<HTML>Steinway Reports Third Quarter Results; Revenue up 9%; EPS $0.28   WALTHAM, Mass.--(BUSINESS WIRE)--Nov. 1, 2001--Steinway Musical Instruments, Inc. (NYSE: <A HREF="aol://4785:LVB">LVB</A>), one of the world's leading manufacturers of musical instruments, today announced results for the third quarter ended September 29, 2001. Net sales totaled $82.9 million, an increase of 9% over the year-ago quarter. EBITDA increased 12%, to $12.1 million from $10.8 million. Pretax earnings increased 18%, to $4.3 million from $3.6 million in 2000. EPS was $0.28 compared to $0.31 in the prior year quarter. For the first nine months of 2001, sales totaled $268.1 million, an increase of 11% over 2000. EBITDA increased 7%, to $42.7 million from $40.0 million in the prior year. Earnings per share before extraordinary items for the nine-month period were $1.28 compared to $1.40 in 2000. Dana Messina, Chief Executive Officer, commented, "We are satisfied with the third quarter results, particularly in light of the economic conditions under which we operated. Our acquisition of United Musical Instruments has provided both the growth we anticipated and greater profit stability by expanding the less economically sensitive band segment of our business." "The piano business in the U.S. has been challenging," Mr. Messina said. "The September terrorist attacks accelerated the economic slowdown we already had been experiencing. This caused our domestic piano shipments to decrease from the prior year period. Domestic gross margins dropped as a result of planned reductions to our production schedule in the third quarter. However, demand for our pianos in overseas markets remained healthy. In addition, foreign gross margins improved as the sales mix shifted toward higher margin concert grands." Turning to band operations, Mr. Messina noted, "Band dealers continued with their "wait-and-see" approach during the third quarter, taking advantage of manufacturers with plenty of inventory. In addition, rather than purchase new product, this year retailers chose to recondition older instruments in their rental pools. Yet, dealers reported business as usual for fall student rentals, indicating that participation in school band remains healthy." Band Operations Sales of band and orchestral instruments reached $45.2 million for the third quarter, an increase of 31% over the prior year. With the addition of UMI, overall unit shipments increased 25%. The company gained market share in many professional brass instrument categories as it shifted its production mix toward these instruments. This shift toward higher margin instruments improved gross margins to 26.5% from 25.8% in the third quarter of 2000. Band instrument inventories decreased $3.2 million since midyear. Year-to-date, sales were up 31% over the prior period. Gross margins improved to 27.2% from 26.9%. Piano Operations Piano sales decreased 9% from the third quarter of 2000, to $37.7 million, on a unit shortfall of 12%. Soft demand in the mid-priced market continued to impact the Company's results. Worldwide, Boston unit shipments declined 22% over the year-ago quarter. In addition, domestic unit shipments of Steinway & Sons grand pianos decreased 18% as retail demand declined. A strengthening of demand for Steinway & Sons grand pianos in overseas markets resulted in a 17% rise in shipments during the quarter. However, the reduced production schedule at our New York factory negatively impacted overall piano gross margins, which dropped to 32.7% from 35.3% in the third quarter of 2000. On a year-to-date basis, piano sales were down 6%, to $121.2 million on unit decreases of 8%. Gross margins rose to 35.6% from 34.7% in the prior period as the mix of sales shifted toward higher margin Steinway models. Outlook Looking ahead to the balance of the year, Mr. Messina commented, "While our international business remained strong through September, we expect market conditions in the U.S. to remain difficult and to negatively affect consumer confidence in our overseas markets. Our current estimates are for the Company's worldwide piano sales to be off 15 - 20% in the fourth quarter." "In order to maintain appropriate inventory levels, we will be further reducing domestic piano production," Mr. Messina explained. "Output will be cut back primarily through periodic plant shutdowns at our New York factory so that we can maintain our loyal and highly trained workforce. As a result, overall piano inventory levels will decrease significantly by year-end. Although less efficient utilization of piano manufacturing capacity will reduce our gross margins in the fourth quarter, we believe this is the right approach for the long-term health of the Company." Messina continued, "The Company has been through many economic cycles in its nearly 150 years. We have a workforce and management team well prepared for this downturn. These cycles are never pleasant but Steinway has always emerged an even stronger competitor. I am confident that we will successfully manage our way through the current challenge." "We expect the band instrument business to be relatively unaffected by the economy and to remain even with the prior year's fourth quarter," Mr. Messina said. "The consistency of our band operations, which was enhanced with our UMI acquisition, will lessen the impact of the slowdown in the piano division. We anticipate EBITDA to remain equal to last year, with EPS between $1.50 and $1.65 for the full year." Conference Call Steinway will be discussing its third quarter results, along with its outlook for the remainder of 2001, on a conference call today, beginning at 5:30 p.m. ET. A webcast of the call will be available to all interested parties at www.steinwaymusical.com. Following the live webcast, an archived version will be available on the Company's web site. </HTML>