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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Under Section 13 or 15(D) of The Securities Exchange
Act of 1934 for Quarter Ended September 30, 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) (I.R.S. 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
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 _____
Number of shares outstanding of each of the issuer's classes of common
stock, as of November 06, 2002:
Class A - Voting 83,864 shares
Class B - Non-voting 1,086,196 shares
ALLEN ORGAN COMPANY
INDEX
Part I Financial Information
Item 1.Financial Statements
Consolidated Condensed Statements of Income for the nine months
ended September 30, 2002 and 2001
Consolidated Condensed Balance Sheets
at September 30, 2002 and December 31, 2001
Consolidated Condensed Statements of Cash Flows for the nine
months ended September 30, 2002 and 2001
Notes to Consolidated Condensed Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
Item 4.Controls and Procedures
Part II Other Information
Item 4.Submission of Matters to a Vote of Security Holders
Item 6.Exhibits and Reports on Form 8-K
Signatures
Certifications
Exhibits
PART I FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
ALLEN ORGAN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
For the 3 Months Ended: For the 9 Months Ended:
9/30/2002 9/30/2001 9/30/2002 9/30/2001
Net Sales $15,705,708 $15,385,870 $49,086,929 $43,764,562
Cost and Expenses
Costs of sales 9,950,064 10,212,368 29,544,274 31,319,047
Selling, general and
administrative 3,318,095 3,628,693 10,574,900 11,850,598
Research and
development 1,873,589 1,919,752 5,876,240 6,274,846
Costs to close
Southampton plant -- -- -- 530,000
Impairment of VIR, Inc.
goodwill -- -- -- 1,400,000
Total Costs and
Expenses 15,141,748 15,760,813 45,995,414 51,374,491
Income (Loss) from
Operations 563,960 (374,943) 3,091,515 (7,609,929)
Other Income and (Expense)
Interest and other income 219,920 201,876 461,121 911,448
Interest expense -- -- -- (315,084)
Loss on sale of property,
plant and equipment (29,518) (175,358) (25,101) (175,358)
Minority interests in
consolidated subsidiaries -- -- -- (33,275)
Total Other Income and
Expense 190,402 26,518 436,020 387,731
Income (Loss) Before Taxes 754,362 (348,425) 3,527,535 (7,222,198)
Income Tax Provision
(Benefit) 226,000 (85,000) 1,058,000 (2,768,000)
Net Income (Loss) $ 528,362 $ (263,425) $ 2,469,535 $ (4,454,198)
Basic and Diluted Earnings
Per Share (Loss) $0.45 $(0.23) $2.11 $(3.81)
Weighted Average Shares
Used in Per Share
Calculation 1,170,235 1,170,505 1,170,235 1,170,505
Dividends Per Share-Cash $0.14 $0.14 $0.42 $0.42
Total Comprehensive
Income (Loss) $ 522,439 $ (190,231) $ 2,499,613 $ (4,578,269)
See accompanying notes.
ALLEN ORGAN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
September 30, Dec 31,
ASSETS 2002 2001
(Unaudited) (Audited)
Current Assets
Cash $ 5,462,989 $ 4,449,998
Investments Including Accrued Interest 17,192,124 11,609,416
Accounts Receivable, net of reserves of
$500,720 and $350,492, respectively 7,819,526 9,947,842
Inventories:
Raw Materials 5,132,829 5,515,815
Work in Process 5,846,722 6,249,775
Finished Goods 4,545,166 4,720,318
Total Inventories 15,524,717 16,485,908
Income Taxes Prepaid and Receivable 574,293 1,106,214
Prepaid Expenses 441,594 386,421
Deferred Income Tax Benefits 1,544,430 1,561,138
Total Current Assets 48,559,673 45,546,937
Property, Plant and Equipment 27,357,137 26,600,965
Less Accumulated Depreciation (15,979,677) (15,109,416)
Total Property, Plant and Equipment 11,377,460 11,491,549
Other Assets
Inventory Held for Future Service 812,625 811,249
Note Receivable 2,397,291 1,997,107
Cash Value of Life Insurance 2,213,982 2,173,566
Deferred Income Tax Benefits 2,022,725 2,022,725
Goodwill, net 194,523 194,523
Intangible Assets, net 1,764,464 2,218,504
Other Assets 16,092 16,092
Total Other Assets 9,421,702 9,433,766
Total Assets $69,358,835 $66,472,252
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts Payable $ 2,367,713 $ 2,750,251
Other Accrued Expenses 2,713,470 1,973,154
Customer Deposits 3,009,541 2,978,023
Total Current Liabilities 8,090,724 7,701,428
Noncurrent Liabilities
Deferred and Other Noncurrent Liabilities 846,859 707,769
Accrued Pension Costs 2,090,725 1,748,040
Total Noncurrent Liabilities 2,937,584 2,455,809
Total Liabilities 11,028,308 10,157,237
STOCKHOLDERS' EQUITY
Common Stock 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 12,921,577 12,903,610
Retained Earnings
Balance, Beginning 55,237,713 59,977,002
Net Income 2,469,535 (4,083,810)
Dividends - Cash 2002 and 2001 (491,498) (655,479)
Balance, End 57,215,750 55,237,713
Accumulated Other Comprehensive Income (1,344,222) (1,374,300)
Sub-total 70,331,098 68,305,016
Treasury Stock
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 58,330,527 56,315,015
Total Liabilities and Stockholders' Equity $69,358,835 $66,472,252
See accompanying notes.
ALLEN ORGAN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the 3 Months Ended: For the 9 Months Ended:
9/30/2002 9/30/2001 9/30/2002 9/30/2001
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ 528,362 $ (263,425) $2,469,535 $(4,454,198)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities
Depreciation and amortization 691,750 655,515 2,111,205 2,257,931
Deferred income tax benefits (2,323) 39,246 16,708 69,147
Loss from impairment of
VIR, Inc. goodwill,
included in operating
expenses -- -- -- 1,400,000
Minority interest in
consolidated subsidiaries -- -- -- 33,275
Change in assets and liabilities
Accounts receivable 1,876,816 (2,787,901) 2,128,316 (504,562)
Inventories 470,815 1,329,979 959,815 2,389,393
Income taxes prepaid
and receivable 810,699 (161,762) 531,921 (3,145,505)
Prepaid expenses 108,820 157,945 (55,173) (242,795)
Prepaid pension costs -- 38,047 -- 7,080
Accounts payable (216,733) 706,004 (382,538) (862,762)
Accrued expenses 315,319 11,094 740,316 (653,057)
Customer deposits (37,721) 24,982 31,518 26,257
Accrued Pension Costs 169,242 -- 342,685 --
Deferred and other noncurrent
liabilities 46,371 34,853 139,090 104,559
Net Cash Provided by (Used
In) Operating Activities 4,761,417 (215,423) 9,033,398 (3,575,237)
CASH FLOW FROM INVESTING
ACTIVITIES
Additions to goodwill and
intangible assets (27,000) -- (29,780) (156,243)
Increase in note receivable -- -- (400,184) (399,058)
Net additions to plant and
equipment (566,046) (63,479) (1,513,296) (1,052,376)
Increase in cash value of
life insurance (40,416) (47,783) (40,416) (47,783)
Net (purchase) or sale of
short-term investments (7,348,328) 208,801 (5,552,630) 12,732,933
Net Cash (Used in) Provided
by Investing Activities (7,981,790) 97,539 (7,536,306) 11,077,473
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from bank loans -- -- -- 3,300,000
Repayment of bank loans -- -- -- (12,000,000)
Proceeds from sale of
subsidiary stock 15,927 -- 17,967 96,333
Reacquired Class B common
shares (10,570) -- (10,570) (6,891)
Dividends paid in cash (163,808) (163,865) (491,498) (491,615)
Subsidiary company stock
reacquired from
minority shareholders -- (350,603) -- (400,053)
Net Cash Used in Financing
Activities (158,451) (514,468) (484,101) (9,502,226)
NET (DECREASE) INCREASE IN CASH (3,378,824) (632,352) 1,012,991 (1,999,990)
CASH, BEGINNING 8,841,813 1,344,730 4,449,998 2,712,368
CASH, ENDING $5,462,989 $ 712,378 $5,462,989 $ 712,378
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid (refunded) for:
Income Taxes $(584,699)$ 77,777 $ 526,079 $ 319,777
Interest $ -- $ -- $ -- $ 315,084
See accompanying notes.
ALLEN ORGAN COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.Interim Financial Statements
The results of operations for the interim periods presented in this
report are not necessarily indicative of results to be expected for the
fiscal year. In the opinion of management, the information contained
herein reflects all adjustments considered necessary for a fair
presentation of the interim financial statements. All such adjustments
are of a normal recurring nature.
Certain notes and other information have been condensed or omitted from
the interim financial statements presented in the Quarterly Report on
Form 10-Q. Therefore, these financial statements should be read in
conjunction with the Company's 2001 Annual Report on Form 10-K.
2.New Accounting Standards
Effective January 1, 2002, the Company adopted the following Statements
issued by the Financial Accounting Standards Board (FASB) neither of
which had a material affect on the Company's financial statements.
SFAS 142, "Goodwill and Other Intangible Assets" - replaces the
requirement to amortize intangible assets with indefinite lives and
goodwill with a requirement for an impairment test. The amount of
goodwill amortization included in the operating expenses for the
three and nine months ended September 30, 2001 was $6,732 and
$71,546, respectively.
SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" - Establishes one accounting model, used for long-lived
assets to be held and used, disposed of by sale or otherwise
disposed.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or
Disposal Activities." SFAS 146 addresses the recognition, measurement
and reporting of costs associated with exit and disposal activities,
including restructuring activities. SFAS 146 is effective for exit or
disposal activities that are initiated after December 31, 2002. Adoption
of SFAS 146 is not expected to have an impact on the consolidated
financial position or results of operations of the Company.
3.Stock Option Plan
On July 25, 2002, the Company adopted the Allen Organ Company Stock
Option Plan to encourage stock ownership by certain key employees.
During the third quarter of 2002, the Company granted options to purchase
12,000 shares of the Company's Class B stock, at the fair market value on
the date of grant. These options were not included in computing earning
per share because their effect was antidilutive.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources:
Cash flows from operating activities increased during the three and nine
months ended September 30, 2002 when compared to the same period in 2001,
due to higher operating income, income tax refunds and decreases in accounts
receivable in the Data Communications segment.
Cash flows from investing activities were used to purchase short term
investments and property and equipment during the nine months ended
September 30, 2002, including approximately $900,000 in the Musical
Instruments segment, $100,000 in the Electronic Assemblies segment and
$500,000 in the Data Communications segment. For the nine months ended
September 30, 2001 cash flows from investing activities were provided by the
liquidation of short term investments which were used to repay bank loans.
Results of Operations:
Sales and Operating Income
For the 3 Months Ended: For the 9 Months Ended:
9/30/2002 9/30/2001 9/30/2002 9/30/2001
Net Sales to
Unaffiliated Customers
Musical Instruments $ 5,778,976 $ 5,976,634 $18,701,819 $18,208,419
Data Communications 8,130,042 7,960,398 25,654,556 16,770,366
Electronic Assemblies 1,486,132 1,134,936 3,582,948 7,401,992
Audio Equipment 310,558 313,902 1,147,606 1,383,785
Total $15,705,708 $15,385,870 $49,086,929 $43,764,562
Intersegment Sales
Musical Instruments $ 133,553 $ 10,260 $ 298,699 $ 51,087
Data Communications -- 136 -- 193,574
Electronic Assemblies 49,063 -- 131,540 --
Audio Equipment 13,151 22,081 71,385 41,482
Total $ 195,767 $ 32,477 $ 501,624 $ 286,143
Income (Loss) from Operations
Musical Instruments $ 154,023 $ 1,170,937 $ 1,799,900 $ 1,846,125
Data Communications 525,480 (972,644) 1,997,708 (9,006,780)
Electronic Assemblies 50,254 (175,962) (298,208) 257,670
Audio Equipment (165,797) (397,274) (407,885) (706,944)
Total $ 563,960 $ (374,943) $ 3,091,515 $(7,609,929)
Musical Instruments Segment
Sales decreased $197,658 and increased $493,400 respectively for the
three and nine months ended September 30, 2002 when compared to the same
periods in 2001. While the order rate for the first nine months of 2002 was
slightly lower than the same period in 2001, sales for the first nine months
of 2002 were higher due to shipments made against the order backlog. This
segment has been negatively affected by lower stock market valuations that
affect consumer confidence as well as their donations to religious
institutions. Religious institutions are a primary market for this
segment's products.
The gross profit percentage decreased to 23% and 30% respectively during
the three and nine months ended September 30, 2002 from 40% and 31% in the
same periods of 2001. These decreases are due to higher operating costs
including employee pension expense and lower absorption of fixed costs
related to planned decreases in the level of inventory necessitating
slightly lower levels of production.
Selling, general and administrative, research and development expenses
increased slightly during the three and nine months ended September 30, 2002
when compared to the same periods in 2001.
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
Sales increased $169,644 and $8,884,190 respectively, for the three and
nine months ended September 30, 2002 when compared to the same periods in
2001. The 2002 sales increased due to new product introductions and from
redirection of the Company's sales and marketing efforts away from CLECs to
other Data Communications markets.
Gross profit margins increased to 51.3% and 52.8% respectively during the
three and nine months ended September 30, 2002 from 36.7% and 34.3% during
the same periods in 2001 due to the higher sales volume over which to absorb
fixed costs and changes in product mix. The gross margins for the three and
nine months ended September 30, 2001 were negatively affected by $819,000
and $1,539,000 respectively, of additional inventory valuation adjustments
recorded at VIR, Inc. (VIR) for slow moving and obsolete inventory
associated with discontinued product lines.
Sales and marketing expenditures decreased approximately $218,000 (12%)
and $685,000 (12%) during the three and nine months ended September 30, 2002
when compared to the same periods in 2001 primarily due to cost reduction
programs.
General and administrative expenses for the three months ended September
30, 2002 were approximately equal to the same period in 2001 and decreased
approximately $300,000 (12%) during the nine months ended September 30, 2002
when compared to the same period in 2001. Research and development
expenditures decreased approximately $103,000 (6%) and $386,000 (7%)
respectively for the three and nine months ended September 30, 2002 when
compared to the same periods in 2001. These decreases are primarily due to
the combination of the VIR operations into Eastern Research, Inc. (ERI)
during 2001 and an overall reduction in personnel.
The combination of increased sales, higher gross margins and lower
operating costs resulted in operating income of approximately $525,000 and
$1,997,000, respectively for the three and nine months ended September 30,
2002 for this segment compared to large operating losses in the same periods
of 2001. The 2001 operating losses were also negatively affected by
inventory valuation adjustments, plant closing costs, and a charge to write
down the goodwill and intangible assets of VIR totaling $819,000 and
$3,469,000 for the three and nine months ended September 30, 2001,
respectively. Future sales visibility remains limited throughout the Data
Communications market that ERI serves with many companies that buy Data
Communications equipment continuing to lower their capital expenditure
spending 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 increased $351,196 during the third quarter and decreased
$3,819,044 during the nine months ended September 30, 2002 when compared to
the same periods in 2001. The increase in sales for the three months ended
September 30, 2002 is due to higher order rates from some existing customers
and the addition of new customers. The decrease in sales for the nine
months was due to the severe economic slowdown that affected the Company's
contract manufacturing customers. Future sales visibility remains limited
for this segment.
Gross profit margin for the third quarter was 8.7% and for the nine
months ended September 30, 2002 was a loss of approximately $(44,000) (1%).
Gross profit margins for the three and nine months ended September 30, 2001
were a loss of approximately $(60,000) (5%) and a gross profit of 8%
respectively.
Selling, general and administrative expenses for the three and nine
months ended September 30, 2002 decreased slightly when compared to the same
periods in 2001.
Audio Equipment Segment
Sales decreased $3,344 and $236,179 for the three and nine months ended
September 30, 2002 when compared to the same periods in 2001. Gross profit
margins were 23% and 24% respectively in the three and nine months ended
September 30, 2002.
Selling, general and administrative costs decreased during the three and
nine months ended September 30, 2002 when compared to the same period in
2001.
Legacy Audio has historically sold its products through a direct
marketing program. This method of distribution limited Legacy's ability to
penetrate the broader market. Legacy has been implementing a program 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,
Legacy has been shifting marketing resources to the new method of
distribution. This results in Legacy receiving a lower price per sale to
allow the dealers to realize a retail markup. The lower product prices that
Legacy receives are in part offset by eliminating Legacy's direct marketing
expense that is not required in the new sales model. The general economic
slowdown has affected the sales for certain consumer goods including the
Company's Legacy products.
Legacy's speaker cabinets are now manufactured at the Company's Macungie,
PA plant. During July 2002 Legacy's sales offices were re-located to the
Macungie facility. The effect of this consolidation was immaterial.
Other Income and Expense
Investment income increased slightly during the three months ended
September 30, 2002 when compared to the same periods in 2001 due to higher
invested balances and decreased during the nine months ended September 30,
2002 due to lower invested balances and lower rates of return available on
invested funds.
Income Taxes
The tax provision for the three and nine months ended September 30, 2002
are based on the estimated effective tax rate for the year, which is less
than the statutory rate due to tax credits and exempt income.
Factors that May Affect Operating Results
The statements contained in this report on Form 10-Q that are not purely
historical are forward looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, including statements regarding the Company's expectations, hopes,
intentions or strategies regarding the future. Forward looking statements
include: statements regarding future products or product development;
statements regarding future research and development spending and the
Company's marketing and product development strategy, statements regarding
future production capacity. All forward looking statements included in this
document are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward
looking statements. Readers are cautioned not to place undue reliance on
these forward looking statements, which reflect management's opinions only
as of the date hereof. Readers should carefully review the risk factors
described in other documents the Company files from time to time with the
Securities and Exchange Commission, including the Annual Report on Form 10-
K. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No change from information disclosed in the Company's 2001 annual report
on form 10-K.
ITEM 4. CONTROLS AND PROCEDURES.
Within ninety days prior to the filing of this Report, the Company's
Chief Executive Officer and 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 or
submitted to the Securities and Exchange Commission. Based upon this
evaluation, they concluded that, as of the date of the evaluation, the
Company's disclosure controls are effective. Since the date of this
evaluation, there have been no significant changes in the Company's internal
controls or in other factors that could significantly affect those controls.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Special Meeting: July 25, 2002
(b) In addition to the waiver of reading of the minutes of the
prior meeting, the shareholders ratified the adoption of the Allen
Organ Company Stock Option Plan. All resolutions were adopted by
the vote of all shareholders present, in person or proxy.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
10.1 Allen Organ Company Stock Option Plan
99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) No reports on Form 8-K were filed during the quarter
ended September 30, 2002.
SIGNATURES
Pursuant to the requirements 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
(Registrant)
Date:November 7, 2002 /s/STEVEN MARKOWITZ
Steven Markowitz, President and Chief
Executive Officer
Date:November 7, 2002 /s/NATHAN S. ECKHART
Nathan S. Eckhart, Vice President-Finance,
Chief Financial and Principal Accounting
Officer
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 quarterly report on Form 10-Q of Allen Organ
Company;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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 quarterly
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 quarterly report (the "Evaluation Date"); and
c)presented in this quarterly 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
quarterly 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 MARKOWITZ
Steven Markowitz
Chief Executive Officer
November 7, 2002
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 quarterly report on Form 10-Q of Allen Organ
Company;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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 quarterly
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 quarterly report (the "Evaluation Date"); and
c)presented in this quarterly 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
quarterly 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
November 7, 2002