BALDWIN
THIRD QUARTER REPORT 1996

TO OUR SHAREHOLDERS
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November 1, 1996    

     Third quarter net sales were equal to last year, $26.5 million. Sales
in the Company's core businesses of Music and Contract Electronics were 
strong, both up 8% for the quarter. However, overall sales do not reflect 
this progress due to the impact on sales of the Company's continuing exit 
from its non-strategic Contract Music/Furniture business, which began in 
the second quarter.  

     Third quarter net earnings were $.2 million or $.06 per 
share as compared to $.7 million or $.20 per share in 1995. The third 
quarter earnings decline is attributable mainly to lower gross profit and 
higher interest expense. While manufacturing costs associated with the 
Contract Music/Furniture business have been reduced, they have not come 
down in proportion to the rapid sales decline in this business, thereby 
hurting gross profit margin. The Company has begun efforts to define and 
implement specific plans to reduce manufacturing costs and selling, general 
and administrative expenses.       

     Interest expense for the third quarter is higher than last year 
because inventory levels are up and because retail financing business 
growth continues to be strong. Management has put in place a comprehensive 
inventory reduction plan to bring inventory levels back into historical 
ranges.        

     Net sales for the first nine months of 1996 decreased to $79.8 
million from $87.0 million. The sales decline is due to the impact of the 
consolidation of Baldwin and Wurlitzer, particularly in the first and 
second quarters of 1996, and due to the Company's exit from the Contract 
Music/Furniture business. For reasons similar to those described for the 
third quarter, net earnings for the first nine months of 1996 decreased 
to $1.6 million or $.48 per share from $2.3 million or $.68 per share in 
1995.

KAREN L. HENDRICKS
Karen L. Hendricks
Chief Executive Officer and President
<PAGE>
CONSOLIDATED SUMMARY OF EARNINGS (unaudited)
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(in thousands, except earnings per share)     

                                     Three Months Ended     Nine Months Ended  
                                        September 30,         September 30,     

                                     ------------------    ------------------   
                     
                                       1996      1995        1996      1995
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Net sales                            $ 26,508  $ 26,519    $ 79,794  $ 86,967
Cost of goods sold                     21,543    21,011      63,634    68,179   
   
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     Gross profit                       4,965     5,508      16,160    18,788
Income on the sale of installment   
  receivables                           1,404     1,231       4,338     3,607
Interest income on installment   
  receivables                             336       210         985       617
Other operating income                    842       933       2,648     2,705
Selling, general and   
  administrative expenses              (6,496)   (6,376)    (19,648)  (20,558)
Interest expense                         (827)     (465)     (2,009)   (1,490)  
   
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     Earnings before income taxes         224     1,041       2,474     3,669
Income taxes                               32       371         848     1,353   
     
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     Net earnings                    $    192  $    670    $  1,626  $  2,316   
  
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Net earnings per share               $    .06  $    .20    $    .48  $    .68   
 
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Average number of shares   
outstanding                             3,423     3,415       3,419     3,415   
  
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CONSOLIDATED SUMMARY BALANCE SHEETS (unaudited)
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(in thousands)
                                                               September 30,   
                                                           -------------------  
  
                                                             1996      1995
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Assets            
     Receivables, net                                      $ 15,414  $ 13,047   
   
     Inventories                                             64,352    47,606   
   
     Other current assets                                     7,785     8,125   
       
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          Total current assets                               87,524    68,778   
   
     Installment receivables, less current portion           12,547     9,911   
   
     Property, plant and equipment, net                      16,800    15,229   
   
     Other assets                                             5,466     6,650   
      
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          Total assets                                     $122,337  $100,568   
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Liabilities and Shareholders' Equity         
     Current portion of long-term debt                     $ 42,314  $ 18,945   
   
     Other current liabilities                               13,678    15,828   
      
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          Total current liabilities                          55,992    34,773   
   
     Long-term debt, less current portion                     3,575     4,475   
    
     Other liabilities                                        6,926     8,850   
    
     Shareholders' equity                                    55,844    52,470   
      
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          Total liabilities and shareholders' equity       $122,337  $100,568
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<PAGE>  

BUSINESSES
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MANUFACTURING
Acoustic pianos 
Actions and keys for the piano industry
  
Printed circuit boards and electro-mechanical assemblies for OEM 
manufacturers of electronic-based products inside and outside the music 
industry


SALES/MARKETING
Acoustic pianos
Electronic keyboards


RETAILING
Company owned outlets in Atlanta, Georgia; Cincinnati, Ohio; 
Indianapolis, Indiana; Lexington and Louisville, Kentucky  

Independent keyboard dealers (400)


FINANCING
Consumer installment financing and dealer consignment


HOME OFFICE
422 Wards Corner Road, Loveland, OH 45140, (513)576-4500


MANUFACTURING LOCATIONS
Conway, Fayetteville and Trumann, Arkansas; Greenwood, Mississippi; 
Juarez, Mexico


REGISTRAR AND TRANSFER AGENT
The Provident Bank, One East Fourth Street Cincinnati, OH 45202

Baldwin Piano & Organ Company common stock is traded on The Nasdaq 
National Market;
Symbol: BPAO


Caption for photo
Chickering Grand Piano