Star Micronics : Annual Report 2022

One Step Closer to a Better World

ANNUAL REPORT 2022 (PDF Version)

For the year ended December 31, 2022

PROFILE

Since its establishment in 1950, Star Micronics Co., Ltd. has worked diligently to "generate the greatest impact from the least materials."

In order to achieve its aspirations, Star Micronics Co., Ltd. (the "Company") has continued to deliver a steady stream of high-added-value products based on its core technologies of small-scale precision processing and assembly. Currently, the Company is engaged in the Special Products business including point-of-sale (POS) printers and the Machine Tools business including CNC automatic lathes.

From each of the sales and manufacturing perspectives,

the Company is also actively engaged in global business development. Today, Star Micronics maintains a ratio of overseas sales to all sales of 90% and a ratio of overseas production to all production of 84%.

Working toward its next leap forward, the Company is leveraging its core technologies to promote a wide range of measures aimed at both creating new businesses and expanding existing businesses.

Star Micronics is committed to contributing to the sustainable development of society as a leading small and medium-sized enterprise that seeks to excel on the world stage.

CONTENTS

Corporate Philosophy, Purpose, Management Policy,
Action Guidelines. .	. . . . . . . . . . . . . .		01
History. .	. . . .	. . . . . .	. . . .	.	. 對 .	.	02
Highlights.	. . . .	. . . . . .	. . . .	.	. . 對	.	04
	Financial Highlights	. . . . . . . . . . . . . .	.	04
Related Information by Geographical Region.	. .	.		05
To Our Shareholders				06
Strategy. .	. . . .	. . . . .	. . . . .	.	. 對 .		10
	Medium-Term Management Plan .	. . . . . . . .		10
Review of Operations.	. . . . . . . . . . . . .	.	15
	Special Products				15
	Machine Tools				17
Solution Center				19

Forward-looking Statements

Sustainability .	.	. . . . . . . . . . . . . . .	.	21
	Environment. .	. . . . . . . . . . . . . . .		21
	Society. .	. .	. . . . . . . . . .	.	. .	. 對	.	26
	Corporate Governance. .	. . . . . . . . . . .		28
Consolidated Eleven-Year Summary		32
Management's Discussion and Analysis. .	. . . . .	.	34
Consolidated Balance Sheet.	. . . . . . . . . .					40
Consolidated Statement of Income				42
Consolidated Statement of Comprehensive Income.	. .		42
Consolidated Statement of Changes in Equity .	. . . .		43
Consolidated Statement of Cash Flows . .	. . . . .	.	44
Notes to Consolidated Financial Statements	. . .	. .			45
Independent Auditor's Report	. . . . . . . . . . .	.	69
Stock Information	. . . . . . . . . . . . . . . .		74

Statements in this annual report with respect to Star Micronics' plans, strategies and beliefs as well as all other statements that are not historical facts are forward-looking statements involving risks and uncertainties. These forward-looking statements rely on a number of assumptions concerning future events. The important factors that could cause actual results to differ materially from such statements include, but are not limited to, general worldwide economic conditions, competitive pressure on sales and pricing, and movements of currency exchange rates.

CORPORATE PHILOSOPHY

A company and its employees must constantly evolve through a process of steady development while also making every effort possible to improve the lives of each individual. This growth must happen together.

PURPOSE

Contribute to the sustainable development of society as a "leading small and medium-sized enterprise" that seeks to excel at the world stage

As a technology group, Star Micronics strives to provide new value through unique technologies that increase corporate value. At the same time, the Company will enrich the lives of its employees by providing a place where diverse engaged employees can contribute their best. Our goal as a group is to stand at the forefront of Japan's small and medium-sized enterprises by generating a high level of productivity that rivals large companies as we contribute to the sustainable development of society.

MANAGEMENT POLICY

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3

4

5

Do not pursue scale unnecessarily; position capital efficiency and labor productivity as primary evaluation indicators

Maintain the ability to continuously offer new value to society in response to changes in the environment

Constantly look to the global market for each business, and position "global niche" at the core of the Company's strategy

Invest in building an environment that allows employees to realize their full potential and the pursuit of unique technologies from a long-term perspective, regardless of generational environment

Strive to become a company that perpetually evolves in harmony with society through its products and its people

ACTION GUIDELINES

Act with initiative	Continue learning	Pursue technology	Focus on team
and courage			productivity

Annual Report 2022 STAR MICRONICS CO., LTD.

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HISTORY

1950

1958

1960

1962

1965

1971

1976

1979

1981

1984

1989

1990

2000

Star Seisakusho Co., Ltd.

Established in Tegoshi, Shizuoka (current Tegoshi, Suruga-ku,Shizuoka-shi) with a capital of ¥500,000, six employees and five automatic lathes, began the manufacture and sale of such products as wristwatch and camera parts as a small workshop factory.

Began sales of automatic lathes.

After finalizing automatic lathes, began sales with the catchphrase, "automatic lathes made by users for users."

Tokai Seimitsu Co., Ltd.

Established Tokai Seimitsu Co., Ltd. in a partnership with Citizen Watch Co., Ltd.

Evolved as a factory specializing in the manufacture of watch screws.

Began the export of automatic lathes.

Exported the first unit to the UK. Cultivated overseas sales channels and steadily increased market share.

Changed the company's name to Star Micronics Co., Ltd.

Absorbed Tokai Seimitsu Co., Ltd. and changed the company's name to Star Micronics Co., Ltd.

Began the manufacture and sales of electronic buzzers.

Widely adopted as a buzzer for clocks. Electronic buzzers extensively used in mobile phones as an incoming call sound source. Captured a large market share throughout the 1990s.

Began the manufacture and sales of NC automatic lathes.

Began the manufacture and sale of NC automatic lathes. Incorporating innovative ideas and mechanisms, extremely well received for precision accuracy.

Began the manufacture and sale of small printers.

Entering the digital printer field, began the manufacture and sale of products in a bid to respond to the information age and the widespread use of personal computers.

Listed company stock on the Second Section of the Nagoya Stock Exchange.

Began the manufacture and sale of large-scale printers.

Entered the printer market in earnest.

Listed company stock on the First Section of the Nagoya Stock Exchange. (Delisted in 2006.)

Built the new Kikugawa Factory.

Built a new machine tools production base in Kikugawa-cho,Ogasa-gun (current Kikugawa-shi), Shizuoka Prefecture.

Installed state-of-the-art rationalization system machines and contributed to improved productivity by enabling continuous automated operations.

Established Star Micronics Manufacturing Dalian Co., Ltd.

Established a subsidiary in Dalian, China to engage in the manufacture of printers.

Became the fourth foreign company to enter the Dalian Economic and Technological Development Zone.

Listed company stock on the First Section of the Tokyo Stock Exchange.

Listed on the First Section of the Tokyo Stock Exchange after 40 years of operation.

(Shift to the Prime Market from the First Section due to the market restructuring of the Tokyo Stock Exchange in April 2022.)

Began the manufacture and sale of microphones, speakers and receivers.

Developed a full lineup of micro audio components for mobile phones, and aggressively cultivated the market.

02 Annual Report 2022 STAR MICRONICS CO., LTD.

2004

2012

2013

2018

2020

2022

Began the manufacture of CNC lathes as finished products at Star Micronics Manufacturing Dalian Co., Ltd.

Began assembling finished products in China ahead of competitors to reduce costs and strengthen production capacity.

Established Star Micronics Manufacturing (Thailand) Co., Ltd.

Established a subsidiary to manufacture machine tools in Nakhon Ratchasima, Thailand. Set up a machine tools production system across three bases in Japan, China and Thailand in response to the expansion of emerging markets in Asia.

Launched Apple® iOS Compatible MFi Certified Printer

Developed a printer that can be connected to iOS devices via Bluetooth® amid the growing global demand for tablet POS systems using smartphones and tablet devices. Buoyed by the rush of inquiries prior to release, product widely accepted by the market.

*1 Apple is a trademark of Apple Inc., registered in the U.S. and other countries.

*2 IOS is a trademark or registered trademark of Cisco in the U.S. and other countries and is used under license.

*3 The Bluetooth® word mark and logos are registered trademarks owned by Bluetooth SIG, Inc. and any use of such marks by Star Micronics Co., Ltd. is under license.

Established Star Marketing Japan Co., Ltd.

Established Star Marketing Japan Co., Ltd. as a sales subsidiary in Shimbashi, Tokyo in a bid to further develop and expand the mPOS market in Japan. Through activities in the city center, responded quickly to the diverse needs of customers.

Completed construction of a new head office

Completed construction of a new head office with a view to upgrading and expanding the Company's Business Continuity Plan (BCP) by taking full advantage of such high disaster prevention capabilities as a seismic isolation structure that can handle long-periods of seismic motion and an emergency power supply that can continue for a long period of time. In addition, actively introduced new work styles through a variety of measures including the adoption of information communication technology (ICT) to help create a paperless office and free address system.

Completed construction of the Solution Center

Completed construction of the Solution Center to strengthen before- and after-sales service and product quality. As a new base for the Machine Tools Segment, the Solution Center can serve as a permanent display of various automatic lathes while accommodating multiple functions. The Center is equipped with a wide range of showrooms, a dedicated NC training room, and evaluation, testing and other rooms enabling the use of actual machines for instruction and process testing.

Shift to the Prime Market from the First Section of the Tokyo Stock Exchange.

					¥62,723	¥52,304	¥73,884	¥87,368
NET SALES				million	million	million	million
(Millions of yen)				2 /19 91	2/2001	2/2008	12/2022
100,000
80,000
60,000
40,000
20,000
0	1951	1960	1970	1980	1990	2000	2010	2022
Precision Products	Machine Tools	Components	Special Products

*1 Data up to the fiscal year ended February 28, 1970 is based on the total of each segment.

*2 Data from the fiscal year ended February 29, 1972 to the fiscal year ended February 28, 2005 is classified into the three Precision Electronic Equipment, Machine Tools and Precision Products segments. Effective from the fiscal year ended February 28, 2006, operations were reclassified into four business segments with Precision Electronics Equipment separated into Special Products and Components. However, data from the fiscal year ended February 29, 1972 to the fiscal year ended February 28, 2005 is based on the four business segments for comparative purposes.

*3 Effective from the fiscal period ended December 31, 2018, Star Micronics Co., Ltd. changed its account settlement date from the end of February to December 31.

*4 In conjunction with its decision to dissolve the Precision Products Division, Star Micronics Co., Ltd. took steps to revise the classification of its business segments in 2020. Effective from 2021, the Company reclassified the three Special Products, Machine Tools, and Precision Products segments into the two Special Products and Machine Tools segments.

Annual Report 2022 STAR MICRONICS CO., LTD.

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