<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
       June 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 August 1, 1999 is 3,452,826.


<PAGE>   2



                          BALDWIN PIANO & ORGAN COMPANY

                                      INDEX

<TABLE>
<CAPTION>
                                                                           Page
                                                                          Number
                                                                          ------
<S>                                                                       <C>
PART I.    FINANCIAL INFORMATION

      Item 1.  Financial Statements
           Unaudited Condensed Consolidated Balance Sheets as of
                June 30, 1999 and December 31, 1998......................    3
           Unaudited Condensed Consolidated Statements of Earnings
                for the three months ended and six months ended
                June 30, 1999 and 1998 ..................................    4
           Unaudited Condensed Consolidated Statements of Cash
                Flows for the six months ended June 30, 1999 and 1998 ...    5
           Notes to Unaudited Condensed Consolidated Financial
                Statements, June 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 .......................................   17

      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>
                                                  June 30,        December 31,
                                                    1999             1998
                                                  --------         --------
<S>                                               <C>             <C>
ASSETS
Current assets:
      Cash ...................................    $    458         $    327
      Receivables, net .......................      21,618           23,273
      Inventories ............................      46,432           51,089
      Deferred income taxes ..................       1,671            1,671
      Other current assets ...................       4,462            6,429
                                                  --------         --------
                Total current assets .........      74,641           82,789
Installment receivables,
      less current portion ...................      13,896           14,616
Property, plant and equipment, net ...........      22,320           22,724
Deferred income taxes ........................       1,089            1,089
Other assets .................................      16,952           16,032
                                                  --------         --------
                Total assets .................    $128,898         $137,250
                                                  ========         ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
      Accounts payable .......................    $ 11,180         $ 11,582
      Current portion of long-term debt ......      13,470           11,380
      Income taxes payable ...................           0              452
      Accrued liabilities ....................       4,930            5,766
                                                  --------         --------
                Total current liabilities ....      29,580           29,180
Long-term debt, less current portion .........      38,517           42,817
Other liabilities ............................       2,912            3,978
                                                  --------         --------
                Total liabilities ............      71,009           75,975
                                                  --------         --------

Shareholders' equity:
      Common stock ...........................          42               42
      Additional paid-in capital .............      12,636           12,603
      Accumulated other comprehensive
           income (loss) .....................        (610)            (394)
      Retained earnings ......................      52,317           55,520
                                                  --------         --------
                                                    64,385           67,771
      Less cost of treasury shares ...........      (6,496)          (6,496)
                                                  --------         --------
                Total shareholders' equity ...      57,889           61,275
                                                  --------         --------
                Total liabilities and
                   shareholders' equity ......    $128,898         $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 EARNINGS
                  (in thousands, except net earnings per share)

<TABLE>
<CAPTION>
                                               Three Months Ended              Six Months Ended
                                                    June 30                        June 30
                                             -----------------------        -----------------------
                                              1999             1998          1999            1998
                                             -------         -------        -------         -------
<S>                                          <C>             <C>            <C>             <C>
Net sales .................................  $28,544         $32,108        $59,058         $63,795
Cost of goods sold ........................   24,808          26,695         52,693          53,069
                                             -------         -------        -------         -------
      Gross profit ........................    3,736           5,413          6,365          10,726

Income on the sale of
      installment receivables .............    2,017           1,699          4,068           3,500
Interest income on
      installment receivables .............      341             378            696             808
Other operating income, net ...............      106             321            362             742
                                             -------         -------        -------         -------
                                               6,200           7,811         11,491          15,776
Operating expenses:
      Selling, general and
         administrative ...................    6,951           6,501         13,930          12,954
      Provision for doubtful
           accounts .......................      341             328            684             658
                                             -------         -------        -------         -------
           Operating (loss) profit ........   (1,092)            982         (3,123)          2,164

Interest expense ..........................    1,043             700          1,981           1,285
                                             -------         -------        -------         -------
           Earnings (loss) before
                income taxes ..............   (2,135)            282         (5,104)            879

Income taxes ..............................      773             110          1,901             338
                                             -------         -------        -------         -------
           Net earnings (loss) ............  $(1,362)        $   172        $(3,203)        $   541
                                             =======         =======        =======         =======



Basic earnings (loss) per share ...........  $ (0.40)        $  0.05        $ (0.93)        $  0.16
                                             =======         =======        =======         =======

Diluted earnings (loss) per share .........  $ (0.40)        $  0.05        $ (0.93)        $  0.15
                                             =======         =======        =======         =======

Weighted average number
      of common shares ....................    3,453           3,450          3,453           3,448
                                             =======         =======        =======         =======

Weighted average number of common and
      common equivalent shares ............    3,453           3,521          3,453           3,520
                                             =======         =======        =======         =======
</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>
                                                            Six months ended June 30,
                                                            -------------------------
                                                              1999             1998
                                                            --------         --------
<S>                                                         <C>              <C>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities
      Net earnings (loss) ..........................        $ (3,203)        $    541
      Reconciliations of net earnings
           to net cash provided by (used in)
           operating activities
                Depreciation and amortization ......           1,637            1,398
                Gain on sale of asset ..............              18                0
                Provision for doubtful accounts ....             684              658
                Changes in working capital .........           4,155          (15,921)
                                                            --------         --------
      Net cash provided by (used in)
                operating activities ...............           3,291          (13,324)
                                                            --------         --------

Cash flows from investing activities
      Additions to property, plant and equipment ...          (1,117)          (6,314)
                                                            --------         --------
      Net cash used in investing activities ........          (1,117)          (6,314)
                                                            --------         --------

Cash flows from financing activities:
      Installment receivables written ..............         (46,591)         (45,714)
      Installment receivables liquidated ...........           4,420            6,734
      Proceeds from sale of installment
           receivables .............................          42,338           39,530
      (Repayment) borrowing on long-term debt ......          (2,210)          18,780
      Proceeds from exercise of stock options ......               0               48
                                                            --------         --------
      Net cash (used in) provided by financing
           activities ..............................          (2,043)          19,378
                                                            --------         --------

Net increase (decrease) in cash ....................             131             (260)
Cash at beginning of quarter .......................             327              680
                                                            --------         --------
Cash at end of quarter .............................        $    458         $    420
                                                            ========         ========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid (refunded) during the year for:
      Interest .....................................        $  1,450         $  1,359
                                                            ========         ========
      Income taxes .................................        $   (288)        $    199
                                                            ========         ========
</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
                                  June 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
         six-month periods ended June 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>
                                               June 30,        December 31,
                                                 1999             1998
                                               --------         --------
<S>                                            <C>              <C>
          FIFO cost:
                    Raw material ......        $ 18,312         $ 22,224
                    Work-in-process ...          14,002           11,573
                    Finished goods ....          24,168           27,492
                                               --------         --------
                                                 56,482           61,289
               Less revaluation to LIFO         (10,050)         (10,200)
                                               --------         --------

                    Net inventories ...        $ 46,432         $ 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>
                                                      Six Months Ended June 30:
                                                  1999                           1998
                                    -------------------------------   ------------------------------
                                                              Per                              Per
                                     Income      Shares      Share    Income     Shares       Share
                                    --------     ------     -------   -------    -------      ------

<S>                                 <C>          <C>        <C>       <C>        <C>          <C>
         Earnings per share         $(3,203)     3,453      $(0.93)     $541       3,448        $.16
         Dilutive effect of
           options                                   0                                72
                                                ------                            ------
         Earnings per share-
           assuming dilution        $(3,203)     3,453      $(0.93)     $541       3,520        $.15
                                    -------     ------      ------      ----      ------        ----
</TABLE>


                                       6
<PAGE>   7


                 BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 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          Six Months Ended
                                               June 30                     June 30
                                        ----------------------      ---------------------
                                          1999          1998          1999          1998
                                        --------      --------      --------      -------
<S>                                     <C>           <C>           <C>           <C>
         Music and related              $ 17,139      $ 21,143      $ 35,928      $ 42,152
         Contract Electronics             11,405        10,965        23,130        21,643
         Retail Financing                  2,358         2,074         4,764         4,308
                                        --------      --------      --------      --------
         SALES AND RETAIL FINANCING
          REVENUE                       $ 30,902      $ 34,182      $ 63,822      $ 68,103
                                        --------      --------      --------      --------

         Music and related (*)          $   (853)     $  1,486      $ (2,650)     $  2,559
         Contract Electronics                392           557           548           934
         Retail Financing                  1,408         1,105         2,583         2,344
         Corporate G&A and other
           unallocated                    (2,039)       (2,167)       (3,604)       (3,673)
                                        --------      --------      --------      --------
         OPERATING (LOSS) PROFIT        $ (1,092)     $    981      $ (3,123)     $  2,164
                                        --------      --------      --------      --------

         Music and related              $ 71,450      $ 71,435      $ 71,450      $ 71,435
         Contract Electronics             20,809        22,276        20,809        22,276
         Retail Financing                 28,472        29,322        28,472        29,322
         Corporate G&A                     8,167         5,604         8,167         5,604
                                        --------      --------      --------      --------
         IDENTIFIABLE ASSETS            $128,898      $128,637      $128,898      $128,637
                                        --------      --------      --------      --------

         Music and related              $    514      $    388      $  1,023      $    783
         Contract Electronics                175           189           348           381
         Retail Financing                     16            10            29            20
         Corporate G&A                       125           107           237           214
                                        --------      --------      --------      --------
         DEPRECIATION AND
           AMORTIZATION                 $    830      $    694      $  1,637      $  1,398
                                        --------      --------      --------      --------

         Music and related              $    408      $  2,271      $    973      $  5,630
         Contract Electronics                (49)         (145)           63            76
         Retail Financing                     --            --            --            --
         Corporate G&A                        24           429            81           608
                                        --------      --------      --------      --------
         CAPITAL ADDITIONS              $    383      $  2,555      $  1,117      $  6,314
                                        --------      --------      --------      --------
</TABLE>



                                       7
<PAGE>   8


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


         * During the first quarter of 1999 the Company consolidated its grand
         piano production. This created a large, one-time decrease in Baldwin's
         Music and Related operating profit. Operating loss for Music and
         Related for the six months ended June 30, 1999 would have been $1,150
         without the effect of the 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 Earnings.

         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 furniture and 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 $587,000 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 $913,000. All of these costs were included
         in cost of goods sold. At June 30, 1999, the Company had an accrual of
         approximately $230,000 primarily related to accruals related to certain
         exit related costs in connection with the consolidation. The Company
         believes that the consolidation is substantially complete.

(6)      ACCOUNTING PRONOUNCEMENTS

         SFAS No. 130, "Reporting Comprehensive Income" was issued in June 1997
         and is effective for fiscal years beginning after December 15, 1997.
         Reclassification of financial statements for earlier periods provided
         for comparative purposes was required. The statement requires that an
         enterprise classify items of other comprehensive




                                       8
<PAGE>   9


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


         income by their nature in a financial statement and display the
         accumulated balance of other comprehensive income 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 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):       Six Months Ended June 30,
                                                 1999        1998
         -----------------------------------------------------------
<S>                                           <C>          <C>
         Net earnings (loss)                    $(3,203)     $ 541
         Foreign currency
           translation adjustment                  (216)       --
         -----------------------------------------------------------
           Total comprehensive income (loss)    $(3,419)     $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.



                                       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
SECOND QUARTER AND SIX MONTHS OF 1999 COMPARED
  TO THE SECOND QUARTER AND SIX MONTHS OF 1998


         Total second-quarter sales fell 11 percent to $28.5 million, from $32.1
million a year ago. Net losses for the period were $1,362,000, or 40 cents per
share, vs. income of $172,000, or 5 cents per share for the prior year period.
For the first half of 1999 sales were $59.1 million and a net loss of
$3,203,000, or 93 cents per share, including a loss of 27 cents per share
related to restructuring and other non-recurring cost associated with the
consolidation of grand piano assembly operations. For the first half of 1998,
net income was $541,000, or 16 cents per share, on sales of $63.8 million.

         First half Music sales decline of 15 percent year-to-year was primarily
a function of the continued adverse impact of low-priced Asian imports.

         Through the first half of 1999, Contract Electronics sales have grown 7
percent to $23.1 million from $21.6 million during the first half of 1998.

         Portfolio growth increased first-half Retail Financing revenues to $4.8
million versus $4.3 million for the same period last year.

         Selling, general and administrative expenses for the six months ended
June 30 of 1999 were $13.9 million, an increase of $0.9 million from $13.0
million for the comparable period in 1998. This increase resulted from costs
associated with opening additional Music retail outlets, upgrading Contract
Electronics' infrastructure and collection expenses at Retail Financing due to
the increase in the portfolio.

         Interest expense increased by $0.7 million, to $2.0 million for the six
months ended June 30, 1999 from $1.3 million for the comparable period in 1998.
This increase resulted from the Company's higher debt levels primarily due to an
average increase in inventories of $7 million and capital spending during 1998
of $8.3 million for polyester finishing and piano plate projects.

         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 Corporation.


                                       10
<PAGE>   11


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

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 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 1.5 percentage points above LIBOR, or under certain
specified circumstances, 0.5 percentage points per annum above the Prime Rate.

LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 1999, the Company had outstanding indebtedness of $52.0
million. The Company considers that indebtedness of $20.9 million supports the
retained portion of Retail Financing's portfolio and the remaining indebtedness
of $31.1 million supports the


                                       11
<PAGE>   12


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

$134 million annual operations of Music and Contract Electronics. Further, the
Company has plans to re-engineer 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 with 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 1.5 percentage points above
LIBOR, or under certain specified circumstances, 0.5 percentage points per annum
above the Prime Rate. At June 30, 1999, the rate under the Credit Facility was
6.4% and the Company has approximately $3.4 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'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 Finance as a
service fee.

         Proceeds from the sale of installment receivables amounted to $42.3
million for the six months ended June 30, 1999 and $39.5 million for the
comparable period in 1998. This increase in 1999 compared to 1998 is largely the
result of an increase in the volume of



                                       12
<PAGE>   13


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

new installment contracts written at traditional keyboard dealers and at the
Company's retail stores. 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 $105.5 million of installment receivables sold. The Company
believes an adequate allowance has been provided for all uncollectible
receivables.

         Capital expenditures amounted to $1.1 million through the second
quarter of 1999 and $6.3 million in the comparable period of 1998. At June 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. As the Company continues to evaluate


                                       13
<PAGE>   14



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

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 June 30, 1999, the carrying value and estimated fair value of Company's
debt totaled $52.0 million. All of the Company's debt at June 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

      (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 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

      At the Company's 1999 Annual Meeting of Shareholders held on June 14-15,
1999, the following actions were taken:

The following Directors were elected for terms of office expiring at the Annual
Meeting of Shareholders in 2000 -

                                             Authority
                             Votes For        Withheld
                             ---------        --------

George E. Castrucci          1,610,424       1,455,517
William B. Connell           1,610,424       1,455,517
John H. Gutfreund            1,610,423       1,455,518
Joseph H. Head, Jr.          1,610,323       1,455,618
Karen L. Hendricks           1,610,423       1,455,518
Roger L. Howe                1,610,424       1,455,517



                                       16
<PAGE>   17


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


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)

<TABLE>
<CAPTION>
                                                 Authority
                                 Votes For        Withheld      Abstain
                                 ---------        --------      -------
<S>                              <C>             <C>            <C>
Appointment of
Deloitte & Touche LLP as
independent accountants
for 1999                         3,064,014            301        1,626
</TABLE>

The two shareholders who submitted shareholder proposals for inclusion in the
Company's May 20, 1999 proxy statement did not present such proposals for action
by the Company's shareholders at the Annual Meeting. Accordingly, those
proposals were not voted upon at the Annual Meeting.


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,
Keyboard Acceptance Corporation and Signature Leasing Corporation.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

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

              19      1999 Second Quarter Report to Shareholders of the Company.
              99.1    Press Release, dated June 15, 1999 announcing re-election
                      of Directors.
              99.2    Press Release, dated July 22, 1999 announcing the
                      Company's financial results for the second quarter of
                      1999.
              27      Financial Data Schedule.

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

Index to Exhibits appears on sequentially numbered page 19.

         (b)  Reports on Form 8-K
              -------------------
              The Company filed no reports on Form 8-K during the quarter ended
              June 30, 1999.


                                       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:    August 13, 1999                     BY: /S/ KAREN L. HENDRICKS
      ---------------------                     ------------------------------
                                                Karen L. Hendricks, Chairman,
                                                Chief Executive Officer and
                                                President




DATE:    August 13, 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
------                        -------

19       1999 Second Quarter Report to Shareholders of the Company.


99.1     Press Release, dated June 15, 1999 announcing re-election of Directors

99.2     Press Release, dated July 22, 1999 announcing the Company's financial
         results for the second quarter of 1999.

27       Financial Data Schedule.




                                       19