<PAGE>
============================================================================


                               UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                                 FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         FOR THE QUARTERLY PERIOD ENDED OCTOBER 2, 1999

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934


                       COMMISSION FILE NUMBER 001-11911


                       STEINWAY MUSICAL INSTRUMENTS, INC.
           (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              DELAWARE                                    35-1910745
   (State or Other Jurisdiction of                     (I.R.S. Employer
   Incorporation or Organization)                     Identification No.)

     800 South Street, Suite 425
       Waltham, Massachusetts                               02453
     (Address of Principal Executive Offices)            (Zip Code)

Registrant's telephone number including area code:   (781) 894-9770

                                     and

                           THE SELMER COMPANY, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              DELAWARE                                     95-4432228
   (State or Other Jurisdiction of                      (I.R.S. Employer
   Incorporation or Organization)                      Identification No.)

600 Industrial Parkway, Elkhart, Indiana                     46516
         (Address of Principal Executive Offices)          (Zip Code)

Registrant's telephone number including area code:   (219) 522-1675


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 during the past 90 days. Yes [X] No [ ]

Number of shares of Common Stock issued and outstanding
      as of October 30, 1999:         Class A          477,953
                                      Ordinary       8,747,474
                                      Total          9,225,427

=============================================================================

<PAGE>


               STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
                                    FORM 10Q
                                      INDEX
<TABLE>
<S>           <C>                                                                                       <C>
PART I.       FINANCIAL INFORMATION

ITEM 1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

              Condensed Consolidated Balance Sheets
                  December 31, 1998 and October 2, 1999...................................................3

              Condensed Consolidated Statements of Operations
                  Three months and nine months ended October 3, 1998 and October 2, 1999..................4

              Condensed Consolidated Statements of Cash Flows
                  Nine months ended October 3, 1998 and October 2, 1999...................................5

              Notes to Condensed Consolidated Financial Statements........................................6


ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS..............................................................13

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.................................17


PART II.      OTHER INFORMATION

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K...........................................................17

              SIGNATURES.................................................................................18

</TABLE>




                                       2

<PAGE>


               STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,         OCTOBER 2,
                                                                                     1998                1999
                                                                                ---------------     ---------------
<S>                                                                             <C>                <C>
ASSETS
Current assets:
   Cash                                                                          $      12,460      $       3,928
   Accounts, notes and leases receivable, net of allowance for
        bad debts of $7,512 and $7,211 in 1998 and 1999, respectively                   52,451             84,303
   Inventories                                                                          96,527             96,507
   Prepaid expenses and other current assets                                             2,323              2,654
   Deferred tax assets                                                                   6,620              6,480
                                                                                ---------------     ---------------
Total current assets                                                                   170,381            193,872

Property, plant and equipment, net of accumulated depreciation of
        $25,847 and $28,118 in 1998 and 1999, respectively                              60,194             87,377
Other assets, net                                                                       19,754             17,807
Cost in excess of fair value of net assets acquired, net of accumulated
        amortization of $3,728 and $4,308 in 1998 and 1999, respectively                33,598             31,803
                                                                                ---------------     ---------------
TOTAL ASSETS                                                                     $     283,927      $     330,859
                                                                                ===============     ===============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable and current portion of long-term debt                           $       5,658           $ 10,134
   Accounts payable                                                                      6,793              5,966
   Other current liabilities                                                            29,792             33,049
                                                                                ---------------     ---------------
Total current liabilities                                                               42,243             49,149

Long-term debt                                                                         111,370            144,593
Deferred tax liabilities                                                                25,146             22,774
Non-current pension liability                                                           13,411             12,720
                                                                                ---------------     ---------------
Total liabilities                                                                      192,170            229,236
                                                                                ---------------     ---------------

Commitments and contingent liabilities

Stockholders' equity:
   Common stock                                                                              9                  9
   Additional paid in capital                                                           70,245             71,031
   Retained earnings                                                                    31,143             44,366
   Accumulated other comprehensive income                                               (3,976)            (6,213)
   Treasury stock, at cost                                                              (5,664)            (7,570)
                                                                                ---------------     ---------------
Total stockholders' equity                                                              91,757            101,623
                                                                                ---------------     ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $     283,927      $     330,859
                                                                                ===============     ===============
</TABLE>


See notes to condensed consolidated financial statements.







                                       3

<PAGE>


               STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                      Three Months Ended                Nine Months Ended
                                                 ------------------------------   ------------------------------
                                                  October 3,      October 2,       October 3,      October 2,
                                                     1998            1999             1998            1999
                                                 --------------  --------------   --------------  --------------
<S>                                              <C>              <C>              <C>             <C>
Net sales                                          $   68,646      $   72,707       $  220,807      $  232,001
Cost of sales                                          46,748          50,648          148,333         157,797
                                                 --------------  --------------   --------------  --------------

Gross profit                                           21,898          22,059           72,474          74,204

Operating expenses:
   Sales and marketing                                  8,102           8,360           26,107          27,470
   General and administrative                           3,860           4,201           12,336          12,716
   Amortization                                           963             987            2,871           2,944
   Other operating expense                                105             105              213             185
                                                 --------------  --------------   --------------  --------------
Total operating expenses                               13,030          13,653           41,527          43,315
                                                 --------------  --------------   --------------  --------------

Income from operations                                  8,868           8,406           30,947          30,889

Interest expense, net                                   3,330           3,676            9,057           9,989
Other (income) expense, net                              (192)           (776)            (112)         (1,138)
                                                 --------------  --------------   --------------  --------------
Income before income taxes                              5,730           5,506           22,002          22,038
Provision for income taxes                              2,431           2,037            9,951           8,815
                                                 --------------  --------------   --------------  --------------
Net income                                        $     3,299     $     3,469      $    12,051     $    13,223
                                                 ==============  ==============   ==============  ==============



Net income per share:
    Basic                                        $         .35   $         .38    $       1.29    $       1.43
                                                 ==============  ==============   ==============  ==============
    Diluted                                      $         .35   $         .37    $       1.26    $       1.42
                                                 ==============  ==============   ==============  ==============

Weighted average shares:
    Basic                                           9,331,592       9,241,350        9,353,501       9,247,882
                                                 ==============  ==============   ==============  ==============
    Diluted                                         9,473,550       9,323,630        9,539,343       9,332,767
                                                 ==============  ==============   ==============  ==============
</TABLE>


See notes to condensed consolidated financial statements.

                                       4

<PAGE>



               STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                                    -----------------------------
                                                                                    October 3,       October 2,
                                                                                       1998             1999
                                                                                   --------------   --------------
<S>                                                                                 <C>              <C>
Cash flows from operating activities:
  Net income                                                                         $   12,051       $   13,223
  Adjustments to reconcile net income to
    cash flows from operating activities:
    Depreciation and amortization                                                         7,957            8,638
    Deferred tax benefit                                                                 (1,549)          (1,451)
    Other                                                                                   272              133
    Changes in operating assets and liabilities:
      Accounts, notes and leases receivable                                             (29,413)         (32,489)
      Inventories                                                                        (4,332)          (1,911)
      Prepaid expense and other current assets                                              417             (357)
      Accounts payable                                                                      222             (739)
      Accrued expenses                                                                      670            4,162
                                                                                   --------------   --------------
Cash flows from operating activities                                                    (13,705)         (10,791)

Cash flows from investing activities:
  Capital expenditures                                                                   (4,272)         (33,888)
  Proceeds from disposals of fixed assets                                                   132              138
  Changes in other assets                                                                 2,156             (631)
                                                                                   --------------   --------------
Cash flows from investing activities                                                     (1,984)         (34,381)

Cash flows from financing activities:
  Net borrowings under lines of credit                                                   15,538           16,406
  Proceeds from long-term debt                                                                            22,500
  Repayments of long-term debt                                                             (713)            (994)
  Proceeds from issuance of stock                                                         1,017              786
  Purchase of treasury stock                                                             (2,938)          (1,906)
                                                                                   --------------   --------------
Cash flows from financing activities                                                     12,904           36,792

Effect of foreign exchange rate changes on cash                                              41             (152)
                                                                                   --------------   --------------

Decrease in cash                                                                         (2,744)          (8,532)
Cash, beginning of period                                                                 5,271           12,460
                                                                                   --------------   --------------

Cash, end of period                                                                 $     2,527      $     3,928
                                                                                   ==============   ==============

Supplemental Cash Flow Information
    Interest paid                                                                   $     6,794      $     7,475
                                                                                   ==============   ==============
    Taxes paid                                                                       $   12,573       $   10,684
                                                                                   ==============   ==============
</TABLE>

See notes to condensed consolidated financial statements.

                                                    5

<PAGE>



               STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 OCTOBER 2, 1999
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)


(1)  BASIS OF PRESENTATION

     The accompanying condensed consolidated financial statements of Steinway
Musical Instruments, Inc. and subsidiaries (the "Company") for the nine months
ended October 3, 1998 and October 2, 1999 are unaudited. In the opinion of
management, these statements have been prepared on the same basis as the audited
consolidated financial statements as of and for the year ended December 31,
1998, and include all adjustments which are of a normal and recurring nature,
necessary for the fair presentation of financial position, results of operations
and cash flows for the interim period. The condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998. The results of operations for
the nine months ended October 2, 1999 are not necessarily indicative of the
results that may be expected for the entire year.


(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     PRINCIPLES OF  CONSOLIDATION - The consolidated financial statements of
the Company include the accounts of all of its direct and indirect wholly
owned subsidiaries, including The Selmer Company, Inc. ("Selmer") and The
Steinway Piano Company, Inc. ("Steinway"). Significant intercompany balances
have been eliminated in consolidation.

     RECLASSIFICATIONS - Certain reclassifications of 1998 amounts have been
made to conform to the 1999 financial statement presentation.

     INCOME PER SHARE - Basic income per share is computed using the weighted
average number of shares outstanding during each period. Diluted income per
share reflects the effect of the Company's outstanding options using the
treasury stock method. A reconciliation of the weighted average shares used for
the basic and diluted computations for the three month and nine month periods
ended October 3, 1998 and October 2, 1999 is as follows:
<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED             NINE MONTHS ENDED
                                                              ------------------             -----------------
                                                             1998           1999            1998           1999
                                                             ----           ----            ----           ----
<S>                                                      <C>            <C>             <C>             <C>
Weighted average shares:
     For basic income per share                             9,331,592      9,241,350      9,353,501       9,247,882
     Dilutive effect of stock options                         141,958         82,280        185,842          84,885
                                                          -----------    -----------     ----------     -----------
     For diluted income per share                           9,473,550      9,323,630      9,539,343       9,332,767
                                                           ==========      =========      =========       =========

</TABLE>
                                       6
<PAGE>



     COMPREHENSIVE INCOME - Other comprehensive income is comprised of foreign
currency translation adjustments. Total comprehensive income for the three month
and nine month periods ended October 3, 1998 and October 2, 1999 is as follows:
<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED             NINE MONTHS ENDED
                                                              ------------------             -----------------
                                                             1998           1999            1998           1999
                                                             ----           ----            ----           ----
<S>                                                      <C>              <C>           <C>               <C>
     Net income                                          $   3,299        $   3,469      $ 12,051         $ 13,223
     Other comprehensive income (loss)                       2,724            1,642         2,380           (2,237)
                                                        ----------       ----------    ----------       ----------
     Total comprehensive income                          $   6,023        $   5,111      $ 14,431         $ 10,986
                                                         =========        =========      ========         ========
</TABLE>

(3)  INVENTORIES

     Inventories consist of the following:
<TABLE>
<CAPTION>
                                                                                   December 31,      October 2,
                                                                                       1998             1999
                                                                                  ---------------  ---------------
<S>                                                                                <C>             <C>
Raw materials                                                                      $     15,266     $     14,952
Work in process                                                                          35,010           35,710
Finished goods                                                                           46,251           45,845
                                                                                  ---------------  ---------------
Total                                                                              $     96,527     $     96,507
                                                                                  ===============  ===============
</TABLE>

(4)      OTHER (INCOME) EXPENSE, NET

     Other (income) expense, net consists of the following:
<TABLE>
<CAPTION>

                                                      Three months ended                Nine months ended
                                                 ------------------------------   ------------------------------
                                                  October 3,      October 2,       October 3,      October 2,
                                                     1998            1999             1998            1999
                                                 --------------  --------------   --------------  --------------
<S>                                              <C>               <C>             <C>              <C>
West 57th Building income                        $          -      $   (1,164)     $         -      $   (2,353)
West 57th Building expenses                                               814                            1,640
Foreign exchange (gain) loss, net                        (157)           (319)               3            (117)
Miscellaneous                                             (35)           (107)            (115)           (308)
                                                 --------------  --------------   --------------  --------------

Other (income) expense, net                      $       (192)    $      (776)     $      (112)     $   (1,138)
                                                 ==============  ==============   ==============  ==============
</TABLE>


(5)  COMMITMENTS AND CONTINGENT LIABILITIES

     Certain environmental matters are pending against a subsidiary of the
Company, which might result in monetary damages, the amount of which, if any,
cannot be determined at the present time. Philips Electronics, a previous owner
of a subsidiary of the Company, has agreed to hold the Company harmless from any
financial liability arising from these environmental matters which were pending
as of December 29, 1988. Management believes that these matters will not have a
material adverse impact on the Company's results of operations or financial
condition.

                                       7
<PAGE>



(6)  SUMMARIZED FINANCIAL INFORMATION

     The Company is a holding company whose only material asset consists of its
investment in its wholly owned subsidiary, Selmer. Summarized financial
information for Selmer and its subsidiaries is as follows:
<TABLE>
<CAPTION>

                                                                                       Nine Months Ended
                                              December 31,       October 2,       October 3,        October 2,
                                                  1998              1999             1998              1999
                                             ---------------   ---------------  ---------------   ---------------
<S>                                             <C>               <C>           <C>                <C>
Current assets                                   $ 167,938         $ 190,835
Total assets                                       280,991           327,347
Current liabilities                                 53,712            63,819
Stockholder's equity                                97,080           108,198
Total revenues                                                                     $  218,871        $  229,878
Gross profit                                                                           71,806            73,593
Net income                                                                             11,929            13,355

</TABLE>

(7)  SEGMENT INFORMATION

     The Company has identified two distinct and reportable segments: the piano
segment and the band and orchestral instrument segment. These segments were
selected based upon the way in which management oversees and evaluates the
results of each operation. The following tables present information about the
Company's operating segments for the three and nine month periods ended October
3, 1998 and October 2, 1999:

<TABLE>
<CAPTION>

THREE MONTHS ENDED 1998                  Piano Segment               Band and Orchestral Segment  Other &   Consol
                              ------------------------------------  ------------------------------
                                 US     GERMANY    OTHER    TOTAL      US       OTHER    TOTAL     ELIM      TOTAL
                                 --     -------    -----    -----      --       -----    -----     ----      -----
<S>                            <C>      <C>        <C>     <C>      <C>        <C>      <C>     <C>        <C>
Revenues from external
    customers                  $24,095   $7,943    $3,653   $35,691  $31,731    $1,224   $32,955 $       -  $68,646
Net income                         491      144       236       871       18        16        34     2,394    3,299


THREE MONTHS ENDED 1999                  Piano Segment               Band and Orchestral Segment  Other &   Consol
                              ------------------------------------  ------------------------------
                                 US     GERMANY    OTHER    TOTAL      US       OTHER    TOTAL     ELIM      TOTAL
                                 --     -------    -----    -----      --       -----    -----     ----      -----
Revenues from external
    customers                  $28,384   $8,279    $3,979   $40,642  $30,594    $1,471   $32,065 $       -  $72,707
Net income (loss)                1,058      126       290     1,474     (808)       31      (777)    2,772    3,469


NINE MONTHS ENDED 1998                   Piano Segment               Band and Orchestral Segment  Other &   Consol
                              ------------------------------------  ------------------------------
                                 US     GERMANY    OTHER    TOTAL      US       OTHER    TOTAL     ELIM      TOTAL
                                 --     -------    -----    -----      --       -----    -----     ----      -----
Revenues from external
    customers                  $74,696  $25,601   $11,598  $111,895 $105,769    $3,143  $108,912 $       - $220,807
Net income                       1,554      685       673     2,912    1,707        57     1,764     7,375   12,051


NINE MONTHS ENDED 1999                   Piano Segment               Band and Orchestral Segment  Other &   Consol
                              ------------------------------------  ------------------------------
                                 US     GERMANY    OTHER    TOTAL      US       OTHER    TOTAL     ELIM      TOTAL
                                 --     -------    -----    -----      --       -----    -----     ----      -----
Revenues from external
    customers                  $83,553  $26,154   $12,835  $122,542 $106,253    $3,206  $109,459 $       - $232,001
Net income                       3,143      730     1,007     4,880      226        46       272     8,071   13,223
</TABLE>
                                       8
<PAGE>



(8)  SUMMARY OF MERGER AND GUARANTEES

     The acquisition of Steinway in May 1995 was funded by Selmer's issuance of
$105 million of 11% Senior Subordinated Notes (the "Notes") due 2005 and
available cash balances of the Company. Selmer's payment obligations under the
Notes are fully and unconditionally guaranteed on a joint and several basis by
the Company as Parent (the "Guarantor Parent"), and by Steinway and certain
direct and indirect wholly-owned subsidiaries of the Company, each a "Guarantor"
(the "Guarantor Subsidiaries"). These subsidiaries, together with the operating
divisions of Selmer, represent all of the operations of the Company conducted in
the United States. The remaining subsidiaries, which do not guarantee the Notes,
represent foreign operations (the "Non Guarantor Subsidiaries").

     The following condensed consolidating supplementary data illustrates the
composition of the combined Guarantors. Separate complete financial statements
of the respective Guarantors would not provide additional material information
which would be useful in assessing the financial composition of the Guarantors.
No single Guarantor has any significant legal restrictions on the ability of
investors or creditors to obtain access to its assets in event of default on the
Guarantee other than its subordination to senior indebtedness.

     Investments in subsidiaries are accounted for by the parent on the cost
method for purposes of the supplemental consolidating presentation. Earnings of
subsidiaries are therefore not reflected in the parent's investment accounts and
earnings. The principal elimination entries eliminate investments in
subsidiaries and intercompany balances and transactions.

                                       9
<PAGE>

        STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATING BALANCE SHEETS
                         OCTOBER 2, 1999
                      (DOLLARS IN THOUSANDS)
                            (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          Non
                                       Guarantor       Issuer           Guarantor      Guarantor
                                        Parent        Of Notes        Subsidiaries    Subsidiaries    Eliminations Consolidated
                                       ---------      --------        ------------    ------------    ------------ ------------
<S>                                  <C>             <C>               <C>            <C>             <C>          <C>
ASSETS
Current assets:
   Cash                              $        -       $      351        $   2,491      $     1,086     $       -      $  3,928
   Accounts, notes and leases
     receivable, net                          1           65,290            6,919           12,093                      84,303
   Inventories                                            32,319           36,940           28,365        (1,117)       96,507
   Prepaid expenses and other
     current assets                         314            1,548              202              590                       2,654
   Deferred tax assets                                     1,050            2,819            3,584          (973)        6,480
                                     ----------       ----------        ---------      -----------      --------     ---------
Total current assets                        315          100,558           49,371           45,718        (2,090)      193,872

Property, plant and equipment, net          100           13,400           58,723           15,154                      87,377
Investment in subsidiaries               71,143          169,387           56,147                       (296,677)            -
Other assets, net                           613              936           11,449            6,122        (1,313)       17,807
Cost in excess of fair value
    of net assets acquired, net                            9,164           10,930           11,709                      31,803
                                     ----------       ----------       ----------      -----------     ---------     ---------

TOTAL ASSETS                          $  72,171        $ 293,445        $ 186,620       $   78,703     $(300,080)    $ 330,859
                                     ==========       ==========       ==========      ===========     =========     =========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable and current
      portion of long-term debt       $       -       $        -        $     576       $   9,558      $       -     $  10,134
   Accounts payable                          15            2,308            2,438           1,205                        5,966
   Other current liabilities            (14,214)          11,357           28,751           9,548         (2,393)       33,049
                                     ----------       ----------       ----------      -----------     ---------     ---------
Total current liabilities               (14,199)          13,665           31,765          20,311         (2,393)       49,149

Long-term debt                               29          120,516           23,491             557                      144,593
Intercompany                             23,378           71,957         (100,282)          4,947                            -
Deferred tax liabilities                                   2,161            9,136          11,477                       22,774
Non-current pension liability                                102                           12,720           (102)       12,720
                                     ----------       ----------       ----------      -----------     ---------     ---------
Total liabilities                         9,208          208,401          (35,890)         50,012         (2,495)      229,236

Stockholders' equity                     62,963           85,044          222,510          28,691       (297,585)      101,623
                                     ----------       ----------       ----------      -----------     ---------     ---------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                  $  72,171        $ 293,445        $ 186,620      $   78,703      $(300,080)    $ 330,859
                                     ==========       ==========       ==========      ===========     =========     =========
</TABLE>

                                      10

<PAGE>



                       STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                               NINE MONTHS ENDED OCTOBER 2, 1999
                                    (DOLLARS IN THOUSANDS)
                                          (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  Non
                                         Guarantor    Issuer     Guarantor     Guarantor
                                          Parent     of Notes   Subsidiaries  Subsidiaries Eliminations Consolidated
                                          ------     --------   ------------  ------------ ------------ ------------
<S>                                    <C>           <C>        <C>          <C>           <C>           <C>

Net sales                              $        -    $ 105,409   $   90,080   $   43,339    $ (6,827)     $ 232,001
Cost of sales                                           75,552       59,991       28,886      (6,632)       157,797
                                       ----------    ---------   ----------   ----------    --------      ---------

Gross profit                                    -       29,857       30,089       14,453        (195)        74,204

Operating expenses:
  Sales and marketing                                   10,596       10,898        6,063         (87)        27,470
  General and administrative                2,195        4,033        3,218        3,270                     12,716
  Amortization                                             344        1,630          970                      2,944
  Other operating (income) expense         (1,810)        (249)       1,472          685          87            185
                                       ----------    ---------   ----------   ----------    --------      ---------
Total operating expenses                      385       14,724       17,218       10,988           -         43,315
                                       ----------    ---------   ----------   ----------    --------      ---------

Income (loss) from operations                (385)      15,133       12,871        3,465        (195)        30,889

Interest (income) expense, net                          14,569       (4,975)         395                      9,989
Other (income) expense, net                                            (815)        (323)                    (1,138)
                                       ----------    ---------   ----------   ----------    --------      ---------

Income (loss) before income taxes            (385)         564       18,661        3,393        (195)        22,038

Provision for (benefit of)
   income taxes                              (176)         356        7,189        1,508         (62)         8,815
                                       ----------    ---------   ----------   ----------    --------      ---------

Net income (loss)                      $     (209)  $      208   $   11,472   $    1,885       $(133)     $  13,223
                                       ==========    =========   ==========   ==========    ========      =========

</TABLE>

                                       11


<PAGE>



                            STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
                              CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                                       NINE MONTHS ENDED OCTOBER 2, 1999
                                             (DOLLARS IN THOUSANDS)
                                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                             Non
                                                    Guarantor     Issuer     Guarantor    Guarantor
                                                      Parent     Of Notes   Subsidiaries Subsidiaries  Eliminations   Consolidated
                                                      ------     --------   ------------ ------------  ------------   ------------
<S>                                               <C>          <C>          <C>         <C>            <C>            <C>
Cash flows from operating activities:
  Net income (loss)                               $    (209)   $     208    $   11,472   $    1,885     $    (133)    $  13,223
  Adjustments to reconcile net income (loss)
  to cash flows from operating activities:
    Depreciation and amortization                        31        2,495         4,033        2,079                       8,638
    Deferred tax benefit                                                          (656)        (795)                     (1,451)
    Other                                                             81            42           10                         133
    Changes in operating assets and liabilities:
      Accounts, notes and leases receivable              (1)     (28,331)       (1,569)      (2,588)                    (32,489)
      Inventories                                                  6,279        (5,095)      (3,290)          195        (1,911)
      Prepaid expense and other current assets         (190)         (62)          205         (310)                       (357)
      Accounts payable                                   15          603        (1,178)        (179)                       (739)
      Accrued expenses                               (3,260)         571         6,553          360           (62)        4,162
                                                   --------       ------       -------      -------         -----       -------
Cash flows from operating activities                 (3,614)     (18,156)       13,807       (2,828)            -       (10,791)

Cash flows from investing activities:
  Capital expenditures                                  (32)        (688)      (32,660)        (508)                    (33,888)
  Proceeds from disposals of fixed assets                                                       138                         138
  Changes in other assets                                            158          (789)                                    (631)
                                                   --------       ------       -------       -------         -----       -------
Cash flows from investing activities                    (32)        (530)      (33,449)        (370)            -       (34,381)

Cash flows from financing activities:
  Net borrowings (repayments) under
     lines of credit                                   (206)      10,516         2,097        3,999                      16,406
  Proceeds from long-term debt                                                  22,500                                   22,500
  Repayments of long-term debt                                                    (295)        (699)                       (994)
  Proceeds from issuance of stock                       786                                                                 786
  Purchase of treasury stock                         (1,906)                                                             (1,906)
  Intercompany dividends                                           1,095         3,000       (4,095)                          -
  Other intercompany transactions                     4,972        4,428       (13,217)       3,817                           -
                                                   --------       ------       -------      -------         -----       -------
Cash flows from financing activities                  3,646       16,039        14,085        3,022             -        36,792

Effect of exchange rate changes on cash                                                        (152)                       (152)

Decrease in cash                                          -       (2,647)       (5,557)        (328)            -        (8,532)
Cash, beginning of period                                          2,998         8,048        1,414                      12,460
                                                   --------       ------       -------      -------         -----       -------

Cash, end of period                                $      -        $ 351    $    2,491      $ 1,086         $   -       $ 3,928
                                                   ========        =====       =======      =======         =====       =======

</TABLE>
                                      12


<PAGE>



ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS)

INTRODUCTION

         The Company, through its Steinway and Selmer subsidiaries, is one of
the world's leading manufacturers of musical instruments.

         Certain statements contained in the following Discussion and Analysis
of Financial Condition and Results of Operations are "forward-looking
statements" within the meaning of Section 21E of the Securities and Exchange Act
of 1934, as amended. These forward-looking statements represent the Company's
present expectations or beliefs concerning future events. The Company cautions
that such statements are necessarily based on certain assumptions which are
subject to risks and uncertainties, including, but not limited to, changes in
general economic conditions, increased competition, exchange rate fluctuations,
and the availability of production capacity which could cause actual results to
differ materially from those indicated herein. Further information on these risk
factors is included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 and its Final Prospectus filed in August 1996.


RESULTS OF OPERATIONS

THREE MONTHS ENDED OCTOBER 2, 1999 COMPARED TO THREE MONTHS
   ENDED OCTOBER 3, 1998

         NET SALES - Net sales increased $4.1 million (6%) to $72.7 million in
the third quarter of 1999. This growth occurred in the piano segment where piano
sales increased $5.0 million (14%) over the prior year period. Overall piano
shipments increased 18%, with Boston units increasing 31%. Band and orchestral
instrument sales decreased $0.9 million (3%) in the third quarter of 1999. While
shipping delays relating to production inefficiencies caused band unit sales to
decrease 2% during the quarter, unit shipments of percussion and string
instruments increased 7% and 16%, respectively.

         GROSS PROFIT - Gross profit increased by $0.2 million (1%) to $22.1
million in the third quarter of 1999. Gross margins decreased from 31.9% in 1998
to 30.3% in 1999. Competitive pricing constraints and production inefficiencies
adversely affected band margins, which declined from 29.4% in 1998 to 25.7% in
1999. Piano margins decreased slightly from 34.2% in 1998 to 34.0% in 1999 as a
result of a yen driven cost increase in the Boston line.

         OPERATING EXPENSES - Operating expenses increased by $0.6 million (5%)
to $13.7 million in the third quarter of 1999. Expenses as a percentage of sales
decreased from 19.0% in 1998 to 18.8% in 1999.

         INCOME FROM  OPERATIONS  - Income from  operations  decreased  by $0.5
million (5%) to $8.4 million in the third quarter of 1999.

         INCOME TAXES - The Company's effective tax rate was 42.4% and 37.0% in
the third quarter of 1998 and 1999, respectively. A statutory rate reduction in
Germany, as well as a shift in the geographical distribution of income away from
jurisdictions with higher tax rates, lowered the effective tax rate of the
Company.

                                      13
<PAGE>

NINE MONTHS ENDED OCTOBER 2, 1999 COMPARED TO NINE MONTHS ENDED OCTOBER 3, 1998

         NET SALES - Net sales increased $11.2 million (5%) to $232.0 million in
the first nine months of 1999. Piano sales increased $10.6 million (10%) in 1999
on unit increases of 3% for Steinway pianos and 14% for the Boston line. Band
and orchestral instrument sales remained essentially flat at $109.0 million with
modest price appreciation offsetting an overall 2% unit decline.

         GROSS PROFIT - Gross profit increased by $1.7 million (2%) to $74.2
million over the prior year period. Gross margins declined from 32.8% in 1998 to
32.0% in 1999. Band margins declined from 30.6% in 1998 to 28.5% in 1999 as a
result of production inefficiencies, competitive pricing constraints and a
higher mix of lower margin products in the current year period. Piano margins
increased slightly from 35.0% in 1998 to 35.1% in 1999.

         OPERATING EXPENSES - Operating expenses increased by $1.8 million (4%)
to $43.3 million in the first nine months of 1999. Expenses as a percentage of
sales decreased slightly from 18.8% in 1998 to 18.7% in 1999.

         INCOME FROM OPERATIONS - Income from  operations  remained flat at
$30.9 million for the first nine months of each year.

         INCOME TAXES - The Company's effective tax rate was 45.2% and 40.0% in
the first nine months of 1998 and 1999, respectively. A statutory rate reduction
in Germany, as well as a shift in the geographical distribution of income away
from jurisdictions with higher tax rates, lowered the effective tax rate of the
Company.


LIQUIDITY AND CAPITAL RESOURCES

         The Company has relied primarily upon cash provided by operations,
supplemented as necessary by seasonal borrowings under its working capital line,
to finance its operations, repay long-term indebtedness and fund capital
expenditures.

         Cash used in operations in the first nine months was $13.7 million in
1998 and $10.8 million in 1999. The decrease in cash used in operations in 1999
resulted from $1.2 million of additional cash earnings from operations and $0.6
million of additional non-cash expenses. The net working capital requirements
decreased $1.1 million to $31.3 million for the first nine months of 1999.

         During the first quarter of 1999, the Company acquired the Steinway
Hall building located on West 57th Street in New York City for approximately
$30.8 million. Funds for the acquisition were provided from cash on hand and a
new $22.5 million mortgage loan provided by the Company's existing lender. This
loan, which has a five year term, is due in monthly installments of $0.2 million
based on a twenty-five year amortization, and bears interest at the 30-day Libor
rate plus 1.5%.

         Additional capital expenditures of $4.3 million and $3.1 million in the
first nine months of 1998 and 1999, respectively, were primarily used for the
purchase of new machinery and building improvements. The Company expects to
maintain this level of capital spending in the future as it continues to
modernize its equipment and renovate its facilities in order to improve its
production efficiency.

                                      14
<PAGE>

         The Company's domestic, seasonal borrowing requirements are
accommodated through a committed, revolving credit facility with a domestic bank
(the "Credit Facility"). The Credit Facility provides the Company with a
potential borrowing capacity of up to $60 million, based on eligible accounts
receivable and inventory balances. The Credit Facility, as amended on May 21,
1999, bears interest at the Eurodollar rate plus 1.25% and expires April 1,
2004. As of October 2, 1999, $12.4 million was outstanding and additional
availability was approximately $46.8 million. Open account loans with foreign
banks also provide for borrowings by Steinway's foreign subsidiaries of up to 30
million Deutsche marks ($16.4 million at the October 2, 1999 exchange rate).

         The Company's long-term financing consists primarily of $110 million of
Senior Subordinated Notes and the $22.5 million mortgage loan. The Company's
debt agreements contain restrictive covenants that place certain restrictions on
the Company, including restrictions on the Company's ability to incur additional
indebtedness, to make investments in other entities, or to pay cash dividends.
Beginning on June 1, 2000, the Senior Subordinated Notes may be redeemed at the
Company's option, in whole or in part, at 104.125% of the principal amount plus
accrued and unpaid interest thereon to the applicable redemption date.

         The Company repurchased 30,000 shares of its common stock at a cost of
$0.6 million during the third quarter of 1999. A total of 85,900 shares have
been repurchased in 1999 at a cost of $1.9 million.

         Management believes that cash on hand, together with cash flows
anticipated from operations and available borrowings under the Credit Facility,
will be adequate to meet debt service requirements, fund continuing capital
requirements and satisfy working capital and general corporate needs through
1999.

         YEAR 2000 COMPLIANCE - The Year 2000 issue is the result of computer
programs being written using two digits rather than four digits to define the
applicable year. Computer programs and hardware that are date sensitive may
recognize a date using "00" as the year 1900 rather than the year 2000. The
Company's products, which are finely crafted instruments, do not contain
software programs and therefore this issue will not affect their functionality.
However, it could cause some disruptions of internal operations, including,
among other things, a temporary inability to process transactions or engage in
normal business activities.

         The Company has focused its Year 2000 review in the following areas:
(1) information technology ("IT") systems such as hardware and software; (2)
non-IT systems such as manufacturing, distribution and facility equipment
containing embedded microprocessors; and (3) the readiness of third-parties such
as suppliers and customers. An inventory of all IT and non-IT systems has been
taken and programs are in place to insure that the appropriate testing and
remediation or replacement occurs.

         Virtually all of the Company's critical manufacturing and accounting
information systems have been tested for Year 2000 compliance. Many of the
critical information systems were replaced over the past two years with Year
2000 compliant programs in the normal course of business. The Company believes
that all non-compliant IT hardware and software systems have been replaced.

         Preliminary testing of non-IT systems and equipment indicated that many
of these systems relied on time intervals rather than dates in their operation.
The Company has contacted the manufacturers of the non-IT equipment used in
production to obtain assurances as to whether the manufacturers' systems are
Year 2000 compliant. Testing and remediation of these systems will continue
throughout 1999.

                                      15
<PAGE>

         The Company has communicated with major suppliers and customers to
determine the extent to which the Company may be vulnerable if a third party
fails to correct their own Year 2000 issue. Most suppliers and customers
replying to our inquiries have indicated that they expect to be Year 2000
compliant. Noncompliance by third parties, however, could adversely affect the
Company's operations. The Company's ability to produce and deliver its products
could be affected by failures of infrastructure systems providing power, heat
and water; by disruptions in distribution channels; or by suppliers' inability
to deliver materials.

         The Company currently believes it has effectively addressed the Year
2000 problem and does not anticipate any significant internal disruptions. In
addition, the Company currently believes that the risk of disruption caused by
third parties will be minimal since its operations are geographically dispersed
and rely on a large supplier and customer base. Based on these beliefs, the
Company has not developed specific contingency plans related to the Year 2000.
The Company will continue to evaluate and monitor its readiness for the Year
2000 and will develop contingency plans to mitigate the effects of disruptions
based on the magnitude and probability of such disruptions occurring.

         The Company does not expect the costs associated with its Year 2000
compliance to be material. Internal employees, whose salaries and wages are
included in normal operating expenses, have modified many of the Company's
information technology systems. Less than $1 million has been spent to date and
future costs are not anticipated to be material to the Company's financial
position or results of operations.

NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 establishes new
standards of accounting and reporting for derivative instruments and hedging
activities. This statement requires that all derivatives be recognized at fair
value in the balance sheet, and that the corresponding gains or losses be
reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that exists.
The statement will be effective for the Company in fiscal 2001. Management is
currently evaluating the effect of adopting SFAS No. 133 on the consolidated
financial statements.

                                      16
<PAGE>



ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES
         ABOUT MARKET RISK

         The Company is subject to market risk associated with changes in
foreign currency exchange rates and interest rates. The Company mitigates its
foreign currency exchange rate risk by maintaining foreign currency cash
balances and holding forward foreign currency contracts. These contracts are
used as a hedge against intercompany transactions and are not used for trading
or speculative purposes. The fair value of the forward foreign currency exchange
contracts is sensitive to changes in foreign currency exchange rates. The impact
of an adverse change in foreign currency exchange rates would not be materially
different than that disclosed in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.

         The Company's Credit Facility and mortgage loan bear interest at rates
that fluctuate with changes in the Eurodollar rate and the Libor rate,
respectively. Substantially all of the Company's long-term debt, except the
mortgage loan referred to above, is at fixed interest rates. Accordingly, the
Company's interest expense on its Credit Facility and mortgage loan and the fair
value of its fixed long-term debt is sensitive to changes in market interest
rates. The effect of an adverse change in market interest rates on the Company's
interest expense and the fair value of its long-term debt would not be
materially different than that disclosed in the Company's Annual Report on Form
10-K for the year ended December 31, 1998.



PART II  OTHER INFORMATION


ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

<TABLE>
<CAPTION>
     EXHIBIT #         DESCRIPTION
     ---------         -----------
     <S>               <C>

      27.1.     Steinway Musical Instruments, Inc. - Financial Data Schedule

      27.2       The Selmer Company, Inc. - Financial Data Schedule
</TABLE>

     (b) Reports on Form 8-K

         The Company did not file any reports on Form 8-K during the quarter
ended October 2, 1999.

                                      17

<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized.




                                    STEINWAY MUSICAL INSTRUMENTS, INC.

                                    /s/   Dana D. Messina
                                    ---------------------------------------
                                    Dana D. Messina
                                    Director, President and Chief Executive
                                    Officer

                                    /s/   Dennis M. Hanson
                                    ---------------------------------------
                                    Dennis M. Hanson
                                    Vice President and Chief Financial Officer


                                    THE SELMER COMPANY, INC.

                                    /s/   Thomas T. Burzycki
                                    ------------------------------------------
                                    Thomas T. Burzycki
                                    Director, President and Chief Executive
                                    Officer

                                    /s/   Michael R. Vickrey
                                    ------------------------------------------
                                    Michael R. Vickrey
                                    Executive Vice President and Chief
                                    Financial Officer


Date:   November 16, 1999
                                      18