UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SD
SPECIALIZED DISCLOSURE REPORT
(Commission File Number) | (Exact Name of Registrant as Specified in Its Charter) (Address of Principal Executive Offices) (Zip Code) | (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
1-9516 | ICAHN ENTERPRISES L.P. | Delaware | 13-3398766 |
767 Fifth Avenue, Suite 4700 New York, NY 10153 | |||
333-118021-01 | ICAHN ENTERPRISES HOLDINGS L.P. | Delaware | 13-3398767 |
767 Fifth Avenue, Suite 4700 New York, NY 10153 | |||
Peter Reck: (212) 702-4300 767 Fifth Avenue, Suite 4700, New York, NY 10153 |
(Name and telephone number, including area code, of the person to contact in connection with this report.) |
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
x | Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2013. |
Introduction
This Specialized Disclosure Report on Form SD (“Form SD”) of Icahn Enterprises L.P. (“Icahn Enterprises”) and Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”) and their consolidated subsidiaries has been prepared pursuant to Rule 13p-1 and Form SD promulgated under the Securities Exchange Act of 1934 for the reporting period of January 1, 2013 to December 31, 2013. In this Form SD, (i) “the Company,” “we,” “us” and “our” refers to Icahn Enterprises L.P. and Icahn Enterprises Holdings L.P. and their subsidiaries, (ii) “Holding Company” refers solely to Icahn Enterprises and Icahn Enterprises Holdings.
Rule 13p-1 requires disclosure of certain information when a company manufactures or contracts to manufacture products for which “Conflict Minerals” are necessary to the functionality or production of those products. The “Conflict Minerals” for the purposes of Rule 13p-1 are gold, columbite-tantalite (coltan), cassiterite, and wolframite (including their derivatives, tantalum, tin and tungsten, and the U.S. Secretary of State may designate other minerals in the future). If Conflict Minerals are necessary to the functionality or production of one or more products that a company manufactures or contracts to manufacture, that company must investigate its supply chain in an effort to determine whether those Conflict Minerals originated in any of the “Covered Countries” under Rule 13p-1. The “Covered Countries” for the purposes of Rule 13p-1 are the Democratic Republic of the Congo (the DRC), the Republic of the Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola.
Company Overview and Conflict Minerals Reporting
We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Automotive, Energy, Metals, Railcar, Gaming, Food Packaging, Real Estate and Home Fashion. We conduct our business principally through our consolidated subsidiaries. For more information regarding our business, see Part I of the Company’s most recent annual report on Form 10-K, which can be publicly accessed at www.ielp.com.
We conducted an analysis of our consolidated subsidiaries and identified two majority-owned subsidiaries - Federal-Mogul Holdings Corporation (“Federal-Mogul”) and American Railcar Industries, Inc. (“ARI”) - whose operations involve Conflict Minerals. Accordingly, the Conflict Minerals Reports (“CMR”) of Federal-Mogul and ARI have been attached to this Form SD as exhibits. The Holding Company does not have operations involving Conflict Minerals and therefore a CMR for the Holding Company is not applicable.
A copy of each of Federal-Mogul’s and ARI’s CMR is filed as Exhibit 1.02.1 and Exhibit 1.02.2, respectively, to this Form SD and is publicly available at www.ielp.com.
Federal-Mogul and ARI are each registrants subject to Rule 13p-1 and Form SD. As such, Federal-Mogul and ARI have filed their respective Form SDs, which are publicly available on their respective websites at www.federalmogul.com and www.americanrailcar.com. In addition, a copy of each of Federal-Mogul’s and ARI’s conflict mineral policy can be publicly accessed at the respective websites of the companies.
Section 1 - Conflict Minerals Disclosure
Item 1.01 Conflict Minerals Disclosure Report.
Item 1.02 Exhibit.
Copies of Federal-Mogul’s and ARI's Conflict Minerals Reports are filed as Exhibits 1.02.1 and 1.02.2, respectively, hereto and are publicly available at their respective websites at www.federalmogul.com and www.americanrailcar.com.
Section 2 - Exhibits
Item 2.01 Exhibits.
1.02.1 - Conflict Minerals Report of Federal-Mogul
1.02.2 - Conflict Minerals Report of ARI
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ICAHN ENTERPRISES L.P. | |||
(Registrant) | |||
By: | Icahn Enterprises G.P. Inc., its general partner | ||
By: | /s/ Peter Reck | ||
Peter Reck | |||
Chief Accounting Officer | |||
ICAHN ENTERPRISES HOLDINGS L.P. | |||
(Registrant) | |||
By: | Icahn Enterprises G.P. Inc., its general partner | ||
By: | /s/ Peter Reck | ||
Peter Reck | |||
Chief Accounting Officer | |||
Date: June 2, 2014
EXHIBIT 1.02.1
Federal-Mogul Holdings Corporation
Conflict Minerals Report
For The Year Ended December 31, 2013
This conflict minerals report (“CMR”) is presented in accordance with Rule 13p-1 under the Securities Exchange Act of 1934, as amended (the “Rule”), for the year ended December 31, 2013. The Rule was adopted by the Securities and Exchange Commission (“SEC”) to implement reporting and disclosure requirements related to conflict minerals as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Act”). The Rule imposes certain reporting obligations on SEC registrants whose manufactured products contain conflict minerals that are necessary to the functionality or production of their products. Conflict minerals are defined as cassiterite, columbite-tantalite, gold, wolframite, and their derivatives, which are limited to tin, tantalum, tungsten, and gold (“3TG”). These requirements apply to registrants regardless of the geographic origin of the conflict minerals and whether or not they fund armed conflict.
Federal-Mogul Holdings Corporation (herein referred to as “Federal-Mogul” or the “Company”) conducted an analysis of its products and found that certain of its products contain 3TG. After conducting a reasonable country of origin analysis, Federal-Mogul is unable, with absolute certainty, to determine the origin of 3TG in its products and therefore the Company cannot exclude the possibility that some 3TG may have originated in the Democratic Republic of Congo or an adjoining country (the “Covered Countries”). Federal-Mogul also believes that 3TG in its products is not from recycled or scrap sources. Accordingly, the Company is required under the Rule to submit this CMR describing the due diligence exercised on the source and chain of custody of the Company’s conflict minerals.
In accordance with SEC guidance, this CMR is not audited.
1. | Company Overview |
This CMR has been prepared by management of Federal-Mogul. The information includes the activities of all majority-owned subsidiaries and variable interest entities that are required to be consolidated. It does not include the activities of variable interest entities that are not required to be consolidated.
The Company is a leading global supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reduction and safety systems. The Company serves the world’s foremost original equipment manufacturers (“OEM”) and servicers (“OES”) (collectively “OE”) of automotive, light, medium and heavy-duty commercial vehicles, off-road, agricultural, marine, rail, aerospace, power generation and industrial equipment, as well as the worldwide aftermarket. The Company seeks to participate in both of these markets by leveraging its original equipment product engineering and development capability, manufacturing know-how, and expertise in managing a broad and deep range of replacement parts to service the aftermarket. The Company believes that it is uniquely positioned to effectively manage the life cycle of a broad range of products to a diverse customer base. Federal-Mogul is a leading technology supplier and a market share leader in several product categories. As of December 31, 2013, the Company had current OEM products included on more than 300 global vehicle platforms and more than 700 global powertrains used in light, medium and heavy-duty vehicles. The Company offers premium brands, OE replacement and entry/mid-level products for all aftermarket customers. Therefore, the Company can be first to the aftermarket with new products, service expertise and customer support. This broad range of vehicle and powertrain applications reinforces the Company’s belief in its unique market position.
The Company operates with two end-customer focused business segments. The powertrain (or “PT”) segment focuses on original equipment products for automotive, heavy duty and industrial applications. The motorparts (or “Motorparts”) division sells and distributes a broad portfolio of products in the global aftermarket, while also serving original equipment manufacturers with products including braking, chassis, wipers and other vehicle components. This organizational model allows for a strong product line focus benefitting both original equipment and aftermarket customers and enables the global Federal-Mogul teams to be responsive to customers’ needs for superior products and to promote greater identification with Federal-Mogul premium brands. Additionally, this organizational model enhances management focus to capitalize on opportunities for organic or acquisition growth, profit improvement, resource utilization and business model optimization in line with the unique requirements of the two different customer bases.
PT offers its customers a diverse array of market-leading products for OE applications, including pistons, piston rings, piston pins, cylinder liners, valve seats and guides, ignition products, dynamic seals, bonded piston seals, combustion and exhaust gaskets, static gaskets and seals, rigid heat shields, engine bearings, industrial bearings, bushings and washers, plus element resistant systems protection sleeving products, acoustic shielding, and flexible heat shields. Motorparts offers powertrain products manufactured by PT, distributed through globally-recognized aftermarket brands to the independent aftermarket and also offers brake disc pads, brake linings, brake blocks, brake system components, chassis products, wipers, and other product lines to OEM, OES and aftermarket customers.
Federal-Mogul has manufacturing facilities and/or distribution centers in 23 countries and, accordingly, all of the Company’s reporting segments derive sales from both domestic and international markets.
Supply Chain
Federal-Mogul’s highly engineered products are manufactured from a variety of raw materials and incorporate subcomponents which are distributed through a global supply chain. The Company has relationships with a considerable network of suppliers throughout the world, and Federal-Mogul has found that the majority of its suppliers are three tiers or more removed from smelter and refiner operations. Therefore, Federal-Mogul must rely on its direct suppliers to work with their upstream suppliers in order to provide information on the origin of 3TG contained in components and materials supplied to Federal-Mogul. While Federal-Mogul has incorporated disclosure requirements with respect to conflict minerals in its Restricted Substance Management Standard, and it is Federal-Mogul’s expectation that its suppliers will adopt policies and procedures with respect to conflict minerals, many of the Company’s agreements with suppliers have been in force for a number of years, and the Company cannot unilaterally impose new contract terms or flow-down requirements that would otherwise obligate such suppliers to comply with Federal-Mogul’s 3TG due diligence efforts.
Because it is not practicable to conduct a survey of all Federal-Mogul suppliers, the Company developed a risk-based approach to due diligence that focused on products believed to contain 3TG based on specifications and other documentation (the “product-centric approach”), as well as suppliers thought to potentially provide Federal-Mogul with components and materials incorporating 3TG (the “supplier-centric approach”). The Company believes this was a reasonable approach because the combined product-centric and supplier-centric approaches offers a certain level of corroboration in information received from suppliers while also focusing on major suppliers.
Conflict Minerals Policy
The Company has adopted a conflict minerals policy which is publicly available on its website at http://www.federalmogul.com/en-US/Suppliers/Pages/ConflictMinerals.aspx.
For additional information about Federal-Mogul’s commitment to responsible sourcing and other human rights, see the Company’s Code of Conduct and Basic Working Conditions for Suppliers policy at http://www.federalmogul.com/en-US/Suppliers/Pages/Purchasing-Policies.aspx.
2. | Due Diligence Process |
Design of Due Diligence
Federal-Mogul’s due diligence measures conform, in all material respects, with the due diligence framework presented by The Organisation for Economic Co-operation and Development (“OECD”) in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition (the “OECD Guidance”), including the related supplements for gold and for tin, tantalum and tungsten.
Due Diligence Activities With Respect to Products Manufactured During 2013
(i) | Established a Strong Company Management System: |
Federal-Mogul has adopted a conflict minerals policy, which has been communicated to its suppliers and is publicly available on Federal-Mogul’s website.
Federal-Mogul’s purchasing department led the Company’s conflict minerals compliance program. However, early on, the Company identified other key roles within the organization requiring input into Federal-Mogul’s conflict minerals compliance program. Centralized program management resources were added to each business segment to direct and monitor progress of the
product line purchasing and engineering groups responsible for carrying out the Company’s combined product-centric and supplier-centric 3TG diligence approaches. The Company’s executive management was briefed about the progress and results of the Company’s due diligence efforts on a regular basis. As guidance to the program managers, Federal-Mogul formed an overview committee which included representatives from purchasing, supplier quality, and legal. The overview committee frequently sought insight from engineering, information technology, and executive management.
As Federal-Mogul does not typically have direct relationships with 3TG smelters and refiners, the Company participated in several industry-wide initiatives in an effort to develop conflict-free supply chains, including: the Electronics Industry Citizenship Coalition-Global e-Sustainability Initiative’s (EICC-GeSI) Conflict-Free Sourcing Initiative (CFSI), the Automotive Industry Action Group’s (AIAG) Conflict Minerals Work Group, and the National Association of Manufacturers’ (NAM) Conflict Minerals Task Force. Controls included an integrity policy that outlines the expected behaviors of Federal-Mogul’s employees, the Code of Conduct and Basic Working Conditions for Suppliers policy that provides expected business practices for suppliers, and the disclosure requirements with respect to conflict minerals in Federal-Mogul’s Restricted Substance Management Standard.
Federal-Mogul’s due diligence process included a supplier-centric approach. The Company’s purchasing department is the primary interface with suppliers and had the responsibility of ensuring Federal-Mogul’s requirements concerning the Company’s conflict minerals policy were understood. Purchasing representatives engaged with suppliers to complete the EICC-GeSI Conflict Minerals Reporting Template (the “CMRT”). Further, purchasing personnel provided training to improve content and strengthen supplier knowledge of the Rule. Training materials and workshops were made available via the program managers when engagement with suppliers was required.
The Company established grievance mechanisms whereby employees, suppliers and other interested parties can report concerns or violations of Federal-Mogul’s policies. Such concerns or violations can be made via the Federal-Mogul helpline (which is described at http://www.federalmogul.com/en-US/Company/Pages/Integrity-Policy.aspx) or through a specific conflict minerals related e-mail address at conflictminerals@federalmogul.com.
(ii) | Identified and Assessed Risk in the Supply Chain: |
Federal-Mogul’s due diligence process for identifying the presence of 3TG included both a product-centric and a supply-centric approach. The combination and overlap of these approaches helped identify potential risks or red flags.
In the Company’s product-centric approach, the Company leveraged its technical infrastructure to: (a) identify where specifications required the use of 3TG that were necessary to the function of the product the Company manufactured or contracted to manufacture and (b) categorize relevant suppliers as high-importance based on independent engineering judgment that 3TG was likely to exist in a purchased product.
In Federal-Mogul’s supplier-centric approach, suppliers were expected to return a completed CMRT or provide information through the iPoint Conflict Minerals Platform (“iPCMP”), including all smelter and refiner information for the designated minerals. Responses from suppliers were reviewed against internal criteria developed by the Company and the results of Federal-Mogul’s product-centric approach were used to determine if follow-up with a supplier was necessary. The Company maintained a dashboard with the relevant suppliers’ classification. This document also provided details on missing information or necessary follow-up with relevant suppliers.
The objective is to obtain the complete smelter information from these relevant suppliers, to encourage suppliers to implement due diligence measures, and to adhere to conflict-free sourcing policies. From the responses received from suppliers, it is clear that the majority of suppliers are not yet able to provide a list of smelters used to process 3TG contained in the components supplied to their customers. Federal-Mogul is a member of the CFSI and will continue to work with that program and the Company’s industry peers to educate the supply base on proper due diligence measures so that the Company can understand the source and chain of custody of Federal-Mogul’s 3TG.
(iii) | Designed and Implemented a Strategy to Respond to Risks: |
Federal-Mogul has implemented a risk management plan which includes: requiring suppliers to respond to the CMRT or submit information through iPCMP; reviewing and verifying responses from suppliers and following-up on any discrepancies; assigning levels of risk to suppliers based on the results of Federal-Mogul’s product-centric and supplier-centric due diligence approaches; and categorizing any identified smelters into appropriate groups based on such smelters’ location, place of mines and audit status. Executive management was briefed about the Company’s due diligence efforts on a regular basis.
As part of the Company’s risk management plan, to ensure suppliers understand the Company’s expectations for due diligence and completing the CMRT, Federal-Mogul conducted workshops and training with suppliers. Federal-Mogul exercised leverage over those relevant suppliers, and clearly communicated the expectation for them to adopt conflict-free sourcing policies as a risk mitigation practice.
(iv) | Carried out Independent Third Party Audit of Supply Chain Due Diligence at Identified Points in the Supply Chain: |
Federal-Mogul does not typically have a direct relationship with 3TG smelters and refiners and therefore does not perform or direct audits of these entities within Federal-Mogul’s supply chain. However, the Company supported audits conducted by third party auditors through Federal-Mogul’s participation in the CFSI and Federal-Mogul obtained information about the results of smelter audits, when available.
(v) | Reported on Supply Chain Due Diligence: |
This CMR, Federal-Mogul’s conflict minerals policy, and further correspondence with suppliers on conflict minerals is available on the Company’s website at www.federalmogul.com.
3. | Due Diligence Results |
Survey Responses
Federal-Mogul reviewed supplier responses against specified criteria to determine which suppliers required further engagement from Federal-Mogul. Such criteria included untimely or incomplete responses as well as inconsistencies within the data reported in the CMRT. While the Company has worked directly with these suppliers to provide more accurate and complete responses, not all responses included the names and locations of smelters. Of those suppliers that included responses on smelters, the Company was unable to obtain sufficient information to determine whether those 3TG were from mines which benefited from or financed any armed groups.
The majority of responses the Company received from its suppliers provided data at a company-level. For this reason, Federal-Mogul was unable to determine if the smelters or refiners were actually in the Company’s supply chain. For this same reason, Federal-Mogul cannot be certain that any 3TG reported by its suppliers were contained in components or parts Federal-Mogul purchased.
Efforts to Determine Mine or Location of Origin
As part of Federal-Mogul’s reasonable country of origin inquiry and Federal-Mogul’s due diligence efforts, Federal-Mogul requested its suppliers to complete the smelter information in the CMRT. To the extent information was provided by the Company’s suppliers, Federal-Mogul then leveraged the Conflict-Free Smelter Program (the flagship program of the CFSI) to determine the mines or locations of origin of the 3TG in the Company’s supply chain. As a subscribing member, Federal-Mogul participated in the CFSI activities. Federal-Mogul has also monitored and stayed abreast of the OECD implementation programs and the International Tin Research Institute Tin Supply Chain Initiative. The Company has determined that this process is the most reasonable in determining the mine or locations of origin.
Smelter and Refiners
Of Federal-Mogul’s suppliers reporting the existence of 3TG in their products, most reported at a company-level and not a part-level. Therefore, whether any 3TG was contained in components or parts the Company purchased, or whether an identifiable smelter impacted Federal-Mogul’s supply chain is not clear. The Company has therefore elected not to present the smelter and refiner names in this CMR.
4. | Steps to be Taken to Mitigate Risk |
Federal-Mogul intends to take the following steps to improve the due diligence conducted by the Company and to further mitigate any risk that the necessary 3TG in the Company’s products could benefit armed groups in the Covered Countries:
▪ | Include a conflict minerals flow-down clause in supplier agreements and/or the Company’s general terms and conditions of purchase. |
▪ | Encourage suppliers to educate and train their lower tier suppliers to have a conflict-free sourcing policy. |
▪ | Request all high-importance suppliers to use the iPCMP reporting tool to increase the response rate. |
▪ | Advocate for smelters and refiners to join the Conflict-Free Smelter Program. |
▪ | Continue to work with relevant trade associations to define and improve best practices. |
* * * * *
EXHIBIT 1.02.2
American Railcar Industries, Inc.
Conflict Minerals Report
INTRODUCTION
This Conflict Minerals Report (CMR) of American Railcar Industries, Inc. (ARI or the Company) has been prepared pursuant to Rule 13p-1 and Form SD promulgated under the Securities Exchange Act of 1934 for the reporting period of January 1, 2013 to December 31, 2013 (the Reporting Period).
Rule 13p-1 requires disclosure of certain information when a company manufactures or contracts to manufacture products for which “Conflict Minerals” are necessary to the functionality or production of those products. The “Conflict Minerals” for the purposes of Rule 13p-1 are gold, columbite-tantalite (coltan), cassiterite, and wolframite (including their derivatives, tantalum, tin and tungsten, and the U.S. Secretary of State may designate other minerals in the future). If Conflict Minerals are necessary to the functionality or production of one or more products that a company manufactures or contracts to manufacture, that company must investigate its supply chain in an effort to determine whether those Conflict Minerals originated in any of the “Covered Countries” under Rule 13p-1. The “Covered Countries” for the purposes of Rule 13p-1 are the Democratic Republic of the Congo (the DRC), the Republic of the Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola. As described in this CMR, certain of the Company’s operations manufacture, or contract to manufacture, products for which Conflict Minerals are necessary to the functionality or production of those products.
In accordance with Securities and Exchange Commission guidance, this CMR is not audited.
DESCRIPTION OF PRODUCTS COVERED BY THIS REPORT
ARI designs, manufactures and sells railcars and a wide range of components primarily for the North American railcar and industrial markets. ARI's railcars include numerous components, including, but not limited to, railcar wheels, brakes, axles, bearings, yokes, tank railcar heads, sideframes, bolsters and other heavy castings, and raw materials, such as steel and normalized steel plate. For more information about ARI's products, see Part 1, Item 1 of the Company’s most recent Annual Report on Form 10-K, which can be accessed at www.americanrailcar.com.
This CMR relates to products: (i) for which Conflict Minerals are necessary to the functionality or production of those products; (ii) that were manufactured, or contracted to be manufactured, by the Company; and (iii) for which the manufacture was completed during the Reporting Period. As a result of our reasonable country of origin inquiry (RCOI) and the due diligence procedures described below, ARI has identified certain components in its supply chain that contain certain Conflict Minerals. Based on these procedures, ARI is currently unable to determine the country of origin or the facilities used to process the Conflict Minerals contained in these components. These components constitute only a small portion of the materials content of the railcars produced at ARI's manufacturing facilities.
RCOI
The Company manufactures, or contracts to manufacture, products for which Conflict Minerals are necessary to the functionality or production of those products. Accordingly, the Company has conducted a good faith RCOI regarding the necessary Conflict Minerals used in its products. This good faith RCOI was reasonably designed to determine whether any of the necessary Conflict Minerals originated in the Covered Countries and whether any of the necessary Conflict Minerals may be from recycled or scrap sources. RCOI procedures included evaluating ARI's suppliers’ responses to the Electronic
Citizenship Coalition (EICC)/Global e-Sustainability Initiative (GeSI) Conflict Minerals Reporting Template (the Template). Where applicable, the Company also inquired and/or obtained supplier policies on Conflict Minerals and made follow-up inquiries with appropriate personnel of the suppliers as necessary.
Design of Due Diligence
Based on the Company’s RCOI, the Company was also required to exercise due diligence on the source and chain of custody of the Conflict Minerals in its products. The design of the due diligence measures described in this CMR for tin, tungsten, tantalum, and gold conforms in all material respects with the Organization for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas: Second Edition, including the related supplements on gold, tin, tantalum and tungsten (collectively, the OECD Guidance). The OECD Guidance is an internationally recognized due diligence framework for the following Conflict Minerals: tin, tantalum, tungsten, and gold.
Due Diligence Measures Performed
The Company’s supply chain is complex, and there are many third parties in the supply chain between ARI's suppliers and the original sources of any Conflict Minerals. The Company does not purchase Conflict Minerals directly from mines, smelters or refiners. The Company must therefore rely on its suppliers to provide information regarding the origin of Conflict Minerals that are in ARI's products. Given this context, the Company undertook the following measures to exercise due diligence on the source and chain of custody of the Conflict Minerals in its products for the Reporting Period:
i. | ARI has established a management system to support its supply chain due diligence. |
a. | ARI has adopted an organizational structure and communication process that is intended to establish a system of transparency over the supply chain. This system is meant to help ARI obtain critical information regarding the supply chain of Conflict Minerals used in its products. |
b. | ARI adopted a company policy in 2014 regarding Conflict Minerals in its supply chain. This policy is available at the Company’s website: www.americanrailcar.com. |
c. | ARI has assigned authority and responsibility to a multi-disciplinary team consisting of its Vice President of Procurement, Director of Financial Reporting, and Director of Internal Audit (collectively, the Conflict Minerals Committee). The Conflict Minerals Committee receives periodic support from ARI's General Counsel and reports all Conflict Minerals matters directly to the Senior Vice President, Chief Financial Officer and Treasurer. |
d. | ARI has distributed communications to its suppliers making them aware of Rule 13p-1 and ARI's related policies and apprising them of ARI's expectations regarding compliance with Rule 13p-1, ARI's related policies and any other requests that ARI may send to them. |
e. | ARI maintains business records relating to Conflict Minerals due diligence in accordance with the Company's existing processes. |
ii. | ARI has taken steps to identify and assess risk in its supply chain. |
a. | ARI conducted a thorough search for Conflict Minerals in its supply chain using its enterprise resource planning system. For products or materials identified as high risk, bills of material and product specifications were also reviewed. |
b. | ARI engaged in discussions with its immediate suppliers in an effort to identify the smelters/refiners of any Conflict Minerals in its supply chain during the Reporting Period. |
c. | ARI uses the Template to assess its suppliers’ use, or lack thereof, of Conflict Minerals in the products and materials ARI purchases. |
d. | ARI identified suppliers in its supply chain for the Reporting Period by reviewing payments and purchase orders issued to suppliers during the Reporting Period and then sent those suppliers a copy of the Template (a Survey). As of April 30, 2014, a significant amount of Surveys were returned. Several follow-up reminders were sent to suppliers who did not respond to the Survey. If a supplier did not respond to the Survey or the response was too general (i.e. declaration at company level instead of product level), ARI conducted a reasonable assessment of the composition of the suppliers’ product or materials in an effort to determine if the |
product or materials contained Conflict Minerals. ARI also reviewed Survey responses from suppliers that supplied similar products and materials to evaluate the consistency and accuracy of responses.
iii. | ARI has designed and implemented a strategy to respond to identified risks. |
a. | ARI’s Conflict Minerals Committee monitors internal accountability with respect to the implementation of the supply chain due diligence process and reports its findings of the supply chain risk assessment to upper level management and ARI's Audit Committee of the Board of Directors. |
b. | ARI has undertaken additional fact and risk assessments as necessary to conform in all material respects with the relevant requirements of Step 3(D) of the OECD Guidance Supplement on Tin, Tantalum, and Tungsten and Step 3(E) of the OECD Guidance on Gold. This has included, but is not limited to, engaging in follow-up discussions with suppliers about the composition of their products and materials, requests for suppliers to complete Surveys, and working to incorporate Conflict Minerals language into ARI’s supplier contracts. If a supplier identifies that it has Conflict Minerals in the products or materials it supplies, ARI is actively engaging that supplier to provide us with the locations of the smelter(s)/refiner(s) of those Conflict Minerals and to obtain a copy of their Conflict Mineral policies. For the smelters identified in ARI’s supply chain that are providing Conflict Minerals, ARI is reviewing the Conflict-Free Smelter Initiative List to determine if they are compliant with the Conflict Free Sourcing Initiative (CFSI). |
iv. | ARI has determined reliance upon independent third-party audits of smelter/refiner due diligence practices by the CFSI is appropriate. |
a. | ARI is a downstream consumer of necessary conflict minerals and is many steps removed from smelters and refiners who provide minerals and ores. ARI does not purchase raw materials or ores, and does not, to the best of its knowledge, directly purchase Conflict Minerals from any of the Covered Countries. Therefore, ARI does not perform or direct audits of smelters and refiners within the supply chain, but rather the Company relies on the audits carried out by the CFSI. |
v. | ARI complies with Step 5 of the OECD Guidance by making its CMR available on its website at www.americanrailcar.com. |
DRC CONFLICT UNDETERMINABLE AND RISK MITIGATION
After exercising the due diligence described above, the Company was unable to determine whether or not its products qualify as “DRC conflict free,” as defined under Rule 13p-1 and Form SD. Further, the Company was also unable to determine the facilities used to process the necessary Conflict Minerals in ARI's products. Through the due diligence efforts described above, the Company also attempted to determine the mine or location of origin of such Conflict Minerals with the greatest possible specificity but was unable to do so for this Reporting Period.
The Company expects to take the following steps, among others, to improve its due diligence measures and to further mitigate the risk that the necessary Conflict Minerals contained in the Company’s supply chain benefit armed groups in the Covered Countries: (i) continuing to engage with suppliers to obtain current, accurate and complete information about the supply chain; (ii) encouraging suppliers to implement responsible sourcing; and (iii) working to incorporate Conflict Minerals contract provisions into supplier contracts and purchase orders through the Company's updated standard terms and conditions as published on its website.