June 1, 2016

Notice regarding Issuance of Zero Coupon Convertible Bonds due 2021
STAR MICRONICS CO., LTD. (the "Company") resolved, at its Board of Directors' meeting held on May
31, 2016, to issue Zero Coupon Convertible Bonds due 2021 (bonds with stock acquisition rights(tenkanshasaigata shinkabu yoyakuken-tsuki shasai)) (the "Bonds with Stock Acquisition Rights").

Background and Purpose of Issuance of Bonds with Stock Acquisition Rights
The Company's group has been promoting a global niche strategy as its basic business policy, with the goalof maximizing profitability in growing industries and building a strong presence within its areas of expertise;and it has developed three business segments, namely Special Products Segment, Machine Tools Segmentand Precision Products Segment.
Under this business policy, the Company's group will continue working hard to boost our corporate value
going forward through establishment of optimal production systems and the development ofhigh-value-added products, active pursuit of sales within emerging country markets as well as European andU.S. markets, and a focus on research and development activities aimed at expansion into new businessareas.
In the Special Products Segment, the Company's group is currently building a new business model thatutilizes cloud computing, while also working to increase sales of its mPOS (mobile point of sale) printers.
In the Machine Tools Segment, the Company's group is proceeding with expansion of its line of
fixed-headstock automatic lathes, and aiming to introduce new design and production methods which will
accelerate development and reduce production lead time, intended to boost corporate value by enhancing
business scope.
Faced with calls for increased capital efficiency and shareholder returns, the Company's group will explore
increasing shareholder returns and reducing shareholders' equity through share repurchases, focusing on
improving capital efficiency and increasing corporate distributions by promoting business investment andincreasing profits while maintaining a sound financial condition.
In line with the above policies, the Company resolved to issue the Bonds with Stock Acquisition Rights inorder to fund business investment and to undertake a repurchase of its own shares through a low-costfinancing tool with significant debt characteristics.

This announcement is intended as general information regarding the issuance of convertible bonds by STAR MICRONICS CO., LTD. (the"Company"). This announcement does not constitute an offer of, or the solicitation of an offer to buy or subscribe for the Bonds or the shares ofcommon stock of the Company in any jurisdiction in which such offer or solicitation is unlawful. In particular, the Bonds and the shares ofcommon stock of the Company issuable upon exercise of the Stock Acquisition Rights (together, the "Securities") have not been, and will not be,registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and, subject to certain exceptions, may not be offered or soldwithin the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S of the Securities Act). The Securities may
not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. No public offering ofthe Securities will be made in the United States.

1Use of Proceeds
The net proceeds of the issue of the Bonds with Stock Acquisition Rights are estimated to be approximately¥8 billion, and are expected to be used primarily as follows.
(1) approximately ¥5 billion by the end of December 2016 as funding for the repurchase of shares by theCompany for the purposes of improving capital efficiency;(2) approximately ¥2 billion by the end of February 2018 as funding for investment for development of newproducts such as mPOS (mobile point of sale) printers and development and capital expenditure forserialising fixed-headstock automatic lathes for the purposes of expanding the business scope; and(3) approximately ¥1 billion by the end of February 2018 as funding for developmental investments forcommercialization of cloud services.
To the extent such repurchase takes place prior to the closing date in respect of the Bonds with StockAcquisition Rights using cash reserves and borrowings, the Company intends to apply the amount referred toabove in respect of the proceeds of the offering of the Bonds with Stock Acquisition Rights to thereplenishment of such reserves and repayment of such borrowings.

As the Company will repurchase its

own shares taking into consideration, among other things, market conditions, the aggregate amount of therepurchase may not reach the amount of proceeds referred to above, in which case, such proceeds may beused as part of funding for capital expenditures or research and development.
###This announcement is intended as general information regarding the issuance of convertible bonds by STAR MICRONICS CO., LTD. (the"Company"). This announcement does not constitute an offer of, or the solicitation of an offer to buy or subscribe for the Bonds or the shares ofcommon stock of the Company in any jurisdiction in which such offer or solicitation is unlawful. In particular, the Bonds and the shares ofcommon stock of the Company issuable upon exercise of the Stock Acquisition Rights (together, the "Securities") have not been, and will not be,registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and, subject to certain exceptions, may not be offered or soldwithin the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S of the Securities Act). The Securities may
not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. No public offering ofthe Securities will be made in the United States.

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