<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
 September 30, 1999                                           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 November 15, 1999 is 3,452,826.


<PAGE>   2


                          BALDWIN PIANO & ORGAN COMPANY

                                      INDEX
<TABLE>
<CAPTION>
                                                                              Page
<S>                                                                          <C>
Number
------

PART I.    FINANCIAL INFORMATION

      Item 1.  Financial Statements
           Unaudited Condensed Consolidated Balance Sheets as of
                September 30, 1999 and December 31, 1998 ...............        3
           Unaudited Condensed Consolidated Statements of Operations
                for the three months ended and nine months ended
                      September 30, 1999 and 1998 .......................       4
           Unaudited Condensed Consolidated Statements of Cash
                Flows for the nine months ended
                      September 30, 1999 and 1998 .......................       5
           Notes to Unaudited Condensed Consolidated Financial
                Statements, September 30, 1999 ..........................       6

      Item 2.   Management's Discussion and Analysis of Financial
                         Condition and Results of Operations ............      10

      Item 3.   Quantitative and Qualitative Disclosures About
                         Market Risk ....................................      15

PART II.   OTHER INFORMATION

      Item 1.   Legal Proceedings .......................................      16

      Item 2.   Changes in Securities and Use of Proceeds ...............      16

      Item 3.   Defaults upon Senior Securities .........................      16

      Item 4.   Submission of Matters to a Vote

                           of Security Holders ..........................      16

      Item 5.   Other Information .......................................      16

      Item 6.   Exhibits and Reports on Form 8-K ........................      17

      Signatures ........................................................      18

      Exhibit Index .....................................................      19
</TABLE>



                                       2
<PAGE>   3


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands of dollars)
<TABLE>
<CAPTION>
                                                       Sept. 30,     December 31,
                                                         1999           1998
                                                       ---------      ---------
<S>                                                    <C>            <C>
ASSETS
Current assets:
      Cash .......................................     $   1,171      $     327
      Receivables, net ...........................        20,811         23,273
      Inventories ................................        44,250         51,089
      Deferred income taxes ......................         1,671          1,671
      Other current assets .......................         4,364          6,429
                                                       ---------      ---------
                Total current assets .............        72,267         82,789
Installment receivables,
      less current portion .......................        14,136         14,616
Property, plant and equipment, net ...............        21,430         22,724

Deferred income taxes ............................         3,086          1,089
Other assets .....................................        17,333         16,032
                                                       ---------      ---------
                Total assets .....................     $ 128,252      $ 137,250
                                                       =========      =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
      Accounts payable ...........................     $  15,003      $  11,582
      Current portion of long-term debt ..........        13,833         11,380
      Income taxes payable .......................             0            452
      Accrued liabilities ........................         6,265          5,766
                                                       ---------      ---------
                Total current liabilities ........        35,101         29,180
Long-term debt, less current portion .............        33,715         42,817
Other liabilities ................................         2,868          3,978
                                                       ---------      ---------
                Total liabilities ................        71,684         75,975
                                                       ---------      ---------
Shareholders' equity:
      Common stock ...............................            42             42
      Additional paid-in capital .................        12,636         12,603
      Accumulated other comprehensive
           income (loss) .........................          (309)          (394)
      Retained earnings ..........................        50,695         55,520
                                                       ---------      ---------
                                                          63,064         67,771
                                                       ---------      ---------
      Less cost of treasury shares ...............        (6,496)        (6,496)
                                                       ---------      ---------
                Total shareholders' equity .......        56,568         61,275
                                                       ---------      ---------
                Total liabilities and
                   shareholders' equity ..........     $ 128,252      $ 137,250
                                                       =========      =========
</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     Nine Months Ended
                                              Sept. 30               Sept. 30
                                        --------------------   --------------------
                                          1999        1998       1999        1998
                                        --------    --------   --------    --------
<S>                                     <C>         <C>        <C>         <C>
Net sales ...........................   $ 29,106    $ 34,277   $ 88,164    $ 98,072
Cost of goods sold ..................     31,033      28,884     83,726      81,953
                                        --------    --------   --------    --------
      Gross profit (loss) ...........     (1,927)      5,393      4,438      16,119
Income on the sale of
      installment receivables .......      1,464       1,983      5,532       5,483
Interest income on
   installment receivables ..........        306         388      1,002       1,196
Other operating income, net .........      6,117         223      6,479         966
                                        --------    --------   --------    --------
                                           5,960       7,987     17,451      23,764
Operating expenses:
      Selling, general and
         administrative .............      6,971       6,608     20,901      19,563
      Provision for doubtful
           accounts .................        406         343      1,090       1,001
                                        --------    --------   --------    --------
           Operating (loss) profit ..     (1,417)      1,036     (4,540)      3,200

Interest expense ....................      1,108         885      3,089       2,170
                                        --------    --------   --------    --------
           Earnings (loss) before
                income taxes ........     (2,525)        151     (7,629)      1,030

Income taxes (benefits) .............       (903)         58     (2,804)        396
                                        --------    --------   --------    --------
           Net earnings (loss) ......   $ (1,622)   $     93   $ (4,825)   $    634
                                        ========    ========   ========    ========
Basic earnings (loss) per share .....   $  (0.47)   $   0.03   $  (1.40)   $   0.18
                                        ========    ========   ========    ========
Diluted earnings (loss) per share ...   $  (0.47)   $   0.03   $  (1.40)   $   0.18
                                        ========    ========   ========    ========
Weighted average number
      of common shares ..............      3,453       3,453      3,453       3,450
                                        ========    ========   ========    ========
Weighted average number of
      common and common
           equivalent shares ........      3,453       3,465      3,453       3,502
                                        ========    ========   ========    ========
</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)
<TABLE>
<CAPTION>

                                                    Nine Months Ended Sept. 30,
                                                       1999        1998
                                                     --------    --------
<S>                                                  <C>         <C>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
      Net earnings (loss) ........................   $ (4,825)   $    634
      Reconciliations of net earnings (loss)
           to net cash provided by (used in)
           operating activities
                Depreciation and amortization ....      2,440       2,303
                Gain on sale of assets ...........     (5,917)          0
                Provision for doubtful accounts ..      1,090       1,002
                Changes in working capital .......      9,387     (20,423)
                                                     --------    --------
      Net cash provided by (used in)
                operating activities .............      2,175     (16,484)
                                                     --------    --------
Cash flows from investing activities:
      Additions to property, plant and
           equipment .............................     (1,862)     (8,573)
      Proceeds from sale of assets ...............      6,819           0
                                                     --------    --------
      Net cash provided by (used in)
         investing activities ....................      4,957      (8,573)
                                                     --------    --------
Cash flows from financing activities:
      Installment receivables written ............    (71,085)    (70,655)
      Installment receivables liquidated .........      6,124       8,067
      Proceeds from sale of installment
           receivables ...........................     65,322      65,796
      (Repayment) borrowing on long-term debt ....     (6,649)     21,505
      Proceeds from exercise of stock options ....          0          44
                                                     --------    --------
      Net cash (used in) provided by financing
           activities ............................     (6,288)     24,757
                                                     --------    --------
Net increase (decrease) in cash ..................        844        (300)
Cash at beginning of period ......................        327         680
                                                     --------    --------
Cash at end of period ............................   $  1,171    $    380
                                                     ========    ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid (refunded) during the year for:
      Interest ...................................   $  2,129    $  1,975
                                                     ========    ========
      Income taxes ...............................   $   (333)   $    311
                                                     ========    ========
</TABLE>

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
                                 Sept. 30, 1999
              (in thousands of dollars, except earnings per share)

(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
         generally accepted accounting principles 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 Annual Report and Form 10-K for the year ended December 31,
         1998.

         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
         nine-month periods ended September 30, 1999 and 1998. Results of
         operations for interim periods are not necessarily indicative of
         results to be expected for an entire year.

(2)     INVENTORIES

        Inventories consist of the following:
<TABLE>
<CAPTION>
                                        Sept. 30,  December 31,
                                          1999        1998
                                        --------    --------
<S>                                     <C>         <C>
        FIFO cost:
                  Raw material ......   $ 17,908    $ 22,224
                  Work-in-process ...     12,471      11,573
                  Finished goods ....     24,234      27,492
                                        --------    --------
                                          54,613      61,289
             Less revaluation to LIFO    (10,363)    (10,200)
                                        --------    --------
                  Net inventories ...   $ 44,250    $ 51,089
                                        ========    ========
</TABLE>

(3)     EARNINGS PER SHARE

         A reconciliation of the numerator and denominator of basic earnings per
         share to diluted earnings per share is as follows:

<TABLE>
<CAPTION>

                                                                  Nine Months Ended Sept. 30:
                                                         1999                                      1998
                                            --------------------------------          ------------------------------
                                                                        Per                                     Per
                                             Income     Shares         Share          Income       Shares      Share
                                             ------     ------         -----          ------       ------      -----
<S>                                         <C>          <C>           <C>               <C>        <C>        <C>
         Earnings per share                 $(4,825)     3,453         $(1.40)           $634       3,450      $.18

         Dilutive effect of
           options                                           0                                         52
                                                        ------                                       -----
         Earnings per share-
           assuming dilution                $(4,825)     3,453         $(1.40)          $634         3,502     $.18
                                            -------      -----         ------           ----         -----     ----
</TABLE>



                                       6
<PAGE>   7


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 Sept. 30, 1999
                            (in thousands of dollars)

(4)  SEGMENT INFORMATION

         In June 1997, the FASB issued Statement of Financial Accounting
         Standards (SFAS) No. 131 "Disclosures about Segments of an Enterprise
         and Related Information". SFAS No. 131 establishes standards for
         reporting information about operating segments. The adoption of this
         statement in 1998 resulted in additional financial statement
         information reported on the basis used internally by management to
         evaluate performance and allocate resources. The Company did not make
         material changes to its previously reported segment groupings.
<TABLE>
<CAPTION>

                                        Three Months Ended       Nine Months Ended
                                             Sept. 30                 Sept. 30
                                      ----------------------    ---------------------
                                        1999         1998         1999         1998
                                      ---------    ---------    ---------    ---------
<S>                                   <C>          <C>          <C>          <C>
         Music and related ........   $  17,915    $  24,342    $  53,843    $  66,494
         Contract Electronics .....      11,191        9,935       34,321       31,578
         Retail Financing .........       1,770        2,371        6,534        6,679
                                      ---------    ---------    ---------    ---------
         SALES AND RETAIL FINANCING
          REVENUE .................   $  30,876    $  36,648    $  94,698    $ 104,751
                                      ---------    ---------    ---------    ---------

         Music and related (*) ....   $   1,418    $   1,610    $  (1,232)   $   4,169
         Contract Electronics .....        (908)         (26)        (360)         908
         Retail Financing .........         610        1,360        3,193        3,704
         Corporate G&A and other
           unallocated ............      (2,537)      (1,908)      (6,141)      (5,581)
                                      ---------    ---------    ---------    ---------
         OPERATING (LOSS) PROFIT ..   $  (1,417)   $   1,036    $  (4,540)   $   3,200
                                      ---------    ---------    ---------    ---------

         Music and related ........   $  69,746    $  79,744    $  69,746    $  79,744
         Contract Electronics .....      20,896       21,917       20,896       21,917
         Retail Financing .........      29,101       29,135       29,101       29,135
         Corporate G&A ............       8,509        5,477        8,509        5,477
                                      ---------    ---------    ---------    ---------
         IDENTIFIABLE ASSETS ......   $ 128,252    $ 136,273    $ 128,252    $ 136,273
                                      ---------    ---------    ---------    ---------

         Music and related ........   $     511    $     510    $   1,534    $   1,293
         Contract Electronics .....         156          216          504          597
         Retail Financing .........          10           10           39           30
         Corporate G&A ............         126          169          363          383
                                      ---------    ---------    ---------    ---------
         DEPRECIATION AND
           AMORTIZATION ...........   $     803    $     905    $   2,440    $   2,303
                                      ---------    ---------    ---------    ---------

         Music and related ........   $     646    $   1,942    $   1,619    $   7,572
         Contract Electronics .....          47           50          110          126
         Retail Financing .........        --           --           --           --
         Corporate G&A ............          52          267          133          875
                                      =========    =========    =========    =========
         CAPITAL ADDITIONS ........   $     745    $   2,259    $   1,862    $   8,573
                                      =========    =========    =========    =========
</TABLE>


                                       7
<PAGE>   8


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 Sept. 30, 1999
                            (in thousands of dollars)

         * Third quarter 1999 results include a one-time pretax gain of $5,937
         or $1.04 per share, on the sale of the Company's manufacturing facility
         in Juarez, Mexico. Also, during the first quarter of 1999 the Company
         consolidated its grand piano production. This created a one-time
         decrease in Baldwin's Music and Related operating profit of $1,500 or
         27 cents per share. Operating loss for Music and Related for the nine
         months ended September 30, 1999 would have been $5,669 without the
         effect of these one-time costs.

         The amounts reflected as "Sales and Retail Finance Revenue" in the
         above table are included in the "Net Sales", "Income on the sale of
         installment receivables" and "Interest income on installment
         receivables" captions on the Consolidated Statements of Operations.

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

         The Contract Electronics segment assembles printed circuit boards and
         electromechanical devices for original equipment manufacturers (OEMs)
         outside the music industry.

         The Retail Finance segment provides point-of-sale consumer financing
         and leasing through keyboard product dealers located throughout the
         United States.

         The Company uses the LIFO method of valuing music products inventory
         and the FIFO method for Contract Electronics inventory.

(5)      RESTRUCTURING

         On January 6, 1999, the Company announced the consolidation of its
         grand piano assembly from its Conway, Arkansas plant to its Trumann,
         Arkansas facility. In connection with this consolidation, the Company
         recorded a restructuring charge of approximately $587 in the first
         quarter of 1999 primarily related to severance and direct exit costs.
         Other costs associated with the consolidation incurring in the first
         quarter of 1999 amounted to $913. All of these costs were included in
         cost of goods sold. At September 30, 1999, the Company had an accrual
         of approximately $272 primarily related to certain exit costs in
         connection with the consolidation. The Company believes that the
         consolidation is substantially complete.

(6)      ACCOUNTING PRONOUNCEMENTS

         SFAS No. 130, "Reporting Comprehensive Income" requires that an
         enterprise classify items of other comprehensive income by their



                                       8
<PAGE>   9


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 Sept. 30, 1999
                            (in thousands of dollars)

         nature in a financial statement and display the accumulated balance of
         other comprehensive income (loss) separately from retained earnings and
         additional paid-in capital in the equity section of the balance sheet.
         The Company adopted this standard in the first quarter of 1998.

         The Company currently records as other comprehensive income (loss) 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.
<TABLE>
<CAPTION>

         Comprehensive income (loss):  Nine Months Ended Sept. 30,
                                           1999       1998
         --------------------------------------------------------
<S>                                       <C>        <C>
         Net earnings (loss) ........     $(4,825)   $   541

         Foreign currency
           Translation Adjustment ...          85         --
         --------------------------------------------------------
           Total Comprehensive Income     $(4,740)   $   541
         --------------------------------------------------------
</TABLE>

         During June 1998, the Financial Accounting Standards Board issued SFAS
         No. 133, "Accounting for Derivative Instruments and Hedging
         Activities". The Board has subsequently delayed for a year the
         implementation of the standard, thus the Company will be required to
         adopt SFAS No. 133 no later than January 2001. Management has not yet
         determined what impact this statement will have on the Company's
         financial statements.

(7)      DISCONTINUED OPERATIONS

         During July 1999, the Company announced its intention to seek a
         buyer for its Retail Financing businesses, Keyboard Acceptance
         Corporation and Signature Leasing Company.  The Company is in the
         final stages of negotiation for the sale of its Retail Financing
         units and expects to make an announcement during the fourth
         quarter of 1999.  See Note 4 for information regarding the assets
         and operating profit of this segment.



                                       9
<PAGE>   10


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

RESULTS OF OPERATIONS
THIRD QUARTER AND NINE MONTHS OF 1999 COMPARED
  TO THE THIRD QUARTER AND NINE MONTHS OF 1998

         Total third-quarter sales decreased 15 percent to $29.1 million, from
$34.3 million a year ago. Net losses for the period were $1,622,000, or 47 cents
per share, vs. income of $93,000, or 3 cents per share for the prior year
period. For the nine months ended September 30, 1999 sales were $88.2 million
with a net loss of $4,825,000, or $1.40 per share. Included in the results for
the first nine months of 1999 is the one time gain from the sale of the
Company's plant facility in Juarez, Mexico of $1.04 per share, and a loss of 27
cents per share related to restructuring and other non-recurring cost associated
with the consolidation of grand piano assembly operations. Through the third
quarter of 1998, net income was $634,000, or 18 cents per share, on sales of
$98.1 million.

         Through the first nine months of 1999, Music and Related sales declined
19 percent to $53.8 million. The Music and Related sales decline was primarily
caused by excess dealer inventories during 1999 to date. At September 30, 1999
dealer inventories have returned to normal seasonal levels and orders for the
Company's music products have risen significantly. The Company's manufacturing
facilities are currently working expanded shifts in an effort to meet current
demand.

         At Contract Electronics, year-to-year sales grew 9 percent to $34.3
million, up from $31.6 million a year ago primarily a result of increased sales
with our existing customers.

         The portfolio for Retail Financing rose 8 percent compared to a year
ago. Revenues for the period of $6.5 million were less than a year ago due to
higher variable interest rates on the portion of the portfolio sold to a third
party.

         Selling, general and administrative expenses for the nine months ended
September 30, 1999 were $20.9 million, an increase of $1.3 million from $19.6
million for the comparable period in 1998. This increase resulted from higher
severance and employee benefit costs.

         Interest expense increased by $0.9 million, to $3.1 million for the
nine months ended September 30, 1999 from $2.2 million for the comparable period
in 1998. This increase resulted from the Company's higher outstanding debt
levels caused by higher than normal inventories during most of 1999 and 1998
capital spending financed with debt.

           As publicly announced in July 1999, the Company has retained an
investment banker to seek potential buyers for the Retail Financing businesses,
Keyboard Acceptance Corporation and Signature Leasing Company. The Company
is in the final stages of negotiation for the sale of its Retail Financing units
and expects to make an announcement during the fourth quarter of



                                       10
<PAGE>   11


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

1999. See Note 4 for information regarding the assets and operating profit of
this segment.

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. During 1998 and early 1999, this was not the case for vertical piano
selling prices due to the effect of low cost Asian imports.

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

     The Company and its subsidiaries' operating results are sensitive to
changes in interest rates primarily because of fixed interest rates on
installment receivables contracts and floating interest rates on a substantial
portion of indebtedness. Additionally, the buyer of the installment receivables
earns interest on the outstanding principal balance of the contracts based upon
a floating interest rate provision.

     The Company can partially offset the effect of interest rate changes by
increasing interest rates on its new installment receivable contracts. In
November 1997 and December 1998, the Company entered into two-year interest rate
cap agreements in order to reduce the potential impact of increases in interest
rates on $20 million and $44 million, respectively, of floating-rate long-term
debt. The agreements entitle the Company to receive from the counterparty, on a
monthly basis, interest income to the extent the one-month commercial paper rate
exceeds 12%. Further, in mid-March 1999, the Company made arrangements to
replace the swap agreement with a counterparty for a two-year "no-cost collar"
of $32 million which has a floor at the mid-March 1999 Commercial Paper rate and
a ceiling of 108 basis points higher. The Company is exposed to credit losses in
the event of nonperformance by the counterparty to its interest rate caps, but
has no off-balance sheet credit risk of accounting loss. The Company
anticipates, however, that the counterparty will be able to satisfy their
obligations under the contracts. The Company does not obtain collateral or other
security to support financial instruments subject to credit risk, but monitors
the credit standing of the counterparty.

         The annual rate of interest under the Company's revolving Credit
Facility is equal to 2.0 percentage points above LIBOR, or under certain
specified circumstances, 0.5 percentage points per annum above the Prime Rate.



                                       11
<PAGE>   12


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

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 1999, the Company had outstanding indebtedness of
$47.5 million. The Company considers that indebtedness of $20.7 million supports
the retained portion of Retail Financing's portfolio and the remaining
indebtedness of $26.8 million supports the operations of Music and Contract
Electronics. Further, the Company is re-engineering its inventory management
systems and expects positive cash flow will be sufficient to support
operations based on cash provided from operations, available borrowings and
inventory reductions.

         During 1997 the Company replaced its short-term $50 million revolving
line of credit with a long-term, secured $40 million revolving Credit Facility
expiring on October 1, 2000; however the Company can terminate the agreement at
any time without penalty upon sixty days' notice. Under the Credit Facility, the
lenders have made available a line of credit based upon certain percentages of
the carrying value of the company's inventories and accounts receivable. The
annual rate of interest under the Credit Facility is equal to 2.0 percentage
points above LIBOR, or under certain specified circumstances, 0.5 percentage
points per annum above the Prime Rate. At September 30, 1999, the rate under the
Credit Facility was 7.38% and the Company has approximately $5.4 million of
additional borrowing available under this Credit Facility.

         The Company's debt agreements contain covenants that require the
Company to maintain certain financial ratios and tangible net worth within
defined amounts. The Company is currently in violation of certain of those
covenants and is operating on waivers obtained from its lenders.  The Company
is currently negotiating with its current lenders and other potential
lenders and expects to be in compliance with its debt covenants by the
end of the fourth quarter 1999.

         The Company's finance subsidiary (Retail Financing) sells substantially
all of its installment receivable contracts up to a maximum outstanding
principal amount of $150 million. Certain installment receivables are not
eligible for sale and are retained by Retail Financing. Retail Financing
continues to service all installment receivables sold. At the time of each
installment receivable sale, Retail Financing receives cash equal to the unpaid
principal balance of the contracts, less a purchase discount applied to the
principal balance of the contacts sold. The purchase discount is adjusted at
each receivable sale using the loss experience and effective yield of the
portfolio.

         The buyer of the installment receivables earns interest on the
outstanding principal balance of the contracts based upon a floating interest
rate provision. Over the duration of the contracts, the difference between the
actual yield on the installment contracts sold and the amount retained by the
buyer under the floating interest rate provisions is remitted to Retail
Financing as a service fee.

         Proceeds from the sale of installment receivables amounted to $65.3
million for the nine months ended September 30, 1999 and



                                       12
<PAGE>   13


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

$65.8 million for the comparable period in 1998. Under the sale agreements,
Retail Financing is required to repurchase accounts that become more than 120
days past due or accounts that are deemed uncollectible. The repurchase price is
equal to the remaining unpaid principal balance of the contract on the date
repurchased, less the related purchase discount. Retail Financing is responsible
for all credit losses associated with the sold receivables, and is contingently
liable for approximately $106.7 million of installment receivables sold. The
Company believes an adequate allowance has been provided for all uncollectible
receivables.

         Capital expenditures amounted to $1.9 million through the third quarter
of 1999 and $8.6 million in the comparable period of 1998. At September 30,
1999, the Company has less than $500,000 in outstanding capital commitments. The
Company expects 1999 capital expenditures to be less than depreciation expense.

YEAR 2000

     The Year 2000 problem is a result of computer programs being written using
two digits (rather than four) to define the applicable year. Any of the
Company's programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000, which would result in
miscalculations or system failures.

     The Company's major computer systems consist of third-party software. The
conclusion of the Company's analysis is that the latest existing releases of
this software contain the necessary changes to correct any significant Year 2000
problems. As a matter of ongoing policy, in order to assure continuing
contractual vendor support, the Company promptly installs and implements
third-party releases that it believes are Year 2000 compliant. The Company has
spent approximately $500,000 on these releases during 1998 and $100,000 during
1999, which amounts were planned expenditures irrespective of any Year 2000
issues. The Company has tested and has further plans to test its software for
compliance. Costs of addressing potential problems have not and are not
currently expected to have a material adverse impact on the Company's financial
position, results of operations or cash flows in future periods.

     The Company's compliance plan includes review of Year 2000 readiness of its
major manufacturing equipment, products, suppliers and customers. The Company
has no Electronic Data Interchange (EDI) interfaces with either its customers or
vendors. To date, the Company has not discovered any significant Year 2000
issues in these areas and does not anticipate any significant problems. The
Company believes it has substantially completed its Year 2000 compliance plan.

         Therefore, the Company has not developed specific contingency plans in
preparation for the year 2000. However, the Company has continued



                                       13
<PAGE>   14


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

its structured MIS Recover Plan which is designed to include Year 2000 related
problems. As the Company continues to evaluate and test its readiness for the
year 2000, the Company will assess whether there are any specific areas where a
contingency plan could help alleviate possible adverse effects from the year
2000. If so, the Company will develop contingency plans in those areas prior to
the end of 1999. Accordingly, the Company plans to devote the necessary
resources to resolve all significant Year 2000 issues in a timely manner.

     The most likely Year 2000 problems that the Company may face appear to
arise from the possible noncompliance of third parties. Possible difficulties
could arise in receiving materials from suppliers or from failures in the
operations of the Company's electronic contracting customers. In addition, in
the event that the Year 2000 would cause widespread loss of power or other
utilities in areas where the Company, its suppliers or customers operate, the
Company's business and operations could be disrupted. Such events could have a
material adverse impact on the Company.

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) changes in
consumer preferences resulting in a decline in the demand for pianos, (ii) the
inability to reduce SG&A expenses as expected, (iii) an increase in the price of
raw materials, (iv) political and/or economic instability in foreign countries
where the Company has operations or has suppliers who supply the Company, (v) an
unexpected increase in interest rates, (vi) a shift in strength of the overall
U.S. economy thereby possibly reducing durable goods purchases, and, (vii)
failure to remedy in a timely manner any Year 2000 issues that might arise.



                                       14
<PAGE>   15


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                                    ITEM III
                    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

         The principal market risk (i.e. the risk of loss arising from adverse
changes in market rates and prices) to which the Company is exposed is interest
rates on debt and fixed rate installment receivables and the commodity price of
wood used in the manufacturing process.

         At September 30, 1999, the carrying value and estimated fair value of
the Company's debt totaled $47.5 million. All of the Company's debt at September
30, 1999 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
$0.5 million. The Company has limited its risk related to interest rate changes
by purchasing certain interest rate caps and collars 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.



                                       15
<PAGE>   16


                 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

         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 is not in default nor has it defaulted on any indebtedness.
The Company is not obligated to pay any dividends or other payment to any of its
shareholders.

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

         No matters have been submitted to a vote of security holders during the
third quarter of 1999.

ITEM 5.  OTHER INFORMATION

         As publicly announced in July 1999, the Company has retained an
investment banker to seek potential buyers for the Retail Financing businesses
consisting of Keyboard Acceptance Corporation and Signature Leasing Company. The
Company is in the final stages of negotiation for the sale of its Retail
Financing units and expects to make an announcement during the fourth quarter
of 1999.

         During the third quarter, the Company sold its Juarez, Mexico facility,
as discussed above. The Company also has appointed Herbert A. Denton as a new
member of the Company's Board of Directors, extended the term of the employment
agreement for Karen Hendricks, chief executive officer and president, through
August 31, 2002, and amended the change of control agreements for Ms. Hendricks
and Duane Kimble, chief financial officer.



                                       16
<PAGE>   17


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

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

         10.1     Amendment to Agreement of Employment between the Company and
                  Karen L. Hendricks.

         10.2     Amendment to Change in Control Agreement between the Company
                  and Karen L. Hendricks.

         10.3     Amendment to Change in Control Agreement between the Company
                  and Duane D. Kimble.

         10.4     Sixth Amendment to Credit Agreement among the Company, Fifth
                  Third Bank and Bank One, Indiana (formerly NBD Bank).

         10.5     First Amendment to Amended and Restated Term Loan Agreement
                  among the Company, Fifth Third Bank and Bank One, Indiana
                  (formerly NBD Bank).

         27       Financial Data Schedule.

         99.1     Press Release, dated November 12, 1999 announcing the
                  Company's financial results for the third quarter of 1999.




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

Index to Exhibits appears on sequentially numbered page 19.

         (b)      REPORTS ON FORM 8-K

                  The Company filed a report on Form 8-K on September 7, 1999
                  announcing the sale of the Juarez, Mexico manufacturing
                  facility, and that Herbert A. Denton joined the Board of
                  Directors.



                                       17
<PAGE>   18


                 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:      November 15, 1999        BY:   /s/ Karen L. Hendricks
      --------------------------       -------------------------------------
                                       Karen L. Hendricks, Chairman,
                                       Chief Executive Officer and
                                       President

DATE:      November 15, 1999        BY:   /s/ Duane D. Kimble
      --------------------------       -------------------------------------
                                       Duane D. Kimble,
                                       Executive Vice President, and
                                       Chief Financial Officer



                                       18
<PAGE>   19


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
                                INDEX TO EXHIBITS

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

10.1     Amendment to Agreement of Employment between the Company and Karen L.
         Hendricks.

10.2     Amendment to Change in Control Agreement between the Company and Karen
         L. Hendricks.

10.3     Amendment to Change in Control Agreement between the Company and Duane
         D. Kimble.

10.4     Sixth Amendment to Credit Agreement among the Company, Fifth Third Bank
         and Bank One, Indiana (formerly NBD Bank).

10.5     First Amendment to Amended and Restated Term Loan Agreement among the
         Company, Fifth Third Bank and Bank One, Indiana (formerly NBD Bank).

27       Financial Data Schedule.

99.1     Press Release, dated November 12, 1999 announcing the Company's
         financial results for the third quarter of 1999.