UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

o 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 Incorporation or Organization)		(I.R.S. Employer Identification No.)
		(I.R.S. Employer Identification No.)

800 South Street, Suite 305 Waltham, Massachusetts		02453
(Address of Principal Executive Offices)		(Zip Code)

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

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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ý No o

Number of shares of Common Stock issued and outstanding as of November 4, 2004:	Class A	477,952
	Ordinary	7,535,195
	Total	8,013,147

ITEM 1 CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In Thousands Except Share and Per Share Amounts)

	Three Months Ended						Nine Months Ended
	September 30, 2004			September 27, 2003			September 30, 2004			September 27, 2003
Net sales	$	94,653		$	82,546		$	268,402		$	243,090
Cost of sales	68,757			59,655			192,378			176,654

Gross Profit	25,896			22,891			76,024			66,436

Operating expenses:
Sales and marketing	10,465			9,383			32,298			31,340
General and administrative	7,358			5,480			19,771			16,969
Amortization of intangibles	269			288			815			865
Other operating expenses	207			110			232			418
Facility rationalization charges	—			2,075			—			2,075
Total operating expenses	18,299			17,336			53,116			51,667

Income from operations	7,597			5,555			22,908			14,769

Other income, net	(806		)	(699		)	(2,152		)	(2,032		)
Interest income	(512		)	(352		)	(1,740		)	(1,473		)
Interest expense	4,202			3,541			11,994			10,641

Income before income taxes	4,713			3,065			14,806			7,633

Income taxes	1,885			1,227			5,920			2,952

Net income	$	2,828		$	1,838		$	8,886		$	4,681

Earnings per share:
Basic	$	0.35		$	0.21		$	1.10		$	0.53
Diluted	$	0.34		$	0.21		$	1.06		$	0.53

Weighted average shares:

PART I.		UNAUDITED FINANCIAL INFORMATION

Item 1.		Consolidated and Condensed Consolidated Financial Statements:

		Consolidated Statements of Income Three months and nine months ended September 30, 2004 and September 27, 2003

		Condensed Consolidated Balance Sheets September 30, 2004 and December 31, 2003

		Consolidated Statements of Cash Flows Nine months ended September 30, 2004 and September 27, 2003

		Consolidated Statement of Stockholders’ Equity Nine months ended September 30, 2004

		Notes to Consolidated and Condensed Consolidated Financial Statements.

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

Item 3.		Quantitative and Qualitative Disclosures about Market Risk

Item 4.		Controls and Procedures

PART II.		OTHER INFORMATION

Item 6.		Exhibits and Reports on Form 8-K

		Signatures

STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

ITEM 1 CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS