NGK-manufactured NAS (sodium-sulfur) batteries used for storing electricity caught on fire on September 21, 2011. The batteries are owned by The Tokyo Electric Power Company, Incorporated and installed at the Tsukuba Plant (Joso City, Ibaraki Prefecture) of Mitsubishi Materials Corporation (Head office: Chiyoda-ku, Tokyo). This fire caused the NAS batteries which had been installed in a special package outside to burn. The fire did not spread to the customer's buildings or facilities, and nobody was injured.

The fire authorities are presently investigating the cause of the fire. In order to quickly find the cause of the fire, NGK has also conducted its own investigation of the scene of the fire as well as stripped down the batteries that did not burn. In addition, NGK is working on a detailed investigation of the NAS batteries that caught on fire with the cooperation of fire authorities. The investigation is looking at every possible cause such as the design, components, manufacturing, inspection and installation.

Immediately after the batteries caught on fire, NGK began successively to analyze the operating record for data such as temperature and voltage before and after the fire, examine the manufacturing history of the NAS batteries, and to simulate the combustion based on a fault-tree analysis (FTA) of the incident.

In addition, NGK has conducted experiments to replicate the fire in order to examine measures for preventing another outbreak.

Furthermore, following on-site inspections by the fire authorities, NGK has begun to also examine the batteries, packages and residue recovered from the accident scene.

Under the supervision of the fire department, and with the input of experts from outside the Company, personnel from the technical departments across the Company, in addition to those from the NAS battery business, are making full-scale effort to objectively determine the cause of the fire.

NGK will continuously report on the progress and disclose the cause of the fire as soon as it can be identified.

On February 15, 2010, there was a fire at the Oyama Plant (Oyama City, Tochigi Prefecture) of Takaoka Electric Mfg. Co., Ltd. (Headquarters: Chuo-ku, Tokyo). These NAS batteries were the first line of high-output batteries, with all the individual batteries in the module connected in series in order to produce high output. The NAS batteries that caught on fire recently were a standard type and therefore different. However, NGK takes it very seriously that there have been two incidences of fires involving NAS batteries installed at customers' premises. In February 2005, there was also a fire at NGK's NAS battery plant in Komaki City, Aichi Prefecture. This fire broke out when a modular battery was undergoing high-voltage testing, being applied a high voltage that was not applied during normal operation.

NGK asked all customers using NAS batteries to stop using them soon after the fire occurred to make doubly sure of safety until the cause of the fire is identified and measures to prevent a reoccurrence have been implemented. At the same time, NGK has asked customers who need to maintain a minimal level of functionality, such as using batteries as an emergency power source, to consult with it on an individual basis about the method of operation.

Under the supervision of the fire authorities, NGK continues investigation into the cause of the fire and steadily executes additional safety measures. NGK will first introduce the safety measures to currently installed batteries and restart their operations, to ensure that customers can use currently installed batteries without anxiety.

As of March 31, 2011, NAS batteries storing 305,000 kilowatts of electricity were in use in 174 locations in Japan and 5 overseas countries (the U.S., the United Arab Emirates, France, Germany and the U.K.).

Sales activities have not stopped. However, sales activities are also focused on measures for ensuring safety. We are consulting on an individual basis with new customers based on the status of investigations to identify the cause of the fire and implementation of measures to prevent a reoccurrence.

Yes, we decided to voluntary suspend production of NAS batteries immediately after the fire occurred while manufacturing and technology divisions focus on investigating the cause of the fire and looking at measures to prevent a reoccurrence, and responding to customers.

NGK continues investigation into the cause of the fire and steadily executes additional safety measures. NGK aims to resume production of NAS batteries incorporating safety measures in the first half of the fiscal year ending March 2013.

Our forecast for NAS battery sales for the year ending March 2012 is for a decline from 28.0 billion yen (forecasted in May 2011) to 0.8 billion yen due to the postponement of shipments following the fire. On the earnings front, we have lowered our operating income forecast in the Power Business, which includes NAS batteries, by 9.0 billion yen from our previous forecast announced in May 2011. This includes a loss at factories as we are assuming there will be no production of NAS batteries in the second half of the fiscal year ending March 2012.

While some details have yet to be determined, NGK expects to incur an extraordinary loss of around ¥60 billion for the fiscal year ending March 31, 2012, based on the sum total of the cost of investigation, upgrades and other safety measures, as well as loss from valuation of assets, and other expenses.

NGK plans to record an allowance based on a close examination of the investigation into the cause of the incident and safety measures, along with related expenses. NGK expects the NAS battery fire incident to have a negative impact of around ¥50 billion on the net income forecast for the fiscal year ending March 31, 2012.

For details, please see the press release titled "NAS Battery Fire Incident Response and Future Measures (PDF:53KB)" dated December 19, 2011.