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, 1996

                            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 17, 1997:

Class A - Voting     84,984          Class B - Non-voting     1,238,715
<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                                                       
<PAGE>
                                  PART I
Item 1.    Business

           General developments of business.

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

           Industry segments.

                The  Company  operates in three industry segments:  musical
           instruments,  data  communications  and  electronic  assemblies.
           For  financial information concerning the segments, see Note  16
           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  69%,
           81% and 87% of revenue in 1996, 1995 and 1994 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 internationally.
           The segment's business is not seasonal.
                The  principal raw materials used in the segment's products
           are  electronic components and wood, both of which  are  readily
           available from various sources without undue difficulty.
                The  Company's working capital is sufficient  to  meet  the
           normal  expansion  of  inventory and receivables.  No  excessive
           inventories  are required to meet rapid delivery.   The  segment
           does  not  engage  in any significant amounts  of  consignments,
           extended payment terms, or lease guarantees of its customers  as
           are  utilized  by  the industry.  The Company has  entered  into
           product  repurchase  agreements  concerning  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  1997  and  1996  was $2.9  million  and  $3.2  million
           respectively.   All  orders are expected to  be  filled  in  the
           current 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  at
           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 21% of 1996 revenues and for  the  5
           month   period  from  acquisition  through  December  31,   1995
           accounted for 9% of 1995 revenues.
                 Data   communications  products  are  sold  primarily   to
           wholesale and retail distributors worldwide.
                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 14% of  its  1996
           revenue from one customer.
                 The   segment   operates  through  three  majority   owned
            subsidiaries:
                
                VIR,  Inc.  (VIR)   Designs, manufactures,  and  markets  a
            number  of  data  communication products  including  patch  and
            testing  equipment, often referred to as tech control products.
            The  products  are  of  varying  complexity  and  are  used  to
            connect,  test  and trouble shoot data lines in large  computer
            installations.
                The company competes in a relatively mature field producing
            high  quality products at competitive prices.  The company  has
            approximately  four major competitors all of which  are  larger
            than  VIR.   The  company  has  not  been  aggressive  in   its
            marketing  efforts  in  the  past and  since  the  acquisition,
            management  has been implementing a more aggressive  sales  and
            marketing program.
                The dollar amount of unshipped order backlog at the end  of
            February,   1997   and   1996   was   $234,000   and   $324,000
            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  has  recently introduced a network  switching
            platform.   This  systems  type product  combines  circuit  and
            packet  switching  with  state of  the  art  band  width.   The
            products  modular  architecture   accommodates  expansion   and
            migration  to higher speed technologies.  The company  is  also
            proceeding  with  a  number of related new product  development
            efforts.
                The company competes in a market which 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,
            dominated by several large data communications companies,  such
            as  Cisco  Systems, Inc., AT&T 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   also
            manufactures  direct  access  products  which  are   relatively
            inexpensive   and  easy  to  manufacture,  thus   this   is   a
            competitive  field  where margins can  erode  as  new  products
            emerge.
                The dollar amount of unshipped order backlog at the end  of
            February,  1997 and 1996 was $376,000 and $69,000 respectively.
            All orders are expected to be filled in the current year.
                
                Linear  Switch Corporation (LSC)  Company has  developed  a
            matrix  switch  which can transport high-speed digital  signals
            and   allow   "any-to-any"  connectivity  between   and   among
            connections.
                During  1996  the  company finalized  a  contract  with  an
            international  telecommunications company.  Although  shipments
            will  begin in 1997, it is not possible to determine the amount
            of business that will result from this contract.
                 The   company  competes  with  approximately  five   other
            companies  in  the matrix switch market, dominated  by  General
            Signal  Networks.   The Company's product targets  applications
            which  require a relatively small matrix switch whose cost  per
            port  is  low.  Potential customers include government agencies
            and large companies.

                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  own
           musical  instruments business. This segment accounted  for  10%,
           10%  and  13%  of revenue in 1996, 1995, and 1994  respectively.
           AIA receives a majority of its business from one customer.
                The  electronic assemblies segment is very competitive with
           numerous  manufacturers  capable of  producing  these  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 1997 and 1996 was $764,000 and $551,000
           respectively.   All  orders are expected to  be  filled  in  the
           current year.

                General.

                The  Company  spent  $2,786,390, $1,307,691,  and  $625,190
           annually  in  1996, 1995, and 1994 respectively on research  and
           development.   The  majority of the 1996 and  1995  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  525
           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  15  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.
                Effective  January  3,  1994,  the  Company  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     11,000  Sales and research  facility.
                                                 Leased until  October, 1997.


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 1996.


                                  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:

                  1995             High           Low
                  
                  First Quarter    42             35 1/2
                  Second Quarter   44 1/2         41
                  Third Quarter    48             41
                  Fourth Quarter   45 3/4         40 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  10  Class  A Shareholders  and  441  Class  B
           Shareholders of record as of March 17, 1997.

           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 1995
                  
                  Record Date      Payable        Amount
                  
                  Cash 2/17/95    3/3/95          $.13
                  Cash 5/19/95    6/2/95          $.13
                  Cash 8/18/95    9/1/95          $.13
                  Cash11/17/95   12/1/95          $.16

                  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
                  Cash11/15/96  11/29/96          $.16


Item 6.    Selected Financial Data

                                      Years Ended December 31,
                      1996         1995         1994         1993        1992

Net Sales         $36,715,128  $30,024,761  $28,842,789  $26,477,983 $26,238,092

Net Income        $ 3,865,876  $ 4,015,105  $ 4,449,703  $ 3,456,154 $ 3,397,045
                              
Earnings per share$      2.88  $      2.94  $      3.25  $      2.48 $      2.41

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

At Year End

  Total Assets    $63,966,646  $65,299,426  $58,464,695  $55,752,570 $53,581,050

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

The 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,
                                             1996            1995
           Working Capital               $47,511,096      $46,681,555
           Current Ratio                   29 to 1          16 to 1
           Debt to Equity Ratio           .04 to 1         .09 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  increased  during
       1996   when   compared  to  1995.   Increases  in  working   capital
       requirements   in  the  data  communication  segment,   particularly
       inventory  and  accounts receivable, continue  to  reduce  operating
       cash   flows.    During  1995  cash  flows  provided  by   operating
       activities  declined  from  1994  primarily  due  to  increases   in
       inventory   levels  in  the  musical  instruments   and   electronic
       assemblies   segments,   and  from  an  approximately   $1   million
       contribution  to  the company pension plans, which  was  allowed  by
       changes in the tax code, related to a previous plan amendment.
           During  1996,  cash  flows from investing activities  were  used
       primarily  to  fund the purchase of treasury shares.   During  1995,
       cash  flows  from  investing  activities  were  used  to  fund   the
       acquisition  of  the data communications segment and  repurchase  of
       treasury  shares.   During both periods the  company  increased  its
       expenditures  for property and equipment primarily  related  to  the
       enhancement  of  its  electronics manufacturing  capabilities.   The
       Company  presently has no major commitments for capital expenditures
       which would require significant capital resources.

       Results of Operations:
       Sales and Operating Income
           Consolidated   net   sales  increased   $6,690,367   (22%)   and
       $1,181,972  (4.1%) during 1996 and 1995 primarily due to sales  from
       the data communications segment which was acquired in August, 1995.
           
                                            December 31,
                                  1996         1995          1994
       Net Sales
       Musical Instruments
        Domestic               $19,824,334  $18,913,194   $19,772,391
        Export                   5,594,286    5,408,720     5,398,667
                                25,418,620   24,321,914    25,171,058
       Data communications
        Domestic                 6,229,961    1,634,036         --
        Export                   1,417,636    1,027,826         --
                                 7,647,597    2,661,862         --
       Electronic Assemblies
        Domestic                 3,648,911    3,040,985     3,671,731
                               $36,715,128  $30,024,761   $28,842,789

       Income from Operations
       Musical instruments     $ 3,634,901  $ 3,332,103   $ 4,356,912
       Data communications        (349,785)     122,417         --
       Electronic assemblies       520,602      457,167       892,493
                               $ 3,805,718  $ 3,911,687   $ 5,249,405


       Musical Instruments Segment

           The  1996  increase in domestic sales reflects 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.
           The  1995  decrease  in  domestic sales  was  primarily  due  to
       variations  in product mix, offset some what by slight increases  in
       selling  prices.   Sales in 1995 included less  large  organ  models
       than 1994 or 1996.
           Export  sales  increased in 1996 and 1995 due to the  continuing
       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 30.4%, 30.9% and  32.3%  for
       the  three years ended December 31, 1996.  The decrease in the  1996
       gross   profit  margin  reflects  slight  increases  in  the  direct
       material  and labor costs used in the company's products.  The  1995
       decrease  in gross profit margin reflects variations in product  mix
       and slight increases in some overhead costs.
           Selling,  administrative and other expenses  were  approximately
       equal to 1995 when they declined slightly from 1994.


       Data Communications

           Domestic  sales  for 1996 were higher than the  same  period  in
       1995,   primarily   from   increased  sales   of   ERI's   products.
       International  sales  for  1996  decreased  when  compared  to  1995
       primarily  due  to a large order in 1995 which was not  repeated  in
       1996.
           Domestic  and  export sales for the 5 months ended December  31,
       1995  were  approximately equal when compared to the same period  in
       1994.
           Each  of  the  companies  increased their  sales  and  marketing
       efforts  throughout 1996 and expect to do so throughout 1997,  which
       management believes should positively affect future sales.
           Gross  profit margins were 52% in 1996 compared to 55% in  1995.
       This  decrease  reflects changes in product  mix  and  decreases  in
       selling prices of ERI's products caused by competitive pressures  in
       the  market  place.  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  for  1996 increased  when  compared  to  1995
       reflecting  the  increased  sales  and  marketing  effort   deployed
       throughout  1996.  Administrative and other expenses for  1996  were
       comparable to 1995.  Selling, administrative and other expenses  for
       1995  were comparable to the same period in 1994.  Selling  expenses
       will  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.
           Research  and development expenses were $1,972,167 and  $637,468
       for  the  year  ended December 31, 1996 and the  five  months  ended
       December  31,  1995  respectively.  These  expenditures,  which  the
       company  plans  to  continue  at  a  similar  pace  in  the  future,
       represent  the  segment's commitment to new product development  and
       support.


       Electronic Assemblies

           Sales  increased  for  1996 when compared to  1995  from  higher
       order  volume  from  existing customers  and  orders  received  from
       several new customers.
           Sales   and  operating  income  declined  in  1995  from   1994,
       primarily  due to a special project for one customer in  1994  which
       was not repeated in 1995.
           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.


       Other Income (Expense)

           The  variations in interest income in 1996, 1995, and  1994  are
       primarily   attributable  to  the  yields  available  on  short-term
       investments  and the amounts of principal invested.   The  1996  and
       1995  amounts  include  $287,982 and $295,560  of  realized  capital
       gains respectively.
           During   1994  the  Company  settled  a  lawsuit  for   wrongful
       prosecution  brought against the attorneys for one of the  Company's
       competitors.  This resulted from a lawsuit the Company settled  with
       its  competitor  in 1992.  Other income for 1994 includes  $385,000,
       less legal expenses, related to the settlement.
           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  effective tax rate increased in 1996 due to a lower  amount
       of  tax-free  non-operating investment income.   The  effective  tax
       rate  decreased in 1995 primarily due to lower state tax rates,  the
       formation   of   Allen   Organ  International,   a   Foreign   Sales
       Corporation, and higher tax-free non-operating investment income.


Item 8.    Financial Statements
                See Item 14 for index.


Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure
                None
<PAGE>
               CONCANNON, GALLAGHER, MILLER & COMPANY, P.C.
                      CERTIFIED PUBLIC ACCOUNTANTS
Michael J. Gallagher, CPA
Michael R. Miller, CPA
William C. Mason, CPA
Dale E. Grate, 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
                       INDEPENDENT AUDITORS' REPORT

The Board of Directors
 and Shareholders
Allen Organ Company

      We have audited the accompanying consolidated balance sheets of Allen
Organ  Company and Subsidiaries as of December 31, 1996 and  1995  and  the
related  consolidated statements of income and retained earnings, and  cash
flows  for  each of the three years in the period ended December 31,  1996.
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 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
1995  and the consolidated results of their operations and their cash flows
for  each  of  the three 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                       1996         1995

CURRENT ASSETS
 Cash                                          $   781,202  $   196,100
 Investments, including accrued interest        29,016,935   30,766,266
 Accounts receivable                             4,817,939    4,431,499
 Inventories                                    14,072,147   13,428,585
 Prepaid income taxes                              397,404      856,630
 Prepaid expenses                                  142,769      103,420
     Total Current Assets                       49,228,396   49,782,500

PROPERTY, PLANT AND EQUIPMENT, AT COST,
 LESS ACCUMULATED DEPRECIATION                   7,847,515    7,778,498

OTHER ASSETS
 Prepaid pension costs                             889,206    1,021,517
 Inventory held for future service               1,237,986    1,219,872
 Goodwill, net                                   3,278,114    4,227,600
 Cash value of life insurance                      858,217      629,481
 Note receivable                                   163,148      122,586
 Intangible and other assets, net                  464,064      517,372
     Total Other Assets                          6,890,735    7,738,428
     Total Assets                              $63,966,646  $65,299,426

   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
 Current portion of long term debt             $    --      $   347,000
 Accounts payable                                  396,173      535,276
 Deferred income taxes                              60,033       64,322
 Other accrued expenses                            499,355    1,691,328
 Customer deposits                                 761,739      463,019
   Total Current Liabilities                     1,717,300    3,100,945

NONCURRENT LIABILITIES
 Deferred liabilities                              782,189      841,687
 Long term debt, net of current portion             --        1,388,000
   Total Noncurrent Liabilities                    782,189    2,229,687
   Total Liabilities                             2,499,489    5,330,632

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
 Common stock, par value $1 per share
 Authorized
   Class A shares - 400,000 in 1996 and 1995
   Class B shares - 3,600,000 in 1996 and 1995
 Issued
   Class A shares (voting) -
    128,104 in 1996 and 1995                       128,104      128,104
   Class B shares (nonvoting) -
    1,409,889 in 1996 and 1995                   1,409,889    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                              52,915,056   49,786,163
 Unrealized gain on investments                     89,380       94,136
 Minority interest                                 157,826      313,941
   Sub-total                                    67,458,865   64,490,843
 Less cost of common shares in treasury
   1996 - 43,120 Class A shares and
          170,636 Class B shares                 5,991,708       --
   1995 - 43,120 Class A shares and
          131,835 Class B shares                    --        4,522,049
     Total Shareholders' Equity                 61,467,157   59,968,794
     Total Liabilities and
       Shareholders' Equity                    $63,966,646  $65,299,426
                                
 The accompanying notes are an integral part of the consolidated
  financial statements.
<PAGE>
              ALLEN ORGAN COMPANY AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
                                
                                                 Years Ended December 31,
                                            1996         1995         1994

NET SALES                                $36,715,128  $30,024,761  $28,842,789

COSTS AND EXPENSES
  Cost of sales                           23,789,872   20,109,427   18,910,136
  Selling, administrative and
    other expenses                         6,333,148    4,695,956    4,058,058
  Research and development                 2,786,390    1,307,691      625,190
    Total Cost and Expenses               32,909,410   26,113,074   23,593,384

INCOME FROM OPERATIONS                     3,805,718    3,911,687    5,249,405

OTHER INCOME (EXPENSE)
  Investment income                        2,025,024    2,115,551    1,436,182
  Other, net                                  24,621       26,810      265,116
  Interest expense                           (10,309)     (42,856)      --
  Minority interests in 
   consolidated subsidiaries                  55,822       23,913       --
    Total Other Income (Expense)           2,095,158    2,123,418    1,701,298

INCOME BEFORE TAXES ON INCOME              5,900,876    6,035,105    6,950,703

TAXES ON INCOME
  Current                                  2,087,000    1,559,000    2,525,000
  Deferred                                   (52,000)     461,000      (24,000)
   Total Taxes on Income                   2,035,000    2,020,000    2,501,000
NET INCOME                                 3,865,876    4,015,105    4,449,703

RETAINED EARNINGS
  Balance, January 1                      49,786,163   46,524,142   42,828,013
  Deduct cash dividends
   (1996-$.55, 1995-$.55, 1994-$.55)        (736,983)    (753,084)    (753,574)
  Balance, December 31                   $52,915,056  $49,786,163  $46,524,142

EARNINGS PER SHARE                       $      2.88  $      2.94  $      3.25
                                
 The accompanying notes are an integral part of the consolidated
  financial statements.
<PAGE>
                   ALLEN ORGAN COMPANY AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                  Years Ended December 31,
                                               1996         1995         1994

CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                             $  3,865,876  $  4,015,105  $ 4,449,703
 Adjustments to reconcile net income
  to net cash provided by operating
  activities
  Minority interest in consolidated
   subsidiaries                              (55,822)      (23,913)      --
  Depreciation and amortization              815,277       636,777      562,241
  Amortization of bond premiums                4,349        58,918      218,519
  Loss (Gain) on sale of property,
   plant and equipment                         5,692          (437)      43,829
  Loss (Gain) on sale of investments        (287,982)     (295,560)       1,853
  Change in assets and liabilities
    Accounts receivable                     (386,440)      120,141       (2,187)
    Inventories                           (1,292,561)   (2,014,580)    (969,076)
    Prepaid income taxes                     459,226      (580,050)    (175,517)
    Prepaid expenses                         (39,349)       (4,517)      58,165
    Deferred income tax benefits              --            110,536      64,729
    Prepaid pension costs                    132,311    (1,109,038)      --
    Accounts payable                        (139,103)     (267,387)     (19,771)
    Accrued taxes on income                   --            --          (60,983)
    Other accrued expenses                (1,518,438)     (325,032)     198,291
    Customer deposits                        298,720        16,362     (448,735)
    Deferred income taxes and liabilities    (59,500)      474,702     (155,211)
    Other noncurrent liabilities              --            --          (28,782)
      Net Cash Provided by Operating
       Activities                          1,802,256       812,027    3,737,068

CASH FLOWS FROM INVESTING ACTIVITIES
 Cash proceeds from maturity of investments
  classified as held to maturity              --        54,960,373   40,285,010
 Cash paid for purchase of investments
  classified as held to maturity              --       (21,631,598) (40,883,194)
 Cash proceeds from sale of investments
  classified as available for sale        38,938,452     3,520,772       --
 Cash paid for purchase of investments
  classified as available for sale       (36,914,531)  (30,402,728)  (1,532,275)
 Increase in cash value of life insurance   (228,736)     (221,343)    (207,633)
 Increase in note receivable                 (40,562)      (40,731)     (81,855)
 Payment for acquisition, net of cash
  acquired                                    --        (3,639,338)      --
 Increase in intangible and other assets      --          (533,084)      --
 Purchase of minority shareholders'
  interest in subsidiary                     (20,000)       --           --
 Cash proceeds from sale of property,
  plant and equipment                         10,000           500          100
 Cash paid for purchase of property,
  plant and equipment                       (761,483)     (940,689)    (440,151)
   Net Cash Provided by (Used in)
    Investing Activities                     983,140     1,072,134   (2,859,998)

CASH FLOWS FROM FINANCING ACTIVITIES
  Dividends paid in cash                    (736,983)     (753,084)    (753,574)
  Reacquired Class B common shares        (1,469,659)   (1,060,749)    (474,862)
  Subsidiary company stock reacquired
   from minority shareholders                 (3,572)       --           --
  Subsidiary company stock issued to
   minority shareholders                       9,920        20,705       --
    Net Cash Used in Financing Activities (2,200,294)   (1,793,128)  (1,228,436)

NET INCREASE (DECREASE) IN CASH              585,102        91,033     (351,366)

CASH, JANUARY 1                              196,100       105,067      456,433

CASH, DECEMBER 31                      $     781,202  $    196,100  $   105,067

            SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
  Cash paid for income taxes            $   1,793,338 $  2,142,682  $ 2,767,260
  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)      --           --
                                        $      --     $     --      $    --

 The accompanying notes are an integral part of the consolidated 
  financial statements.
<PAGE>
              ALLEN ORGAN COMPANY AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 Significant Accounting Policies
        Allen  Organ  Company  and Subsidiaries'  operations  are
     classified   into   three   industry   segments:     musical
     instruments, data communications and electronic  assemblies.
     See  note  16  for additional information on  the  operating
     activities of each segment.
        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.                             97.60%
         Eastern Research, Inc.                92.68%
         Linear Switch Corporation             90.93%
        Certain   amounts   in  the  1995  and   1994   financial
     statements  have been reclassified to conform  to  the  1996
     presentation.
        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  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.
        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.
        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 are stated  at  cost.   D
     epreciation  is computed over estimated useful  asset  lives
     using   both  straight-line  and  accelerated  methods   for
     financial   reporting  and  accelerated  methods   for   tax
     reporting.
        Goodwill  represents  the excess of  cost  over  the  net
     assets  acquired.  Goodwill is amortized on a  straight-line
     basis  over  forty years and is presented net of accumulated
     amortization  of $129,696 and $44,501 at December  31,  1996
     and  1995 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.
        Intangible  assets  consist of organization  costs  which
     are  stated  at  cost and amortized using the  straight-line
     method over ten years.                                
        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.
        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.
        Research  and  development expenditures  are  charged  to
     expense as incurred.

NOTE 2 Business Acquisitions
        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 1996 amounted to $29,142.   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  shareholders equivalent to their interest  in  the
     selling companies.  Additional shares of ERI will be  issued
     over the next year to employees, approximating a 1% interest
     in the Company.
        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,  1996.
     Assets and liabilities have been recorded at their estimated
     fair  market  values  with  the  excess  being  recorded  as
     goodwill   which   will   be  amortized   over   40   years.
     Organizational  costs  have been capitalized  in  connection
     with the acquisition and will be amortized over 10 years.
        
NOTE 3  Investments
       The  cost and fair value of investments in debt and equity
       securities are as follows:
                                             Gross        Gross        
                               Amortized   Unrealized   Unrealized      Fair
                                  Cost        Gains       Losses        Value 
   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
                                                                             
   December 31, 1995                                     
   Available for sale
    Equity securities        $    376,030 $     66,104 $        --  $    442,134
    Mutual Funds                4,264,521       92,352          --     4,356,873
    U.S. Treasury Bills        20,456,336          --           --    20,456,336
    Federal Agency and
     Municipal Bonds            5,510,923          --           --     5,510,923
    Totals                   $ 30,607,810 $    158,456 $        --  $ 30,766,266

        Marketable  debt  securities have an average  contractual
     maturity of approximately 1 year or less.
        Proceeds  from the sale of assets classified as available
     for  sale were $38,938,452 during 1996, resulting in a  gain
     of  $287,982  based  on original cost of  these  investments
     determined using a first-in, first-out method.
        The  change  in net unrealized holding gains (losses)  on
     securities  available for sale in the  amount  of  $(9,046),
     $324,273,  and  $(145,769)  net  of  deferred  tax   expense
     (benefits)  of  $(4,290), $131,738, and $(58,982)  has  been
     charged to shareholders' equity for the years ended December
     31, 1996, 1995, and 1994, respectively.
           
NOTE 4 Inventories
                                                 December 31,
                                             1996         1995
           Finished goods                $ 1,709,962  $   981,471
           Work in process                 5,912,456    5,658,610
           Raw materials                   6,449,729    6,788,504
            Total Inventory              $14,072,147  $13,428,585
     
     The  Company maintains an inventory of various parts  to  be
used  to service musical instruments as future needs arise.  This
inventory,  $1,237,986 and $1,219,872 at December  31,  1996  and
1995, respectively, is reported as a noncurrent asset.

NOTE 5 Property, Plant and Equipment
                                                      December 31,
                                                   1996          1995
           Land and improvements               $ 2,407,579   $ 2,407,579
           Buildings and improvements            7,585,667     7,445,965
           Machinery and equipment               6,379,116     5,977,260
           Office furniture and equipment        1,191,378     1,018,947
           Vehicles                                177,391       207,622
            Sub-Total                           17,741,131    17,057,373
           Less accumulated depreciation         9,893,616     9,278,875
            Property, plant and equipment                      
             net of accumulated depreciation   $ 7,847,515   $ 7,778,498
                                                            
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.


NOTE 7 Income Taxes
           The   provision  for  income  taxes  consists  of  the
       following:
                    1996                   1995                   1994
            Currently              Currently              Currently
             Payable   Deferred     Payable   Deferred     Payable   Deferred
Federal    $1,620,000 $   59,000  $1,300,000 $  380,000  $1,958,000 $  (17,000)
State         467,000   (111,000)    259,000     81,000     567,000     (7,000)
 Total     $2,087,000 $  (52,000) $1,559,000 $  461,000  $2,525,000 $  (24,000)
           
           A  reconciliation  of the provision for  income  taxes
       with the statutory rate follows:
                             1996               1995               1994
Statutory provision for 
 federal income tax    $1,987,000  34.0%  $2,044,000  34.0%  $2,363,000  34.0%
State taxes, net of
 federal tax benefits     235,000   4.0      224,000   3.7      370,000   5.3
Tax credits               (60,000) (1.0)      (8,000) (0.1)     (22,000) (0.3)
Other items, net         (127,000) (2.2)    (240,000) (4.0)    (210,000) (3.0)
 Total                 $2,035,000  34.8   $2,020,000  33.6%  $2,501,000  36.0%
           
           The  following temporary differences give rise to the net
     deferred tax liability at December 31, 1996 and 1995.
                                                      1996         1995
        Deferred Tax Liabilities
          Excess of tax depreciation/amortization
           over book depreciation/amortization    $ (487,166)  $ (412,499)
          Excess of pension expense for tax
           purposes over book                       (359,646)    (413,356)
          Unrealized gain not recognized for
           tax purposes                              (60,033)     (64,322)
            Total Deferred Tax Liabilities          (906,845)    (890,177)
        Deferred Tax Assets
          Deferred compensation not recognized
           for tax purposes                           25,540       28,585
          State net operating loss carry forwards    102,000       26,000
            Total Deferred Tax Assets                127,540       54,585
            Net Deferred Tax Liability            $ (779,305)  $ (835,592)
           
        Deferred  taxes are presented in the company's  financial
          statements as follows:
                                                      1996         1995
          Current deferred tax liability          $  (60,033)  $  (64,322)
          Non-current deferred tax liability        (719,272)    (771,270)
            Net deferred tax liability            $ (779,305)  $ (835,592)
                                
NOTE 8 Other Accrued Expenses

                                                        December 31,
                                                      1996         1995
          Accrued salaries and commissions        $  302,223   $  379,566
          Accrued interest                               --        43,014
          Liability for inventory purchased
           in connection with acquisition                --     1,036,334
          Other                                      197,132      232,414
            Total                                 $  499,355   $1,691,328

NOTE 9 Commitments and Contingencies
           As  of  December  31, 1996, the Company  is  contingently
     liable  for  a  maximum amount of approximately  $1,394,182  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, 1996, 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 July, 2000.  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  $169,493  for
     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:
           
            1997                     $ 165,200
            1998                        92,400
            1999                        92,400
            2000                        53,900
             Total                   $ 403,900
                                
                                
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:
           
                                               1996         1995         1994
           Service cost - benefits
           earned during the period       $   282,303  $   279,432  $   274,987
           Interest cost on projected
            benefit obligations               952,301      887,261      839,838
           Return on assets
             Actual                        (1,544,571)  (1,772,567)      27,301
             Deferred gain (loss)             554,953      978,678     (834,046)
           Amortization of net loss from
            prior periods                       9,513       48,463        8,649
           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             $   256,481  $   423,249  $   318,711


           The  funded status of the Company's pension  plans  is
       as follows:
           
                                                    December 31,
                                                1996            1995
Actuarial present value of
 benefit obligations:
  Vested benefits                           $(11,768,830)   $(11,358,778)
  Nonvested benefits                             (60,134)        (52,759)
Accumulated benefit obligation               (11,828,964)    (11,411,537)
Effect of assumed increase in
 compensation levels for
 salaried plan                                (1,423,492)     (1,039,398)
Projected benefit obligations for
 service rendered to date                    (13,252,456)    (12,450,935)
Plan assets at fair value                     13,641,779      12,788,615
Plan assets in excess of
 projected benefit obligation                    389,323         337,680
Unrecognized prior service cost                  295,293         369,283
Unrecognized net asset at transition            (360,044)       (432,052)
Unrecognized net loss                            564,634         746,606
Prepaid Pension Cost                        $    889,206    $  1,021,517


           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  7%  was
       used  for  the salaried plan.  The assumed long-term  rate
       of return on plan assets was 8%.
           The  Company provides 401(k) deferred compensation and
       profit   sharing  plans  for  the  benefit   of   eligible
       employees.  The plans allow 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 plans are  discretionary  as
       determined  by  the  Company's board  of  directors.   The
       Company   contributions   were  $139,732,   $157,483   and
       $136,501   to   the   plans  in  1996,   1995   and   1994
       respectively.


NOTE 11    Deferred Liabilities
                                                            December 31,
                                                        1996           1995
           Deferred compensation expense           $    62,917    $    70,417
           Deferred income taxes                       719,272        771,270
             Total deferred liabilities            $   782,189    $   841,687


NOTE 12    Long-Term Debt
                                                            December 31,
                                                        1996           1995
       Notes payable, obligation satisfied in
        connection with settlement agreement
        discussed in Note 2                        $    --        $ 1,735,000
       Current portion                                  --           (347,000)
       Long-term debt                              $    --        $ 1,388,000

NOTE 13    Common Stock, Capital in Excess of Par Value and Treasury Stock

                      Common Stock                Capital In
              Class A              Class B        Excess of    Treasury Stock
          Shares   Amount     Shares    Amount    Par Value  Shares     Amount
Balance
 December
 31,1993  128,104 $128,104  1,409,889 $1,409,889 $12,610,377 159,010 $3,838,205
Reacquired
 Class B
 Shares                                                       14,446    474,862
Balance
 December
 31, 1994 128,104  128,104  1,409,889  1,409,889  12,610,377 173,456  4,313,067
Reacquired
 Class B
 Shares                                                       25,889  1,060,749
Reissued
 Class B
 Shares                                              148,233 (24,390)  (851,767)
Balance
 December
 31, 1995 128,104  128,104  1,409,889  1,409,889  12,758,610 174,955  4,522,049
Reacquired
 Class B
 Shares                                                       38,801  1,469,659
Balance
 December
 31, 1996 128,104 $128,104  1,409,889 $1,409,889 $12,758,610 213,756 $5,991,708


NOTE 14    Earnings Per Share
           Earnings  per  share  were  computed  using  1,340,047
       shares  in  1996, 1,366,076 shares in 1995, and  1,370,486
       shares  in  1994,  the weighted average number  of  shares
       outstanding during each year.


NOTE 15    Export Sales
           In  1996,  1995  and 1994, net sales  by  the  musical
       instruments  segment include export sales, principally  to
       Canada,   Europe   and   the  Far  East   of   $5,594,286,
       $5,408,720,  and $5,398,667, respectively.  Net  sales  by
       the  data  communications  segment  include  export  sales
       principally  to Europe and the Far East of $1,417,636  for
       1996  and  $1,027,826 for the five months  ended  December
       31, 1995.


NOTE 16     Industry Segment Information
           The  Company's  operations are classified  into  three
       industry     segments:    musical    instruments,     data
       communications  and  electronic assemblies.   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.
           
           Following is a summary of segmented information for
           1996, 1995 and 1994.
                                                      December 31,
                                           1996          1995          1994
Net Sales to Unaffiliated Customers
  Musical instruments                  $ 25,418,620  $ 24,321,914  $ 25,171,058
  Data communications                     7,647,597     2,661,862        --
  Electronic assemblies                   3,648,911     3,040,985     3,671,731
   Total                               $ 36,715,128  $ 30,024,761  $ 28,842,789

Income from Operations                
  Musical instruments                  $  3,634,901  $  3,332,103  $  4,356,912
  Data communications                      (349,785)      122,417        --
  Electronic assemblies                     520,602       457,167       892,493
   Total                               $  3,805,718  $  3,911,687  $  5,249,405

Identifiable Assets
  Musical instruments                  $ 20,790,307  $ 20,505,183  $ 18,827,345
  Data communications                     8,937,839     9,181,209        --
  Electronic assemblies                   2,600,627     2,108,721     1,329,090
   Sub-total                             32,328,773    31,795,113    20,156,435
  General corporate assets               31,637,873    33,504,313    38,308,260
   Total                               $ 63,966,646  $ 65,299,426  $ 58,464,695

Capital Expenditures
  Musical instruments                  $    530,624  $    903,737  $    440,151
  Data communications                       230,859        36,952        --
   Total                               $    761,483  $    940,689  $    440,151

Depreciation and Amortization
  Musical instruments                  $    580,090  $    557,052  $    562,241
  Data communications                       235,187        79,725        --
   Total                               $    815,277  $    636,777  $    562,241

           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.
           
NOTE 17    Legal Settlement
           During   1994  the  Company  settled  a  lawsuit   for
       wrongful  prosecution brought against  the  attorneys  for
       one  of  the Company's competitors.  This resulted from  a
       lawsuit the Company settled with its competitor in 1992.
           Other  income  for 1994 includes $385,000  less  legal
       expenses related to this settlement.

NOTE 18    Investment Income

                                                     December 31,
                                            1996          1995          1994

  Interest Income                      $  1,382,301  $  1,712,340  $  1,355,304
  Dividend Income                           354,741       107,651        82,731
  Gain (Loss) on Sale of Investments        287,982       295,560        (1,853)
   Total                               $  2,025,024  $  2,115,551  $  1,436,182


NOTE 19    Pro Forma Financial Information
           The  following  pro  forma financial  information  has
       been  prepared  giving effect to the acquisition  of  VIR,
       ERI  and LSC (including settlement agreement dated May 10,
       1996)  as  if  the  transaction had  taken  place  at  the
       beginning   of  the  respective  year.   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,
                                                1995
           Net Sales                         $34,760,371
           Net Income                          4,309,302
           Net Income Per Share                    $3.15


NOTE 20    Stock Option Plan
           During  December, 1996, Eastern Research,  Inc.  (ERI)
       adopted  a  non-qualified stock option plan to assist  the
       Company  in  attracting  and  retaining  personnel.    The
       maximum  number  of shares that may be  issued  under  the
       plan  approximates a 10% interest in ERI.   Stock  options
       will  be awarded beginning in 1997, will vest over a  four
       year period and have a term of six years.
<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     43   Director         Since 1980
                         Meeting in 1997

Eugene Moroz               Next Annual     73   Director         Since 1968
                         Meeting in 1997

Leonard W. Helfrich        Next Annual     67   Director         1964 - 1968 and
                         Meeting in 1997                         1972 to present

Orville G. Hawk            Next Annual     79   Director         Since 1989
                         Meeting in 1997

Albert F. Schuster         Next Annual     77   Director         Since 1989
                         Meeting in 1997

Martha Markowitz           Next Annual     75   Director         Since 1991
                         Meeting in 1997

Jeffrey L. Schucker        Next Annual     42   Director         Since July 1996
                         Meeting in 1997

            (b)  Identification of Executive Officers.  All have served
                 in executive capacities for at least five years.

                                                                 Time Period
                            Date Term                             Position
Name                         Expires       Age  Position            Held

Steven Markowitz           Next Annual     43   President        1990 to
                         Meeting in 1997                         present

Eugene Moroz               Next Annual     73   Vice President   Since 1965
                         Meeting in 1997        

Leonard W. Helfrich        Next Annual     67   Vice President,* 1958 - 1968
                         Meeting in 1997         Secretary       and 1971 to
                                                                 present
                                                        
Barry J. Holben            Next Annual     44   Vice President   October 1995
                         Meeting in 1997                         to present

Dwight A. Beacham          Next Annual     50   Vice President   October 1995
                         Meeting in 1997                         to present

Nathan S. Eckhart          Next Annual     33   Treasurer,**     Since 1996
                         Meeting in 1997        Assistant Secretary

   *  Leonard  W.  Helfrich  was  elected  Vice  President  at  the  Annual
      Meeting on May 24, 1996.  He previously was Treasurer since 1990.
   ** Nathan  S.  Eckhart was elected Treasurer and Assistant Secretary  at
      the  Annual  Meeting on May 24, 1996.  He previously was  Controller
      since 1993.
   
            (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  then  more  recently   as
                       Foreign   Sales  Manager.   Mr.  Eckhart  has   been
                       employed by the Company since 1993 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   1996      96,547   22,865         30,766
  (Chief Executive Officer)      1995      93,010   20,125         31,537
                                 1994      90,607   22,105         32,249

Leonard W. Helfrich,             1996      88,113   21,385         
  Vice President - Finance       1995      84,746   19,005         
  (Secretary)                    1994      82,722   20,875         

*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 1996 Actuarial
                  Valuation Report:

                 Steven A. Markowitz     $54,943.  Age 43.
                 Leonard W. Helfrich     $31,502.  Age 67.

                 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 $250 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 per  cent  of
            any   class  of  such  securities.   Class  A  Common   Shares
            constitute   the   only   securities   with   voting   rights.
            Information as of February 28, 1997.
                                          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, 1996.

                                                    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                  799       (1) (3) as
                                        to 799
                           11,691       (2) (4) as
                                        to 11,691              .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' Report.

                 Consolidated Balance Sheets as of December 31, 1996 and 1995.

                 Consolidated Statements of Income and Retained Earnings for
                 the years ended December 31, 1996, 1995, and 1994.

                 Consolidated Statements of cash flows for the years
                 ended December 31, 1996, 1995, and 1994.

                 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(5)     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.
                 5.  Incorporated  by  reference  to  the  exhibit
                     filed with the Registrants Annual Report on Form  10-K
                     for the year ended December 31, 1995.
    

            (b)  Reports  on  Form  8-K.  None  filed  during  fourth
                 quarter of 1996.


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 20, 1997                 STEVEN A. MARKOWITZ
                                     Steven A. Markowitz
                                     President and Director



Date: March 20, 1997                 LEONARD W. HELFRICH
                                     Leonard W. Helfrich
                                     Vice President - Finance, and Director,
                                     Chief Financial Officer



Date: March 20, 1997                 MARTHA MARKOWITZ
                                     Martha Markowitz
                                     Director


Date: March 20, 1997                 ALBERT F. SCHUSTER
                                     Albert F. Schuster
                                     Director