Steinway Musical Instruments, Inc.Management Presentation

CJS Securities New Ideas ConferenceThursday, January 11, 2007

Presented by:Dana D. Messina, CEO

2

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995

Today’s presentation 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 which could cause actual results to differ materially from those indicated today.

These risk factors include: • changes in general economic conditions• recent geopolitical events• increased competition• work stoppages and slowdowns• exchange rate fluctuations• variations in the mix of products sold• market acceptance of new instrument product and distribution strategies• ability of suppliers to meet demand• concentration of credit risk• fluctuations in effective tax rates resulting from shifts in sources of income• the ability to successfully integrate and operate acquired businesses.

Further information on these risk factors is included in the Company’s filings with the Securities and Exchange Commission.

Today's presentation will include EBITDA as well as other adjusted financial measurements, all which are considered to be non-GAAP terms. These measures present operating results on a basis excluding certain non-comparable items. Reconciliations of these measures to the most comparable GAAP terms are available on the Company's website at www.steinwaymusical.com.

3

Company OverviewCompany Overview

• World’s leading manufacturer of musical instruments• Produces the highest quality piano in the world• Leading U.S. manufacturer of band & orchestral instruments• Most widely-recognized and prestigious brands• Worldwide distribution capabilities through a network of

dealers– Serves professional, amateur and student musicians as well as

orchestras and educational institutions

• Geographic diversification of sales complemented by wide range of products offered

4For 12 months ended 9/30/06

Steinway Musical Instruments$388 million revenue

$0

$100

$200

$300

$207$181

Band Division Piano Division

(reve

nue

in m

illion

s)

5

Business Strategy

• Maintain worldwide industry leadership position• Pursue piano opportunities in Asia while

maintaining U.S./Europe market share• Continue to improve band division margins• Reduce working capital requirements• Pursue continuous improvement in all areas of the

business

6

2006 Accomplishments

• Successful bond refinancing• Essex piano re-launch• Continued band turnaround1

• Achieved broader piano distribution in China• Improved product / channel strategy including

the introduction of many new instruments• Streamlined manufacturing at all facilities

1 before impact of strike

7

$43.0

$37.3 $32.5$27.7

$0

$8

$16

$24

$32

$40

2002 2003 2004 2005

Conn-Selmer & Steinway NY only

1 Excludes Leblanc in 2004 and 2005 for comparative purposes

(in m

illio

ns)

(13.3%)

(12.9%)

(14.8%)

WIP Inventory Reduction1

Conn-Selmer & Steinway NY only

8

YTD 9/30/06 Charges

• Lost profit due to strike $ 4.0• Piano plant shutdown $ 1.3• Customer bankruptcy $ 4.3• Inventory reserve adjustment $ 2.4

Total atypical charges $12.0 million

Band Division

10

Band Instrument Market

• Unit sales tied to demographic trends

• Key demographic: 11-year olds– Approximately 1 in 10 plays a musical

instrument– 10% will eventually purchase a “step-up”

musical instrument– 5% will eventually purchase a professional

instrument

11

Band Division Strategy

• #1 or #2 market position in every product category

• Capitalize on strong brand names • Acquisitions to fill in product categories where

we do not have #1 or #2 position• Global manufacturing strategy combining

domestic manufacturing and foreign sourcing • Consolidate to the highest quality, lowest cost

domestic facility

Piano Division

13

Steinway & Sons

• Founded in 1853• World’s premier piano – Extraordinary

worldwide brand recognition• Unparalleled Concert & Artist Program• 98% of soloists performing with major

symphony orchestras choose Steinway pianos

• Most successful dealers in the industry

14

Clockwise from upper-left: Grove Park Piano

from the Art Case Collection,Chippendale Grand

from the Crown Jewel Collection,Boston Model GP-156,

Steinway & Sons Concert Grand Model D, and Essex Model EGP-155C.

15

Piano Division Overview

• Successful business model• Differentiated programs and products• Unique, exclusive, profitable distribution system• Favorable demographics

– Typical customer between 40 and 50 years old with household income over $300K

• 69 All-Steinway Schools worldwide– Stable segment of the business that reduces

cyclicality

16Essex Grands and Verticals

Boston Grands and Verticals

Steinway Ebony Grands and Verticals

Crown Jewels

Limited Edition

Art Case

Legendary

Heirloom Collection

Steinway Products

17

Steinway & Sons, Bosendorfer, Fazioli, Grotrian Steinweg

Boston, Yamaha, Kawai, Schimmel, Seiler, Sauter, Bechstein, Baldwin, Mason & Hamlin, Chas Walter

Essex, Young Chang (Korea),Samick (Korea), Petrof

Source: Management’s industry estimates

PremiumUS $55,000

Upper MiddleUS $22,000

LowUS $9,000

9%69,400Total Market

28,300

9%3,800

7%33,700

89%3,600

Steinway Market Share

Samick and Yamaha (Indonesia),Story & Clark, Young Chang,Pearl River & Others (China), Eastern Europe, Estonia

Lower MiddleUS $13,000

Steinway’s Competitive Position

Grand Piano Units

Business Outlook & Financials

19

$0

$100

$200

$300

$400

2002 2003 2004 2005 9/30/05 9/30/06

(in m

illion

s)

Piano Band

332 337375

384

12 months ended

387 388

Net Sales

20

$0

$20

$40

$60

2002 2003 2004 2005 9/30/2005 9/30/2006

(in m

illion

s)

Piano Band

5046 46

51

12 months ended

38

49

Adjusted EBITDA

21

$14.73$13.09$12.45

$11.01$9.90$8.09

$7.20

$18.34

$16.96$18.13

$0

$5

$10

$15

$20

Dec'96

Dec'97

Dec'98

Dec'99

Dec'00

Dec'01

Dec'02

Dec'03

Dec'04

Dec'05

CAGR Dec-05 = 11%Book Value Per Share

22

2007 Band Operations

• Order rates look strong• Increased production of professional instruments

key to success• Margin improvement from higher production

levels, manufacturing improvements and sourcing

• Production/sourcing better aligned with demand

23

The Woodwind & The Brasswind

• Very successful e-commerce business• $136M sales in 2005 • Atypical charges – Chapter 11• Growing & profitable until mid-2005• Undervalued asset

– Strategy: Use distribution expertise to assist existing school music dealers

• Auction January 24th

24

2007 Piano Operations

• Challenging environment in U.S. and Western Europe

• Opportunity for growth in Eastern Europe and China– Expand distribution in China

25

2007 Corporate Actions

• Potential acquisitions• Potential asset sales• Balance sheet leverage• Excess cash flow

26The Company defines Adjusted EBITDA as earnings before net interest expense, income taxes, depreciation and amortization, adjusted to exclude non-recurring, infrequent or unusual items. Adjusted EBITDA should not be construed as a substitute for operating income or a better indicator of liquidity than cash flows from operating activities, which are determined in accordance with GAAP.

2003 2004 2005 9/30/05 9/30/06Cash flows from operating activities $30.9 $23.9 $31.4 $34.0 $30.3Changes in operating assets and liabilities -8.3 1.3 -6.3 -9.4 -10.0Stock-based compensation expense -0.9Income taxes, net of deferred tax benefit 7.3 10.6 8.9 10.5 8.4

Net interest expense 11.9 13.4 13.6 13.6 11.8Provision for doubtful accounts -0.2 -0.5 -0.4 -0.4 -5.1

Other -0.1 -0.1 0.2 0.6 1.3Non-recurring, infrequent or unusual cash charges 4.8 2.2 1.6 1.5 2.2Adjusted EBITDA $46.3 $50.8 $49.0 $50.4 $38.0

12 months ended

Reconciliation of Cash Flows to Adjusted EBITDA

($ in millions)

Steinway Musical Instruments, Inc.Management Presentation

CJS Securities New Ideas ConferenceThursday, January 11, 2007

Presented by:Dana D. Messina, CEO