible  assets  are  presented  net  of  accumulated  amortization  of
     $134,225 and $75,520 at December 31, 1997 and 1996, respectively.

     Income Taxes:
        Income  taxes are provided for the tax effects of transactions reported
     in  the  financial  statements and consist of  taxes  currently  due  plus
     deferred taxes.  Deferred taxes are recognized for differences between the
     basis  of  assets and liabilities for financial statement and  income  tax
     purposes.

     Research and Development:
        Research  and  development  expenditures  are  charged  to  expense  as
     incurred.

     Stock-Based Compensation:
        The  Company accounts for its stock-based compensation plans using  the
     accounting  prescribed  by Accounting Principles  Board  Opinion  No.  25,
     Accounting  for  Stock  Issued to Employees.  Since  the  Company  is  not
     required  to adopt the fair value based recognition provisions  prescribed
     under Statement of Financial Accounting Standards No. 123, Accounting  for
     Stock-Based  Compensation,  it  has  elected  only  to  comply  with   the
     disclosure requirements set forth in the Statement.  (See Note 17.)

     Year 2000:
        The  Company  has  taken  actions to make  its  systems,  products  and
     infrastructure Year 2000 compliant.  The Company began work several  years
     ago  to  prepare  its  products and its financial  information  and  other
     computer-based  systems  for  the Year 2000,  including  replacing  and/or
     updating  existing  legacy  systems.   Allen  continues  to  evaluate  the
     estimated  costs associated with these efforts based on actual experience.
     While  these efforts will involve additional costs, the Company  believes,
     based  on available information, that it will be able to manage its  total
     Year  2000 transition without any material adverse effect on its  business
     operations, products or financial prospects.

     New Accounting Standards:
        The  Financial Accounting Standards Board has issued the following  new
     Statements,  all  of  which  are effective for  financial  statements  for
     periods beginning after December 15, 1997.
           SFAS  130,  Reporting  Comprehensive Income - establishes  standards
           for   reporting  and  display  of  comprehensive  income   and   its
           components in a full set of general purpose financial statements.
           SFAS  131,  Disclosures about Segments of an Enterprise and  Related
           Information   -   establishes  standards  for   reporting   selected
           information  about operating segments in interim financial  reports.
           It   also  establishes  standards  for  related  disclosures   about
           products and services.
           SFAS  132,  Employers'  Disclosures about Pensions  and  Other  Post
           Retirement Benefits - revises disclosures about pensions  and  other
           post retirement benefit plans.
        The  Company  will implement these standards during 1998  and  believes
     that  they  will  not  have a material effect on the  Company's  financial
     statements.

NOTE 2 Business Acquisitions
     Legacy Audio:
        On  April 1, 1997 the Company purchased a 75% interest in Legacy  Audio
     in  exchange  for $1,512,000 in cash.  In connection with the acquisition,
     the  company  established a new subsidiary, Legacy Audio, Inc.  (LAI),  to
     acquire  the  assets  of  the  seller.  A founding  owner  of  the  seller
     contributed  the  remaining 25% of the assets of the  seller  to  the  new
     company  in  exchange  for  a  25% interest in  LAI.   Additionally,  this
     founding owner has been named the President and Chief Designer of LAI.
        The  acquisition has been accounted for as a purchase.  The results  of
     operations  of  LAI  have  been  included in  the  Company's  consolidated
     financial statements from the date of acquisition.  Assets and liabilities
     have  been recorded at their estimated fair market values with the  excess
     being recorded as goodwill which will be amortized over periods from 10  -
     20 years.

     VIR, Inc., Eastern Research, Inc., Linear Switch Corporation:
        On  August 1, 1995, the Company acquired the assets of VIR, Inc. (VIR),
     Eastern  Research, Inc. (ERI) and Linear Switch Corporation  (LSC),  three
     related  companies which were under common control, for  $7,653,234.   The
     purchase price was made up of 24,390 shares of Allen Organ stock valued at
     approximately  $1,000,000, notes and liabilities totaling  $2,978,601  and
     $3,674,633 in cash.
        On  September 7, 1995, the Company repurchased the Allen Organ  Company
     stock issued in connection with the asset acquisition for $1,000,000.  The
     Securities Restriction Agreement dated August 1, 1995 was terminated along
     with the stock repurchase.
        On  May 10, 1996, the Company entered into an agreement with the seller
     of  the three data communications companies acquired on August 1, 1995, to
     settle  an  indemnity claim against the seller by adjusting  the  purchase
     price and payment terms for the acquired companies.
        The  terms  of the agreement provided for the $880,885 balance  due  on
     the  obligation incurred to purchase some of the inventory to be satisfied
     by  the  payment  of  $250,000.  Further, the Note Payable  of  $1,735,000
     issued as part of the purchase price has been canceled in exchange  for  a
     current  payment  of  $900,000 and a contingent annual  payment  for  five
     years, effective January 1, 1996, of 4.5% of the acquired companies annual
     sales  exceeding $7,000,000.  The total contingent payment  for  1997  and
     1996  amounted  to  $92,432  and  $29,142,  respectively.   The  agreement
     provides  that  the  total  of the contingent payments  shall  not  exceed
     $2,000,000.   The  employment  agreement between  VIR  and  its  President
     (majority  owner of the selling companies) has been modified  so  that  he
     shall  now  be  a consultant to the companies, with payment based  on  the
     number of hours worked at the request of the companies.
        In  connection with the acquisition, the Company established three  new
     subsidiary  companies  to acquire the assets of  sellers.   As  additional
     consideration,  the  new  subsidiaries issued shares  of  their  stock  to
     minority employee stockholders equivalent to their interest in the selling
     companies.
        The acquisitions have been accounted for as purchases.  The results  of
     operations  of  VIR,  ERI,  and LSC have been included  in  the  Company's
     consolidated  financial  statements from the date of  acquisition  through
     December  31,  1997.  Assets and liabilities have been recorded  at  their
     estimated fair market values with the excess being recorded as goodwill 
     and is being amortized over periods from 3 - 20 years.  Organizational 
     costs have been  capitalized in connection with the acquisitions are being
     amortized over 10 years.

NOTE 3  Investments
       The  cost  and  fair value of investments in debt and equity  securities
       are as follows:
       
                                        
                                              Gross       Gross        Fair
                                Amortized   Unrealized  Unrealized     Value
                                  Cost        Gains       Losses
                                   
   December 31, 1997                                     
   Available for sale                                       
    Equity securities        $    215,354  $       82   $  69,663  $   145,773
    Mutual Funds                                          
     Short Term Gov't Funds    10,268,613          --               10,268,613
     Municipal  Bond Funds      5,725,690     111,096         --     5,836,786
     Equity Funds               2,071,521     169,121      7,480     2,233,162
    U.S. Treasury Bills         1,556,000          --         --     1,556,000
   Totals                    $ 19,837,178  $  280,299   $ 77,143  $ 20,040,334
                                                                               
   December 31, 1996                                     
   Available for sale                                   
    Equity securities        $    288,981  $       --   $ 21,298  $    267,683
    Mutual Funds                                          
     Short Term Gov't Funds    11,925,188      40,000         --    11,965,188
     Municipal  Bond Funds      5,957,538          --     12,847     5,944,691
     Corporate  Bond Funds      1,609,509      37,795         --     1,647,304
     Equity Funds               2,968,685     101,386         --     3,070,071
    U.S. Treasury Bills         5,889,064          --         --     5,889,064
    Federal Agency Bonds          228,560       4,374         --       232,934
    Totals                   $ 28,867,525  $  183,555   $ 34,145  $ 29,016,935
                            
        Marketable  debt  securities have an average  contractual  maturity  of
     approximately 1 year or less.
        Realized gains and losses are determined based on the original cost  of
     these  investments using a first-in, first-out method.  During 1997,  1996
     and 1995, sales proceeds and gross realized gains and losses on securities
     classified as available for sales were:
        
                                  1997           1996           1995
                                                            
     Sales proceeds           $30,263,188    $38,938,452    $ 3,520,772
                                                            
     Gross realized losses    $    44,448    $     9,100    $    12,514
                                                            
     Gross realized gains     $   809,558    $   297,082    $   308,074
        
        The  change  in  net  unrealized holding gains (losses)  on  securities
     available for sale in the amount of $53,746, $(9,046), and $324,273 net of
     deferred  tax  expense (benefits) of $14,650, $(4,290), and  $131,738  has
     been  included  in stockholders' equity for the years ended  December  31,
     1997, 1996 and 1995, respectively.

NOTE 4 Inventories
                                                 December 31,
                                              1997        1996
           Finished goods                 $ 2,046,835  $ 1,709,962
           Work in process                  7,343,590    5,912,456
           Raw materials                    8,532,962    6,449,729
            Total Inventory               $17,923,387  $14,072,147

           The  Company maintains an inventory of various parts to be  used  to
       service  musical  instruments as future needs  arise.   This  inventory,
       $1,260,346  and $1,237,986 at December 31, 1997 and 1996,  respectively,
       is reported as a noncurrent asset.

NOTE 5 Property, Plant and Equipment
                                                                    Estimated
                                                December 31,         Useful
                                            1997          1996       Lives
       Land and improvements            $ 2,445,579   $ 2,407,579   10 yrs
       Buildings and improvements         8,100,068     7,585,667   10 - 40 yrs
       Machinery and equipment            7,751,766     6,379,116    5 - 10 yrs
       Office furniture and equipment     1,545,262     1,191,378    3 - 8  yrs
       Vehicles                             241,869       177,391    4 yrs
        Sub-Total                        20,084,544    17,741,131
       Less accumulated depreciation     10,569,532     9,893,616
        Property, plant and equipment net
         of accumulated depreciation    $ 9,515,012   $ 7,847,515

           Depreciation  expense charged to operations was  $836,769,  $676,775
       and $570,064 in 1997, 1996 and 1995 respectively.

NOTE 6 Note Receivable
           The   Company  has  entered  into  a  Split-Dollar  Life   Insurance
       agreement  with  its  President who is the  insured  and  owner  of  the
       policy.  The policy owner shall pay the portion of the premium equal  to
       the  value  of  the  economic  benefit  determined  in  accordance  with
       applicable  IRS Revenue Rulings.  The Company shall pay the  balance  of
       the net premiums which shall approximate $40,000 annually.
           The  agreement  provides  that  the Company  shall  be  entitled  to
       recover the amount of premiums paid out of the built up cash value  upon
       termination  of the agreement or out of the proceeds upon the  death  of
       the  insured.   As  security for repayment the Company is  a  collateral
       assignee  of the policy to the extent of any such unreimbursed  premium.
       The  note receivable does not materially exceed the cash surrender value
       of this policy.

NOTE 7 Income Taxes
           The provision for income taxes consists of the following:
                    
                     1997                     1996                   1995
            Currently                Currently              Currently
             Payable     Deferred     Payable    Deferred   Payable   Deferred
       
Federal   $1,270,000   $  73,000   $1,620,000  $  59,000  $1,300,000 $ 380,000
State         26,000    (128,000)     467,000   (111,000)    259,000    81,000
 Total    $1,296,000   $ (55,000)  $2,087,000  $ (52,000) $1,559,000 $ 461,000
                   
           A  reconciliation  of  the  provision  for  income  taxes  with  the
       statutory rate follows:
                              1997               1996                1995
Statutory provision for
 federal income tax     $1,614,000  34.0%  $1,987,000  34.0%  $2,044,000  34.0%
State taxes, net of
 federal tax benefits       81,000   1.6      235,000   4.0      224,000   3.7 
Tax credits                (60,000) (1.3)     (60,000) (1.0)      (8,000) (0.1)
Tax-exempt income         (110,000) (2.3)     (65,000) (1.1)    (161,000) (2.7)
Exempt income of foreign
 sales corporation        (101,000) (2.1)    (104,000) (1.8)     (82,000) (1.4)
Other items, net           (38,000) (0.8)     (42,000) (0.7)      (3,000) (0.1)
Effect of change in 
 prior year's state tax   
 revenue allocations      (229,000) (4.8)          --    --           --    --
Effect of change in state 
 valuation allowance of  
 deferred tax asset         84,000   1.8           --    --           --    --
  Total                 $1,241,000  26.1%  $2,035,000  34.8%  $2,020,000  33.6%
  
           The  decrease  in  the  1997  tax provision  is  attributable  to  a
       decrease  in the estimated effective tax rate for the current and  prior
       tax year resulting from a change in state tax revenue allocations.
           The  following temporary differences give rise to the net  deferred
       tax liability at December 31, 1997 and 1996.
                                                      1997           1996
        Deferred Tax Liabilities
         Excess of tax depreciation/amortization
          over book depreciation/amortization     $ (533,989)    $ (487,166)
         Excess of pension expense for tax 
          purposes over book                        (288,801)      (359,646)
         Unrealized gain not recognized 
          for tax purposes                           (74,091)       (60,033)
           Total Deferred Tax Liabilities           (896,881)      (906,845)
        Deferred Tax Assets
         Deferred compensation not recognized 
          for tax purposes                            20,211         25,540
         State net operating loss carry forwards     185,716        102,000
         Reserve for Bad Debts                        11,383             --
         Inventory Reserve                            23,633             --
           Sub-total                                 240,943        127,540
         Valuation Allowance                         (84,000)            --
           Total Deferred Tax Assets                 156,943        127,540
            Net Deferred Tax Liability            $ (739,938)    $ (779,305)
           
           Deferred taxes are included in the company's financial 
        statements as follows:
                                                      1997           1996
         Current deferred tax liability           $  (74,091)     $ (60,033)
         Non-current deferred tax liability         (665,847)      (719,272)
          Net deferred tax liability              $ (739,938)     $(779,305)
                                       
           The  Company  has  available at December  31,  1997,  approximately
     $3,250,000 of unused state net operating loss carry forwards that may  be
     applied  against future taxable income and that expire in  various  years
     from 2002 to 2004.
           At  December 31, 1997 the Company recorded a valuation allowance of
     $84,000  against  the  deferred tax assets  relating  to  uncertainty  of
     realizing state net operating loss carry forwards.

NOTE 8 Other Accrued Expenses

                                                       December 31,
                                                    1997          1996
         Accrued salaries and commissions        $ 385,176     $ 302,223
         Other                                     307,106       197,132
          Total                                  $ 692,282     $ 499,355

NOTE 9 Commitments and Contingencies
           As  of December 31, 1997, the Company is contingently liable for  a
     maximum  amount  of  approximately  $1,472,107  in  connection  with  the
     financing arrangements of certain customers.
           Under  the terms of an agreement with the wife of the late Chairman
     and principal shareholder, the Company may be required to purchase within
     eight  months of her death, at the option of her personal representative,
     an amount of Class B Common Shares then owned by her or includable in her
     estate for Federal Estate Tax purposes sufficient to pay estate taxes and
     costs,  subject to the limitations of Section 303 of the Internal Revenue
     Code.   At  December  31,  1997,  the shareholder  owned  or  would  have
     includable  in  her estate 261,072 shares of Class B Common  Stock.   The
     Company has purchased life insurance on the life of the shareholder  with
     a  face  value  of  $6,000,000.  Management believes that  the  insurance
     proceeds  would be sufficient to substantially fund this possible  future
     commitment  and that any excess would not have a material effect  on  the
     financial condition of the Company.
           The  Company's data communications segment leases its  offices  and
     production facility under non-cancelable operating leases which expire at
     various  dates  through  February 2001.  These  leases  include  renewal
     options  for periods ranging from two to fifteen years with increases  of
     lease  payments  based  on  changes in the Consumer  Price  Index.   Rent
     expense  was $179,765 and $169,493 for 1997 and 1996 and $70,233 for  the
     period  from  August 1 (inception) to December 31, 1995.  Minimum  annual
     rent payments for the operating leases are as follows:
           
            1998                     $ 218,633
            1999                       236,320
            2000                       199,220
            2001                        24,220
             Total                   $ 678,393

NOTE 10    Retirement Plans
           The  Company sponsors two noncontributory pension plans which cover
     substantially all of its employees.  Salaried plan benefits are generally
     based on the employee's years of service and compensation levels.  Hourly
     plan  benefits  are based on various monthly amounts  for  each  year  of
     credited service.  The Company's funding policy is to contribute  amounts
     to  the  plans  sufficient to meet the minimum funding  requirements  set
     forth  in the Employee Retirement Income Security Act of 1974, plus  such
     additional  amounts as the Company may determine to be  appropriate  from
     time to time.  Plan assets are comprised principally of cash equivalents,
     U.S.   Government  obligations,  fixed  income  securities,  and   equity
     securities.                                       
           A  summary  of the components of net periodic pension cost  for  the
       plans is as follows:
                                            1997         1996          1995
      Service cost - benefits 
       earned during the period       $   299,166   $   282,303   $   279,432
      Interest cost on projected 
       benefit obligations                953,842       952,301       887,261
      Return on assets
        Actual                         (2,057,294)   (1,544,571)   (1,772,567)
        Deferred gain                   1,025,998       554,953       978,678
      Amortization of net loss 
       from prior periods                      --         9,513        48,463
      Amortization of unrecognized 
       prior service cost                  73,990        73,990        73,990
      Amortization of initial 
       unrecognized net asset             (72,008)      (72,008)      (72,008)
        Net Pension Cost              $   223,694   $   256,481   $   423,249

           The funded status of the Company's pension plans is as follows:

                                                      December 31,
                                                  1997           1996
      Actuarial present value of
       benefit obligations:
        Vested benefits                      $(12,222,438)  $(11,768,830)
        Nonvested benefits                        (89,213)       (60,134)
      Accumulated benefit obligation          (12,311,651)   (11,828,964)
      Effect of assumed increase in
       compensation levels 
       for salaried plan                         (910,741)    (1,423,492)
      Projected benefit obligations 
       for service rendered to date           (13,222,392)   (13,252,456)
      Plan assets at fair value                14,764,799     13,641,779
      Plan assets in excess of 
       projected benefit obligation             1,542,407        389,323
      Unrecognized prior service cost             221,303        295,293
      Unrecognized net asset at transition       (288,036)      (360,044)
      Unrecognized net (gain) loss               (680,567)       564,634
      Prepaid Pension Cost                   $    795,107   $    889,206
                                       
           The  projected benefit obligation for the plans was determined using
       an  assumed  discount  rate of 7.5%.  An assumed long-term  compensation
       increase rate of 6% and 7% in 1997 and 1996, respectively, was used  for
       the  salaried plan.  The assumed long-term rate of return on plan assets
       was 8%.
           The  Company  provides  a  401(k) deferred compensation  and  profit
       sharing  plan  for the benefit of eligible employees.  The  plan  allows
       eligible  employees  to  defer a portion of their  annual  compensation,
       pursuant  to  Section  401(k)  of the Internal  Revenue  Code.   Company
       profit-sharing   contributions  to  the  plan   are   discretionary   as
       determined   by   the  Company's  board  of  directors.    The   Company
       contributions  were  $147,160, $139,732 and $157,483  to  the  plans  in
       1997, 1996 and 1995 respectively.
                                       
NOTE 11    Deferred Liabilities
                                                         December 31,
                                                       1997         1996
           Deferred compensation expense           $  55,417    $  62,917
           Deferred income taxes                     665,847      719,272
            Total Deferred Liabilities             $ 721,264    $ 782,189

NOTE 12    Earnings Per Share
           Earnings  per  share were computed using 1,258,966 shares  in  1997,
       1,340,047  shares  in 1996, and 1,366,076 shares in 1995,  the  weighted
       average  number  of  shares outstanding during each year.   The  Company
       does not have any dilutive equity instruments.

NOTE 13    Export Sales
           In  1997,  1996  and  1995,  net sales by  the  musical  instruments
       segment include export sales, principally to Canada, Europe and the  Far
       East  of  $4,432,974,  $5,594,286, and  $5,408,720,  respectively.   Net
       sales   by   the  data  communications  segment  include  export   sales
       principally  to  Europe  and  the  Far  East  of  $2,103,734  for  1997,
       $1,417,636  for  1996 and $1,027,826 for the five months ended  December
       31,  1995.   Net sales by audio equipment segment include  export  sales
       principally  to Europe and the Far East of $211,561 for the nine  months
       ended December 31, 1997.

NOTE 14    Industry Segment Information
           The   Company's   operations  are  classified  into  four   industry
       segments:   musical   instruments,   data   communications,   electronic
       assemblies,  and  audio equipment.  The musical instruments  segment  is
       comprised   of   operations   principally  involved   in   the   design,
       manufacture,  sale  and  distribution  of  electronic  keyboard  musical
       instruments,  primarily digital computer organs and related accessories.
       Musical   instruments   are  sold  primarily  to   retail   distributors
       worldwide.
           The   data  communications  segment  began  during  1995  with   the
       acquisition  discussed  in  Note 2.  The  segment  is  involved  in  the
       design,  manufacture,  sale  and  distribution  of  data  communications
       equipment.    Data  communications  products  are  sold   primarily   to
       wholesale and retail distributors worldwide.
           The  electronic  assemblies segment is involved in the  manufacture,
       sale  and  distribution of electronic assemblies for  outside  customers
       used   primarily  as  control  devices  and  other  circuitry  in  their
       products.   Subcontract  assembly services  are  provided  primarily  to
       industrial concerns in Pennsylvania and New Jersey.
           The  audio  equipment  segment began in 1997  with  the  acquisition
       discussed   in  Note  2.   The  segment  is  involved  in  the   design,
       manufacture, sale and distribution of high quality speaker cabinets  and
       related  equipment for hi-fi stereo and home theater applications.   The
       segment's  products are sold worldwide directly to individual  customers
       for  home  use  with  a  lesser  percentage distributed  through  dealer
       audition sites.

           Following is a summary of segmented information for 1997,  
       1996  and 1995.
                                                    December 31,
                                          1997            1996          1995
Net Sales to Unaffiliated Customers
  Musical instruments                $ 23,351,483    $ 25,418,620  $ 24,321,914
  Data communications                   9,037,521       7,647,597     2,661,862
  Electronic assemblies                 5,935,381       3,648,911     3,040,985
  Audio equipment                       2,023,699              --            --
   Total                             $ 40,348,084    $ 36,715,128  $ 30,024,761

Intersegment Sales
  Musical Instruments                $      5,252    $         --  $         --
  Data Communications                      84,939         125,288            --
  Electronic Assemblies                   938,479         296,132            --
  Audio Equipment                          52,244              --            --
   Total                             $  1,080,914    $    421,420  $         --

Income (Loss) from Operations                     
  Musical instruments                $  2,718,085    $  3,634,901  $  3,332,103
  Data communications                  (1,069,165)       (349,785)      122,417
  Electronic assemblies                   631,521         520,602       457,167
  Audio equipment                         337,495              --            --
   Total                             $  2,617,936    $  3,805,718  $  3,911,687

Identifiable Assets
  Musical instruments                $ 22,669,782    $ 20,790,307  $ 20,505,183
  Data communications                  10,294,411       8,937,839     9,181,209
  Electronic assemblies                 4,422,908       2,600,627     2,108,721
  Audio equipment                       2,153,922              --            --
   Sub-total                           39,541,023      32,328,773    31,795,113
  General corporate assets             23,020,981      31,637,873    33,504,313
   Total                             $ 62,562,004    $ 63,966,646  $ 65,299,426

Capital Expenditures
  Musical instruments                $  1,574,743    $    530,624  $    903,737
  Data communications                     386,308         230,859        36,952
  Audio equipment                          85,046              --            --
   Total                             $  2,046,097    $    761,483  $    940,689

Depreciation and Amortization
  Musical instruments                $    657,686    $    580,090  $    557,052
  Data communications                     392,108         235,187        79,725
  Audio equipment                          64,845              --            --
   Total                             $  1,114,639    $    815,277  $    636,777

           Intersegment  sales are generally priced at cost plus  a  percentage
       mark-up,  and  are generally thought to be marginally less  than  prices
       which  would be charged for the same product to unaffiliated  customers.
       Intersegment  sales  are  excluded  from  net  sales  reported  in   the
       accompanying  consolidated income statements.   Identifiable  assets  by
       segment  are  those  assets  that are used in the  Company's  operations
       within  that  segment.  General corporate assets consist principally  of
       cash and short-term investments.
           The  electronic assemblies segment derived 55%, 85% and 90%  of  its
       revenues  from  one  customer in 1997, 1996 and 1995 respectively.   The
       data communications segment derived 12% and 14% of its revenue from  one
       customer  in  1997  and  1996,  respectively.   The  Company's   musical
       instrument and audio equipment segments are not dependent on any  single
       customer.

NOTE 15    Investment Income

                                                        December 31,
                                             1997          1996          1995

       Interest Income                   $ 1,198,362  $ 1,382,301   $ 1,712,340
       Dividend Income                       151,250      354,741       107,651
       Gain on Sale of Investments           765,110      287,982       295,560
        Total                            $ 2,114,722  $ 2,025,024   $ 2,115,551

NOTE 16    Pro Forma Financial Information
           The  following  pro forma financial information have  been  prepared
       giving  effect to the acquisitions of Legacy Audio, Inc., VIR,  ERI  and
       LSC  (including  settlement agreement dated May  10,  1996)  as  if  the
       transactions  had  taken place at the beginning of the  respective  year
       (1997  and 1996 for Legacy Audio and 1995 for all other).  The pro forma
       financial  information is not necessarily indicative of the  results  of
       operations  which  would have been attained had  the  acquisitions  been
       consummated  on any of the foregoing dates or which may be  attained  in
       the future.
           
                                               Years Ended December 31,
                                           1997          1996           1995
      Pro forma Net Sales             $40,809,887    $38,681,238    $34,760,371
      Pro forma Net Income              3,490,772      3,889,960      4,309,302
      Pro forma Net Income Per Share  $      2.77    $      2.90    $      3.15

NOTE 17    Stock Option Plans
           During  1997,  VIR,  Inc.  (VIR) and Eastern  Research,  Inc.  (ERI)
       established  employee stock-based compensation plans to assist  them  in
       attracting  and  retaining  personnel.   The  maximum  number  of  these
       subsidiaries'  shares that may be issued under the plans approximates  a
       15%  interest in each of the respective companies.  Options  are  issued
       at  estimated  fair market value and the Company has a  right  of  first
       refusal for any shares issued under these options.  The maximum term  of
       the options is 6 years, and they generally vest equally over 4 years.
           As  of  December  31, 1997, total options issued  for  VIR  and  ERI
       represent   12%   and  10%,  respectively,  of  the   shares   currently
       outstanding.  Vested options consist of 2% of the currently  outstanding
       shares of ERI.
           No  compensation  expense was recognized for these  plans  in  1997.
       Had  compensation  cost been determined pursuant to FASB  Statement  No.
       123,  net  income and earnings per share would have been $3,431,897  and
       $2.73, respectively.
<PAGE>                                       
           
                                 PART III

Item 10.    Directors and Executive Officers of the Registrant.

                 (a)            Identification of Directors
                                                               Time Period
                              Date Term                         Position
Name                           Expires       Age  Position         Held

Steven Markowitz             Next Annual     44   Director     Since 1980
                           Meeting in 1998
Eugene Moroz                 Next Annual     74   Director     Since 1968
                           Meeting in 1998
Leonard W. Helfrich          Next Annual     68   Director     1964 - 1968 and
                           Meeting in 1998                     1972 to present
Orville G. Hawk              Next Annual     80   Director     Since 1989
                           Meeting in 1998
Albert F. Schuster           Next Annual     78   Director     Since 1989
                           Meeting in 1998
Martha Markowitz             Next Annual     76   Director     Since 1991
                           Meeting in 1998
Jeffrey L. Schucker          Next Annual     43   Director     Since July 1996
                           Meeting in 1998

                 (b)            Identification of Executive Officers.  
                                
                                                                 Time Period
                              Date Term                           Position
Name                           Expires     Age  Position            Held

Steven Markowitz           Next Annual     44   President        1990 to
                         Meeting in 1998                         present
Eugene Moroz               Next Annual     74   Vice President   Since 1965
                         Meeting in 1998
Leonard W. Helfrich        Next Annual     68   Vice President,  1958 - 1968
                         Meeting in 1998        Secretary        and 1971 to
                                                                 present
Barry J. Holben            Next Annual     45   Vice President   October 1995
                         Meeting in 1998                         to present
Dwight A. Beacham          Next Annual     51   Vice President   October 1995
                         Meeting in 1998                         to present
Nathan S. Eckhart          Next Annual     34   Treasurer,       Since 1996
                         Meeting in 1998        Assistant Secretary

   
                  (c)  Identification of Certain Significant Employees.

                       Not required to be answered.

                  (d)  Family Relationships.

                        Except  for Martha Markowitz and Steven  Markowitz,
                  who  are  mother and son, there is no family relationship
                  between any officers or directors of the Company.

                  (e)  Business Experience.

                            (1)  Steven Markowitz, Eugene Moroz, Leonard W.
                       Helfrich and Dwight Beacham, have been employees  of
                       the Company in executive capacities for at least the
                       last  five  years.  Mr. Holben has been employed  by
                       the  Company  since  1989,  spending  two  years  in
                       product development and four years in various  sales
                       capacities.   Mr. Eckhart has been employed  by  the
                       Company from 1993 to 1996 as Controller and prior to
                       that  time  was  a  manager for a public  accounting
                       firm.  Mr. Hawk who has been retired more than  five
                       (5)  years  was formerly Chairman of the  Board  and
                       President of First National Bank of Allentown.   Mr.
                       Schuster is a church director of music and prior  to
                       his  retirement more than five (5) years ago  was  a
                       supervisor  at  Bethlehem  Steel  Corporation.   Mr.
                       Schucker  is  currently President of  Middle  Market
                       Capital  Advisors,  L.L.C.  and  formerly   a   Vice
                       President   of   Meridian  Capital  Markets.    Mrs.
                       Markowitz  is  the  widow of Jerome  Markowitz,  the
                       Company's   founder,  and  represents   the   family
                       interests.

                  (f)  Involvement  in  Certain  Legal   Proceedings   by
                       Directors or Officers.

                       None.

                  (g)  Compliance with Section 16(a) of the Exchange Act.

                       No transaction required to be reported.

Item 11.    Executive Compensation.
                       Deleted paragraphs and/or columns are not 
                  required to be answered.

             (b)  SUMMARY COMPENSATION TABLE:
                                       Annual Compensation     All Other
                                          Salary   Bonus      Compensation  *
Name and Principal Position       Year      $        $             $

Steven A. Markowitz, President    1997    100,090  18,598       30,650
  (Chief Executive Officer)       1996     96,547  22,865       30,766
                                  1995     93,010  20,125       31,537

Leonard W. Helfrich,              1997     93,624  17,402
  Vice President - Finance        1996     88,113  21,385
  (Secretary)                     1995     84,746  19,005

*Value  of  Split  Dollar Life Insurance.  See Note 6 to  the  accompanying
consolidated  financial  statements  for  additional  information  on  this
arrangement.

             (f)  Defined Benefit or Actuarial Plan Disclosure.

                  Estimated  Annual Benefit obtained from  1997  Actuarial
                   Valuation Report:

                   Steven A. Markowitz     $55,819.  Age 44.
                   Leonard W. Helfrich     $35,354.  Age 68.

                  Amount shown is calculated from prior compensation to date
                  and estimated compensation to normal retirement age (65).
                   

             (g)  Compensation of Directors:

                  Non-employee Directors receive  $350  for each Board
                  and committee meeting attended plus reasonable expenses 
                  in connection with attendance.  Employee Directors receive
                  no additional compensation for their services as a Director.
                  

             (h)  Employment Contracts and Termination  of Employment and
                  Change in Control Arrangements:

                  There are no employment contracts between the Company and 
                  any of the Company's Executive Officers.  Mr.  Markowitz,
                  Mr. Helfrich, Mr. Beacham, Mr. Holben and  Mr.  Eckhart
                  participate in an Executive Incentive  Plan  whereby  a  
                  bonus is  distributed  to  each  participant executive
                  in  proportion to the  annual  salary  of  the participants.
                  The bonus pool is 1% of consolidated  pre-tax profit for
                  the fiscal year after elimination of bonus accrual  and
                  non-operating extraordinary gains or  losses as determined
                  by the Board of Directors.


             (j)  Additional Information with Respect to Compensation
                  Committee Interlocks and Insider Participation in 
                  Compensation Decisions:

                 (1)   Leonard   W. Helfrich, Vice President, Secretary,
                       and Director of the  Company, is the sole member of
                       the Compensation Committee  of the Board of Directors
                       whose  function is  to  set the compensation of the
                       President.   The compensation of all other employees
                       is set by or at the direction of the President.
                       
Item 12.     Security Ownership of Certain Beneficial Owners and Management

             (a)   Voting securities of the registrant owned of  record  or
             beneficially by each person who owns of record, or is known by
             the  registrant to own beneficially, more than 5 percent  of
             any   class  of  such  securities.   Class  A  Common   Shares
             constitute   the   only   securities   with   voting   rights.
             Information as of February 28, 1998.
                                          Amount and
                                          Nature of
            Names and           Title of  Beneficial   % of
            Addresses             Class   Ownership    Class
            Jerome Markowitz        A     81,531       95.9%
            Trust (2)                     (1)
            821 N. 30th St.
            Allentown, PA

            (1)  Sole voting and investment power

            (2)  The  shares are held by Trustees under an Inter  Vivos
                 Trust  established by Mr. Markowitz, who died  in  February,
                 1991,  for the benefit of his family, principally his widow,
                 Martha   Markowitz.   The  Trustees  are  Steven  Markowitz,
                 President  and  a  Director  of  the  Company,  and   Martha
                 Markowitz, a Director of the Company.

             (b)   Each class of equity securities of the registrant  or  any
             of   its   parents   or  subsidiaries,  other  than   directors'
             qualifying shares, beneficially owned directly or indirectly  by
             all  directors  naming them and directors and  officers  of  the
             registrant,  as  a  group, without naming them.  Information  as
             of December 31, 1997.

                                                        Percent  Percent
                                        Nature of         of       of
                 Class     Class        Beneficial       Class    Class
Directors          A         B          Ownership          A        B

Steven Markowitz    58                  (1) (3)           .07 %
                           13,562       (1) (3)                    1.09 %
                81,531*                 (2) (4)         95.94 %
                          242,016*      (2) (4)                   19.53 %

Eugene Moroz                  719       (1) (3) as
                                        to 719
                           11,771       (2) (4) as
                                        to 11,771                   .94 %

Leonard W. Helfrich           328       (2) (4)                     .03 %
                                                                     
Orville G. Hawk                50       (2) (4)                     .004%

Martha Markowitz           19,056       (1) (3)                    1.53 %
                81,531*                 (2) (4)         95.94 %
                          242,016*      (2) (4)                   19.53 %


                                                        Percent  Percent
All Directors                                             of       of
and Officers     Class     Class                         Class    Class
as a Group         A         B                             A        B

     7          81,589**  287,502**                     96.01 %** 23.20 %


              (1)   Sole voting power
              (2)   Shared voting power
              (3)   Sole investment power
              (4)   Shared investment power

               *     Shares owned by the Jerome Markowitz Trust  for
                     which   Martha  Markowitz  and  Steven  Markowitz,   Co-
                     Trustees, have shared voting and investment power and of
                     which  Martha  Markowitz is the primary beneficiary  and
                     Steven Markowitz, one of the residuary beneficiaries.

               **    The shares held by the Jerome Markowitz Trust are
                     not duplicated in the totals for the Class A and Class B
                     Shares.

             (c)     Changes in Control.  Not required to be answered.

Item 13.    Certain Relationships and Related Transactions

            See  Note  9  to Financial Statements, concerning an  agreement
            between  the  Company and Martha Markowitz, a Director  of  the
            Company.

                                  PART IV

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

            (a)  (1)  Financial Statements

                 The  following consolidated financial statements  of
                 Allen  Organ Company and its subsidiaries are included  in
                 Part II, Item 8:

                 Independent Auditors' Reports.

                 Consolidated Balance Sheets as of December 31,  1997
                 and 1996.

                 Consolidated  Statements  of  Income for the years ended  
                 December 31,1997, 1996, and 1995.

                 Consolidated Statements of Changes in Stockholders' Equity
                 for the years ended December 31, 1997, 1996 and 1995.

                 Consolidated Statements of cash flows for the  years
                 ended December 31, 1997, 1996, and 1995.

                 Notes to Consolidated Financial Statements.

                 The   individual   financial  statements   of   the
                 Registrant's subsidiaries have been omitted, as  they  are
                 all  included  in  the  consolidated financial  statements
                 referred to above.

            (a) (2) Financial Statement Schedules

                 Financial schedules are omitted as not applicable.

            (a) (3) Exhibits
                    Exhibit No.    Description
                     2(4)    Plan of acquisition
                     3.1(1)  Articles of Incorporation as amended
                     3.2(2)  Bylaws, as amended
                    10.1(2)  Executive Incentive Plan adopted October 24, 1996
                    10.2(3)  Agreement of Amendment between the Company
                              and Martha Markowitz
                    21       Subsidiaries of the registrant

                    1.       Incorporated  by  reference  to  the  exhibit
                             filed with the Registrants Annual Report on Form  
                             10-K for the year ended December 31, 1984.
                    2.       Incorporated  by  reference  to  the  exhibit
                             filed  with the Registrants Quarterly Report  on 
                             Form 10-Q for the period ended September 30, 1996.
                    3.       Incorporated  by  reference  to  the  exhibit
                             filed with the Registrants Annual Report on Form  
                             10-K for the year ended December 31, 1992.
                    4.       Incorporated  by  reference  to  the  exhibit
                             filed with the Registrants Current Report on form 
                             8-K dated August 1, 1995.
    

            (b)     Reports  on  Form  8-K.  None  filed  during  fourth
                    quarter of 1997.


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.


                                ALLEN ORGAN COMPANY



Date: March 25, 1998                 STEVEN A. MARKOWITZ
                                     Steven A. Markowitz
                                     Chief Executive Officer,
                                     President and Director
                                     



Date: March 25, 1998                 LEONARD W. HELFRICH
                                     Leonard W. Helfrich
                                     Vice President-Finance,
                                     and Director, Chief
                                     Financial and Principal
                                     Accounting Officer
                                     

Date: March 25, 1998                 MARTHA MARKOWITZ
                                     Martha Markowitz
                                     Director


Date: March 25, 1998                 JEFFREY L. SCHUCKER
                                     Jeffrey L. Schucker
                                     Director