(1)	Promote Strong Growth Strategy through 4-Profit Center Structure Currently, KENWOOD operates under a three-profit center structure comprised of the Car Electronics (CE), Communications Equipment (COM) and Home Electronics (HE) Divisions. The CE Division is further broken down into the two very distinct fields of Car Electronics Consumer and Car Electronics OEM. The large differences in the features of these two areas, coupled with the greater expansion of the OEM business market, led to the decision to form two new divisions; Car Electronics Consumer (CE Consumer) Division and Car Electronics OEM Division (CE OEM). As a result, KENWOOD will now operate under a four-profit center system, thus allowing each division to develop growth strategies that are optimal to their operations.
(2)	Better Market Response, Stronger Products and Improved Quality through the Launch of the Consumer Business Sector Consumer Business Sector (Launch) In order to improve the Company's operational capabilities in the ever-changing consumer electronics field, a decision was made to form the "Consumer Business Sector". This new Group is comprised of the three profit centers that directly engage in consumer-related business (i.e. CE Consumer, CE OEM, and HE Divisions) and two newly established cost centers (i.e. Speaker System Division and Consumer Business Development Center). The move is expected to improve the Company's responsiveness to market changes, promote R&D for new technology and strategic joint development between segments so that new products and platforms can be developed, and improve the overall quality of products. Speaker System Division (Newly Established) --- Level 1 KENWOOD has continued to enhance its acoustics business with the objective being to improve sound quality to the greatest extent. The Company has upgraded and expanded its sound quality research functions and has succeeded in developing high-quality digital amplifiers for the consumer market. In the past, the HE and CE divisions separately carried out the functions of the acoustic business. However, the change in the organizational structure will result in the establishment of an independent "Speaker System Division", an important division common to the Consumer Business Sector that will engage in business development from the sole standpoint of speakers. The new division is expected not only contribute to the growth of the CE and HE Divisions but also strengthen the internal capabilities of the acoustic business. Consumer Business Development Center (Newly Established) --- Level 1 The "Consumer Business Development Center" will be established to promote the development of new, highly-competitive products and product platforms for the Mobile & Home Multimedia System business, an area of consumer electronics that is particularly active when it comes to technological innovation. The Center will make company-made strategic investments, promote the development of basic technologies common to the divisions of the Company, and engage in advanced and strategic development.
(3)	Overall Improvements to New Product Development Capabilities and Improvements to the Design and Quality of the Mass Production Model Product Management Operation for Each Division (Newly Established) --- Level 1.5 A Product Management Operation will be established in each division with its purpose being to improve the Company's ability to develop new products for the mature audio products market and the growth multimedia market that also cater to the regions they are going to ultimately be sold in. As sub-level, the Department will have personnel in various functions such as marketing, product planning, design, basic design, and profit/loss management. This structure will allow the Department to assume the role of managing each product process from conceptualization to commercialization and the profit/loss associated with the development of such products. Product Design Operation for Each Division (Newly Established) --- Level 1.5 A Product Design Department will be established in each division with its purpose to design the mass production system for various products based on the basic design established by the Product Management Operation and to ensure quality control of such products. As a sub-level, the Department will have a development/design team for mass production models and a plant-based team that takes on the responsibilities associated with various functions including mass production design, production technology, component quality, manufacturing quality, and delivery time compliance. This structure will allow the Department to assume the role of managing the mass production model process from development to mass production. Car Electronics Consumer Division: Car Multimedia System Development Project (Newly Established) --- Level 1.5 As part of the organizational changes, the Car Multimedia System Development Project will be established within the Car Electronics Consumer Division. The role of the new group will be to develop and commercialize new car multimedia systems (including car navigation systems) and improve on the activities carried out in the car electronics field ahead of the establishment of a "Mobile & Home Multimedia System" business.
(4)	Improve Operational Capabilities through Final Completion of Production Innovation Measures Production Innovation System KENWOOD is currently in the final stages of completing the production innovation activities that will improve overall operational capabilities. As part of this strategy, a stronger relationship between all divisions and manufacturing companies of the newly established four-profit center structure will be pursued. In addition, the three manufacturing companies that have already begun implementing production innovation measures (i.e. KENWOOD Yamagata Corporation, KENWOOD Nagano Corporation, and KENWOOD Electronics Technologies Singapore Pte. Ltd.) will be designated production innovation headquarters. Subsequently, these three companies will lead other manufacturing companies towards implementing various production innovation measures. Moreover, leaders trained in the various production innovation practices will be dispatched to each manufacturing company with a responsibility to develop such practices at their designated locations. The Production Innovation Division, which will be headed up by the CEO, will have control over all of these activities. KAM HQ (KENWOOD Asian Manufacturing Headquarter) (Established as of February 1, 2004) On February 1, 2004, KAM HQ (KENWOOD Asian Manufacturing Headquarters) was established within KENWOOD Electronics Technologies Singapore Pte. Ltd.. The purpose of this new group is to promote and enhance production innovation activities at manufacturing facilities in Singapore and Malaysia.

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Updated 04/03/31 (C) 2004 KENWOOD Corporation