Case - Baldwin Piano and Organ Company

Case - Baldwin Piano and Organ Company - MANAGEMENT 120A...

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MANAGEMENT 120A CASE 1 Income Determination BALDWIN PIANO AND ORGAN COMPANY The following information is based on the annual report and 10-K statement of Baldwin Piano and Organ Company. The company is the largest domestic manufacturer of keyboard musical instruments, and it manufactures or distributes all major product classes of pianos and electronic organs. The company believes that the breadth and quality of its line of keyboard musical instruments, its large and well-established dealer distribution networks, and its efficient and low-cost manufacturing capabilities have enabled it to maintain its strong market share in the keyboard musical instrument market. Over the company’s 131-year history, its principal products have been pianos and organs. The company significantly expended its principal business lines through its 1988 acquisition of the key-board operations of The Wurlitzer Company, which now operates as a wholly owned subsidiary of the company. Over the years, the company has also expanded and diversified its product line in order to utilize excess capacity and its woodworking, electronics and technical expertise. The company manufactures printed circuit boards, electronic assemblies, grandfather and other quality clocks and wooden cabinets. The company ships keyboard instruments and clocks to its dealer network on a consignment basis. Accordingly, revenue is recognized at the time the dealer sells the instrument to a third party. The company charges a monthly display fee on all consigned inventory held by dealers longer than 90 days. This display fee, on an annual basis, ranges from 12% to 16% of the selling price of such inventory to the dealer. Display fee income is included under the component “Other operating income, net.” The company distributes its Baldwin keyboard musical instruments in the United States through approximately 500 independent dealers (600 outlets) and 11 company-owned stores operating in six major metropolitan areas. Most of the independent dealers carry Baldwin products as their principal line – and often their exclusive one. The company has been engaged in financing the retail purchase of its products for over
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This note was uploaded on 04/04/2008 for the course MGMT 120A taught by Professor Litt during the Spring '08 term at UCLA.

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Case - Baldwin Piano and Organ Company - MANAGEMENT 120A...

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