However, profitability of the business deteriorated as the market matured and trends changed. To turn around the situation, the Company implemented drastic restructuring in fiscal 2002 (ending March 2003), integrating product lineups into the three categories that are profitable and promising while reducing sales areas by changing sales strategy. Furthermore, the Company strengthened operational capabilities and earnings power by advancing the production innovation project. As a result, profitability improved remarkably in the year ended March 31, 2004, although sales declined sharply.

The Company now focuses on the development of digital amplifiers with high fidelity and high power, the features meeting the needs of the digital era, and products compatible with networks, which match with the Company's concept of providing sound entertainment in every living scene. As part of this effort, the Company in May 2004 launched a hard-disc audio system that can handle music distribution services offered by Any Music Inc., in which the Company has a stake. This was followed by the release of a network-based theater system, which reads music and videos stored on a PC through wireless networks and reproduces them with at high quality.

From now on, the Company will continue to position home electronics as the core in the world of sound entertainment, and evolve them while putting emphasis on the high fidelity sound reproduction that the Company has traditionally pursued. We will also integrate home electronics with portable audio equipment and car electronics to further make our products seamless. Through these efforts, we will establish the "Mobile & Home Multimedia Systems" business that offers higher quality and a high degree of entertainment value.

Car Electronics
Development of digital and network technologies for automobiles has opened remarkable possibilities in the fields of car audio and navigation systems. Since its entry into the automotive electronics market in 1980, the Company has built a high brand presence worldwide, utilizing the capability to cultivate potential needs of the market and the ability to plan and develop products, while emphasizing a consumer business based on the high fidelity technology it has accumulated over the years.

In the consumer business, we are selling new proposal-oriented products that combine high tone quality technique with advanced technology, in the car multimedia field, which continues to grow. Among others there is an audio-visual hard disc navigation system that focuses on entertainment and convenience, tuners for digital satellite broadcasting and the first civilian use of tuners for terrestrial digital broadcasting. To further solidify its global presence in the traditional automotive audio field, the Company is increasing its product lineups by commercializing flagship models bringing together the essence of the most advanced tone quality technologies, while raising its presence in emerging regions through the use of global networks.

As for the OEM business, the Company is rapidly expanding operations not only in Japan but also in north America, Europe and elsewhere in Asia, by taking advantage of its high grade technologies, which consistently receive high marks for the consumer business, the ability to plan and develop products, as well as reliability and brand presence. In April 2004, the OEM section became independent of the Car Electronics Division and has been increasing its presence in components for automotive electronics as well as in car multimedia and audio systems.

Currently, the Company is launching large projects and proactively investing in them to commercialize car multimedia products that are more attractive and competitive, aiming to enhance competitiveness in the field of car navigation systems, the use of which is expected to fully spread in Europe and China. The Company is also working hard to boost business competitiveness and profitability, by vertically integrating plants at home and abroad in the consumer and OEM businesses, separately.