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Announcement of Subsidiary Consolidation and Organizational Changes Effective January 1 In May 2003 KENWOOD Corporation (Haruo Kawahara, President, headquartered in Hachioji, Tokyo) adopted a medium-term management plan intended to run for three years, from fiscal 2003 through fiscal 2005, and efforts to implement it throughout the corporate group are ongoing. The midterm business performance figures for fiscal 2003, announced last November, indicate that the company has made an excellent start, with mid-term consolidated net income the highest on record. This achievement is the result of the structural reforms implemented during the past fiscal year as well as manufacturing innovations introduced beginning in March 2003. However, optimism regarding the business climate in which KENWOOD finds itself is still premature, due to factors such as sluggish demand in the European and North American markets. In order to meet the targets for the final fiscal year of the plan, the company as a whole continues to put its combined effort into the implementation of important new measures, including development of new products, acceleration of manufacturing innovations, reinforcement of the consolidated business structure of the corporate group, and strengthening of the KENWOOD brand. As part of its efforts to speed up the implementation of the above measures and gain the maximum effect from them, KENWOOD Corporation put into effect a consolidation of subsidiaries and organizational changes on January 1 of this year. Consolidation of Subsidiaries KENWOOD Service Corporation and KENWOOD Logistics Corporation, two subsidiaries with many overlapping and redundant functions, were merged into a single corporate entity on January 1 in order to improve the efficiency of our service functions and the distribution operations of the corporate group. The two parties to the merger are of equal standing, but officially the merging corporation is KENWOOD Service Corporation. Thus, the name of the new company following consolidation is KENWOOD Service Corporation. The merger will have no effect on the consolidated business performance of KENWOOD Corporation. Corporate Overview Following Consolidation
KENWOOD Corporation Organizational Changes In order to put in place an organization that will enable greater specialization in headquarters and business division functions and more sophisticated implementation of corporate operations, and also to realize precise and rapid "system management," organizational changes were implemented on January 1 of this year. These changes focus mainly on headquarters functions; on the Car Electronics Division, KENWOOD's main field of business; and on the Home Electronics Division, where extensive restructuring aimed at enhancing financial soundness is underway. Main Organizational Changes
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