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January 5, 2004
Press Release

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
(1)  Company name: KENWOOD Service Corporation
(2)  President: Akio Ueda
(3)  Address: 1-16-2 Hakusan, Midori-ku, Yokohama, Kanagawa
(4)  Date established: October 1, 1993
(5)  Business activities: Repair and servicing of audio and communications equipment, storage, freight shipping, refurbishing of audio equipment, etc.
(6)  Number of employees: 139
(7)  Paid-in capital: \443,000,000
(8)  Stockholders: KENWOOD Corporation 100%

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
(1)  Car Electronics Division
In order to improve the precision and speed of consolidated operations and realize メsystem management,モ systemic reinforcement at the U.S. sales subsidiary last December is being followed by the establishment of a new consolidated business division and efforts to strengthen the business promotion division.
(2)  Home Electronics Division
The initial goals of the regional projects initiated in 2003 have been completed, so they are to be replaced with new projects organized by business segment. The aim of this change is the establishment of common worldwide platforms that will lead to further advances in future. Accordingly, the U.S.A. Project, Japan Project, and Euro Project are being dissolved and a Home Multimedia Project and Domestic Home Multimedia Sales Project (2nd Level) are being established.
(3)  Corporate Procurement Division
Of the distribution operations formerly performed by KENWOOD Logistics Corporation, which was a wholly-owned subsidiary of KENWOOD Corporation, the planning, management, and logistics functions will henceforth be the responsibility of the newly formed Logistics Division (2nd Level) within the Corporate Procurement Division.
(4)  General Management Strategy Division
The Customer Support Center, formerly operated by KENWOOD Service Corporation, will henceforth be affiliated with the General Management Strategy Division. In addition, a CS Promotion Office (2nd Level) has been newly established in order to further enhance customer satisfaction.

For queries regarding this article, please contact:

Public Relations Office
Strategic Business Planning Division
KENWOOD Corporation (Japan)
Tel: 0426-46-6724
Fax: 0426-46-1440
Email: pr.qa@pr.kenwood.co.jp

Updated 04/01/05 (C) 2004 KENWOOD Corporation