Kenwood 2002 Annual Report Download - page 4

To Shareholders
The business environment for Kenwood continues to be
sluggish as the US economy, which has been the driving
force in the world economy, shows signs of regression
along with the prolonged slump in the domestic and
Asian economies. In the meantime, the Company has
worked diligently to strengthen itself through improved
profitability and cash flow management practices
consistent with the mid-term reconstruction plan
formulated in March 2001.
As a result, the Company successfully recorded an
operating income of 6.1 billion yen, compared to zero
profit in the previous year, while consolidated sales
remained almost level with that of the previous year, at
302.6 billion yen. Looking at performance in terms of
each business segment; the core businesses of car
electronics and wireless radio reported steady earnings.
The home electronics business continued to lose money,
while low profit margins in the cellular phone business
meant that, for all intents and purposes, money was also
lost in this business sector. In other areas, losses have
been trimmed as a result of the withdrawal from non-
profitable business areas such as GSM and CD-ROM.
Net cash from operating activities was 15.2 billion yen,
while net cash used in investing activities held at 8.0
billion yen. This resulted in a positive 7.2 billion yen free
cash flow — a dramatic turnaround from the previous
year's negative cash flow of 12.2 billion yen. Included in
this cash flow computation is 13.7 billion yen used to
repay the Company's borrowings and 12.7 billion yen
invested in dies and software development that are vital
to our current and future business.
Kenwood's current operating income and free cash
flow point to the Company's growing strength.
KENWOOD Corporation Annual Report 2002
02