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, 2002

                       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 21, 2003:
Class A - Voting     83,864                Class B - Non-voting     1,086,196

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Act).
                            Yes              No   X

The aggregate market value of the Class B Common Shares held by non-affiliates
of the Registrant as of June 30, 2002:  $32,665,937
<PAGE>

                              ALLEN ORGAN COMPANY

                                     INDEX
Item
                                    PART I

1. Business
      - General developments of business
      - Industry Segments
      - Description of business
      - Financial information about geographic areas
      - Available information
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 Consolidated Financial Data
7. Management's Discussion and Analysis of Financial Condition and
      Results of Operations
7A.Quantitative and Qualitative Disclosures About Market Risk
8. Financial Statements and Supplemental Data
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
14.   Controls and Procedures


                                    PART IV

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

Signatures

Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Financial Statement Schedules

Exhibits
<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.
                During 2002 the Company's Data Communications segment increased
          its  sales  and  operating results when compared to 2001.   This  was
          mainly   the  result  of  new  product  introductions,  cost  cutting
          initiated  in  previous  years,  and  from  the  redirection  of  the
          Company's  sales  and marketing efforts away from  Competitive  Local
          Exchange Carriers (CLEC's) to other Data Communications markets.  The
          Company  continues  to  be cautious because the  Data  Communications
          industry  remains in a long recession and the general  weak  economic
          environment.   Future sales in this segment have become  increasingly
          dependent  on  larger sales opportunities that could  result  in  the
          amount and timing of future revenue being more volatile.
                The  economic  downturn has negatively affected  the  Company's
          Electronic  Assemblies  segment as well resulting  in  a  significant
          reduction  in its order rate in 2002.  Management expects this  lower
          order rate to continue into future quarters.
                While  there  are  many factors that may affect  the  Company's
          future business, the Company is particularly concerned with the  weak
          economic  environment  that may alter or delay  customers  purchasing
          decisions in any of the four industry segments that it operates.

          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 21 to the Consolidated Financial Statements.

          Description of business.

              Musical Instruments.

                Allen  Organ  Company is a leading manufacturer  of  electronic
          keyboard  musical  instruments, primarily digital  electronic  church
          organs and accessories.  This segment accounted for 37%, 40% and  39%
          of net sales in 2002, 2001 and 2000, respectively.
                The  principal  market for the Musical Instruments  segment  is
          institutions, primarily churches.  Sales to the home market make up a
          smaller  portion  of this segment's sales.  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.  Traditionally, organs
          have  longer  service requirements than other digital  products.   As
          life  cycles for electronic components have shortened in recent years
          the  Company  has had to redesign some circuit boards to satisfy  the
          needs of current and past customers.  At the present time, management
          does  not  expect this issue to significantly affect  future  product
          shipments.
                This  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 12 to the  Consolidated  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 2003 and 2002 was $4.2
          million  and $5.2 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.  Management  believes
          it  has  a  major position in the institutional market in the  United
          States  (largest  world  market) because of product  performance  and
          competitive  prices,  and  a  smaller  percentage  of  the  home   or
          entertainment market.

                Data Communications.

                The  Data  Communications segment consists of Eastern Research,
          Inc.  (ERI). During 2001 the Company combined the operations  of  VIR
          Linear Switch with ERI.  The combined operations are headquartered at
          ERI's  facility in Moorestown, New Jersey.  ERI designs  and  markets
          data  networking  products  enabling  network  service  providers  to
          deliver services to their customers.  This segment accounted for 54%,
          43% and 46% of net sales in 2002, 2001 and 2000, respectively.
                Data Communications products are sold directly to end-users, to
          wholesale  and retail distributors worldwide and to a smaller  extent
          under  OEM agreements with some customers.  The segment maintains  an
          inventory  of  in-process  and finished  goods  to  allow  for  rapid
          fulfillment of customer orders that is expected in the industry.
                The  principal  raw  materials used in the Data  Communications
          products are electronic components, which are readily available  from
          various  sources  without  undue  difficulty.   As  life  cycles  for
          electronic components have shortened in recent years, the Company has
          had  to  redesign some circuit boards to satisfy the needs of current
          and  past customers.  At the present time, management does not expect
          this to significantly affect future product shipments.
                The  Data  Communications segment derived 40% of its net  sales
          from two customers in 2002 and 13% and 16% of its net sales from  one
          customer in 2001 and 2000, respectively.
                ERI's  customer  base  includes  major  end-user  corporations,
          Network  Service  Providers,  Wireless  Service  Providers,  Internet
          Service   Providers  and  systems  integrators.    There   are   many
          competitors  in this market that is dominated by several  large  data
          communications companies, such as Adtran, Tellabs and  Alcatel.   The
          Company's  strategy  has been to target market niches  with  products
          that provide new features and packaging with attractive pricing.
                ERI initially built its business in the CSU/DSU market and also
          developed  router technology products.  In 1997, ERI  introduced  its
          multi-service access concentrator (DNX) family of products.  ERI  has
          expanded  this  product  family and broadened  its  feature  set  and
          considers  the DNX its flagship product.  The DNX revenues  represent
          approximately  89%  of  ERI's  net  sales  for  2002.   To   properly
          capitalize  on  this  market's  opportunities,  ERI  has  implemented
          aggressive marketing strategies and product development work and will
          continue  to do so in a way that takes into account ERI's  needs  and
          the current economic environment.
               ERI markets the VIR Linear Switch products that consist of patch
          and testing equipment, often referred to as tech control products and
          test access equipment.  These products are of varying complexity  and
          are  used  to connect, switch, test and trouble shoot data  lines  in
          large computer installations.
                This segment derived approximately 28% and 13% of its net sales
          from  international markets in 2002 and 2001, respectively, primarily
          from  Asia  Pacific and Europe.  ERI will continue to  pursue  growth
          opportunities in markets outside the United States.  The  realization
          of  future  business  from  these opportunities  could  be  adversely
          affected  by  currency fluctuations, social and political  risks  and
          changes in foreign economies.
                The  dollar  amount of unshipped order backlog at  the  end  of
          February   2003   and  2002  was  $2.0  million  and   $3.0   million
          respectively.   All orders are expected to be filled in  the  current
          year.
                This segment has redirected its sales and marketing efforts  to
          focus on markets for which its product line is well suited, including
          the   wireless,  enterprise,  government  and  certain  international
          markets.   This segment has been successful in increasing  its  sales
          and  operating income during 2002.  Future sales in this segment have
          become  increasingly  dependent on larger  sales  opportunities  that
          could  result in the amount and timing of future revenue  being  more
          volatile.
                During  2002, ERI introduced the DNX-1u, which is  targeted  at
          Wireless  Service  Providers.  This and prior  product  introductions
          have  strengthened the DNX product line and contributed to the  sales
          growth during 2002.

               Electronic Assemblies.

                Allen  Integrated Assemblies (AIA), a division of  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 for its Musical Instruments business.   This
          segment accounted for 7% of 2002 net sales, 14% of 2001 net sales and
          12%  of  net sales in 2000.  AIA derived 73%, 82% and 76% of its  net
          sales from three customers in 2002, 2001 and 2000, respectively.
                The  Electronic  Assemblies segment is  very  competitive  with
          numerous manufacturers offering similar services.  AIA customers  are
          generally  obtained  from  a geographic area  located  close  to  the
          Company.
                The  dollar amount of the segment's unshipped order backlog  at
          the  end  of  February  2003  and 2002  was  $721,000  and  $529,000,
          respectively.   All orders are expected to be filled in  the  current
          year.

               Audio Equipment.

                The Audio Equipment segment operates through Legacy Audio,  Inc
          and Allen Audio, Inc.  This segment accounted for 2% of net sales  in
          2002 and 3% of net sales in 2001 and 2000, respectively.
                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  Audio Equipment 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
               Legacy Audio, Inc. (LAI) designs, manufactures and markets high-
          quality  audio  speaker cabinets for hi-fi stereo  and  home  theater
          applications.   It also markets electronic audio equipment,  such  as
          amplifiers,  that  are  manufactured to its specifications  by  third
          party suppliers.
                The  principal market for LAI's products is consumers for  home
          use.    The   segment's  products  are  mainly  distributed   through
          independent retail dealers and directly to end-users.  This segment's
          business is not seasonal.
                LAI  historically  sold its products through direct  marketing.
          Management believes that this method of distribution has limited  its
          ability  to  penetrate the broader market.  During 2001  the  Company
          began  implementing a plan to distribute its products through a  more
          traditional dealer network.  The Company has added independent retail
          dealers and will continue to do so in a conservative manner to  build
          a  quality dealer network.  During this period LAI has been  shifting
          marketing  resources to the new method of distribution.  In addition,
          the general economic slowdown has negatively affected sales.
                The high-end audio market is evolving from the traditional two-
          channel  to  the  multi-channel market, which  is  utilized  in  home
          theater   applications.   LAI  has  developed  and  markets  products
          specifically for these home theater applications.
                In  August  2002,  LAI  closed its  manufacturing  facility  in
          Springfield,  Illinois  and  consolidated  all  production  into  the
          Company's manufacturing facility in Macungie, PA.
                LAI  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 2003 and 2002  was  $106,000  and
          $244,000, respectively.  All orders are expected to be filled in  the
          current year.
               Allen Audio, Inc. (AAI) designs, manufactures and markets Public
          Address  System products.  AAI has developed a public address  system
          mixer  utilizing Digital Signal Processor (DSP) technology also  used
          in  the  Allen  digital organs.  AAI has also  developed  a  line  of
          speaker  cabinets for the public address field.  These  products  are
          being   distributed   through  dealers,  primarily   in   the   sound
          reinforcement business.

          General.

                The  Company's working capital is sufficient to meet the normal
          expansion of inventory and receivables.
                The  Company  spent $7,782,571, $8,004,838, and  $7,340,209  in
          2002, 2001, and 2000, respectively, on research and development.  The
          Company  maintains  an ongoing commitment to new product  development
          and expects future expenditures for these activities to be comparable
          to the 2002 level.
                The  Company  and  its  subsidiaries employ  approximately  490
          persons.
                The  Company  monitors its compliance with applicable  federal,
          state,  or  local  provisions  with regard  to  the  environment  and
          implements  procedures or modifies its equipment as  necessary.   The
          Company  does  not  expect any significant capital additions  in  the
          coming year to maintain its compliance.

           Financial information about geographic areas.

                The  Company does not own manufacturing or sales facilities  in
          any  foreign  countries.   See Note 14 to the Consolidated  Financial
          Statements for additional information on export sales.
                Export  sales are all made in US dollars and, based on customer
          credit  information,  are  made either on open  credit  terms,  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.

           Available information.

               The Company files annual reports on Form 10-K, quarterly reports
          of  Form  10-Q, current reports on Form 8-K and amendments  to  those
          reports  pursuant to Section 13(a) or 15(d) of the exchange Act  with
          the  Commission.   The public may read and copy any  materials  filed
          with the Securities and Exchange Commission at their Public Reference
          Room  at 450 Fifth Street, NW, Washington, DC 20549.  The public  may
          also  obtain this information by calling the Commission at 1-800-SEC-
          0330.   The  Securities and Exchange also maintains as Internet  site
          that  contains  reports and other information  statements  and  other
          information regarding electronic filers at www.sec.gov.

Item 2.   Properties

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

                                                                Approximate
          Location                 Square Footage                  Use
        Musical Instruments, Audio Equipment and Electronic Assemblies:
         Macungie, Pennsylvania        242,000     Administrative, research and
                                                  manufacturing facility. Owned
                                                  by Allen Organ Company.
                                                  Operating at approximately
                                                  80% capacity.


         Macungie,   Pennsylvania       27,000     International sales,
                                                  exhibition center, museum
                                                  and teaching facility. Houses
                                                  the sales offices for Musical
                                                  Instruments, Allen Audio and
                                                  Legacy Audio. Owned by  Allen
                                                  Organ Company.

        Data Communications:
         Moorestown,  New   Jersey      39,000    Administrative, sales and
                                                  research  facility.  Leased
                                                  until September 2005.

                During 2002, the Company's subsidiary, VIR, Inc., entered  into
          an  agreement to terminate the lease on its Southampton, Pennsylvania
          facility, which it had vacated in 2001.
                In  October 2002, the Company's subsidiary, Legacy Audio, Inc.,
          sold  its  manufacturing and sales facility located  in  Springfield,
          Illinois.  See Note 21 to the Consolidated Financial Statements,  for
          additional information.

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 2002.

                                    PART II

Item 5.     Market  for  the Registrant's Common Stock and Related  Stockholder
            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  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:

                  2002             High           Low
                  First Quarter $  35.18       $  30
                  Second Quarter   42.5           33.69
                  Third Quarter    41.25          37.4
                  Fourth Quarter   41.23          37

                  2001             High           Low
                  First Quarter    55             33
                  Second Quarter   39             31.75
                  Third Quarter    36.473         30.02
                  Fourth Quarter   33.5           30.4

                The  Company  has  7  Class  A Shareholders  and  250  Class  B
          Shareholders of record as of March 20, 2003.
                During  the  past  two fiscal years, the Company  has  declared
          dividends on both its class A and B shares as follows:

                  Record of Quarterly Dividends Paid in 2002

                  Record Date        Payable     Amount
                  Cash  2/15/2002    3/1/2002    $0.14
                  Cash  5/17/2002    5/31/2002   $0.14
                  Cash  8/16/2002    8/30/2002   $0.14
                  Cash  11/15/2002   11/29/2002  $0.14

                  Record of Quarterly Dividends Paid in 2001

                  Record Date        Payable     Amount
                  Cash  2/16/2001    3/2/2001    $0.14
                  Cash  5/18/2001    6/1/2001    $0.14
                  Cash  8/17/2001    8/31/2001   $0.14
                  Cash  11/16/2001   11/30/2001  $0.14

Item 6.   Selected Financial Data
                                  Years Ended December 31,
                    2002         2001        2000         1999        1998

Net Sales       $67,739,548  $60,490,513  $72,516,208  $58,018,742 $44,966,075
Net Income
 (Loss)         $ 2,685,357  $(4,083,810) $ 3,954,896  $ 2,884,488 $  (616,711)
Basis and
 diluted
 earnings (loss)
 per share      $      2.29  $     (3.49) $      3.38  $      2.46 $     (0.52)
Cash dividends
 per share      $      0.56  $      0.56  $      0.56  $      0.56 $      0.56
At Year End
 Total Assets   $73,362,868  $66,472,252  $80,807,742  $67,466,070 $61,989,953
 Long-Term Debt,
 net of current
 portion        $         0  $         0  $         0  $         0 $         0

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,
                                       2002             2001
          Working Capital          $41,551,688      $38,656,758
          Current Ratio               4.8 to 1         6.0 to 1
          Debt to Equity Ratio       0.30 to 1        0.18 to 1

        Cash  flows provided by operating activities increased during 2002,  as
     compared to 2001 and 2000 primarily due to higher operating income in  the
     Data  Communications  segment, reductions  in  inventory  in  the  Musical
     Instruments and Electronic Assemblies segments and income tax refunds.
        Cash  flows provided by operating activities decreased during  2001  as
     compared  to 2000, primarily due to operating losses incurred in the  Data
     Communications segment.
        Cash  flows  used  in investing activities during  2002  were  used  to
     purchase  approximately $1,039,000, $188,000 and $672,000 of property  and
     equipment  in  the  Musical Instruments, Electronic  Assemblies  and  Data
     Communications segments, respectively.
        Cash  flows  provided by investing activities during 2001 includes  the
     sale  of  more  than  $12,000,000 in short term investments  to  fund  the
     repayment  of  ERI's  bank  loans.   Cash  flows  were  used  to  purchase
     approximately  $529,000  and $736,000 of property  and  equipment  in  the
     Musical Instruments and Data Communications segments, respectively.
        Cash  flows  used  in investing activities during  2000  were  used  to
     purchase  approximately  $3,157,000  in  plant  and  equipment,  including
     $2,148,000  for leasehold improvements and new computer, office  and  test
     equipment to support the growth of ERI.
        As  indicated  in Note 8 of the Consolidated Financial Statements,  ERI
     had  obtained bank financing to provide them with working capital as  well
     as  funds  to repay $7,000,000 of ERI's inter-company loans due  to  Allen
     Organ  Company.   The  proceeds of the term  loan  were  invested  in  the
     Company's short-term investment accounts.  During June 2001 ERI repaid all
     outstanding bank loans totaling $12,000,000 with funds provided  by  Allen
     Organ  Company.  The Company originally obtained these loans to  give  ERI
     financial autonomy as it explored strategic alternatives.  As a result  of
     changes  in  the  financial  markets, the Company  decided  to  repay  the
     outstanding loans to eliminate the costs related to this financing.

     Results of Operations:

     Sales and Operating Income
        Consolidated  sales for 2002 increased $7,252,035 (12%)  when  compared
     to 2001, primarily due to higher sales in the Data Communications segment.
     Consolidated sales for 2001 decreased $12,025,695 (17%) when  compared  to
     2000, primarily due to lower sales in the Data Communications segment,  as
     well as in the Musical Instruments segment.

                                           December 31,
                                2002            2001            2000
        Net Sales
        Musical Instruments
         Domestic            $21,694,445     $20,616,513     $24,422,709
         Export                3,248,480       3,759,129       3,635,123
          Total               24,942,925      24,375,642      28,057,832

        Data Communications
         Domestic             26,107,275      22,567,298      25,556,745
         Export               10,428,899       3,342,587       7,764,597
          Total               36,536,174      25,909,885      33,321,342

        Electronic Assemblies
         Domestic              4,750,143       8,382,021       8,624,199

        Audio Equipment
         Domestic              1,441,084       1,603,650       2,323,865
         Export                   69,222         219,315         188,970
          Total                1,510,306       1,822,965       2,512,835

        Total                $67,739,548     $60,490,513     $72,516,208

        Income (Loss) from Operations
        Musical Instruments  $ 2,017,527     $ 2,184,321     $ 5,029,871
        Data Communications    2,105,802      (8,284,232)     (2,063,221)
        Electronic Assemblies   (401,165)        125,000       1,284,806
        Audio Equipment         (615,317)       (988,353)       (429,386)
         Total               $ 3,106,847     $(6,963,264)    $ 3,822,070

     Musical Instruments Segment

        The  domestic  sales for 2002 increased $1,077,932.   While  the  order
     rate for 2002 was slightly lower than 2001, the 2002 sales were higher due
     to  shipments made to customers against a higher order backlog.  The  2001
     decrease  in  domestic  sales was the result of  shipments  in  2000  made
     against  a  higher order backlog.  As discussed on page  3,  the  economic
     downturn may affect future order volume.
        Export sales were lower in 2002, as compared to the previous year,  and
     approximately equal in 2001 and 2000.  Certain foreign markets continue to
     be affected by unfavorable economic conditions.  While the value of the US
     dollar  compared to certain foreign currencies has decreased, there  is  a
     time lag before any such change can have an impact on export sales.
        In  recent  years  the Company has entered a different  subset  of  the
     organ  market  that  includes the sale of its organ consoles  and  control
     electronics to customers that want to retain their wind-blown  pipes.   In
     the  past,  this market was served by pipe organ manufacturers  and  local
     pipe  organ  maintenance organizations.  The Company's ability to  produce
     both  the wood cabinetry and digital electronics gives it an advantage  in
     this market.
        Gross  profit  margins on sales were 29.5%, 30.1%  and  36.5%  for  the
     years  ended  December  31, 2002, 2001 and 2000, respectively.   The  2002
     decrease  was  due  to higher operating costs, primarily employee  pension
     expense  and lower absorption of fixed costs related to planned  decreases
     in   the  level  of  inventory  necessitating  slightly  lower  levels  of
     production.  The decrease in gross profit in 2001, when compared to  2000,
     was  a  result of lower sales volume over which to absorb fixed costs  and
     changes in product mix.
        Selling and advertising expenses remained relatively constant in  2002,
     2001   and   2000.    General   and  administrative   expenses   increased
     approximately   $38,000  in  2002  when  compared  to  2001,   which   was
     approximately equal to 2000.
        Research  and development expenses decreased approximately  $29,000  in
     2002 from 2001 and decreased approximately $25,000 in 2001 from 2000.
        Several  of  the  Company's  operating expenses  continue  to  rise  at
     significant  rates  including business insurances,  medial  insurance  and
     pension expense.  The Company's pension expense has increased due to lower
     investment  returns  realized  in the Company's  defined  benefit  pension
     plans.  The Company has reduced its long-term rate of return assumption in
     both  of  its defined benefit pension plans due to lower projected  future
     investment returns and expects that pension related costs will increase in
     future years.

     Data Communications Segment

        Domestic  sales increased $3,539,977 in 2002, compared to the  previous
     year,   and   decreased  $2,989,447  in  2001  when  compared   to   2000.
     International sales increased $7,086,312 in 2002, compared to the previous
     year,  and  decreased $4,422,010 during 2001 when compared to  2000.   The
     increase  in international sales in 2002 was primarily from sales  to  one
     customer.   The 2002 sales increased due to new product introductions  and
     from  redirecting  the  Company's sales and marketing  efforts  away  from
     CLEC's to other Data Communications markets, for which its product line is
     well  suited, including the wireless, enterprise, government  and  certain
     international  markets.   The 2001 sales decreased  from  2000  due  to  a
     general slowdown in the world economy and a more significant industry-wide
     slowdown  in Data Communications markets.  Some of this segment's products
     had  been sold to CLEC's, many of which had difficulty raising capital and
     became insolvent.
        Gross  profit  margins were 50%, 40% and 47% in 2002,  2001  and  2000,
     respectively.   The 2002 increase is attributable to higher  sales  volume
     over  which  to absorb fixed costs and changes in product  mix.   Cost  of
     goods  sold for 2001 includes $1,539,000 of additional non-cash  inventory
     valuation  adjustments recorded at VIR, Inc. for slow moving and  obsolete
     inventory associated with discontinued product lines.  The result of these
     adjustments was to decrease the 2001 gross profit margin by 6% from 46% to
     40%.   The  decrease in the 2001 gross profit margin from 2000,  excluding
     the  inventory valuation adjustments, was due to lower sales  volume  over
     which  to  absorb fixed costs and competitive pressures to  lower  selling
     prices  of products.  While the Company strives to maintain profit margins
     by developing products that offer desirable features, the industry is very
     competitive which often results in pricing changes to obtain and  maintain
     market share.
        Selling  expenses decreased approximately $654,000 in 2002 compared  to
     2001,  and  decreased approximately $1,123,000 in 2001 from  2000.   These
     decreases are related to cost cutting measures initiated in the first half
     of  2001  due  to  the  economic downturn.   In  addition,  2001  expenses
     decreased due to lower sales in 2001.
        Administrative  expenses  decreased  approximately  $21,000   in   2002
     compared to 2001, and decreased approximately $347,000 in 2001 compared to
     2000,  from cost cutting measures initiated in the first half of 2001  due
     to the economic downturn.
        Research  and  development  expenses were  $6,352,909,  $6,599,104  and
     $5,911,740  for  the  years  ended  December  31,  2002,  2001  and  2000,
     respectively.    The 2002 decrease is primarily due to the combination  of
     the  VIR  operations into ERI during the second half of 2001.  The segment
     is  committed to new product development and expects these expenditures to
     continue at approximately the same level in 2003.
        The  combination  of increased sales, higher gross  margins  and  lower
     operating costs resulted in operating income of $2,105,802 during 2002 for
     this  segment  compared to an operating loss of $8,284,232 in  2001.   The
     2001  operating  loss  was  negatively  affected  by  inventory  valuation
     adjustments, plant closing costs, and a charge to write down the  goodwill
     and intangible assets of VIR totaling $3,469,000.  Future sales visibility
     remains limited throughout the Data Communications market that ERI  serves
     with  many companies that buy equipment continuing to lower their  capital
     expenditures  for  such equipment.  These factors,  along  with  continued
     uncertainty  in  completing sales to larger accounts,  create  significant
     uncertainty of operating results in future quarters.

     Electronic Assemblies Segment

        Sales  decreased $3,631,878 and $242,178 in 2002 and 2001, respectively
     compared  to  the  previous  year.   The segment's  order  rate  decreased
     significantly  beginning in the second half of 2001 as  a  result  of  the
     economic   slowdown   that  has  also  affected  the  Company's   contract
     manufacturing  customers.  The order rate is expected  to  continue  at  a
     lower  level in future quarters.  Because of this decrease in  sales,  the
     Company  continues to take steps to reduce its costs at its  Macungie,  PA
     plant.
        Gross  profit  margin  for  2002 was a loss of approximately  $(61,000)
     (1%).   Gross  profit  margins were 7.1% and  19.5%  for  2001  and  2000,
     respectively.  These decreases are the result of lower sales over which to
     absorb fixed costs.
        Selling,  general  and administrative expenses decreased  approximately
     $52,000  in 2002 compared to 2001, and increased approximately $95,000  in
     2001 compared to 2000.  The segment continues its efforts to diversify its
     customer base and to improve its production capabilities to offer state of
     the art manufacturing services to its customers.

     Audio Equipment Segment

        Sales  decreased $312,659 and $689,870 in 2002 and 2001,  respectively,
     compared  to  the previous year.  Legacy Audio has historically  sold  its
     products  through  a direct marketing program.  Management  believes  that
     this  method  of  distribution has limited its ability  to  penetrate  the
     broader market.  In 2002, Legacy began distributing its products through a
     more traditional dealer network.  The Company has added independent retail
     dealers  and will continue to do so in a conservative manner  to  build  a
     quality  dealer  network.  During this period, Legacy  has  been  shifting
     marketing  resources to the new method of distribution.  In addition,  the
     general  economic  slowdown has slowed the sales of some  consumer  goods.
     This  has resulted in a decrease in direct sales that has not been  offset
     by dealer sales.
        Gross  profit  margins  were  22%, 12% and  43%  for  the  years  ended
     December  31,  2002, 2001 and 2000, respectively.  The 2002 increase  over
     the  previous year was due to steps taken to reduce this segment's  costs,
     including  the  consolidation of all manufacturing into the  Macungie,  PA
     plant.  The 2001 decrease compared to 2000 is attributable to lower  sales
     volume over which to absorb fixed costs.
        Selling,  general  and  administrative  costs  decreased  approximately
     $233,000  and  $250,000 in 2002 and 2001, respectively,  compared  to  the
     previous  year, as a result of steps taken to reduce operating  costs  and
     because of Legacy Audio's switch to a dealer based selling model.
        The  Company  has  developed a line of Public Address  System  products
     which  it  markets  under the name Allen Audio.  These products  are  sold
     through a dealer network, some of which are also organ dealers.

     Other Income (Expense)

        Investment  income increased slightly for the year ended  December  31,
     2002 when compared to 2001 due to realized gains on investments and higher
     invested  balances  that offset lower rates of return on  invested  funds.
     Investment  income  for the year ended December 31,  2001  decreased  when
     compared  to  2000 due to lower invested balances.  Interest  expense  was
     incurred in 2001 and 2000 on short-term bank financing related to ERI.
        The  2001  loss  on  the sale of property, plant &  equipment  includes
     approximately  $158,000 of losses related to the disposition  of  property
     and  equipment  at  VIR's  Southampton, PA facility  that  was  closed  in
     September 2001.

     Income Taxes

        The  effective tax rate (benefit) was 29.3%, (36.8%) and 22.4% in 2002,
     2001  and 2000, respectively.  The decrease in the 2002 effective tax rate
     is due to tax credits and other non-taxable items.  The 2001 effective tax
     rate  increased  due to tax credits and other preference items  increasing
     the benefit to the Company related to the 2001 loss.

     Significant Accounting Policies

        The  significant  accounting policies of the Company are  described  in
     Note  1  of  the  Consolidated Financial Statements.  The  preparation  of
     financial  statements  in conformity with accounting principles  generally
     accepted  in  the  United  State of America requires  management  to  make
     estimates  and assumptions that affect the reported amounts of assets  and
     liabilities  and disclosures of contingent assets and liabilities  at  the
     date  of the financial statements and the reported amounts of revenue  and
     expense during the reporting period.
        Certain   accounting   estimates  and  assumptions   are   particularly
     sensitive  because  of  their significance to the  consolidated  financial
     statements  and  the  possibility that future events  affecting  them  may
     differ  markedly.  The accounting policies of the Company , which  require
     significant estimates and assumptions, are described below.

          Carrying  Value of Obsolete and Slow Moving Inventory:   The  Company
          has  written down the value of inventory that may become obsolete  or
          that  will  not  be  used in the normal course  of  business  to  its
          estimated net realizable value.

          Allowance  for  Doubtful  Accounts:   The  Company  has  recorded  an
          allowance  for  the  estimated amount of accounts  which  may  become
          uncollectible.

          Carrying  Value  of  Goodwill  and Intangible  Assets:   The  Company
          reviews  the  recoverability of its goodwill and  intangible  assets.
          Any impairment in value is charged against current operations.

          Realization  of Deferred Income Tax Benefits:  As discussed  in  Note
          17 of the Consolidated Financial Statements, the Company has recorded
          valuation allowances related to the uncertainty of realizing  certain
          state and federal net operating loss carryforwards.

        Risk  factors that may affect these judgements include the  volume  and
     timing  of  orders  received, changes in global  economics  and  financial
     markets,  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 availability of electronic components that
     the  Company  purchases  from suppliers, 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.

     Contractual Obligations and Commercial Commitments

        Following  is a summary of contractual obligations and other commercial
     commitments of the Company:

                                       Payments Due by Period
          Contractual
          Obligations        Total      Less than    1-3      4-5     After
                                         1 year     years    years   5 years
        Operating Leases    $868,606    $312,856   $555,750    $0        $0

                            Total    Amount of Commitment Expiration Per Period
        Other Commercial   Amounts    Less than     1-3       4-5      After
          Commitments     Committed    1 year      years     years    5 years

        Contingent
        Repurchase
        Commitments
        Related to
        Customer
        Financing
        Arrangements      $1,644,038  $1,644,038       $0      $0        $0

     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 and 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 2003.  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 global economics and financial markets,  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  availability of electronic components that  the  Company
     purchases from suppliers, 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.

     New Accounting Standards

        In  December  2002, the Financial Accounting Standards  Board  ("FASB")
     issued  SFAS  No. 148, "Accounting for Stock-Based Compensation-Transition
     and  Disclosure-an amendment of SFAS No. 123." This statement amends  SFAS
     No. 123, "Accounting for Stock-Based Compensation," to provide alternative
     methods  of  transition for a voluntary change to  the  fair  value  based
     method  of  accounting for stock-based employee compensation. In addition,
     this  Statement  amends the disclosure requirements of  Statement  123  to
     require  prominent  disclosures  in  both  annual  and  interim  financial
     statements  about  the  method  of  accounting  for  stock-based  employee
     compensation  and the effect of the method used on reported  results.  The
     Company continues to account for stock-based compensation using Accounting
     Principles  Board  Statement  No.  25, "Accounting  for  Stock  Issued  to
     Employees,"  and has not adopted the recognition provisions  of  SFAS  No.
     123,  as  amended  by SFAS No. 148. However, the Company has  adopted  the
     disclosure  provisions for the current fiscal year and has  included  this
     information in the Company's consolidated financial statements.
        Effective  January  1,  2002,  the  Company  adopted  SFAS   No.   142.
     Accordingly,   no   amortization  of  goodwill  was  recognized   in   the
     accompanying consolidated financial statements of operations for the  year
     ended  December 31, 2002, compared to $52,666 and $129,627 for  the  years
     ended  December 31, 2001 and 2000, respectively.  In accordance  with  the
     provisions  of  SFAS  No.  142,  management  has  performed  the  required
     transitional  impairment  test of goodwill  and  has  determined  that  no
     impairment  loss need be recognized in the year ended December  31,  2002.
     As  required  by  SFAS No. 142, prior results have not been  restated.   A
     reconciliation  of the previously reported net income (loss)  and  earning
     (loss) per common share for the years ended December 31, 2001 and 2000, as
     if SFAS No. 142 had been adopted as of January 1, 2000, is as follows:
                                                     December 31,
                                                  2001          2000
           Reported net (loss) income         $(4,083,810)   $3,954,896
           Add back: Goodwill amortization,
            net of related tax effect              32,165        79,612
           Adjusted net (loss) income         $(4,051,645)   $4,034,508

           Basic and diluted (loss) earnings
            per share, as reported            $     (3.49)   $     3.38
           Impact of goodwill amortization,
            net of tax                               0.03          0.07
           Adjusted basic and diluted (loss)
            earnings per share                $     (3.46)   $     3.45

        During   2002  the  FASB  issued.  SFAS  146,  "Accounting  for   Costs
     Associated  with  Exit or Disposal Activities", which addresses  financial
     accounting  and  reporting  for costs associated  with  exit  or  disposal
     activities.  The Company does not expect the adoption of SFAS No.  146  to
     have a material effect on the Company's consolidated financial statements.

Item 7A    Quantitative and Qualitative Disclosures About Market Risk.

        Financial  instruments that potentially subject the Company  to  market
     and/or 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's  Musical Instruments segment sells  most  of  its  products
     through  established  dealer  networks.  The Data  Communications  segment
     sells  most  of  their products directly to end-users,  to  wholesale  and
     retail  distributors worldwide and under OEM agreements  with  other  data
     communications  companies.   The market and credit  risk  associated  with
     related  receivables  is limited due to the large number  of  dealers  and
     distributors  and their geographic dispersion.  The Company has  no  other
     material exposure to market risk.

Item 8.    Financial Statements and Supplemental Data

        The  information required by this Item is set forth on pages 15 through
     34 hereto and is incorporated by reference herein.

Item 9.    Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

        There were no reportable events as described in Item 304(b).
<PAGE>

KPMG
4905 Tilghman Street
Allentown, PA 18104

                      INDEPENDENT AUDITORS' REPORT


The Board of Directors
 and Stockholders
Allen Organ Company


      We  have  audited the accompanying consolidated balance  sheets  of
Allen  Organ Company and Subsidiaries as of December 31, 2002  and  2001,
and  the related consolidated statements of income, stockholders'  equity
and  cash flows and the related financial statement schedule for each  of
the  years  in  the  three year period ended December  31,  2002.   These
consolidated  financial statements and financial statement  schedule  are
the responsibility of the Company's management.  Our responsibility is to
express  an  opinion  on  these  consolidated  financial  statements  and
financial statement schedules based on our audits.

      We  conducted  our  audits in accordance  with  auditing  standards
generally  accepted  in  the United States of America.   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 financial position of
Allen  Organ Company and Subsidiaries as of December 31, 2002  and  2001,
and  the results of their operations and their cash flows for each of the
years in the three year period ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America.
Also,  in  our  opinion, the related financial statement  schedule,  when
considered  in  relation to the basic consolidated  financial  statements
taken  as  a  whole,  presents  fairly, in  all  material  respects,  the
information set forth therein.

     As discussed in Note 1 to the consolidated financial statements,
effective January 1, 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets".

/s/KPMG LLP
Allentown, PA
February 28, 2003
<PAGE>

                      ALLEN ORGAN COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                            December 31,
                     ASSETS                               2002         2001
CURRENT ASSETS
 Cash                                                 $ 4,515,189  $ 4,449,998
 Investments including accrued interest                17,176,750   11,609,416
 Accounts receivable, net of allowance for
  doubtful accounts of $502,209 in 2002
  and $350,492 in 2001                                 12,184,564    9,947,842
 Inventories                                           16,223,682   17,297,157
 Prepaid income taxes                                     161,071    1,106,214
 Prepaid expenses                                         318,943      386,421
 Deferred income taxes                                  1,992,694    1,561,138
  Total Current Assets                                 52,572,893   46,358,186

PROPERTY, PLANT AND EQUIPMENT, NET                     10,857,494   11,491,549

OTHER ASSETS
 Note receivable from related party                     2,397,291    1,997,107
 Cash value of life insurance                           2,273,163    2,173,566
 Deferred income taxes                                  3,422,448    2,022,725
 Intangible assets, net                                 1,628,964    2,218,504
 Goodwill, net                                            194,523      194,523
 Other assets                                              16,092       16,092
  Total Other Assets                                    9,932,481    8,622,517
   Total Assets                                       $73,362,868  $66,472,252

          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Accounts payable                                     $ 5,688,967  $ 2,750,251
 Accrued expenses                                       2,638,258    1,973,154
 Customer deposits                                      2,693,980    2,978,023
  Total Current Liabilities                            11,021,205    7,701,428

NONCURRENT LIABILITIES
 Deferred and other noncurrent liabilities              1,028,785      707,769
 Accrued pension costs                                  5,006,546    1,748,040
  Total Noncurrent Liabilities                          6,035,331    2,455,809
   Total Liabilities                                   17,056,536   10,157,237

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
 Common stock, par value $1 per share
 Authorized
  Class A Voting Shares-400,000 in 2002 and 2001
  Class B Non-Voting Shares-3,600,000 in 2002 and 2001
 Issued      2002              2001
  Class A   127,232 shares;   127,232 shares              127,232      127,232
  Class B 1,410,761 shares; 1,410,761 shares            1,410,761    1,410,761
 Capital in excess of par value                        12,961,610   12,903,610
 Retained earnings                                     57,267,763   55,237,713
 Accumulated other comprehensive loss                  (3,460,463)  (1,374,300)
 Less cost of common shares in treasury
  2002-43,368 Class A shares;324,565 Class B shares   (12,000,571)
  2001-43,368 Class A shares;324,304  Class B shares               (11,990,001)
   Total Stockholders' Equity                          56,306,332   56,315,015
    Total Liabilities and Stockholders' Equity        $73,362,868  $66,472,252

          See accompanying notes to Consolidated Financial Statements.
<PAGE>

              ALLEN ORGAN COMPANY AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF INCOME

                                               Years Ended December 31,
                                          2002           2001          2000

NET SALES                             $67,739,548    $60,490,513   $72,516,208
COSTS AND EXPENSES
 Cost of sales                         41,963,839     41,707,417    43,730,716
 Selling, administrative and
  other expenses                       14,886,291     15,811,522    17,623,213
 Research and development               7,782,571      8,004,838     7,340,209
 Plant closure costs                         --          530,000          --
 Impairment of goodwill and intangibles      --        1,400,000          --
  Total Costs and Expenses             64,632,701     67,453,777    68,694,138

INCOME (LOSS) FROM OPERATIONS           3,106,847     (6,963,264)    3,822,070

OTHER INCOME (EXPENSE)
 Investment income                        716,335      1,018,162     1,542,347
 Interest expense                            --         (315,083)     (320,942)
 Loss on sale of property, plant
  and equipment                           (55,184)      (175,358)      (58,288)
 Other income, net                         28,359         25,008        20,414
 Minority interests in
  consolidated subsidiaries                  --          (33,275)       68,295
   Total Other Income                     689,510        519,454     1,251,826

INCOME (LOSS) BEFORE TAXES              3,796,357     (6,443,810)    5,073,896

PROVISION FOR TAXES
 Current                                1,669,000     (1,168,000)    1,736,000
 Deferred                                (558,000)    (1,192,000)     (617,000)
  Total Provision for Taxes             1,111,000     (2,360,000)    1,119,000

NET INCOME (LOSS)                     $ 2,685,357    $(4,083,810)  $ 3,954,896

OTHER COMPREHENSIVE INCOME (LOSS),
 NET OF TAX
 Unrealized gain (loss) on
  investments:
  Unrealized gain (loss) arising
   during period                      $   132,305    $  (138,420)  $  (171,313)
  Less:  reclassified adjustment
   for (loss) gain included in
   income                                 (97,186)       (41,153)      (11,097)
    Total                                  35,119       (179,573)     (182,410)
 Minimum pension liability
  adjustment                           (2,121,282)    (1,334,717)         --
Other comprehensive loss               (2,086,163)    (1,514,290)     (182,410)

COMPREHENSIVE INCOME (LOSS)           $   599,194    $(5,598,100)  $ 3,772,486

BASIC AND DILUTED EARNINGS (LOSS)
 PER SHARE                            $      2.29    $     (3.49)  $      3.38


  See accompanying notes to Consolidated Financial Statements.
<PAGE>

                     ALLEN ORGAN COMPANY AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                      Common Stock                   Capital
                                                                     in
                                Class A               Class B        Excess of
                           Shares     Amount     Shares     Amount   Par Value

Balance-December 31, 1999  127,232   $127,232  1,410,761 $1,410,761 $12,758,610
Balance-December 31, 2000  127,232    127,232  1,410,761  1,410,761  12,758,610
 Tax benefit from
  exercise of subsidiary
  stock options                                                         145,000
Balance-December 31, 2001  127,232    127,232  1,410,761  1,410,761  12,903,610
 Tax benefit from
  exercise of subsidiary
  stock options                                                          58,000
Balance-December 31, 2002  127,232   $127,232  1,410,761 $1,410,761 $12,961,610


                                        Accumulated
                                        Other
                            Retained    Comprehensive       Treasury Stock
                            Earnings    Income (Loss)    Shares       Amount

Balance-December 31, 1999  $56,677,650 $   322,400      367,282   $(11,974,962)
Net income                   3,954,896
Reacquired Class B Shares                                    96         (3,732)
Change in unrealized
 gain on securities
 available for sale                       (182,410)
Cash dividend paid
 ($0.56 per share)            (655,544)
Balance-December 31, 2000   59,977,002     139,990      367,378    (11,978,694)

Net loss                    (4,083,810)
Reacquired Class B Shares                                   156         (6,891)
Reacquired Class A Shares                                   138         (4,416)
Change in unrealized
 gain (loss) on securities
 available for sale                       (179,573)
Minimum pension liability
 adjustment                             (1,334,717)
Cash dividend paid
 ($0.56 per share)            (655,479)
Balance-December 31, 2001   55,237,713  (1,374,300)     367,672    (11,990,001)

Net income                   2,685,357
Reacquired Class B Shares                                   261        (10,570)
Change in unrealized
 gain (loss) on securities
 available for sale                         35,119
Minimum pension liability
 adjustment                             (2,121,282)
Cash dividend paid
 ($0.56 per share)            (655,307)
Balance-December 31, 2002  $57,267,763 $(3,460,463)     367,933   $(12,000,571)

         See accompanying notes to Consolidated Financial Statements.
<PAGE>
                     ALLEN ORGAN COMPANY AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                Years Ended December 31,
                                            2002          2001         2000
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income (loss)                       $2,685,357   $(4,083,810)  $3,954,896
 Adjustments to reconcile net income
  (loss) to net cash provided by
  operating activities
 Depreciation and amortization            2,801,512     2,974,898    2,519,496
 Minority interest in consolidated
  subsidiaries                                 --          33,275      (68,295)
 Loss from impairment of goodwill and
  intangibles                                  --       1,400,000          --
 Loss on sale of property, plant and
  equipment                                  55,184       175,358       58,288
 Gain on sale of investments               (156,248)      (65,635)     (17,684)
 Tax benefit from exercise of stock
  options                                    58,000       145,000          --
 Deferred income taxes                     (518,984)   (1,296,667)    (711,566)
 Change in assets and liabilities
  Accounts receivable                    (2,236,722)      337,817      158,771
  Inventories                             1,073,475     3,201,673   (3,050,201)
  Prepaid income taxes                      945,143    (1,092,242)     (13,972)
  Prepaid expenses                           67,478       (82,079)     (17,204)
  Prepaid pension costs                    (175,071)      126,006      (36,548)
  Other assets                                 --           2,500       22,548
  Accounts payable                        2,938,716      (697,868)    (145,589)
  Accrued income taxes                         --            --       (683,133)
  Accrued expenses                          665,104      (842,948)     888,946
  Customer deposits                        (284,043)      (13,605)   1,406,432
  Deferred and other noncurrent
   liabilities                              321,016       397,753      130,101
 Net Cash Provided by Operating
  Activities                              8,239,917       619,426    4,395,286

CASH FLOWS FROM INVESTING ACTIVITIES
 Cash proceeds from sale of investments
  classified as available for sale       30,633,381    18,682,314    9,908,680
 Cash paid for purchase of investments
  classified as available for sale      (36,009,348)   (5,711,291) (15,118,347)
 Increase in cash value of life
  insurance                                 (99,597)     (138,699)    (313,370)
 Increase in note receivable               (400,184)     (440,386)    (445,574)
 Additions to intangible assets             (89,386)     (156,243)    (906,700)
 Cash proceeds from sale of property,
  plant and equipment                       319,155        11,250      100,206
 Cash paid for purchase of property,
  plant and equipment                    (1,898,586)   (1,458,233)  (3,157,814)
 Net Cash (Used In) Provided by
  Investing Activities                   (7,544,565)   10,788,712   (9,932,919)

CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from bank loans                      --       3,300,000    8,700,000
 Repayment of bank loans                       --     (12,000,000)        --
 Dividends paid in cash                    (655,307)     (655,479)    (655,544)
 Reacquired Class A common shares              --          (4,416)        --
 Reacquired Class B common shares           (10,570)       (6,891)      (3,732)
 Subsidiary company stock reacquired
  from minority stockholders                   --        (400,055)        --
 Proceeds from sale of subsidiary stock      35,716        96,333         --
 Net Cash (Used in) Provided by
  Financing Activities                     (630,161)   (9,670,508)   8,040,724

NET INCREASE IN CASH                         65,191     1,737,630    2,503,091

CASH, JANUARY 1                           4,449,998     2,712,368      209,277

CASH, DECEMBER 31                        $4,515,189    $4,449,998   $2,712,368

            SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

 Cash paid (refunded) for income taxes   $  750,008    $ (218,816)  $2,535,061
 Cash paid for interest                  $     --      $  315,084   $  320,942

The above changes in assets and
 liabilities excludes the following
 adjustments related to the minimum
 pension liability.
  Accumulated other comprehensive income $2,121,282    $1,334,717   $     --
  Deferred income tax benefits            1,312,295       794,019         --
  Accrued pension costs                  (3,433,577)   (2,128,736)        --

         See accompanying notes to Consolidated Financial Statements.
<PAGE>
                     ALLEN ORGAN COMPANY AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 Background and Significant Accounting Policies
     Background:
        Allen  Organ  Company  and  Subsidiaries  (Company)  operate  in   four
     industry  segments:  Musical Instruments, Data Communications,  Electronic
     Assemblies,  and Audio Equipment.  See Note 21 for additional  information
     on the operating activities of each segment.

     Principles of Consolidation:
        The  consolidated  financial statements include  the  accounts  of  the
     Company  and  its  wholly-owned subsidiaries  (Allen  Audio,  Inc.,  Allen
     Diversified,  Inc.,  Legacy  Audio, Inc.)  and  majority-owned  subsidiary
     (Eastern  Research, Inc.).  In addition, the Company has  other  inactive,
     wholly-owned  subsidiaries.  All material intercompany  transactions  have
     been eliminated.

     Use of Estimates:
        The  preparation of financial statements in conformity  with  generally
     accepted accounting principles in the United States 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 (SFAS) 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.

     Accounts Receivable Reserve:
         The   Company   records   an  allowance  for  uncollectible   accounts
     receivable based on historical loss experience, customer payment  patterns
     and  current  economic trends.  Management reviews  the  adequacy  of  the
     allowance for uncollectible accounts receivable on a quarterly basis  and,
     if necessary, increases or decreases the reserve.

     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  the estimated useful asset lives using both  straight-line
     and  accelerated  methods for financial reporting and accelerated  methods
     for tax reporting purposes.

     Goodwill and Intangible Assets:
        Goodwill  represents the excess of costs over fair value of  assets  of
     businesses acquired. The Company adopted the provisions of SFAS  No.  142,
     Goodwill and Other Intangible Assets, as of January 1, 2002. Goodwill  and
     intangible  assets  acquired  in  a  purchase  business  combination   and
     determined  to  have  an  indefinite useful life are  not  amortized,  but
     instead  tested  for impairment at least annually in accordance  with  the
     provisions  of  SFAS No. 142.  SFAS No. 142 also requires that  intangible
     assets  with  estimable  useful lives be amortized over  their  respective
     estimated  useful lives to their estimated residual values,  and  reviewed
     for  impairment in accordance with SFAS No. 144, Accounting for Impairment
     or Disposal of Long-Lived Assets.
        Prior  to  January  1, 2002, goodwill was amortized  to  expense  on  a
     straight-line basis over various periods of 5-20 years. The carrying value
     of  goodwill  was  reviewed  for possible impairment  whenever  events  or
     changes in circumstances indicated that an impairment might exist.
        Intangible  assets  represent  identifiable  assets  such  as  customer
     lists, developed technology and trademarks acquired in connection with the
     purchase  of the Company's subsidiaries.  Intangible assets are  amortized
     on  a straight-line basis over various periods generally from 5 - 20 years
     and  are  presented  net  of accumulated amortization  of  $3,024,517  and
     $2,381,307 at December 31, 2002 and 2001 respectively.
        The  carrying value of goodwill and intangible assets for each business
     is   continually  reviewed  to  assess  its  recoverability  from   future
     operations,  based  on  future cash flows (undiscounted)  expected  to  be
     generated  by such operations.  Any impairment in value indicated  by  the
     assessment  would be computed based on discounted cash flows  and  charged
     against current operations.

     Revenue Recognition:
        The  Company  recognizes  revenue when products  are  shipped  and  the
     customer  takes  ownership and assumes risk of  loss,  collection  of  the
     relevant  receivable is probable, persuasive evidence  of  an  arrangement
     exists and the sales price is fixed or determinable.

     Research and Development and Advertising:
        Research  and development and advertising expenditures are  charged  to
     expense  as  incurred.  Research and development expenses  are  separately
     disclosed  in the consolidated statements of operations while  advertising
     costs  were  $333,695,  $440,757, and $505,170 in  2002,  2001  and  2000,
     respectively.

     Income Taxes:
        Income  taxes  are accounted for under the asset and liability  method.
     Deferred  tax  assets and liabilities are recognized for  the  future  tax
     consequences  attributable to differences between the financial  statement
     carrying  amounts of existing assets and liabilities and their  respective
     tax  bases and operating loss and tax credit carryforwards.  Deferred  tax
     assets  and  liabilities are measured using enacted tax rates expected  to
     apply  to taxable income in the years in which those temporary differences
     are  expected  to  be recovered or settled.  The effect  on  deferred  tax
     assets and liabilities of a change in tax rates is recognized in income in
     the period that includes the enactment date.

     Financial Instruments:
        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's
     Musical Instruments segment sells most of its products through established
     dealer  networks.   The  Data Communications segment  sells  most  of  its
     products  direct to customers, to distributors worldwide and to  a  lesser
     extent under OEM agreements with other data communications companies.  The
     credit  risk  associated with related receivables is limited  due  to  the
     large number of dealers and distributors and their geographic dispersion.

     Reclassifications:
        Certain  amounts  in the 2001 and 2000 financial statements  have  been
     reclassified to conform to the 2002 presentation.

     New Accounting Standards:
        In  December  2002, the Financial Accounting Standards  Board  ("FASB")
     issued  SFAS  No. 148, "Accounting for Stock-Based Compensation-Transition
     and  Disclosure-an amendment of SFAS No. 123." This statement amends  SFAS
     No. 123, "Accounting for Stock-Based Compensation," to provide alternative
     methods  of  transition for a voluntary change to  the  fair  value  based
     method  of  accounting for stock-based employee compensation. In addition,
     this  Statement  amends the disclosure requirements of  Statement  123  to
     require  prominent  disclosures  in  both  annual  and  interim  financial
     statements  about  the  method  of  accounting  for  stock-based  employee
     compensation  and the effect of the method used on reported  results.  The
     Company continues to account for stock-based compensation using Accounting
     Principles  Board  Statement  No.  25, "Accounting  for  Stock  Issued  to
     Employees,"  and has not adopted the recognition provisions  of  SFAS  No.
     123,  as  amended  by SFAS No. 148. However, the Company has  adopted  the
     disclosure  provisions for the current fiscal year and has  included  this
     information in the Company's consolidated financial statements.
        Effective  January  1,  2002,  the  Company  adopted  SFAS   No.   142.
     Accordingly,   no   amortization  of  goodwill  was  recognized   in   the
     accompanying consolidated financial statements of operations for the  year
     ended  December 31, 2002, compared to $52,666 and $129,627 for  the  years
     ended  December 31, 2001 and 2000, respectively.  In accordance  with  the
     provisions  of  SFAS  No.  142,  management  has  performed  the  required
     transitional  impairment  test of goodwill  and  has  determined  that  no
     impairment  loss need be recognized in the year ended December  31,  2002.
     As  required  by  SFAS No. 142, prior results have not been  restated.   A
     reconciliation  of the previously reported net income (loss)  and  earning
     (loss) per common share for the years ended December 31, 2001 and 2000, as
     if SFAS No. 142 had been adopted as of January 1, 2000, is as follows:
                                                     December 31,
                                                  2001         2000
      Reported net (loss) income              $(4,083,810)  $3,954,896
      Add back: Goodwill amortization, net of
       related tax effect                          32,165       79,612
      Adjusted net (loss) income              $(4,051,645)  $4,034,508

      Basic and diluted (loss) earnings
       per share, as reported                 $     (3.49)  $     3.38
      Impact of goodwill amortization, net of
       tax                                           0.03         0.07
      Adjusted basic and diluted (loss)
       earnings per share                     $     (3.46)  $     3.45

        During  2002 the FASB issued SFAS 146, "Accounting for Costs Associated
     with  Exit  or Disposal Activities", which addresses financial  accounting
     and  reporting for costs associated with exit or disposal activities.  The
     Company  does not expect the adoption of SFAS No. 146 to have  a  material
     effect on the Company's consolidated financial statements.

     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, as amended  by
     SFAS No. 148, Accounting for Stock-Based Compensation, it has elected only
     to  comply  with  the disclosure requirements set forth in the  Statements
     (see Note 19).
        Had  compensation  cost  been determined on the  basis  of  fair  value
     pursuant  to  SFAS No. 123, as amended by SFAS No. 148, net income  (loss)
     and earnings per share would have been decreased as follows:

                                            2002          2001         2000
       Net income (loss)
        As reported                      $2,685,357   $(4,083,810)  $3,954,896
        Deduct: Total stock-based
        employee compensation expense
        determined under fair value based
        method for all awards, net
        of related tax effects              (69,374)      (39,447)    (134,238)
       Pro forma                         $2,615,983   $(4,123,257)  $3,820,658

       Earnings (loss) per share
           As reported                        $2.29        $(3.49)       $3.38
           Pro forma                          $2.23        $(3.52)       $3.26

        The  fair  value of each option granted is estimated on the grant  date
     using  the  Black-Scholes option pricing model.  The following assumptions
     were  made in estimating the fair value of options granted under the Allen
     Organ Company stock option plan:

          Assumptions
           Dividend yield                 1.40%
           Risk-free interest rate        2.50%
           Expected life                7 years
           Expected volatility              10%

NOTE 2  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, 2002
      Available for sale
      Equity securities         $  39,310   $    --     $  5,139    $    34,171
      Mutual Funds
       Short Term Gov't Funds   2,218,717        620       7,931      2,211,406
       Municipal  Bond Funds   14,891,036      9,612         --      14,900,648
       Equity Funds                34,929        --        4,404         30,525
      Totals                  $17,183,992   $ 10,232    $ 17,474    $17,176,750

      December 31, 2001
      Available for sale
      Equity securities       $   129,310   $    --     $ 92,000    $    37,310
      Mutual Funds
       Short Term Gov't Funds   6,602,414    158,818         --       6,761,232
       Municipal  Bond Funds    4,137,455     62,906         --       4,200,361
       Equity Funds               803,440      4,020     196,947        610,513
      Totals                  $11,672,619   $225,744    $288,947    $11,609,416

        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 2002,  2001
     and 2000, sales proceeds and gross realized gains and losses on securities
     classified as available for sale were:

                                  2002           2001          2000

     Sales proceeds           $30,633,381    $18,682,314    $9,908,680

     Gross realized losses    $   379,804    $   216,546    $   37,974

     Gross realized gains     $   536,052    $   282,181    $   55,658

        The  change in net unrealized holding gains on securities available for
     sale  of  $55,961, $283,786, and $276,948, net of deferred tax expense  of
     $20,842,  $104,213, and $94,538, has been included in other  comprehensive
     income  in  stockholders' equity for the years ended  December  31,  2002,
     2001, and 2000, respectively.

NOTE 3 Inventories
                                                  December 31,
                                               2002         2001
           Finished goods                  $ 5,064,803  $ 4,720,318
           Work in process                   5,707,215    6,249,775
           Raw materials                     5,451,664    6,327,064
            Total                          $16,223,682  $17,297,157

NOTE 4 Property, Plant and Equipment
                                                                    Estimated
                                               December 31,          Useful
                                             2002         2001        Lives
           Land and improvements         $ 2,369,298  $ 2,407,298    10 yrs
           Buildings and improvements      9,030,910    9,000,465    2 - 40 yrs
           Machinery and equipment        10,855,793   10,481,698    5 - 10 yrs
           Office furniture and equipment  4,886,443    4,548,093    3 - 8  yrs
           Vehicles                          186,187      163,411    4 yrs
            Sub-total                     27,328,631   26,600,965
           Less accumulated depreciation  16,471,137   15,109,416
            Total                        $10,857,494  $11,491,549

           Depreciation   expense   charged  to  operations   was   $2,158,302,
       $2,303,209 and $1,897,715 in 2002, 2001 and 2000, respectively.

NOTE 5 Note Receivable
           The  Company  has  entered  into  two  split-dollar  life  insurance
       agreements  with  its President, who is the insured  and  owner  of  the
       policies.   The  policy  owner is required to pay  the  portion  of  the
       premiums  equal  to  the  value of the economic  benefit  determined  in
       accordance  with applicable IRS Revenue Rulings.  The Company  pays  the
       balance of the net premiums, which approximates $450,000 annually.
           The  agreements  provide  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 premiums.
       The   Company  is  also  secured  by  the  personal  obligation  of  its
       President.   The  note receivable exceeds the cash  surrender  value  of
       these  policies by approximately $445,000 and $450,000 at  December  31,
       2002  and 2001, respectively.  However, the Company's President  has  an
       adequate level of personal net assets to cover these amounts.

NOTE 6 Intangible Assets
           Intangible assets subject to amortization are as follows:
                                        As of December 31, 2002
                             Gross Carrying  Accumulated   Weighted Average
                                 Amount      Amortization  Amortization Period

       Customer Lists          $  105,679   $   82,015       7 years
       Unpatented Technology    4,269,406    2,862,463       7 years
       Trademarks                 278,396       80,039      20 years
        Total                  $4,653,481   $3,024,517

           Amortization  expense was $643,210, $671,689 and $621,781  in  2002,
       2001  and  2000, respectively.  Estimated amortization expense  for  the
       next five years is as follows:

              2003                   $ 636,251
              2004                     405,935
              2005                     121,465
              2006                      63,214
              2007                      27,789

           Upon adoption of SFAS No. 142, the Company was required to evaluate
     its  existing  intangible  assets  and goodwill  that  were  recorded  in
     purchase    business   combinations,   and   to   make   any    necessary
     reclassifications  in  order  to  conform  with  the  new  classification
     criteria  in  SFAS No. 141 for recognition separate from  goodwill.   The
     Company  was  also  required to reassess the useful  lives  and  residual
     values  of  all  intangible  assets  acquired,  and  make  any  necessary
     amortization  period adjustments by the end of the first  interim  period
     after  adoption.  For intangible assets identified as  having  indefinite
     useful lives, the Company was required to test those intangible asset for
     impairment  in accordance with the provisions of SFAS No. 142 within  the
     first  interim period. Impairment was measured as the excess of  carrying
     value over the fair value of an intangible asset with an indefinite life.
     The results of this analysis did not require the Company to recognize  an
     impairment loss.

NOTE 7 Plant Closure Costs and Impairment Charges
        During  2001  the  Company recorded a charge to operating  expenses  of
     $1,400,000  related  to  the  impairment in  the  value  of  goodwill  and
     intangibles which arose in connection with the previous acquisition  of  a
     company.   This write down was attributable to the downturn  in  the  data
     communications industry in which the company operated, the combination  of
     this  company  into  another  subsidiary  and  closure  of  the  company's
     facility, all of which reduced expectations of future cash flows.
        In  connection with the consolidation of the operations  of  these  two
     subsidiaries and the closure of one plant, the Company recorded  a  charge
     of  $530,000  (including  employee severance  and  benefits  for  nineteen
     employees and other exit costs).  All of these costs were paid by December
     31, 2002.

NOTE 8 Notes Payable - Bank
           In  June 2000 Eastern Research, Inc. (ERI) obtained a term loan and
     revolving  line of credit from a bank.  During June 2001 ERI  repaid  all
     outstanding bank loans totaling $12,000,000 with funds provided by  Allen
     Organ Company.

NOTE 9 Accrued Expenses
                                                         December 31,
                                                      2002        2001
           Accrued salaries and commissions        $1,930,782  $1,386,646
           Accrued plant closing costs                 --         140,700
           Other                                      707,476     445,808
             Total                                 $2,638,258  $1,973,154

NOTE 10    Deferred and Other Noncurrent Liabilities
                                                              December 31,
                                                           2002        2001
           Deferred compensation expense (see Note 15)  $  848,785   $ 587,769
           Other noncurrent liabilities                    180,000     120,000
             Total                                      $1,028,785   $ 707,769

NOTE 11    Warranty Costs
           The  Company provides a warranty covering manufacturing defects  for
       certain  of  its  products for varying lengths of time.   The  Company's
       policy is to accrue the estimated cost of warranty coverage at the  time
       the  sale is recorded.  The activity in the warranty accrual during  the
       year ended December 31, 2002 is summarized as follows:

          Accrual at beginning of year                  $240,000
          Additions charged to warranty expense          223,086
          Claims paid and charged against the accrual   (163,086)
          Accrual at end of year                        $300,000

NOTE 12    Commitments and Contingencies
           As  of December 31, 2002, the Company is contingently liable for  a
     maximum  amount  of  approximately  $1,644,000  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 of the Company, 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, 2002, the shareholder  owned
     or  would have includable in her estate 262,882 shares of Class B  Common
     Stock.   The Company's obligation under this agreement is limited to  the
     insurance  proceeds  to  be  received by the Company  on  life  insurance
     purchased  on the life of the shareholder, which policy has a face  value
     of $6,000,000.
           The  Company's Data Communications segment leases its  offices  and
     production facility under non-cancelable operating leases which expire at
     various  dates through August 2005.  Legacy Audio, Inc. leases  warehouse
     space  under a non-cancelable operating lease which expires in July 2003.
     Rent expense for all Company operating leases was $413,733, $495,816  and
     $440,971  in  2002,  2001 and 2000, respectively.   Minimum  annual  rent
     payments for the operating leases are as follows:

            2003                          $312,856
            2004                           314,438
            2005                           241,312
             Total                        $868,606

NOTE 13    Accumulated Other Comprehensive Loss
                                                            December 31,
                                                          2002         2001
           Unrealized loss on investments, net        $    (4,464)   $ (39,583)
           Minimum pension liability adjustment        (3,455,999)  (1,334,717)
             Total                                    $(3,460,463) $(1,374,300)

NOTE 14    Export Sales
           In  2002,  2001  and  2000,  net sales by  the  Musical  Instruments
       segment include export sales, principally to Canada, Europe and the  Far
       East  of  $3,248,480,  $3,759,129, and  $3,635,123,  respectively.   Net
       sales   by   the  Data  Communications  segment  include  export   sales
       principally  to  Europe  and  Asia  Pacific  of  $10,428,899  for  2002,
       $3,342,587  for 2001, and $7,764,597 for 2000.  Net sales by  the  Audio
       Equipment  segment include export sales principally to  Europe  and  the
       Far East of $69,222 for 2002, $219,315 for 2001 and $188,970 for 2000.

NOTE 15    Retirement Plans
           The  Company  sponsors two noncontributory defined benefit  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  at  December 31, 2002 and cash  equivalents,  U.S.
     Government obligations, fixed income securities, and equity securities at
     December 31, 2001 and 2000.
           Following are reconciliations of the pension benefit obligation and
     the value of plan assets:

                                        2002            2001           2000
      Pension benefit obligation
      Balance, beginning of year    $16,112,915     $15,194,233    $15,065,101
      Service cost                      393,927         353,266        324,423
      Interest cost                   1,085,299       1,055,508      1,024,441
      Benefits paid to
      participants                   (1,117,494)     (1,012,126)      (976,612)
      Increase (decrease) due to
       changes in data/assumptions      993,779         522,034       (243,120)
         Balance, end of year       $17,468,426     $16,112,915    $15,194,233

      Plan assets
      Fair value, beginning of year $13,398,564     $15,689,627    $17,477,871
      Actual investment returns      (1,663,508)     (1,278,937)      (811,632)
      Company contributions             852,041            --             --
      Benefits paid to
       participants                  (1,072,753)     (1,012,126)      (976,612)
         Fair value, end of year    $11,514,344     $13,398,564    $15,689,627

           The funded status of the plans is as follows:
                                                       December 31,
                                         2002             2001         2000
      Excess of the value of plan
       assets over the
       benefit obligation            $(5,954,082)     $(2,714,351)    $495,394
      Unrecognized net transition
       asset                                --               --        (72,012)
      Unrecognized net actuarial
       loss                            6,509,847        3,095,047       83,320
      Adjustment to recognize
       minimum liability              (5,562,313)      (2,128,736)        --
      (Accrued) prepaid benefit
       cost                          $(5,006,548)     $(1,748,040)    $506,702

           The  adjustment  to  recognize  the minimum  pension  liability  of
     $5,562,313  net of deferred tax benefit of $2,106,314, has been  included
     in  other comprehensive income (loss) in stockholders' equity at December
     31, 2002.
           The  following weighted-average rates were used in determining  the
     above plan information:

      Discount rate on the benefit obligation    6.25%      6.75%       7.00%
      Rate of return on plan assets              7.00%      8.00%       8.00%
      Rate of long-term compensation increase    5.00%      6.00%       6.00%

           Pension expense is comprised as follows:
                                              2002         2001        2000

      Service cost                         $  393,927   $  353,266   $ 324,423
      Interest cost                         1,085,299    1,055,508   1,024,441
      Expected return on plan assets       (1,036,157)  (1,210,756) (1,357,306)
      Amortization of net gain from
       prior periods                          133,903         --       (29,421)
      Amortization of unrecognized
       prior service cost                        --           --        73,323
      Amortization of transition asset           --        (72,012)    (72,008)
        Net pension cost                   $  576,972   $  126,006   $ (36,548)

           The  foregoing net amounts regarding the pension benefit  obligation
     and  the  value  of  plan  assets are based on  a  combination  of  both
     overfunded  and  underfunded plans.  The aggregate amounts  relating  to
     underfunded plans are as follows:
                                                     December 31,
                                            2002          2001         2000
      Projected benefit obligation      $17,468,426   $16,112,915   $8,078,231
      Accumulated benefit obligation     16,520,892    15,146,604    7,167,545
      Fair value of plan assets          11,514,344    13,398,564    7,827,166

           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. Profit-sharing
     contributions  to  the  plan  are  discretionary  as  determined  by  the
     Company's  board of directors.  The Company contributions  were  $85,658,
     $248,650 and $125,374 to the plans in 2002, 2001 and 2000, respectively.
           The   Company  provides  supplemental  executive  retirement  plans
     (deferred  compensation) for three of its officers.  These plans  provide
     for  discretionary company contributions, which vest  over  a  five  year
     period,  accrue  interest at the prime rate, not to exceed  9%,  and  are
     payable upon the executive's death or retirement.

NOTE 16    Investment Income
                                                     December 31,
                                            2002        2001         2000
       Interest Income                    $ 550,697   $ 910,144    $1,109,751
       Dividend Income                        9,390     173,653       414,912
       Gain (Loss) on Sale of Investments   156,248     (65,635)       17,684
        Total                             $ 716,335  $1,018,162    $1,542,347

NOTE 17    Income Taxes
           The provision for income taxes consists of the following:
                 2002                    2001                       2000
        Currently               Currently                  Currently
        Payable     Deferred    Payable       Deferred     Payable     Deferred

Federal $1,252,000  $(456,000)  $(1,347,000) $(1,014,000) $1,392,000 $(251,000)
State      417,000   (102,000)      179,000     (178,000)    344,000  (366,000)
 Total  $1,669,000  $(558,000)  $(1,168,000) $(1,192,000) $1,736,000 $(617,000)

           A  reconciliation  of  the  provision  for  income  taxes  with  the
       statutory rate follows:
                       2002                2001                 2000
 Statutory provision
  for federal
   income tax       $1,291,000  34.0%  $(2,180,000)  (34.0)%  $1,702,000  34.0%
 State taxes, net
  of federal tax
   benefits            143,000   3.8      (549,000)   (8.6)      (14,000) (0.3)
 Tax credits          (311,000) (8.2)     (363,000)   (5.7)     (325,000) (6.5)
 Tax-exempt income     (64,000) (1.7)      (96,000)   (1.5)     (106,000) (2.1)
 Exempt income of
  foreign sales
   corporation        (136,000) (3.6)     (100,000)   (1.6)     (151,000) (3.0)
 Other items, net       18,000   0.5        28,000     0.4        13,000   0.3
 Effect of change
  in valuation
  allowance of deferred
  tax assets:
   Federal             105,000   2.8       350,000     5.4          --      --
   State                65,000   1.7       550,000     8.6          --      --
    Total           $1,111,000  29.3% $(2,360,000)  (36.8)%  $1,119,000  22.4%

           The  following temporary differences give rise to the net  deferred
     tax asset at December 31, 2002 and 2001.

                                                        2002           2001
     Deferred Tax Assets
      Excess of book depreciation/amortization
       over tax depreciation/amortization            $  479,305     $  328,155
      Excess of book over tax pension expense         1,831,377        652,031
      Loss on investments not recognized
       for tax purposes                                  36,839         23,434
      Deferred compensation not recognized
       for tax purposes                                 330,424        226,047
      Net operating loss carry forwards               1,876,210      1,743,391
      Other liabilities                                 477,412        247,466
      Reserve for bad debts                             194,586        131,943
      Inventory reserve                               1,358,989      1,231,396
       Sub-total                                      6,585,142      4,583,863
      Valuation Allowance                            (1,170,000)    (1,000,000)
           Total Deferred Tax Assets                 $5,415,142     $3,583,863

         Deferred taxes are included in the Company's financial  statements  as
     follows:
                                                      2002           2001
             Current deferred tax asset            $1,992,694     $1,561,138
             Non-current deferred tax asset         3,422,448      2,022,725
               Total deferred tax asset            $5,415,142     $3,583,863

           At  December  31,  2002,  the Company has  available  approximately
     $2,315,000  of  unused  federal  and  $17,949,000  of  unused  state  net
     operating loss carry forwards that may be applied against future  taxable
     income  and that expire in various years from 2004 to 2022.  The  Company
     has  a  valuation  allowance of $1,170,000 for the  deferred  tax  assets
     related  to  the uncertainty of realizing state net operating loss  carry
     forwards and federal net operating losses of a subsidiary not included in
     the consolidated federal income tax return.

NOTE 18    Earnings Per Share
           Earnings  per  share were computed using 1,170,191 shares  in  2002,
       1,170,480  shares  in 2001, and 1,170,618 shares in 2000,  the  weighted
       average  number  of  shares outstanding during each  year.   Outstanding
       stock  options were not included in computing earnings per share because
       their effect was antidilutive.

NOTE 19    Stock Option Plans
           In  July  2002,  the  Company established  an  employee  stock-based
       compensation plan to assist in attracting and retaining personnel.   The
       maximum number of the Company's Class B shares that may be issued  under
       the  plan approximates a 9% interest in the Company.  Options are issued
       at  the fair market value on the date of grant.  The maximum term of the
       options is 10 years, and generally vest equally over 4 years.
           As  of  December 31, 2002, total options issued represent 1% of  the
       shares  currently  outstanding.  Vested options represent  0.2%  of  the
       currently outstanding shares.
           Following  is  a summary of the activity under the plan  during  the
       year ended December 31, 2002:
                                                           Weighted
                                                           Average
                                             Number of     Exercise
                                              Shares       Price
          Outstanding at beginning of year     --         $   --
          Granted                             12,000        39.00
          Exercised                            --             --
          Forfeited                            --             --
          Outstanding at end of year          12,000       $39.00

          Weighted average fair value of
           options  granted  during the year               $ 5.03

           Following  is  a  summary  of the status of options  outstanding  at
       December 31, 2002:

                   Options Outstanding                 Options Exercisable
                     Weighted Avg.
                      Remaining     Weighted Avg.
Exercise   Number     Contractual     Exercise     Number       Weighted Avg.
 Price    Outstanding    Life          Price     Exercisable    Exercise Price

 $39.00     12,000      9.56 years     $39.00       2,400           $39.00

           Eastern  Research, Inc. (ERI) also provides an employee  stock-based
       compensation plan to assist in attracting and retaining personnel.   The
       maximum  number of subsidiary shares that may be issued under  the  plan
       approximates  a 15% interest in the subsidiary.  Options  are  generally
       issued  at  the estimated fair market value.  The maximum  term  of  the
       options is 6 years, and generally vest equally over 4 years.
           As  of December 31, 2002, total options issued represents 13% of the
       ERI  shares currently outstanding.  Vested options consist of 10% of the
       currently outstanding shares of ERI.
           ERI  recognized  compensation expense of $59,375 in  both  2002  and
       2001  and  $29,687 in 2000 related to options granted with  an  exercise
       price less than the fair market value on the date of grant.
           See  Note  1  for  the pro forma effects on net  income  (loss)  and
       earnings  per share had compensation cost been determined on  the  basis
       of fair value pursuant to SFAS No. 123, as amended by SFAS No. 148.

NOTE 20    Related Party Transactions
           A  member  of  the Company's Board of Directors is  a  principal  in
       firms providing legal and financial advisory services.  Legal fees  paid
       were   $45,851,   $75,094  and  $131,543  in  2002,   2001   and   2000,
       respectively.   Financial advisory fees paid were  $6,000,  $11,753  and
       $63,546 in 2002, 2001 and 2000, respectively.

NOTE 21     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 organs and related accessories.   Musical
       instruments are sold primarily to retail dealers worldwide.
           The  Data Communications segment is involved in the design, sale and
       distribution  of  data  communications equipment.   Data  communications
       products  are  sold direct to customers and distributors  worldwide  and
       under OEM agreements with several customers.
           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 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.   Legacy's
       products  are  sold  worldwide  primarily  through  independent   retail
       dealers  and  to a lesser extent directly to individual customers.   The
       Company, through its subsidiary Allen Audio, Inc., designs, markets  and
       sells  through  distributors a line of Public Address  system  products,
       which  have  been  targeted at small to mid-sized churches,  auditoriums
       and similar customers.
           Intersegment  sales are generally priced at cost plus  a  percentage
       mark-up,  and are generally 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 statements of income.  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 73%, 82% and 76%  of  its
       revenues  from  three  customers in 2002, 2001 and  2000,  respectively.
       The Data  Communications segment derived 40% of its  net sales from  two
       customers in 2002 and 13% and 16% of its net sales from one customer  in
       2001  and  2000,  respectively.  The Company's  Musical  Instrument  and
       Audio Equipment segments are not dependent on any single customer.
           In  October  2002,  Legacy Audio, Inc. sold its manufacturing  plant
       located  in Springfield, Illinois for $285,000 (net of selling expenses)
       and  recognized  a  gain  on the sale of approximately  $7,000.   Legacy
       ceased  operations  at  this  facility effective  August  31,  2002  and
       consolidated  all  of  its  production into the Company's  manufacturing
       facility in Macungie, PA.
           Following is a summary of segmented information for 2002,  2001  and
       2000.

                                                     December 31,
                                            2002          2001         2000
       Net Sales to Unaffiliated Customers
        Musical Instruments             $24,942,925   $24,375,642  $28,057,832
        Data Communications              36,536,174    25,909,885   33,321,342
        Electronic Assemblies             4,750,143     8,382,021    8,624,199
        Audio Equipment                   1,510,306     1,822,965    2,512,835
         Total                          $67,739,548   $60,490,513  $72,516,208

       Intersegment Sales
        Musical Instruments             $   435,915   $    91,820  $   294,146
        Data Communications                    --         193,664      120,712
        Electronic Assemblies               131,540        79,651       15,577
        Audio Equipment                      88,909        87,777       35,563
         Total                          $   656,364   $   452,912  $   465,998

       Income (Loss) from Operations
        Musical Instruments             $ 2,017,527   $ 2,184,321  $ 5,029,871
        Data Communications               2,105,802    (8,284,232)  (2,063,221)
        Electronic Assemblies              (401,165)      125,000    1,284,806
        Audio Equipment                    (615,317)     (988,353)    (429,386)
         Total                          $ 3,106,847   $(6,963,264) $ 3,822,070

       Identifiable Assets
        Musical Instruments             $17,301,133   $17,664,908  $18,693,577
        Data Communications              25,868,894    19,596,306   31,011,641
        Electronic Assemblies             2,373,162     3,377,712    4,444,349
        Audio Equipment                   1,623,546     2,795,550    2,658,110
         Sub-total                       47,166,735    43,434,476   56,807,677
        General corporate assets         26,196,133    23,037,776   24,000,065
         Total                          $73,362,868   $66,472,252  $80,807,742

        Capital Expenditures
         Musical Instruments            $ 1,037,338   $   528,998  $   837,828
         Data Communications                670,320       736,538    2,297,046
         Electronic Assemblies              188,487       188,272        5,320
         Audio Equipment                      2,441         4,425       17,620
          Total                         $ 1,898,586   $ 1,458,233  $ 3,157,814

        Depreciation and Amortization
         Musical Instruments            $   759,689   $   690,084  $   683,673
         Data Communications              1,864,921     2,093,476    1,632,861
         Electronic Assemblies              126,321       113,027      120,750
         Audio Equipment                     50,581        78,311       82,212
          Total                         $ 2,801,512   $ 2,974,898  $ 2,519,496

        Income Tax Expense (Benefit)
         Musical Instruments            $ 1,240,000   $ 1,186,000  $ 1,984,000
         Data Communications                138,000    (3,565,000)  (1,156,000)
         Electronic Assemblies             (152,000)       47,000      484,000
         Audio Equipment                   (115,000)      (28,000)    (193,000)
          Total                         $ 1,111,000   $(2,360,000) $ 1,119,000

NOTE 22     Quarterly Financial Data (Unaudited)

                  First       Second       Third        Fourth
         2002    Quarter      Quarter      Quarter      Quarter      Total
Net Sales      $15,977,488  $17,403,733  $15,705,708  $18,652,619  $67,739,548
Gross Profit     6,628,428    7,158,583    5,755,644    6,233,054   25,775,709
Net Income         931,539    1,009,634      528,362      215,822    2,685,357
Earnings per Share    0.80         0.86         0.45         0.18         2.29

         2001
Net Sales      $13,259,398  $15,119,294  $15,385,870  $16,725,951  $60,490,513
Gross Profit     3,381,851    3,890,162    5,173,502    6,337,581   18,783,096
Net (Loss)
 Income         (2,625,492)  (1,565,281)    (263,425)     370,388   (4,083,810)
(Loss) Earnings
 per Share           (2.24)       (1.34)       (0.23)        0.32        (3.49)

         2000
Net Sales      $16,808,032  $18,931,735  $17,850,297  $18,926,144  $72,516,208
Gross Profit     6,953,628    7,751,695    6,891,620    7,188,549   28,785,492
Net Income         869,852    1,356,195      658,528    1,070,321    3,954,896
Earnings per Share    0.74         1.16         0.56         0.91         3.38

<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     49   Director     Since 1980
                           Meeting in 2003
Eugene Moroz (1)             Next Annual     79   Director     Since 1968
                           Meeting in 2003
Leonard W. Helfrich          Next Annual     73   Director     1964 - 1968
                           Meeting in 2003                     and 1972 to
                                                               present
Orville G. Hawk (1)          Next Annual     85   Director     Since 1989
                           Meeting in 2003
Albert F. Schuster           Next Annual     83   Director     Since 1989
                           Meeting in 2003
Martha Markowitz             Next Annual     81   Director     Since 1991
                           Meeting in 2003
Jeffrey L. Schucker (1)      Next Annual     48   Director     Since July
                           Meeting in 2003                     1996
Ernest Choquette             Next Annual     49   Director     Since April
                           Meeting in 2003                     1998
Michael F. Doyle             Next Annual     48   Director     Since April
                           Meeting in 2003                     2001


   (1)  Audit Committee member.

           (b)  Identification of Executive Officers.
                                                                 Time Period
                              Date Term                          Position
Name                           Expires       Age  Position          Held
Steven Markowitz             Next Annual     49   President       1990 to
                           Meeting in 2003                        present
Barry J. Holben              Next Annual     50   Vice President  October 1995
                           Meeting in 2003                        to present
Dwight A. Beacham            Next Annual     56   Vice President  October 1995
                           Meeting in 2003                        to present
Nathan S. Eckhart            Next Annual     39   Vice President, May 1996
                           Meeting in 2003        Treasurer,      to present
                                                  Secretary

           (c)  Identification of Certain Significant Employees.

                       Not applicable.

           (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, Barry Holben,  Dwight
                       Beacham  and Nathan Eckhart, have been employees  of
                       the Company in executive capacities for at least the
                       last five years.
                                  Mr. Moroz was employed by the Company for
                       over 50 years, having last held the position of Vice
                       President.  He retired from active employment in May
                       1998  and  continues  to  serve  on  the  Board   of
                       Directors.
                                  Mr.  Helfrich was employed by the Company
                       for  nearly  40 years as Vice President-Finance  and
                       Secretary   before  retiring  in  March   2000   and
                       continues to serve on the Board of Directors.
                                  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.
                                  Mrs.  Markowitz  is the widow  of  Jerome
                       Markowitz, the Company's founder, and she represents
                       the family's interest in the Company.
                                  Mr.  Schucker  is  a  Vice  President  at
                       National  Penn Bank.  Prior to joining the bank,  he
                       worked  as  an  investment banker at  various  firms
                       including  Managing Director with Griffin  Financial
                       Group,  President of Middle Market Capital Advisors,
                       L.L.C. (MMCA) and Vice President of Meridian Capital
                       Markets.
                                 Mr. Choquette has been a member of the law
                       firm of Stevens & Lee, Reading PA, for over 20 years
                       and   currently  serves  as  Co-Chairman  of   their
                       Corporate  Group.  Stevens & Lee serves  as  general
                       counsel to the Company.
                                  Mr.  Doyle is President of the  Company's
                       subsidiary Eastern Research, Inc.  Prior to  joining
                       ERI   in  May  of  1997,  Mr.  Doyle  had  20  years
                       experience  in  the  data  communications   industry
                       including positions at Infotron Systems, Inc., Dowty
                       Communications,  Inc., Teleos  Communications,  Inc.
                       and Madge Networks, Inc.

           (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 applicable.

           (b)  SUMMARY COMPENSATION TABLE:
                                                        Long Term
                                              Compen- Compensation All Other
                                      Annual  sation   Securities    Compen-
                                      Salary  Bonus    Underlying    sation
Name and Principal Position     Year    $       $       Options(#)      $

Steven A. Markowitz, President  2002  147,855    -           -       20,969 (1)
(Chief Executive Officer)       2001  140,616    -           -       48,739
                                2000  135,923    -           -       42,322

Dwight A. Beacham,              2002  101,918    -         4,000     12,049 (2)
Vice President - Product        2001   99,209    -           -        8,985
 Development                    2000   96,085    -           -        3,513

Barry J. Holben,                2002  104,008    -         4,000     12,049 (2)
Vice President - Sales          2001   99,964    -           -        8,985
                                2000   95,969    -           -       11,780

Nathan S. Eckhart,              2002  102,823    -         4,000      9,527 (2)
Vice President - Finance,       2001   99,586    -           -       13,699
(Treasurer and Secretary)       2000   95,241    -           -        8,308

(1)-Value  of  split  dollar life insurance policy.  See  Note  12  to  the
accompanying  Consolidated Financial Statements for additional  information
on this arrangement.
(2)-Value   of  vested  deferred  compensation  earned  under  supplemental
executive  retirement plans.  See Note 15 to the accompanying  Consolidated
Financial Statements for additional information on these arrangements.

           (c)  OPTION GRANTS IN LAST FISCAL YEAR:
                                                            Grant Date
                 Individual Grants in 2002                  Present Value

                  Number of       % of Total
                  Securities      Options                                (1)
                  Underlying      Granted to     Exercise    Expir-  Grant Date
 Name              Options        Employees        Price      ation    Present
                   Granted (#)    in Fiscal Year      $        Date    Value $

Dwight A. Beacham    4,000         33.3%          $39.00    7/25/2012  $20,000
Barry J. Holben      4,000         33.3%          $39.00    7/25/2012  $20,000
Nathan S. Eckhart    4,000         33.3%          $39.00    7/25/2012  $20,000

(1) The grant date present value of each option granted is estimated on the
grant  date using the Black-Scholes option pricing model.  See Notes 1  and
19  to  the  accompanying Consolidated Financial Statements for  additional
information.
There were no stock options exercised during 2002.

           (f)  Defined Benefit or Actuarial Plan Disclosure.

                   Estimated  annual benefit obtained from  2002  Actuarial
                   Valuation Report:

                  Steven A. Markowitz      $64,702        Age 49 (1)
                  Dwight A. Beacham        $31,937        Age 56 (1)
                  Barry J. Holben          $36,234        Age 50 (1)
                  Nathan S. Eckhart        $53,180        Age 39 (1)

                 (1)  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  $450  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.
                  The Company has established an Executive Bonus Program in
                  the  form of executive supplemental retirement plans  for
                  the  benefit of Mr. Beacham, Mr. Holben and Mr.  Eckhart.
                  These    plans   provide   for   discretionary    Company
                  contributions, which vest over a five year period, accrue
                  interest  at  the prime rate, not to exceed 9%,  and  are
                  payable upon the executives death or retirement.

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

                 (1)   Nathan    S. Eckhart, Vice President, Treasurer and
                       Secretary and  Ernest J. Choquette, Director of the
                       Company,  serve  on  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 five percent  of
             any   class  of  such  securities.   Class  A  Common   Shares
             constitute   the   only   securities   with   voting   rights.
             Information as of February 28, 2003.
                                          Amount and
                                          Nature of
            Names and           Title of  Beneficial   % of
            Addresses             Class   Ownership    Class
            Jerome Markowitz        A     81,531       97.22%
            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, 2002.

                                                    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)               1.25%
                81,531*                 (2) (4)    97.22 %
                          242,016*      (2) (4)              22.28%

Eugene Moroz                6,290       (1) (3) as
                                        to 6,290
                            6,000       (2) (4) as
                                        to 6,000              1.13%

Leonard W. Helfrich           293       (2) (4)                .03%

Orville G. Hawk                50       (2) (4)                .005%

Martha Markowitz           20,866       (1) (3)               1.92%
                81,531*                 (2) (4)    97.22 %
                          242,016*      (2) (4)              22.28%


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

     7            81,589**  289,077**               97.29%** 26.61%


              (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 is 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 applicable.
      (d)       Securities  authorized for issuance under equity  compensation
                plans:

     Plan category     Number of           Weighted-average    Number of
                       securities to be    exercise price of   securities
                       issued upon         outstanding         remaining
                       exercise of         options, warrants   available for
                       outstanding         and rights          future issuance
                       options, warrants                       under equity
                       and rights                              compensation
                                                               plans (excluding
                                                               securities
                                                               reflected in
                                                               column (a))
                          (a)                 (b)                (c)
     Equity
     compensation
     plans approved
     by security
     holders             12,000             $39.00              88,000

     Equity
     compensation
     plans not
     approved by
     security
     holders               --                 --                  --

     Total               12,000             $39.00              88,000

Item 13.    Certain Relationships and Related Transactions

            See Note 12 to the Consolidated Financial Statements concerning
            an  agreement  between  the Company  and  Martha  Markowitz,  a
            Director of the Company.
            Ernest Choquette, a member of the Company's Board of Directors,
            is  a principal in firms providing legal and financial advisory
            services.   Legal fees paid were $45,851, $75,094 and  $131,543
            in  2002, 2001 and 2000, respectively.  Financial advisory fees
            paid  were $6,000, $11,753 and $63,546 in 2002, 2001 and  2000,
            respectively.

Item 14.    Controls and Procedures

            Within  ninety days prior to filing this report,  the  Company,
            under  the  supervision  and  with  the  participation  of  the
            Company's management, including the Chief Executive Officer and
            the Chief Financial Officer, evaluated the effectiveness of the
            design  and operation of the Company's disclosure controls  and
            procedures,  which  are  designed to insure  that  the  Company
            records,  processes, summarizes and reports  in  a  timely  and
            effective  manner the information required to be  disclosed  in
            the  reports  filed  with of submitted to  the  Securities  and
            Exchange  Commission.  Based on that evaluation, the  Company's
            Chief  Executive Officer and Chief Financial Officer  concluded
            that  the  Company's  disclosure controls  and  procedures  are
            effective.  There were no significant changes to the  Company's
            internal  controls or in other factors that could significantly
            affect   these  controls  subsequent  to  the  date  of   their
            evaluation.

                                  PART IV
Item 15.    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,  2002
                       and 2001.
                      Consolidated Statements of Income for the years ended
                       December 31, 2002, 2001, and 2000.
                      Consolidated Statement of Stockholders'  Equity  for
                       the years ended December 31, 2002, 2001, and 2000.
                      Consolidated Statements of Cash Flows for the  years
                       ended December 31, 2002, 2001, and 2000.
                      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
                       Schedule II.  Valuation and Qualifying Accounts  for
                        the three years ended December 31, 2002.
                       Schedules   other  than   those
                        listed  above  are  omitted  because  they   are
                        either  not required, are not applicable or  the
                        required   information  is  presented   in   the
                        Consolidated Financial Statements.

                 (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(7)   Allen Organ Company Stock Option Plan
                      10.2(3)   Agreement of Amendment between the Company
                                and Martha Markowitz
                      10.3(5)   Executive Bonus Program  and Endorsement
                                Split  Dollar  Life   Insurance Agreements
                                between the Company  and  Dwight A.  Beacham,
                                Nathan S. Eckhart and Barry  J. Holben
                      21        Subsidiaries of the registrant
                      99.1(6)   Audit Committee Charter
                      99.2      Certification  Pursuant  to   18
                                U.S.C. Section 1350, as Adopted Pursuant  to
                                Section  906  of the Sarbanes-Oxley  Act  of
                                2002
                      99.3      Certification  Pursuant  to   18
                                U.S.C. Section 1350, as Adopted Pursuant  to
                                Section  906  of the Sarbanes-Oxley  Act  of
                                2002

                     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 Quarterly Report on Form 10-Q for the
                          period ended September 30, 1999.
                     6.   Incorporated by reference to the exhibit filed with
                          the Registrants Annual Report on Form 10-K for the
                          year ended December 31, 2000.
                     7.   Incorporated by reference to the exhibit filed with
                          the Registrants Quarterly Report on Form 10-Q for the
                          period ended September 30, 2002.

                 (b)   Reports on Form 8-K.  None filed during  the  fourth
                       quarter of 2002.
<PAGE>

SIGNATURES

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


                                     ALLEN ORGAN COMPANY



Date:  March 24, 2003                /s/STEVEN A. MARKOWITZ
                                     Steven A. Markowitz
                                     Chief Executive Officer,
                                     President and Director




Date:  March 24, 2003                /s/NATHAN S. ECKHART
                                     Nathan S. Eckhart
                                     Vice President-Finance,
                                     Chief Financial and
                                     Principal Accounting Officer




Date:  March 24, 2003                /s/LEONARD W. HELFRICH
                                     Leonard W. Helfrich
                                     Director



Date:  March 24, 2003                /s/MARTHA MARKOWITZ
                                     Martha Markowitz
                                     Director
<PAGE>
                   ALLEN ORGAN COMPANY AND SUBSIDIARIES
  Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven Markowitz, certify that:
1.   I have reviewed this annual report on Form 10-K of Allen Organ
  Company;
2.   Based on my knowledge, this annual report does not contain any untrue
  statement of a material fact or omit to state a material fact necessary to
  make the statements made, in light of the circumstances under which such
  statements were made, not misleading with respect to the period covered by
  this annual report;
3.   Based on my knowledge, the financial statements, and other financial
  information included in this annual report, fairly present in all material
  respects the financial condition, results of operations and cash flows of
  the registrant as of, and for, the periods presented in this annual report;
4.   The registrant's other certifying officers and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined
  in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
   a)designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within
      those entities, particularly during the period in which this annual
      report is being prepared;
   b)evaluated the effectiveness of the registrant's disclosure controls
      and procedures as of a date within 90 days prior to the filing date
      of this annual report (the "Evaluation Date"); and
   c)presented in this annual report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;
5.   The registrant's other certifying officers and I have disclosed, based
  on our most recent evaluation, to the registrant's auditors and the audit
  committee of registrant's board of directors (or persons performing the
  equivalent function):
   a)all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have
      identified for the registrant's auditors any material weaknesses in
      internal controls; and
   b)any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's
      internal controls; and
6.   The registrant's other certifying officers and I have indicated in
  this annual report whether or not there were significant changes in
  internal controls or in other factors that could significantly affect
  internal controls subsequent to the date of our most recent evaluation,
  including any corrective actions with regard to significant deficiencies
  and material weaknesses.


/s/STEVEN A. MARKOWITZ
Steven Markowitz
Chief Executive Officer
March 24, 2003

<PAGE>

                   ALLEN ORGAN COMPANY AND SUBSIDIARIES
  Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Nathan S. Eckhart, certify that:
1.   I have reviewed this annual report on Form 10-K of Allen Organ
  Company;
2.   Based on my knowledge, this annual report does not contain any untrue
  statement of a material fact or omit to state a material fact necessary to
  make the statements made, in light of the circumstances under which such
  statements were made, not misleading with respect to the period covered by
  this annual report;
3.   Based on my knowledge, the financial statements, and other financial
  information included in this annual report, fairly present in all material
  respects the financial condition, results of operations and cash flows of
  the registrant as of, and for, the periods presented in this annual report;
4.   The registrant's other certifying officers and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined
  in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
   a)designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within
      those entities, particularly during the period in which this annual
      report is being prepared;
   b)evaluated the effectiveness of the registrant's disclosure controls
      and procedures as of a date within 90 days prior to the filing date
      of this annual report (the "Evaluation Date"); and
   c)presented in this annual report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;
5.   The registrant's other certifying officers and I have disclosed, based
  on our most recent evaluation, to the registrant's auditors and the audit
  committee of registrant's board of directors (or persons performing the
  equivalent function):
   a)all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have
      identified for the registrant's auditors any material weaknesses in
      internal controls; and
   b)any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's
      internal controls; and
6.   The registrant's other certifying officers and I have indicated in
  this annual report whether or not there were significant changes in
  internal controls or in other factors that could significantly affect
  internal controls subsequent to the date of our most recent evaluation,
  including any corrective actions with regard to significant deficiencies
  and material weaknesses.


/s/NATHAN S. ECKHART
Nathan S. Eckhart
Chief Financial Officer
March 24, 2003
<PAGE>

     Allen Organ Company and Subsidiaries

     Schedule II - Valuation and Qualifying Accounts

     For the Years Ended December 31, 2002, 2001 and 2000



                                            Additions
                                 Additions  Charged      Write
                    Balance at   Charged      to          Offs      Balance
                    Beginning     to         Other        And       at End
    Description      Of Year     Expense    Accounts   Recoveries   Of Year


  Year Ended
   December 31, 2002
  Allowance for
   Doubtful
    Accounts       $ 350,492      $234,117    $   -     $ (82,400) $  502,209
  Valuation
   Allowance
   Deferred Tax
   Asset           1,000,000       170,000        -         -       1,170,000

  Year Ended
   December 31, 2001
  Allowance for
   Doubtful
   Accounts        $ 428,791      $ 96,259    $   -     $(174,558) $  350,492
  Valuation
   Allowance
   Deferred Tax
   Asset             100,000       900,000        -          -      1,000,000

  Year Ended
   December 31, 2000
  Allowance for
   Doubtful
   Accounts        $ 300,823      $174,034    $   -     $ (46,066) $  428,791
  Valuation
   Allowance
   Deferred Tax
   Asset             194,000            -         -       (94,000)    100,000

<PAGE>