Conflict Mineral Compliance with Esterline

Esterline Q&A Session

Rhonda Grady, Esterline

Jonathan Hughes 3/18/2015 Conflict Minerals Q&A

Agenda

•Intro to Esterline’s Program •Pre-submitted questions •Questions from the Audience

[email protected] | www.assentcompliance.com | TEL: 1(866)964-6931 Slide 4

Esterline’s Conflict Minerals Program

Rhonda Grady Title: Program Manager, Business Compliance Organization: Corporate Legal Contact Information: Telephone: 870.574.4216 (CST) Email: [email protected] or [email protected]

mailto:[email protected]

mailto:[email protected]



•Currently partnered with Assent Compliance for Turnkey services •Esterline Conflict Minerals Policies: http://www.esterline.com/powersystems/ProductSupport/ConflictMineralsPolicy.aspx •Current Timeline:

•First Survey Request: November 23rd, 2014 •Escalations February 16th - Ongoing •Final Email Scheduled end of March •Due Diligence Began November 24th and is ongoing

http://www.esterline.com/powersystems/ProductSupport/ConflictMineralsPolicy.aspx

http://www.esterline.com/powersystems/ProductSupport/ConflictMineralsPolicy.aspx



•Data Validation Process •All CMRTs are programmatically checked by Assent’s portal for errors against Industry accepted Data Validation schema •When a CMRT contains errors, an email is sent to the Supplier automatically by Assent’s portal •This Email contains an Error Code along with an explanation of the error •Once the CMRT is corrected, it can be resubmitted to the Assent Portal • Assent’s QA team will call all suppliers with invalid data in order to help correct the issue



•Due Diligence Process •All CMRTs are scored for strength and weakness based on Company level section and Smelter data quality •When a CMRT achieves a low score (Ex: No to Questions A, E, G, H and I) or Smelter inconsistencies, Assent’s QA team will reach out to Suppliers directly to identify the risks and work towards a resolution •A Supplier’s willingness to improve their program will be tracked and measured in the Assent system and incorporated into Esterline’s future Conflict Minerals program including Procurement decisions.


Question 1

None of my parts have tin, tungsten, tantalum or gold in them. What should I do? You received a survey because you were identified as a “direct supplier” – a supplier of raw

materials used in the manufacture of a finished product; therefore, we ask that you answer Question(s) 1 and/or 2 “NO” on the CMRT and submit it to Assent. Unless we purchase new SKU’s from you in the future, you will not be re-surveyed annually.


Question 2

We are a distributor and not in scope of the Conflict Minerals regulation - why do I need to submit a CMRT? Esterline is an SEC registrant and subject to the CM disclosure regulation. We are asking

all our direct suppliers, whether they are manufacturer or distributor, to submit a CMRT.


Question 3

We are a small business and find it difficult to determine the source of our minerals - what can I do to help comply with Esterline's request? First and foremost, submit a CMRT.

• If you know your parts don’t contain tin, tantalum, tungsten or gold (3TG), answer “NO” to question(s) 1 and/or 2, as applicable and submit your CMRT.

• If you are unsure about whether your parts contain 3TG or not, then we ask that you survey your supply chain using CMRT Version 3.02, accumulate the information, validate and verify the smelter info, and submit a completed CMRT.


Question 4

We do not sell to Esterline USA, we only sell to a Esterline business unit outside of the USA - do we need to comply with this request? Yes, you will need to comply with the request even if you only supply to an international

Esterline business unit. As an SEC registrant, we are required to disclose the origin of any 3TG used in our finished products regardless of the country of manufacture.


Question 5

What timelines should I use for my internal program? Our internal goal is to accumulate our responses by March 31 and provide our CMRT to

our customers the first week of April. We will continue due diligence and accepting CMRT’s and corrections through April 15th at which point we will begin report preparation.


Question 6

How does Esterline assess and ensure Smelter data accuracy? When a CMRT is submitted through Assent’s portal, the Smelter data is programmatically

validated against Assent’s Smelter database. • Smelters without a CID number are reviewed for duplication and validity and then handed off to

Assent’s Smelter group.


Question 7

What does Esterline consider "reasonable" for an RCOI? We consider a reasonable process to be 3 email attempts and 3 phone attempts. These are

accomplished with ESL and Assent working jointly through various contacts and channels within the supplier’s organization.


Question 8

What criteria does Esterline use to conduct Due Diligence on Supplier Responses? There are 3 “red flags:”

• A supplier who indicates that they purchase 3TG from one of the covered countries from a smelter not validated compliant;

• A supplier who provides an invalid smelter on their CMRT; and • A low score on a CMRT, but specifically a “NO” answer to Questions A,E,G,H or I.


Question 9

What are some best practices that Esterline can recommend to other companies? Educate, Communicate and Follow-through Set reasonable expectations for your suppliers and accept reasonable expectations from your

customers – requirements should always be commercially practicable. Reinforce process and reporting standardization.