<PAGE>   1





                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                              --------------------

                                    FORM 10-Q

               Quarterly Report Pursuant to section 13 or 15(d) of
                     The Securities and Exchange Act of 1934
                              --------------------

For the Quarter ended                               Commission File Number
   March 31, 2001                                          0-14903


                          Baldwin Piano & Organ Company
             (Exact name of registrant as specified in its charter)


           Delaware                                            31-1091812
(State or other jurisdiction of                               (IRS Employer
 incorporation or organization)                             Identification No.)


4680 Parkway Drive, Suite 200
Mason, Ohio  45040-7198
(Address of Principal Executive Offices)    (Zip Code)


Registrant's telephone number, including area code (513) 754-4500



         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
   ---

         The number of shares of the Common Stock outstanding of Baldwin Piano &
Organ Company, as of May 1, 2001 is 3,462,826.


<PAGE>   2


                          BALDWIN PIANO & ORGAN COMPANY

                                      INDEX

Number
------
  Page
  ----

PART I.    FINANCIAL INFORMATION

      Item 1.  Financial Statements
           Unaudited Condensed Consolidated Balance Sheets as of
                March 31, 2001 and December 31, 2000 ....................    3
           Unaudited Condensed Consolidated Statements of Operations
                for the three months ended
                      March 31, 2001 and 2000 ...........................    4
           Unaudited Condensed Consolidated Statements of Cash
                Flows for the three months ended
                      March 31, 2001 and 2000 ...........................    5
           Notes to Unaudited Condensed Consolidated Financial
                Statements, March 31, 2001 ..............................    6

      Item 2.   Management's Discussion and Analysis of Financial
                         Condition and Results of Operations ............    9

      Item 3.   Quantitative and Qualitative Disclosures About
                         Market Risk ....................................   12

PART II.   OTHER INFORMATION

      Item 1.   Legal Proceedings .......................................   13

      Item 2.   Changes in Securities and Use of Proceeds ...............   13

      Item 3.   Defaults upon Senior Securities .........................   13

      Item 4.   Submission of Matters to a Vote
                           of Security Holders ..........................   13

      Item 5.   Other Information .......................................   13

      Item 6.   Exhibits and Reports on Form 8-K ........................   14

      Signatures ........................................................   16

      Exhibit Index .....................................................   17



                                       2
<PAGE>   3


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands of dollars)

<TABLE>
<CAPTION>
                                                      March 31,     December 31,
ASSETS ..........................................       2001            2000
                                                      ---------      ---------
<S>                                                      <C>             <C>
Current assets:
      Cash ......................................     $     194      $     366
      Receivables, net ..........................        11,217          9,375
      Installment receivables retained ..........         3,549          4,027
      Inventories ...............................        39,524         43,567
      Deferred income taxes .....................         2,191         13,007
      Other current assets ......................         2,472          2,466
      Net assets of discontinued
           operations ...........................             0          8,700
                                                      ---------      ---------
                Total current assets ............        59,147         81,508
Property, plant and equipment, net ..............        15,993         17,525
Deferred income taxes ...........................        14,107          1,844
Other assets ....................................         8,296          6,860
                                                      ---------      ---------
                Total assets ....................     $  97,543      $ 107,737
                                                      =========      =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
      Accounts payable ..........................     $  11,180      $  11,951
      Current portion of long-term debt .........        34,308          4,416
      Income taxes payable ......................             0              0
      Accrued liabilities .......................        11,861          9,693
                                                      ---------      ---------
                Total current liabilities .......        57,349         26,060
Long-term debt, less current portion ............             0         36,383
Other liabilities ...............................         1,928          1,975
                                                      ---------      ---------
                Total liabilities ...............        59,277         64,418
                                                      ---------      ---------

Shareholders' equity:
      Common stock ..............................            42             42
      Additional paid-in capital ................        12,747         12,738
      Accumulated other comprehensive loss ......          (694)          (425)
      Retained earnings .........................        32,667         37,460
                                                      ---------      ---------
                                                         44,762         49,815
      Less cost of treasury shares ..............        (6,496)        (6,496)
                                                      ---------      ---------
                Total shareholders' equity ......        38,266         43,319
                                                      ---------      ---------
                Total liabilities and
                   shareholders' equity .........     $  97,543      $ 107,737
                                                      =========      =========
</TABLE>

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



                                       3
<PAGE>   4


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except net earnings per share)

<TABLE>
<CAPTION>
                                                Three months ended March 31,
                                                ----------------------------
                                                     2001        2000
                                                     ----        ----

<S>                                                <C>         <C>
Net sales ......................................   $ 15,637    $ 19,861
Cost of goods sold .............................     14,177      17,767
                                                   --------    --------
            Gross profit .......................      1,460       2,094

Other operating (expense) income, net ..........     (2,541)        167
                                                   --------    --------
                                                     (1,081)      2,261

Operating expenses:
      Selling, general and administrative ......      4,673       4,834
      Provision for doubtful accounts ..........         90          85
                                                   --------    --------
           Operating loss ......................     (5,844)     (2,658)

Interest expense ...............................      1,102         700
                                                   --------    --------
           Loss before income taxes ............     (6,946)     (3,358)

Income taxes ...................................      2,153       1,264
                                                   --------    --------

Net loss from continuing operations ............     (4,793)     (2,094)

Discontinued operations:
      Income from operations, net of tax .......          0         461
      Gain on sales, net of tax ................          0         725
                                                   --------    --------
           Net loss ............................   $ (4,793)   $   (908)
                                                   ========    ========


Earnings (loss) per share:

Basic
Loss from continuing operations ................   $  (1.38)   $  (0.60)
Earnings from discontinued operations ..........          -         .34
                                                   --------    --------
Net loss .......................................   $  (1.38)   $  (0.26)
                                                   ========    ========

Diluted
Loss from continuing operations ................   $  (1.38)   $  (0.60)
Earnings from discontinued operations ..........          -         .34
                                                   --------    --------
Net loss .......................................   $  (1.38)   $  (0.26)
                                                   ========    ========
Weighted average number of common shares .......      3,463       3,463
Weighted average number of common and
      common equivalent shares .................      3,463       3,463
                                                   ========    ========
</TABLE>


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



                                       4
<PAGE>   5


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)


                                                   Three months ended March 31,
                                                   ----------------------------
INCREASE (DECREASE) IN CASH                              2001         2000
---------------------------                           --------    --------
Cash flows from continuing operating activities
     Net earnings (loss) from continuing
     operations ..................................... $ (4,793)   $ (2,094)
     Adjustments to reconcile net earnings
        (loss) to net cash provided by
        (used in) operating activities:
        Depreciation / amortization .................      869         829
        Provision for doubtful accounts .............       90          85
        Deferred income taxes .......................   (1,447)        831
        Change in assets and liabilities -
           Receivables, net .........................   (1,931)     (1,164)
           Installment receivables retained .........      478       1,220
           Inventories ..............................    4,044      (6,612)
           Other current assets .....................       (8)        566
           Other assets .............................     (776)        524
           Accounts payable, accrued and
           other liabilities ........................    1,105         (55)
           Income taxes payable .....................        0        (995)
                                                      --------    --------
Net cash used in continuing operating
   activities .......................................   (2,369)     (6,865)
                                                      --------    --------
   Discontinued operations:
     Income .........................................        0         461
     Adjustment to derive cash flows from
       operating activities .........................        0          (0)
                                                      --------    --------
Net cash provided by
   discontinued operations ..........................        0         461
                                                      --------    --------
Net operating activities ............................   (2,369)     (6,404)
                                                      --------    --------
Cash flows from investing activities:
   Additions to plant, property and equipment .......      (12)        (39)
   Proceeds from sale of CE assets ..................    8,700           0
   Net proceeds from sale of Retail Financing .......        0      33,083
                                                      --------    --------
Net cash provided by (used in) continuing
   operating activities .............................    8,688      33,044
                                                      --------    --------
Cash flows from financing activities:
   Repayment of long-term debt ......................   (6,491)    (20,230)
                                                      --------    --------
Net cash used in continuing operations ..............   (6,491)    (20,230)
Net cash used in discontinued operations ............        0      (6,701)
                                                      --------    --------
Net financing activities ............................   (6,491)    (26,931)
                                                      --------    --------
   Net decrease in cash .............................     (172)       (291)
   Cash at beginning of period ......................      366       1,684
                                                      --------    --------
Cash at end of period ............................... $    194    $  1,393
                                                      --------    --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid (refunded) during the quarter for:
      Interest ...................................... $    663    $    935
                                                      ========    ========
      Income taxes .................................. $     97    $     12
                                                      ========    ========

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements


                                       5


<PAGE>   6

                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2001
                            (in thousands of dollars)

(1)      BASIS OF REPORTING FOR CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The
         unaudited condensed consolidated financial statements included herein
         have been prepared by Baldwin Piano & Organ Company ("Baldwin" or
         "Company") pursuant to the rules and regulations of the Securities and
         Exchange Commission. Certain information and footnote disclosures
         normally included in financial statements prepared in accordance with
         accounting principles generally accepted in the United States of
         America have been omitted pursuant to such rules and regulations,
         although the Company believes that the disclosures are adequate to make
         the information presented not misleading. These financial statements
         should be read in conjunction with the financial statements and notes
         thereto included in the Company's Form 10-K for the year ended December
         31, 2000.

         The financial statements presented herewith reflect all adjustments
         (consisting of normal recurring adjustments) which are, in the opinion
         of management, necessary to a fair statement of the results for the
         three-month periods ended March 31, 2001 and 2000. Results of
         operations for interim periods are not necessarily indicative of
         results to be expected for an entire year.


(2)      DISCONTINUED OPERATIONS In December 2000 the Company adopted a formal
         plan to sell certain assets and liabilities of its Contract Electronics
         (CE) business and in January 2001, the Company completed the sale to
         Ayrshire Electronics, LLC for approximately $9 million, subject to
         certain closing adjustments. The Company recorded an after-tax loss of
         approximately $2.6 million in December, 2000, which includes
         anticipated operating losses from the measurement date to the disposal
         date as well as transaction costs. The completion of the sale of CE
         triggered change in control provisions in the employment contract of
         the former CEO and a severance accrual of $1.3 million was recorded in
         other operating expense in the first quarter of 2001.

         At December 31, 2000, net assets of the CE business to be sold
         consisted of accounts receivable, inventory and property of $11,889 net
         of an allowance for the estimated loss on disposal and liabilities of
         $3,189 which includes operating losses to the anticipated disposal
         date.

         On March 10, 2000, the Company completed the sale of its Retail
         Financing subsidiaries. Gross proceeds from the sale were approximately
         $35 million and an after-tax gain of $725,000 has been recorded in the
         first quarter of 2000. Under the terms of the sales agreement, the
         Company is contingently liable for and

                                       6
<PAGE>   7


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2001
                            (in thousands of dollars)

         must repurchase all accounts that become 120 days past due during a
         two-year period after the closing date. The Company has segregated on
         its balance sheet the accounts repurchased under this agreement as
         "Installment receivables retained" and has recorded a liability for
         potential losses in accrued liabilities.

         The results of operations for all periods presented have been restated
         for the discontinued operations.


(3)     INVENTORIES
        Inventories consist of the following (in thousands of dollars):

                                              March 31,   December 31,
                                                2001          2000
                                              --------      --------

           FIFO cost:
                Raw material ............     $ 12,986      $ 12,139
                Work-in-process .........        6,276         6,730
                Finished goods ..........       32,121        36,557
                                              --------      --------
                                                51,383        55,426
           Less revaluation to LIFO .....      (11,859)      (11,859)
                                              --------      --------
                Net inventories .........     $ 39,524      $ 43,567
                                              --------      --------

(4)     DEBT
        The Company has a secured Credit Facility with an available line of
        credit based on certain percentages of the carrying amount of the
        Company's accounts receivable and inventory, up to a maximum amount of
        $40 million. The financial covenants of the Credit Facility agreement
        require the Company to maintain certain financial ratios and tangible
        net worth within defined amounts. At March 31, 2001, the Company was in
        violation of the tangible net worth covenant. Under the terms of the
        agreement, the lender may call the loan if the Company is in violation
        of any restrictive covenant. The lender has not waived the tangible net
        worth requirement, and accordingly, the entire amount of the credit
        facility of $24.5 million has been included in current liabilities. In
        addition, on May 4, 2001, the lender declared the Company to be in
        default of the loan for unpaid overadvances of credit made by the lender
        to the Company and since that date the lender had been charging the
        default rate of interest on the loan.

        On April 24, 2001, the Company announced that the Company was
        experiencing disappointing sales trends and tighter lending terms from
        its primary lender, thereby creating a liquidity squeeze. The Company
        has continued discussions with its primary lender to address the
        liquidity issues and has obtained overadvances from its lender to help
        address those issues. The Company is negotiating with its primary
        lender to restructure its debt to eliminate the defaults now existing
        under the credit facility, including the obligation to repay the
        overadvances. Since May 4, 2001 the Company's primary lender has
        charged the default rate of interest which is 5.5% above the G.E.
        Capital commercial paper rate. Further, the Company is in active
        discussions with several other possible lending sources and exploring
        several other options to restructure its business and debts. While the
        Company is hopeful about its restructuring prospects, there can be no
        guarantee that those efforts will be successful.

(5)     EARNINGS PER SHARE FROM CONTINUING OPERATIONS
        A reconciliation of the numerator and denominator of basic earnings per
        share to diluted earnings per share is as follows (in thousands, except
        per share amounts):

<TABLE>
<CAPTION>
                                                   Three Months Ended March 31:
                                              2001                              2000
                                 ------------------------------   -------------------------------

                                                         per                              per
                                 Income      Shares     Share     Income      Shares     Share
                                 -------      -----   --------    -------      -----   --------
<S>                              <C>          <C>     <C>         <C>          <C>      <C>
           Earnings per share    $(4,793)     3,463   $  (1.38)   $(2,094)     3,463     (.60)
           Dilutive effect of
             options

           Earnings per share-
             assuming dilution   $(4,793)     3,463   $  (1.38)   $(2,094)     3,463   $ (.60)
</TABLE>

(6)      SEGMENT INFORMATION
         As a result of the discontinued operations described in Note 2, the
         Company now operates in only one segment, Music and related.

         The Music and related segment includes a broad range of acoustic and
         electronic instruments serving a broad consumer base. Keyboard
         instruments are sold through Company-owned retail stores, domestic
         wholesale dealers, factory direct sales and an international dealer
         network. In addition, this segment includes furniture and musical
         components produced on behalf of other manufacturers.



                                       7
<PAGE>   8


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2001
                            (in thousands of dollars)

(7)      OTHER OPERATING (EXPENSE) INCOME
         On January 31, 2001, the Company announced its intention to shutdown
         the Greenwood, Mississippi plant and outsource the component
         manufacturing to other woodworking firms in the United States and
         abroad. The Company recorded a one-time charge in the first quarter of
         2001 of approximately $2.5 million primarily related to severance and
         direct exit costs associated with the shutdown, which is expected to be
         completed in mid-2001. These costs are included in other operating
         (expense) income.

         On March 22, 2001, the Company sold eleven retail stores to an
         affiliate of Chicago-based Biasco Musical Instrument Company, the
         Company's largest dealer, for approximately $4.6 million, subject to
         certain adjustments. A gain on the sale of approximately $580,000 was
         recorded in other operating (expense) income. The proceeds were used to
         reduce the Company's debt.


(8)      COMPREHENSIVE INCOME
         The Company currently records as other comprehensive income the change
         in cumulative translation adjustment resulting from changes in exchange
         rates and the effect of those changes upon translation of the financial
         statements of the Company's foreign operations.

         Comprehensive income (loss):             Three Months Ended March 31,
                                                       2001         2000
--------------------------------------------------------------------------------
         Net earnings (loss)                         $ (4,793)    $ (908)
         Foreign currency
           translation adjustment                        (269)       (51)
--------------------------------------------------------------------------------
           Total comprehensive income (loss)         $ (5,062)    $ (959)
--------------------------------------------------------------------------------


(9)      ACCOUNTING PRONOUNCEMENTS
         During June 1998, and as subsequently amended, the Financial Accounting
         Standards Board issued SFAS No. 133, "Accounting for Derivative
         Instruments and Hedging Activities".  The Company adopted SFAS No. 133
         on January 1, 2001.  The impact was not material to the Company's
         financial statements.



                                       8

<PAGE>   9


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                                     ITEM II
                     Management's Discussion and Analysis of
                     ---------------------------------------
                  Financial Condition and Results of Operations
                  ---------------------------------------------

RESULTS OF OPERATIONS
FIRST QUARTER OF 2001 COMPARED
  TO THE FIRST QUARTER OF 2000

         The Company's first fiscal quarter 2001 sales decreased 22% to $15.6
million, excluding the sale of inventory that was part of the sale of the
Baldwin Retail Stores to Biasco Piano Acquisition, Inc., compared to $19.9
million in the first fiscal quarter of 2000. The lower sales were caused by
higher that normal seasonal dealer inventories resulting from an overall
economic slowdown during the fourth quarter 2000 and continued economic slowness
during the current quarter. In the first fiscal quarter 2001 the Company had a
net loss from continuing operations of $4.8 million, or $1.38 net loss per
share, compared to a net loss from continuing operations of $2.1 million, or
$.60 net loss per share, in the first fiscal quarter 2000. The first quarter
2001 results included several one-time events previously disclosed in press
releases and 8-K filings, including a shutdown charge of $2.5 million, or 50
cents per share, for the closing of the Company's Greenwood, Mississippi
facility and a severance accrual of $1.3 million, or 26 cents per share. The
severance accrual resulted from the completion of the sale of CE that triggered
the change in control provisions in the employment contract of the former CEO.
Excluding these one-time charges, the Company's after-tax loss for the first
quarter 2001 was $2.2 million, or 63 cents per share.

         Selling, general and administrative expenses in the first quarter of
2001 were $4.8 million, a decrease of $100,000 from $4.9 million in the first
quarter of 2000. The decrease from 2000 resulted from cost containment by the
Company.

         Interest expense increased by $0.4 million, from $0.7 million in the
first quarter of 2000 to $1.1 million in the first quarter of 2001. This
increase resulted from rate increases on the Company's debt and increased
average inventory levels from a year earlier.


INFLATION, OPERATIONS AND INTEREST RATES

     Cost inflation can affect the Company's results. However, the Company has
generally been able to offset the impact of higher employment costs per hour and
higher raw material unit costs by improved efficiency and increases in sales
prices.

     The operations of the Company and its predecessors are subject to Federal,
state and local laws regulating the discharge of materials into the environment.
The Company does not anticipate that any

                                       9
<PAGE>   10

                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                                     ITEM II
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     ---------------------------------------
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
           -----------------------------------------------------------

environmental matters currently known to the Company will result in any material
liability.

         The annual rate of interest under the Company's new revolving credit
facility is equal to an index rate plus applicable index margins. The index rate
is equal to the latest 30-day commercial paper rate for high-grade unsecured
notes sold through dealers by major corporations. During the first quarter 2001
the applicable interest rates paid by the Company were 3.5% above the 30-day
commercial paper rate.

LIQUIDITY AND CAPITAL RESOURCES

         On March 24, 2000 the Company entered into a new revolving line of
credit (the "Credit Facility") with General Electric Capital Corporation
("GECC") to finance the Company's working capital requirements and to refinance
the Company's old credit facility. The Credit Facility has a maximum commitment
level of $40 million and a due date of March 24, 2003. Under the Credit
Facility, GECC is committed to make available a line of credit based upon
certain defined percentages of the carrying value of the Company's inventories,
trade accounts receivable and property, plant and equipment.

         The Credit Facility contains financial covenants which require the
Company to maintain certain financial ratios and tangible net worth within
defined amounts and restrict the amount of capital expenditures what can be made
each year. The Credit Facility also contains covenants that restrict, among
other things, the Company's ability to incur new indebtedness, pay dividends,
make loans or investments, prepay debt, issue securities, repurchase the
Company's common stock, guarantee debt, create liens on assets, sell assets,
enter into sale-leaseback transactions, change its operations or business,
purchase real estate, merge or consolidate with other entities or acquire new
businesses. Additionally, the Credit Facility contains provisions by which a
change of control of the Company or a default under the Company's other debt

                                       10

<PAGE>   11


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                                     ITEM II
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     ---------------------------------------
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
           -----------------------------------------------------------

agreements would constitute a default under the Credit Facility. Substantially
all of the assets of the Company and its subsidiaries are pledged as collateral
under the Credit Facility.

         The Company as of March 31, 2001 has total outstanding indebtedness of
$34.3 million. The total indebtedness is comprised of three credit arrangements.
The first is the Credit Facility with GECC described in the paragraph
immediately above with a total outstanding balance of $24.5 million at March 31,
2001.

         On April 24, 2001, the Company announced that the Company was
experiencing disappointing sales trends and tighter lending terms from its
primary lender, thereby creating a liquidity squeeze. The Company has continued
discussions with its primary lender to address the liquidity issues and has
obtained overadvances from its lender to help address those issues. The Company
is negotiating with its primary lender to restructure its debt to eliminate the
defaults now existing under the credit facility, including the obligation to
repay the overadvances. Since May 4, 2001 the Company's primary lender has
charged the default rate of interest which is 5.5% above the G.E. Capital
commercial paper rate. Further, the Company is in active discussions with
several other possible lending sources and exploring several other options to
restructure its business and debts. While the Company is hopeful about its
restructuring prospects, there can be no guarantee that those efforts will be
successful.

         The Company's second credit arrangement is an inventory purchase and
consignment agreement with DFS. Under the terms of this product financing
arrangement, the Company's borrowings are collateralized by pianos consigned to
colleges, universities, artists and concert halls. All debt under this agreement
is classified as current with an annual rate of interest of approximately 9%.
The outstanding balance of this credit agreement is $4.1 million at March 31,
2001.

         The Company's third credit arrangement originated with the sale of its
Retail Financing subsidiary in 1999. The Company entered into a revolving credit
loan agreement with DFS for the repurchase of accounts that become more than 120
days past due during a two year period after the sale closing date. The annual
rate of interest under the revolving credit loan is equal to 0.5 percentage
points per annum above LIBOR, or 4.81% at March 31, 2001. All collections on
repurchased accounts are to be applied against this revolving credit loan, and
the balance remaining on the loan will be due in March 2004. The revolving
credit loan is secured by the repurchased accounts, repossessed merchandise and
an irrevocable standby letter of credit for $2,000,000. The outstanding balance
of this credit agreement is $5.7 million at March 31, 2001.

         The Company has recorded approximately $16 million of deferred tax
assets, relating primarily to net operating loss carryforwards. The Company
currently believes that these assets will be recoverable in the future;
however, if the Company's restructuring prospects are not successful, valuation
allowances may be necessary to adjust such assets to their net realizable value.

         Capital expenditures amounted to $12 thousand in the first quarter of
2001 and $39 thousand in the comparable period of 2000. At March 31, 2001, the
Company has less than $250 thousand in outstanding capital commitments. The
Company expects 2001 capital expenditures to be less than depreciation expense.

FORWARD LOOKING STATEMENTS

         This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements include, without
limitations, the Company's beliefs about trends in the Company's industries, and
its views about the long-term future of these industries and the Company. The
following factors, among others, could cause the Company's financial performance
to differ materially from that expressed in such statements: (i) the Company's
ability to successfully restructure its business and debts, (ii) changes in
consumer preferences resulting in a decline in the demand for

                                       11

<PAGE>   12

                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                                     ITEM II
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)

pianos, (iii) the inability to reduce SG&A expenses as expected, (iv) an
increase in the price of raw materials, (v) political and/or economic
instability in foreign countries where the Company has operations or has
suppliers who supply the Company, (vi) an unexpected increase in interest rates,
and, (vii) a shift in strength of the overall U.S. economy thereby possibly
reducing durable goods purchases.


                                    ITEM III
                    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

         The Company believes three factors impact the susceptibility of the
Company to market risk. The first factor is general economic conditions, which
include the strength of the U.S. economy. The operating results of the Company
could be adversely effected with an overall slowdown of the U.S. economy. The
second factor is demographic trends in the U.S. As mentioned earlier, the
Company programs of institutional loans and sponsorship of educational
activities will be adversely impacted with a decrease of the age population
these programs target. The third factor is an overall interest in music. If
interest in music lessens the Company's sales could be impacted negatively.

         At March 31, 2001, the carrying value and estimated fair value of
Company's debt totaled $34.3 million. All of the Company's debt at March 31,
2001 was at variable interest rates. For such floating rate debt, interest rate
changes generally do not affect the fair market value but do impact earnings and
cash flows, assuming other factors are held constant. Holding other variables
constant (such as foreign exchange rates and debt levels), the earnings and cash
flows impact for the next year resulting from a one percentage point increase in
interest rates on variable rate debt would be approximately $0.3 million. The
Company has limited its risk related to interest rate changes by purchasing
certain interest rate caps discussed above under the "Inflation, Operations and
Interest Rates".

         The Company is subject to market risk with respect to certain
commodities, principally wood prices, because the ability to recover increased
costs through higher pricing may be limited by the competitive environment in
which the Company operates. The Company does not use futures contracts to hedge
anticipated purchases of wood used in the manufacturing and assembly of piano
cases.


                                       12
<PAGE>   13


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         The Company is involved in legal proceedings arising in its normal
course of business. The Company does not believe that any existing claim or suit
will have a material adverse effect on the business or financial condition of
the Company.

         The operations of the Company and its predecessors are subject to
federal, state and local laws regulating the discharge of pollutants into the
environment. The Company does not anticipate that any environmental matters
currently known to the Company will result in proceedings against the Company or
in any material liability.



ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         (a) No changes have been made to the instruments defining the right of
the holders of the Company's common stock or to the rights of such shareholders.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         The Company has not repaid certain overadvances made to it by its
senior lender and is in default of the terms of such credit facility. For
further discussion of this default, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources." The Company is not obligated to pay any dividends or other payment
to any of its shareholders. In addition, the Company is not in compliance with
the tangible net worth requirement contained in the credit agreement, which
breach has not been cured or waived.



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

         No matters have been submitted to a vote of security holders during the
first quarter of 2001.



ITEM 5.  OTHER INFORMATION

         The Company's annual meeting with shareholders will be held on Tuesday,
July 10, 2001. Shareholders of record as of June 8, 2001 will be entitled to
vote at the annual meeting. The only matters to be voted upon will be the
election of directors and the ratification of Deloitte & Touche LLP as the
Company's auditors for fiscal year 2001. It is anticipated that of the current
directors, only Messrs. Pavia, Jones and Denton will stand for re-election to
the Company's Board of Directors. In addition, the following changes have
occurred recently on the Company's Board of Directors: John H. Gutfreund
resigned on April 27, 2001; Kenneth W. Pavia, Sr. was appointed Chairman of the
Board on April 30, 2001; Robert J. Jones was appointed by the Board to fill the
vacancy created upon Mr. Gutfreund's resignation; Karen L. Hendricks resigned on
May 10, 2001; and James P. Heffernan resigned on May 18, 2001.

         The Company's executive management also has changed recently, as
follows: Mrs. Hendricks provided notice to the Company in February 2001 that she
would resign as chief executive officer; the Board appointed Duane D. Kimble
President of the Company in March 2001; and Mr. Jones became the Company's new
chief executive officer effective May 1, 2001.




                                       13

<PAGE>   14


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                           PART II. OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits
          --------

            10.1   Fourth Amendment and Limited Waiver to Credit Agreement among
                   the Company and General Electric Capital Corporation.

            10.2   Fifth Amendment and Limited Waiver to Credit Agreement among
                   the Company and General Electric Capital Corporation.

            99.1   Press Release dated January 8, 2001 announcing the
                   appointment of Kenneth W. Pavia, Sr. to the Company's board
                   of directors. *

            99.2   Press Release dated January 11, 2001 announcing layoffs at
                   the Company's Conway, Arkansas plant. *

            99.3   Press Release dated January 11, 2001 announcing layoffs at
                   the Company's Truman, Arkansas plant. *

            99.4   Press Release dated January 29, 2001 announcing the sale of
                   the Company's Contract Electronics Division to Ayrshire
                   Electronics, LLC. *

            99.5   Press Release dated January 31, 2001 announcing the shut down
                   of the Company's Greenwood, Mississippi plant and outsourcing
                   component manufacturing to other woodworking firms in the U.S
                   and abroad. *

            99.6   Press Release dated February 29, 2001 announcing that Karen
                   L. Hendricks, chairman and chief executive officer, plan to
                   step down as CEO in November 2001. *

            99.7   Press Release dated March 14, 2001 announcing financial
                   results for the fourth quarter and 12 months ended December
                   31, 2000. *

            99.8   Press Release dated March 22, 2001 announcing the sale of
                   eleven of the Company's retail stores to an affiliate of
                   Chicago-based Biasco Musical Instrument Company. *


                                       14

<PAGE>   15

            99.9   Press Release dated April 24, 2001 announcing sales fall off
                   and liquidity squeeze.




                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                     PART II. OTHER INFORMATION (continued)

            99.10  Press Release dated April 27, 2001 announcing the immediate
                   appointment of Robert J. Jones to the position of chief
                   executive officer.

            99.11  Press Release dated April 30, 2001 announcing the appointment
                   of Kenneth W. Pavia, Sr. to the position of chairman of the
                   Company's board.

            99.12  Press Release dated May 11, 2001 announcing the resignation
                   of Karen L. Hendricks from the Company's board of directors
                   effective immediately.

                   *   Incorporated by reference to the Form 8-K of the
                       Company filed April 17, 2001.


                                   ----------

Index to Exhibits appears on sequentially numbered page 17.

(b)      Reports on Form 8-K
         -------------------

                  The Company filed a report on Form 8-K on January 9, 2001
                  announcing the appointment of Kenneth W. Pavia, Sr. to the
                  Company's board of directors.

                  The Company filed a report on Form 8-K on February 12, 2001
                  announcing the sale of the Company's Contract Electronics
                  Division to Ayrshire Electronics, LLC.

                  The Company filed a report on Form 8-K on March 2, 2001
                  announcing that Karen L. Hendricks, chairman and chief
                  executive officer, plan to step down as CEO in November 2001.

                  The Company filed a report on Form 8-K on April 24, 2001
                  announcing sales fall off and liquidity squeeze.

                  The Company filed a report on Form 8-K on May 1, 2001
                  announcing the immediate appointment of Robert J. Jones to the
                  position of chief executive officer.





                                       15

<PAGE>   16


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES


                                   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.



                          BALDWIN PIANO & ORGAN COMPANY



DATE:    May 21, 2001               BY:   /S/ Robert J. Jones
      --------------------              -----------------------------
                                          Robert J. Jones,
                                          Chief Executive Officer




DATE:    May 21, 2001               BY:   /S/ DUANE D. KIMBLE
      --------------------              -----------------------------
                                          Duane D. Kimble,
                                          President, and Chief Financial Officer




                                       16

<PAGE>   17


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                                INDEX TO EXHIBITS



Exhibit
Number                                  Exhibit
------                                  -------

10.1           Fourth Amendment and Limited Waiver to Credit Agreement among the
               Company and General Electric Capital Corporation.

10.2           Fifth Amendment and Limited Waiver to Credit Agreement among the
               Company and General Electric Capital Corporation.

99.1           Press Release dated January 8, 2001 announcing the appointment of
               Kenneth W. Pavia, Sr. to the Company's board of directors.

99.2           Press Release dated January 11, 2001 announcing layoffs at the
               Company's Conway, Arkansas plant. *

99.3           Press Release dated January 11, 2001 announcing layoffs at the
               Company's Trumann, Arkansas plant. *

99.4           Press Release dated January 29, 2001 announcing the sale of the
               Company's Contract Electronics Division to Ayrshire Electronics,
               LLC. *

99.5           Press Release dated January 31, 2001 announcing the shut down of
               the Company's Greenwood, Mississippi plant and outsourcing
               component manufacturing to other woodworking firms in the U.S and
               abroad. *

99.6           Press Release dated February 29, 2001 announcing that Karen L.
               Hendricks, chairman and chief executive officer, plan to step
               down as CEO in November 2001. *

99.7           Press Release dated March 14, 2001 announcing financial results
               for the fourth quarter and 12 months ended December 31, 2000. *

99.8           Press Release dated March 22, 2001 announcing the sale of eleven
               of the Company's retail stores to an affiliate of Chicago-based
               Biasco Musical Instrument Company. *

99.9           Press Release dated April 24, 2001 announcing sales fall off and
               liquidity squeeze.

99.10          Press Release dated April 27, 2001 announcing the immediate
               appointment of Robert J. Jones to the position of chief executive
               officer.

                                       17

<PAGE>   18

                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                          INDEX TO EXHIBITS (continued)

99.11          Press Release dated April 30, 2001 announcing the appointment of
               Kenneth W. Pavia, Sr. to the position of chairman of the
               Company's board.

99.12          Press Release dated May 11, 2001 announcing the resignation of
               Karen L. Hendricks from the Company's board of directors
               effective immediately.

                * Incorporated by reference to the Form 8-K of the Company filed
                  April 17, 2001.



                                       18