<HTML>...Read further to see why things are pretty tough all around but some manufacturers are hanging in there. Bill Bremmer RPT Madison, Wisconsin Steinway Reports Second Quarter Results; Profit of $0.41 Per Share Before Charges   WALTHAM, Mass.--(BUSINESS WIRE)--Aug. 2, 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 second quarter ended June 30, 2001. Net sales totaled $83.7 million, an increase of 7% over the year-ago quarter. EBITDA declined modestly, to $13.8 million from $14.1 million. Net income for the quarter was $3.7 million before extraordinary charges, compared to $4.5 million in the prior year. Fiscal 2001 second quarter earnings include charges of $4.0 million, or $.44 per share, related to the early extinguishment of debt in connection with a successful bond refinancing. Including the impact of these expenses, Steinway reported a loss of $0.03 per share for the quarter compared to earnings of $0.51 per share in the second quarter of 2000. For the first half of 2001, sales totaled $185.2 million, a 12% increase over 2000. Gross margins improved to 31.7% from 31.1%. EBITDA increased 5%, to $30.5 million from $29.1 million in the prior year. Earnings per share before charges for the six-month period were $1.00 compared to $1.09 in 2000. Commenting on the results, Dana D. Messina, Chief Executive Officer, stated, "The second quarter was a challenging one for the Company. While we continued to see steady improvements in both sales and production levels in our overseas markets, demand for our Boston pianos continued to be weak. We also experienced a slowdown in shipments of Steinway pianos domestically. Dealers cancelled many of their orders in the second quarter as the ongoing economic softness in the U.S. finally manifested itself with slower sales at the retail level. In response, we have already started to scale back piano production to more appropriate levels at our New York factory." "Uncertainty about the economy impacted our band operation as well," noted Messina. "Dealers are purchasing later than normal this year knowing that manufacturers have excess inventory. They are delaying certain purchases until they have greater visibility of their "back-to-school" season requirements. In addition, we have been experiencing heavy price competition which has had a negative impact on our results." Looking ahead to the balance of the year, Mr. Messina said, "We continue to have a cautious outlook for the economy in the near-term. Management is focusing its efforts on reducing domestic inventory levels. We are adjusting our production levels to meet current demand and have reduced our band headcount by approximately 5%. Current trends indicate that our domestic piano business should stabilize at 1999 levels by year-end. With the economic slowdown clearly impacting our results in all segments, we expect our full year earnings to be at the low end of our previously forecasted range." Band Operations Sales of band and orchestral instruments reached $45.1 million for the second quarter, an increase of 33% over the prior year. With the addition of UMI, overall unit shipments increased 39%. An increase in the production costs of some new instrument models, coupled with the planned expenses for reengineering our manufacturing systems, caused gross margins to slip to 27.7% from 28.7% in the second quarter of 2000. Year-to-date, sales were up 31% over the prior period. Gross margins held consistent at 27.4%. High inventory levels, coupled with a slowdown in demand for woodwind instruments, forced the Company to adjust headcount levels in certain areas and reduce production schedules for the remainder of 2001. Piano Operations Sales for pianos decreased by 12% over the second quarter of 2000, to $38.5 million, on a unit shortfall of 25% over prior year. This includes an unfavorable foreign translation impact of $1.3 million. Soft demand in the mid-priced market continued to impact the Company's results. Worldwide, Boston unit shipments declined 38% over the prior year period. In addition, domestic unit shipments of Steinway & Sons grand pianos decreased 24% over the year-ago quarter as retail demand declined. A strengthening of demand for Steinway & Sons pianos in overseas markets resulted in an 11% rise in foreign unit sales during the quarter. This increase was led by a 70% increase in Steinway grand sales in Japan. Gross margins for the second quarter improved to 37.7% from 34.6%, as the overall mix of pianos sold shifted toward higher margin Steinway instruments. On a year-to-date basis, piano sales were down 5%, to $83.4 million on unit decreases of 6% for Steinway and 41% for Boston. Gross margins rose to 37% from 34.5% in the prior period. Conference Call Steinway will be discussing its second 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. About Steinway Musical Instruments Steinway Musical Instruments, Inc., through its Steinway, Selmer and UMI subsidiaries, is one of the world's leading manufacturers of musical instruments. Its notable products include Armstrong flutes, Bach trumpets, C.G. Conn trombones, Ludwig drums, Selmer saxophones and Steinway & Sons pianos. Additional information can be obtained by visiting our web site: www.steinwaymusical.com "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 This release contains "forward-looking statements" which 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 filings with the Securities and Exchange Commission.                  STEINWAY MUSICAL INSTRUMENTS, INC.            Condensed Consolidated Statements of Operations                 (In thousands, except per share data)                             Three Months Ended    Six Months Ended                           06/30/2001 07/01/2000 06/30/2001 07/01/2000 Net sales                    $83,661    $77,824   $185,242   $165,599 Cost of sales                 56,597     52,890    126,469    114,061 Gross profit                 27,064     24,934     58,773     51,538 Operating expenses            16,963     14,270     35,600     28,907 Income from operations       10,101     10,664     23,173     22,631 Interest expense, net          4,529      3,602      9,066      6,967 Other (income) expense, net     (229)      (521)      (394)      (676) Income before taxes           5,801      7,583     14,501     16,340 Provision for income taxes     2,100      3,070      5,600      6,620 Income before extraordinary loss                          3,701      4,513      8,901      9,720 Extraordinary loss on early extinguishment of debt (net of tax benefit of $2,662)                    3,950                 3,950 Net income (loss)             ($249)    $4,513     $4,951     $9,720 Earnings per share: Basic and Diluted Before extraordinary loss     $0.41      $0.51      $1.00      $1.09 Extraordinary loss            (0.44)                (0.44) Net earnings                 ($0.03)     $0.51      $0.55      $1.09 Weighted average common shares: Basic and Diluted             8,932      8,907      8,932      8,916                 Condensed Consolidated Balance Sheets                                   06/30/2001  07/01/2000  12/31/2000 Cash                                  $3,629      $4,273     $4,989 Receivables, net                     111,946      75,645     93,042 Inventories                          175,208     107,336    160,296 Other current assets                   6,647       9,350      7,126 Total current assets                297,430     196,604    265,453 Property, plant and equipment, net   104,059      90,046    106,415 Other assets                          49,333      45,614     49,948 Total assets                       $450,822    $332,264   $421,816 Notes payable and current portion of long-term debt                    $8,670      $8,980     $9,516 Other current liabilities             38,310      35,402     47,059  Total current liabilities           46,980      44,382     56,575 Long-term debt                       251,468     149,570    213,894 Other liabilities                     37,098      32,303     38,140 Stockholders' equity                 115,276     106,009    113,207 Total liabilities and stockholders' equity                             $450,822    $332,264   $421,816 CONTACT:   Steinway Musical Instruments, Inc. Julie A. Theriault 781-894-9770 ir@steinwaymusical.com KEYWORD: MASSACHUSETTS BW2494  AUG 02,2001 13:00 PACIFIC   16:00  EASTERN </HTML>