Environmental StatementReport Environmental Protection and Safety LuK- Wooster, Ohio 2016

General Part

Foreword 3 Message from the shareholders 3 Introduction by the Chief Executive Officer 5

Company Portrait 7 The Schaeffler Group 7 Schaeffler worldwide 11

Environmental Protection Worldwide 13 Standards on Environmental Protection and Occupational Safety 14 Schaeffler Environmental, Health and Safety Policy 15

Environmental Communication 16 Award 17 Environmentally Friendly Products 18

Location Part

Location 19 Introducing LuK USA LLC Wooster, Ohio Location 19 Changes at the Location 22

Environmental Impacts and Aspects 23 Environmental Impacts 24 Indirect Environmental Impacts 25

Health and Safety 26 Risk Management 26 Health and Safety 27 Social aspects 28

Key Indicators according EMAS III 29

Environmental Indicators 31 Input/ Output 31

Goals and Programs 33 Improvements not included in annual target planning 34 New goals 2016 35

Validation and responsibilities 36

CONTENTS

CONTENTS | 2

Message from the shareholders

Maria-Elisabeth Schaeffler-Thumann | Georg F. W. Schaeffler

3 | FOREWORD

Yours,

Maria-Elisabeth Schaeffler-Thumann Georg F. W. Schaeffler

Schaeffler, which is based in Herzogenaurach (Germany), is a leading technology company and supplier to the automotive sector and around 60 further industrial sectors. The listed family-owned company has around 86,600 employees worldwide who, with their expertise, reliability, and commitment, lay the foundations for the company’s success.

The highest quality, outstanding technology, and strong innovative ability represent the basis for the Schaeffler Group’s lasting success. Sustainable management is a success factor for both the company and for our established corporate culture, which we as family shareholders represent.

For this reason, the consideration of ecological and social criteria has been an integral part of our corporate guidelines for many years.

In particular, the Schaeffler Group made a commitment to comply with a standardized, worldwide environmental management system that fulfills the highest requirements more than 20 years ago. This system has been continuously developed and now includes the topics of environmental protection, health protection, and occupational safety, which the company implements in a consistent manner.

All manufacturing locations have been validated according to the stringent EMAS regulations and certified according to ISO 14001 and OHSAS 18001 with regard to occupational safety. In the field of environmental protection, Schaeffler is playing a leading role on an international level and received an award from the European EMAS Commission in 2015.

We are delighted that the 2016 environmental statement documents the successful connection between cost- effectiveness, environmental protection, and social factors inside and outside the company.

FOREWORD | 4

Introduction by the Chief Executive Officer

Klaus Rosenfeld

5 | FOREWORD

The world is moving. And it is clearly getting faster by the day. Ongoing climate change, increasing urbanization, globalization, and digitalization will all permanently influence and change the ways in which we live and work.

These are changes that we want to play an active part in shaping. Our “Mobility for tomorrow” strategy was put in place in order to allow us to achieve this goal. Based on the four megatrends listed above, Schaeffler is focusing on four areas across divisions and regional borders: “Eco-Friendly Drives”, “Urban Mobility”, “Interurban Mobility”, and “Energy Chain”. As a globally active automotive and industrial supplier, we provide our customers with products, system solutions, and services that help to make our world cleaner, safer and smarter.

Within the Schaeffler Group too, however, sustainable management along the entire value-added chain and social responsibility are integral parts of the corporate culture that we practice. We place great emphasis on combining economic success with acting responsibly towards our customers, the environment, and our employees. We provide a safe working environment for our employees in addition to active health protection measures and services. This has its key points firmly anchored in our corporate code of conduct.

Group-wide governance guarantees that our guidelines and high standards in the fields of environmental protection, health protection, and occupational safety apply at every Schaeffler location around the world. Every one of the Schaeffler Group’s manufacturing locations works with environmental management systems according to EMAS or ISO 14001. We are always working to further develop these, and we prioritize Europe’s stringent EMAS standard as the basis wherever possible. We do not differentiate between our plants in Germany and those in other countries in Europe, the USA, or Asia; after all, we believe there is only one environment – one that is global and worth protecting. When it comes to fulfilling high environmental and social standards, we also actively involve our suppliers.

As a global family-owned company, we are joined by four central values – sustainable, innovative, excellent, and passionate – and these are the expression of our responsibility towards the environment and our customers and employees, as well as towards future generations. Our aim is to keep continuously developing Schaeffler by not losing sight of our vision, which makes a future worth living possible.

Klaus Rosenfeld Chief Executive Officer, Schaeffler AG

FOREWORD | 6

The Schaeffler Group

The Schaeffler Group is a global automotive and industri-al supplier. Top quality, outstanding technology, and exceptionally innovative spirit form the basis for the continued success of the company. The Schaeffler Group identifies key trends early on, invests in researching and developing new forward-looking pro-ducts, and sets new standards in technology. Extensive systems know-how enables the Schaeffler Group to offer comprehensive solutions that are tailored to customer and market requirements. By delivering high-precision components and systems in engine, transmission, and chassis applications, as well as rolling and plain bearing solutions for a large number of industrial applications, the Schaeffler Group is shaping “Mobility for tomorrow” to a significant degree. The company already offers inno-vative products for hybrid and electric vehicles today.

With its approximately 86,600 employees, the Scha-effler Group is one of the leading global technology companies, and its network of manufacturing locations, research and development facilities, and distribution

companies consists of approximately 170 locations in over 50 countries. The group’s 75 production facili-ties are the cornerstone of its operations. As a global development partner and supplier, Schaeffler maintains stable long-term relationships with its customers and suppliers. In addition to Schaeffler AG, a publicly listed stock corporation incorporated under German law with its registered office in Herzogenaurach that acts as the group’s lead company, the Schaeffler Group includes 152 domestic and foreign subsidiaries as at December 31, 2016.

Strategy “Mobility for tomorrow”

“As a leader in technology, we combine a passion for innovation with the highest standards of quality to shape the future of mobility – for a world that will be cleaner, safer, and smarter.” This is the vision of the Schaeffler Group. To live up to this claim, Schaeffler adopted its strategy “Mobility for tomorrow” in 2016.

Vision“As a leader in technology, we combine a passion for innovation with the highest standards of quality to shape the future of mobility – for a world that will be cleaner, safer, and smarter.”

Mission“Guided by the values of a global family business, we work closely together with our customers as true partners to deliver a compelling value proposition through our best-in-class expertise in manufacturing technology and systems know-how. In doing so, we contribute to the success of our customers, the advancement of our employees, and the prosperity of our society.”

7 | COMPANY PORTRAIT

Eco-friendly drives Urban mobility

Interurban mobility Energy chain

Under this strategy, the Schaeffler Group concentrates on 4 focus areas: Eco-friendly drives, urban mobility, inter-urban mobility, and energy chain. These 4 focus areas are based on four megatrends that will influence the business of the Schaeffler Group in the future: Climate change, urbanization, globalization, and digitalization.

On this basis, the Schaeffler Group’s Board of Managing Directors developed 8 strategic pillars in cooper ation with the Supervisory Board and senior management worldwide. These pillars define the company’s scope for strategic action for the next few years and form the basis for the continuous further development of the Schaeffler Group. The “Agenda 4 plus One” excellence program ensures that the strategy is executed; it comprises 16 strategic initiatives that have significance worldwide and have been selected from a variety of initiatives.

We want to be the preferred technology partner for our customers.

We are an Auto motive and Industrial supplier.

We are a global company with a local presence throughout the world.

We produce components and systems.

We view E-Mobility, Industry 4.0 and Digita-lization as key opportunities for the future.

We strive for the highest possible quality, efficiency and delivery performance.

We want to be an attractive employer.

We live by the values of a global family business.

COMPANY PORTRAIT | 8

Efficient Future Mobility concept vehicles show technological solutions for regional requirements. The Efficient Future Mobility China concept vehicle is shown here.

Divisions

Automotive The Schaeffler Group has divided its business activities into the two divisions Automotive and Industrial. As a partner to the automotive sector, the Schaeffler Group leads the field when it comes to developing and manu-facturing groundbreaking components and systems for engines, trans missions, and chassis, for both vehicles with drive trains based on the internal combustion engine and hybrid and electric vehicles. The Automotive division business is organized into the business divisi-ons (BD) Engine Systems, Transmission Systems, Chassis Systems, and Automotive Aftermarket.

The Automotive division’s main products include clutch systems, transmission components, torsion dampers, valve train systems, camshaft phasing units, electric dri-ves, and bearing solutions in transmissions and chassis. The Schaeffler Group’s precision products and systems are key to helping make engines use less fuel and com-ply with increasingly strict emission requirements. At the same time, they also extend engine and transmission life and increase driving comfort and dynamics.

Its comprehensive technical expertise for the entire drive train is what sets apart Schaeffler Automotive, one of the leading automotive suppliers worldwide. As future consumption and emissions targets can only be fully met by electrifying the drive train, the Schaeffler Group offers solutions for the entire range of electrification types – from hybrid through to fully electric drive systems.

A comprehensive Aftermarket portfolio rounds out the business of the Automotive division. The product range covers applications in clutch and release systems, engine and transmission applications, and chassis applications. In addition, Schaeffler Automotive After-market offers a comprehensive variety of services such as practice-oriented training courses, advice provided by the Schaeffler repair hotline or the group’s online garage portal, as well as the development of specialized tools.

9 | COMPANY PORTRAIT

The bearings and related products manufactured by the Industrial division are used, for example, in wind turbines.

Industrial The Industrial division is primarily managed based on regions due to its wide customer and business structure. On this basis, the Europe, Americas, Greater China, and Asia/Pacific regions operate as profit centers responsible for the Industrial business in their respective markets. Within the regions, the Industrial business is grouped into eight sectors: (1) wind, (2) raw materials, (3) aerospace, (4) rail, (5) offroad, (6) two wheelers, (7) power transmission, and (8) industrial automation. Sales to distributors (Industrial Distribution) round out the Industrial division’s regional business.

The Industrial division’s product spectrum includes rol-ling and plain bearings, linear technology, maintenance products, monitoring systems, and direct drive techno-logy. The Industrial division offers a broad portfolio of bearing solutions, ranging from high-speed and high-precision bearings with small diameters to large-size bearings over three meters in diameter. Components are increasingly being integrated in system solutions, some of which are designed as mechatronic systems with data- generating sensors.

With its rolling bearing, linear technology, and direct drive solutions, the Schaeffler Group offers comprehen-sive technological and application engineering expertise for complete systems from one source that are precisely matched to one another. The focus is increasingly on smart products and on connecting components. One example is the “Machine Tool 4.0”, whose sensor-equip-ped components measure and report vibrations, forces and temperatures at all relevant bearing positions.

The majority of rolling bearings is supplied by the “Bea-ring & Components Technologies” (BCT) unit as an inter-nal supplier. The bearings and related products are used in applications in drive technology, production machine-ry, and wind turbines, as well as in heavy industries. In the aerospace sector, the Schaeffler Group is a leading manufacturer of high-precision bearings for jet and heli-copter engines as well as for space travel applications.

COMPANY PORTRAIT | 10 COMPANY PORTRAIT | 10

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11 | COMPANY PORTRAIT

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COMPANY PORTRAIT | 12

Environmental Protection Worldwide

At all manufacturing locations Since the mid-1990s, Schaeffler has been developing an environmental management system of which it has every reason to be proud today: Virtually all of the company’s manufacturing locations are certified according to ISO 14001 and the even more stringent EMAS regulations. New locations generally follow suit within three years.

Leading role in the application of EMAS The total number of EMAS-registered manu facturing locations, particularly outside the European Union, means that Schaeffler is playing a significant leading role. Schaeffler was the first organization to apply EMAS outside the EU, thus laying the foundation for the registration of locations in third countries that sub-sequently became possible with EMAS III (also referred to as “EMAS Global”).

Numerous awards Schaeffler’s commitment here has already garnered special awards on numerous occasions, including the Bavarian Environmental Medal, the “Ökoglobe”, and the Ford Motor Company’s “Recognition of Achievement, Environmental Leadership”, which it has also won three times in a row. Schaeffler won the EMAS Award for Germany and Europe in 2005 and, in 2015, also received an honorary award during the European EMAS Awards ceremony.

Sharing experiences Schaeffler shares its experience and expertise in this field with interested groups in numerous different ways – for example, it is a member of the Environmental Verification Committee, leads the EMAS Review working group, creates various EMAS reference documents, carries out research studies, receives visits from universities and expert groups, holds regional meetings with EMAS clubs, and takes part in numerous conferences and workshops relating to EMAS and environmental management.

Manufacturing location at Schaeffler Bühl

13 | GLOBAL ENVIRONMENTAL PROTECTION

Standards on Environmental Protection and Occupational Safety

ISO 14001 ISO 14001 is an international, private standard for environmental management systems. It was published in 1996. Similar to the quality standard ISO 9001, also ISO 14001 is built on the Plan-Do-Check-Act cycle for the continuous improvement of systems. That cycle was developed by William Deming in the 1930s years. Like all ISO standards the current ISO 14001 chapters follow the so called high level structure. Important contents are amongst others the preparation of an environmental policy, the assessment of environmental impacts, the definition of responsibilities and the preparation of an environmental program, document control and con-ducting audits. Many bigger companies, especially from the automotive sector, require that their suppliers are certified according to this standard by an accredited certifier. Because of this it is wide spread.

EMAS EMAS stands for environmental management and audit scheme. The basis of the system is a European regulation, which was published in 1993. However the participation is voluntary. EMAS requires a system according to ISO 14001 and additionally compliance with environmental law and the preparation of a com-prehensive environmental statement. Both has to be checked and confirmed by a licensed or accredited environ mental verifier. EMAS is the superior and more ambitious of both systems. It is focusing on performance, transparency and credibility and is mainly implemented within the European Union.

OHSAS 18001 OHSAS 18001 is based on a British standard for occupational health and safety management systems. It exists since 1999 and has much in common with ISO 14001 or ISO 9001. One main element is the preparation of risk assessments. Since 2016 a draft of an ISO 45001 is available, that will replace OHSAS 18001 within the next years.

ISO 50001 ISO 50001 is a relatively young standard for energy management systems. The structure and contents is similar to those of ISO 9001, ISO 14001 and ISO 45001. Especially because of tax incentives the number of ISO 50001 certifications has increased significantly in many countries during the last years.

GLOBAL ENVIRONMENTAL PROTECTION | 14

Schaeffler Environmental, Health and Safety Policy

Environmental protection, occupational health, and occupational safety (EHS) are part of our management principles. We help ensure the continuity and success of our company by creating and sustaining a work environ-ment that is safe, healthy, and conducive to performance and by actively protecting the environment. The following principles apply to all areas of our company. We are committed to taking responsibility for our employees, society, and future generations.

Efficient Occupational Health and Safety and Environmental Protection Management We actively use a global occupational health and safety and environmental management system that is under-going continuous improvement and provide our emplo-yees with a fulfilling and fruitful life until retirement age. We elaborate forward-looking holistic concepts, struc-tures, and processes that we implement in collaboration with our contractual partners. We carry out regular checks across all areas to determine the extent to which these measures have been implemented and to monitor the success of our management system.

Safe, Employee-Friendly Workplaces We are convinced that all occupational accidents and illnesses can be avoided. Motivated employees and managers help us achieve our goal of a zero-accident workplace. When it comes to protection, our employees and contractors have equal priority. When designing work centers and procedures, we take into account the latest trends and developments and place special emphasis on ergonomic design.

Reliable Actions We are committed to observing all legislation and specifications regarding work safety and environmental protection. We act in a responsible manner in accor-dance with our own regulations, which, in many cases, go beyond existing legal requirements. We configure, purchase, operate, and maintain machines and facilities in such a way as to minimize potential hazards, risks, and operational disturbances. Our technology is based on the latest state of the art.

Minimum Environmental Impact and Environmentally-Friendly Products Regardless of the activities we are carrying out, we endeavor to minimize environmental impact by taking suitable measures in advance. We consume raw materi-als and energy sparingly and make every effort to minimi-ze waste, waste water, noise, and other emissions. We manufacture environmentally-friendly products taking into account the entire product lifecycle.

Responsible Employees We hold regular information and training sessions to ensure that our employees and business partners have the expertise and knowledge to carry out their work safely in a health-promoting manner and with the minimum of environmental impact in all areas of the company.

Preventive Measures We preserve and promote the physical and psychological health of our employees. We take comprehensive pre-ventive measures to protect our employees and prevent damage to the environment. Comprehensive and effec-tive emergency measures are in place at all locations to ensure that our employees and visitors are treated properly in the event of injury.

Open Communication We conduct an intensive and trusted dialog with interested parties. We provide information about our work safety and environmental protection measures as well as the impact each of our locations has on the environment.

Chief Executive Officer, Schaeffler AG Klaus Rosenfeld

15 | GLOBAL ENVIRONMENTAL PROTECTION

The company’s intranet provides comprehensive infor-mation: contact persons, databases, a waste guide and much more. This information is made available to all employees worldwide.

Company newsletters and notices are also used to inform employees.

Regular Conferences Environmental protection conferences held every year allow participants to exchange information and coordi-nate goals and actions. These conferences last several days and are attended by the environmental protection coordinators from all locations.

Since environmental protection conferences were first introduced, cooperation and coordination (e. g. for planning environmentally relevant facilities) between all locations have improved tremendously.

Global Regulations: Plant Standards and Procedures All actions relevant for the environment, such as the approval of indirect materials or the specification of substances prohibited for use in products and packaging, are regulated globally by special plant stan-dards. In this way, Schaeffler ensures that hazardous materials are used only if there are no other alternatives.

Environmental Communication

The relevant departments are informed in a timely manner about the use of such materials, and the required action is taken. This means that our customers can be sure that products supplied by Schaeffler contain only approved materials.

Safety rules and regulations also apply to contractors working in Schaeffler plants. A document detailing all safety-related requirements has been prepared for con-tractors working on the plant premises. Contractors may not enter the premises to perform their work unless they have agreed in writing to comply with these require-ments.

Regular Internal and External Audits The level and progress of the company’s environmental protection are also monitored by regular internal audits at all manufacturing sites as well as external audits by an independent environmental verifier. These audits are planned and coordinated at company headquarters and carried out by the Schaeffler auditor pool. The Schaeffler Group’s internal environmental auditors participate in multi-day training courses for auditors on a regular basis.

All locations receive an audit report that includes details of the current status and recommendations for improvement.

Due dates and responsibilities are defined for all relevant measures.

ENVIRONMENTAL COMMUNICATION | 16

European EMAS Award 2015

Schaeffler receives an honorary award for environmental protection

In May 2015, Schaeffler received an honorary award from the European Commission for its leading role in the application of EMAS during the European EMAS Awards ceremony. Schaeffler had registered its first location in China in accordance with EMAS, and has more manufac-turing locations on the register than any other company, particular ly outside of the EU.

The award was presented by Kestutis Saduaskas, director of the European Commission’s Green Economy section, during the ceremony in Barcelona, and received on behalf of Schaeffler by Lennart Schleicher, Director of the Environmental Protection and Safety Management System.

Prior to this, Schaeffler had won the national preliminary selection in the “major companies” category.

The European EMAS Award was first announced in 2005 and even at the start was presented to Schaeffler at both the national and European level.

EMAS, which stands for European Eco-Management and Audit Scheme, is a management system designed to help organizations improve their environmental performance and communicate their results. EMAS is chiefly charac-terized by its performance, credibility, and transparen-cy, and is considered to be the premier environmental management system.

17 | AWARD

Environmentally Friendly Products

Environmental pollution and the depletion of resources can largely be attributed to the increased consumption of products. We must change our way of thinking and in-sist on environmentally friendly products that use fewer resources and minimize the strain on the environment. Our “Integrated Product Policy (IPP)” addresses this idea and aims to promote environmentally friendly products.

Schaeffler – Always One Step Ahead This isn’t a new idea for Schaeffler; we have embraced this idea for many years. We accepted the challenge to design environmentally friendly products a long time ago. What is new is the methods and tools used to achieve this goal. How can we utilize previously untap-ped potential to improve the ecobalance of a product over its entire lifecycle?

New Inroads One way to make environmentally friendly products is to increase the efficiency of the material and energy used, thus reducing environmental impacts. We continuously evaluate and design all material and energy flows, from the time they enter the company to the time they leave as products or residual materials.

Comprehensive Data Management The company’s own environmental data coordinator handles inputs and outputs of material and energy flows for all processes and products at the respective plant. Material flow analyses help further integrate environ-mental management into the company’s corporate units, such as Logistics, Manufacturing and Financial Control-ling. Existing processes and technologies are questioned thoroughly, and additional opportunities for improving processes are recognized and put into practice.

Information Networks Environmental impacts occur even when resources are extracted. To make products even more environ-mentally friendly, Schaeffler stays in close contact with its suppliers and customers. A shared network is used to record and analyze environmental information along the entire product chain. The insights gained allow new solutions to be recognized for environmentally friendly products and sustainable development.

Recycling We try to ensure that manufactured components are recycled at the end of a vehicle’s service life. This is why LuK and INA are founding members of the Partslife recycling system.

ENVIRONMENTALLY FRIENDLY PRODUCTS | 18 ENVIRONMENTALLY FRIENDLY PRODUCTS | 18

Introducing LuK USA LLC Wooster, Ohio Location

Current Size and Population Size of property: 125 acres Total sealed surface: 33.7 acres Total headcount: 1,860

Products Torque converters and clutch plates for the automotive industry.

Production processes Stamping, machining, welding, brazing, washing, heat treating, assembly and testing.

Location of site Industrial park adjacent to agricultural property on the northeast side of Wooster. The Wooster site is 60 miles south of Cleveland and 95 miles northeast of Columbus.

Details about neighborhood The population is comprised of employees of the various businesses. The agricultural activities are mostly crops but are not managed by LuK. LuK’s property includes green space and a small lake.

19 | LOCATION

LuK USA LLC was founded in Wooster, Ohio in 1977. We are a Tier 1 supplier and manufacturer of drive train components for the global automotive industry. LuK has worldwide facilities in North America, South America, Europe, Asia, and Africa. LuK USA LLC is a global subsi-diary of the Schaeffler Group, which includes LuK, INA, and FAG.

LuK is a highly integrated and automated manufacturing facility that combines the best of European and American technology. We design, develop, and manufacture engi-neered solutions from concept to customer in the area of clutches, discs, dual mass flywheels, torque converters (TC) and torque converter clutches (TCC).

From the Wooster site, we shipped out our first clutches in October of 1977. The first expansion included state of the art Heat Treat machinery to have more control of the processes involved with making a quality product. In 1980, the Tool and Die Apprenticeship Program was de-veloped. Growth continued through the 1980s as more American automotive manufacturers were purchasing the LuK clutches. Our first press, a 2,400 ton was installed in 1985. By this time, LuK was already starting to receive

awards from many of the automotive companies for our innovations in engineering. By the end of 1989, LuK began shipping clutches to BMW in Germany.

The 1990‘s saw continued growth and awards. A new patent was received and production began on Torque Converter Clutches. Quality policies were implimented beginning in 1995 under the QS 9000 standards. In 1996, production was started for Allison trucks to ex-pand our influence in other markets for automotive.

The Learning Academy and Daycare was added in 2002 to benefit our employees in training as well as opportu-nities for childcare for our growing LuK family. A five step Lean Program based on Kaizen philosophies began in 2005 and the MOVE group was created to carry on this work and improve production line efficencies. By 2009, LuK began expanding our product line to include the Hy-brid market. Over the years, engineering has continued to excel by helping to build more fuel efficient vehicles at a reduced cost and impact on the environment. The future is still strong as LuK has already broken ground on our second largest expansion in preparation to meet the growing demands from our automotive partners.

Academy

Main Production Facility/Offices

LOCATION | 20

Sr. VP HR Americas

EHS Representative 2

EHS Coordinator

Regional Director EHS

Project Manager

Sector Leader Customer Supplier

Segment Leader TC Assembly

Segment Leader TC Machining

Director Maufacturing Unit

Operations

MOVE

Group Leader Maintenance

Segment Leader TCC

Plant Manager

Facility Maintenance Manager

Energy Coordinator

President Automotive

Vice President Transmission

Systems & Wooster

Director Human Resources

EHS Representative 1

LuK Transmission Organization (with HR and EnEHS)

21 | LOCATION

Changes at the Location

Facilities LuK Wooster acquired a farm property to the north and east of the existing facility. As part of that acquisition, LuK Wooster removed several existing buildings to prepare the site for future manufacturing facilities. The remaining buildings (barns) are being used for storage of older equipment and stamping dies.

New supply and storage facilities LuK Wooster has built a 3,066 m² expansion which holds both a new production line as well as final product sto-rage prior to shipping. In time, more of this area will be used for production lines.

New production machines There have been many additional machines added since 2013. All have been installed to increase capacity due to growth in demand. While some of the new equipment (mostly CNC type machines) were purchased to replace aged units, most were to support the added produc-tion needs. LuK Wooster installed and operates a new 2900 Weingarten Transfer Press, a new 7-Layer Furnace, Brazing Furnace #4, the new AX12 line in World Trans-mission, two new Batch Furnaces, Automatic Bonding Lines #1 and #2, additional Manual Bonding equipment, three DYNO testers (two in Testing and one for Hyundia production). LuK Wooster has also added air compres-sors and a 500 ton cooling tower to handle the increased loads for both.

New products LuK Wooster continues to refine its product design to improve performance efficiency, which results in reduced energy use. Some of the new products have been hybrid dampers for GM and Allison; New Dampers for a Polaris four wheeler ATV and New TC and TCC’s replacing older versions.

Expansion of production The new TC Line 6 has been installed and provides some expansion of production capability. Phase 1 of TCC 5 has been installed to increase production capacity for this component used in the final assembly area. By late 2016, Phase 2 will add a second half of the line with Phase 3 to include the use of robots. Some of this expan-sion was designed to decrease our need to operate on a 7 day work schedule. Also important to the design of this line is the use of conveyors and packaging to improve ergonomic conditions to the employees on the line as compared to previous TCC line layouts.

Relocation of products, machines and/ or other equipment Some machines have been relocated within the facility to streamline the operation and create a better flow for the process. This decreases the number of times parts have to be moved either manually or by lift equipment, saving time and energy. Additional facility changes in the near future will continue this pattern to make production more efficient.

Application of new technologies LuK continues with the lighting efficiency updates, better energy management systems, the wastes recycling pro-grams and the reuse of product dunnage.

Changes in organization LuK restructured its manufacturing into LuK North, South and Operations. LuK has also increased its headcount accordingly to accommodate the increased customer demand.

LOCATION | 22

Environmental Impacts and Aspects

The Impacts and Aspects for all areas of the facility are now being reviewed on an annual basis with additions being made as they occur. The intent of this process is to determine all portions of an operation and how the tasks may effect the environment. The impact comes from the depletion or conservation of natural resources including air, water, land and energy. After determining which areas are impacted, a value will be determined in relation to frequency, quantity, emergency potentials and regulatory requirements to understand the significance of the process.

To understand the significance, a value is assigned based on its perceived impact. For accuracy, a team will perform these reviews which will include members of EHS, Energy and Production. A value of 1 is for low impacts while a 3 is a high rating. Under the Regulatory category, a 1 means it is not regulated while a 2 represents regulatory requirements. With this worksheet (see example below), we will be able to revisit our usages or processes and possibly develop alternatives to decrease our environmental impacts.

Our Stamping process utilizes natural resources from the production of steel as well as electricity to operate the equipment. Heat Treating operations use natural gas and water with an emissions impact from the discharge gases. The remaining machining and assembly processes use water for cooling, electricity for machine operation and com-pressed air. Additionally, usage or water based emulsions were increased in an attempt to reduce the use of oil based coolants. The wastes related to the operations include water, emissions, oil disposal and scrap steel. The scrap steel is sorted and recycled based on type and purity.

23 | ENVIRONMENTAL IMPACTS

Environmental Impacts

Legal requirements LuK has a legal obligation to meet all the applicable air, wastewater, solid waste and chemical reporting regulati-ons that apply to our facility. The Ohio EPA is our primary environmental regulatory authority. The Ohio EPA has been delegated by the Federal EPA (USEPA) as the autho-rity to enforce most of the United States Environmental legal requirements. Legal requirements are reviewed twice a year which may also include the use of an independent consultant and/or a corporate audit team. Deviations from the legal requirements are corrected as soon as possible.

Permits

Air Permits/Emissions LuK maintains compliance with the air pollution requirements by:>> Seeking and obtaining all required construction Permit

to Install (PTI) and operating Permit to Operate (PTO) air permits,

>> Implement permit required best available control technologies for each emission unit,

>> Calculating annual air inventory and emissions and determining fee requirements,

>> Annual reporting to the Ohio EPA, as required by the permits, and

>> Establishing management practices designed to meet all permit requirements

Water Permits/Protection LuK’s impact to the water is through discharges to the publicly owned treatment works (POTW) and direct di-scharge of storm water. LuK manages these impacts by:>> Complying with the City of Wooster ordinances for

waste water discharge. Although LuK does not need a permit to discharge to the POTW at this time, LuK works with the City to periodically sample the quality of the water discharge.

>> The majority of our waste water is from process coo-ling, parts washers and cutting tool coolant usage. This water is collected and stored in two tanks until it is picked up daily by a vacuum truck and hauled off

site to be treated by a licensed treatment company before final discharge to a POTW local to the treatment company.

>> LuK has a General Industrial Storm Water Discharge Permit from the Ohio EPA. We developed and im-plemented a Storm Water Pollution Prevention Plan (SWP3) as part of the permit requirements. This involves regular sampling during notable rain events and documenting water quality observations. There are also quarterly inspections of pollution prevention measures and outfall conditions.

>> LuK has also developed an oil Spill Prevention and Countermeasure Control (SPCC) Plan to prevent the release of petroleum products to the environment.

>> LuK monitors water usage for cooling water to track water conservation measures.

Waste Management>> LuK has characterized all waste streams for compli-

ance and potential recycling.>> There are no permits for land disposal at this time>> Besides the normal compactor waste, we also segre-

gate wastes related to our blasting process. This includes aluminum oxide grit and metal shot media as well as the filters used in the dust collector bag-houses. This waste has a slight radioactivity to it but it is classified as a Normally Occurring Radioactive Material (NORM) and is regulated as a non-hazardous waste under the standards. This waste is hauled to a non-hazardous landfill and manifested for verification of disposal.

>> Recycled wastes include used oils, metals, plastics, cardboard, paper, aluminum cans, used lamps and used batteries.

>> LuK has eliminated most of its hazardous wastes from the facility through its waste management programs. Periodically, small lab packs are gathered to dispose of used chemicals under the status of Conditionally Exempt Small Quantity Generator.

>> LuK Wooster has no polluted areas or no cleanup operations currently taking place

ENVIRONMENTAL IMPACTS | 24

Indirect Environmental Impacts

Products and packaging LuK’s products and packaging are customer driven. Each major customer has its own packaging requirements. LuK has successfully encouraged most of our customers to utilize returnable packaging (dunnage).

Employee transportation Due to the diverse residence of the LuK employees, car pooling and ride sharing is encouraged but limited. Due to the location of the facility, public transportation is not an option.

Environmental performance of contractors, sub contractors and suppliers LuK requires all contractors to comply with all applicable regulations and to employ methods to minimize their impact on the environment.

Environmental impacts out of purchasing processes The purchase of raw materials are coordinated with the environmental, health and safety department to assure the least negative impacts on the environment, health and safety.

Environmental Aspect and Impact Worksheet A worksheet was completed in the past and will be up-dated. After major expansions are completed, an update will also be conducted to look for changes. Annually, the worksheet will be reviewed going forward to identify any changes that need documented.

25 | ENVIRONMENTAL IMPACTS

Fire protection LuK Wooster has state of the art firefighting equipment installed throughout the facility. These include fire extin-guishers, sprinkler systems, dedicated fire suppression systems (e.g. ansul and CO2 systems) and emergency communications systems. In conformance with com-munity and insurance standards, LuK maintains a fire pump system that provides adequate flow and pressure during an event. LuK maintains a close relationship with the local fire department, who will provide first responder assistance in the event of a fire, explosion or spill. The fire department is located within a 5 minute re sponse time and an additional station being added in 2015 which will be less than one mile away.

LuK personnel are trained to perform their assigned roles and responsibilities for the emergency response, which can include fire extinguisher use, hazard assessment, or evacuation.

Plant security LuK Wooster limits access to the facility through security guards and visitor reception areas. All employees are is-sued security badges that provide access to the facility at their designated entries. All visitors must sign-in and be escorted by LuK personnel while at the facility. Contrac-tors are provided limited access passes and are required to check in with their LuK contacts as their assignments progress. The facility has some form of security servi-ces 24 hours a day, every day of the year. Cameras are located in various areas both inside and outside the facility. Digital video storage is greater than 30 days and can be reviewed as needed for breeches in security or safety reasons. Security officers are able to observe the live action of the cameras from their office. The receiving of hazardous/dangerous goods are carefully monitored by plant engineering or the department receiving these materials.

Risk Management

Emergency plans and management The United States Environmental Protection Agency (USEPA), United States Occupational Safety and Health Administrations (OSHA), Ohio EPA and the Ohio Fire Marshall require a variety of emergency management plans to be developed and implemented. These include: Oil SPCC (USEPA), Storm Water Pollution Prevention Plan (Ohio EPA), Emergency Action Plan (EAP-OSHA), Fire Suppression Systems (Ohio Fire Marshall), Waste Management Contingency Plan (USEPA & Ohio EPA) and Hazardous Chemical and Substance Release Reporting Plan (USEPA & Ohio EPA). These various plans have been developed and implemented and updated as required. All personnel with roles and responsibilities are trained on their duties. These plans are periodically tested by ac-tual events, simulations events and table top exercises.

HEALTH AND SAFETY | 26

LuK Wooster believes that its most important asset is the employees and partners. Assuring their health and safe-ty while performing their jobs is paramount to achieving LuK’s mission.

Occupational Safety The United States Occupational Safety & Heath Admi-nistration (OSHA) dictates extensive requirements for each employer to achieve in order to maintain a safe work environment. LuK continually reviews the work place hazards through documented process evaluations, routine inspections and training programs. As the facility changes, LuK updates and revises these programs.

When accidents occur, reports are completed and investigations take place to determine all potential root causes and develop corrective actions. These corrective actions may include training, equipment repairs, or necessary changes in equipment. Once a month, the Executive Safety Steering Committee meets. Part of this meeting is to discuss the injury statistics as well as chan-ges that may need to take place based on the more seve-re injuries from the last month. This meeting can also be used to review potential Capital Expense projects related to energy, environmental, health or safety changes.

Ergonomics As new operations and activities are introduced to the LuK facility, the ergonomics of the operations are reviewed to assure a safe work environment for all the employees. As injuries occur, the ergonomics aspects of the job are reviewed as part of the root cause analysis. Finally, as a preventive measure, LuK Wooster periodi-cally reviews operations to check for changes that can potentially cause acute or chronic ergonomic related injuries.

Health and Safety

Occupational Hygiene & Health LuK Wooster reviews all chemicals prior to use in the facility to identify potential health or physical hazards that are detrimental to the workers. As each operation is planned, risk assessments are performed to proactively establish necessary controls, as required. Dosimeter testing (for noise levels) and industrial hygiene sampling (for dust or fume levels) are routinely used to identify problems and the effectiveness of controls.

Training LuK Wooster uses a variety of methods to train our em-ployee in safety or health related topics. Technical skills or topics could involve third party organizations to per-form the training to employees who would be required to attend. One-on-one, small group or department training are normally done using power point presentations. Some e-learning has been used when the training topics need to reach the entire population.

LuK Wooster encourages employees to live healthy lives through a Voluntary Wellness Program. Each employee has resources available to them based on their unique requirements for developing and maintaining a healthy life style. A program we continue to use is called Luk-Styles. With this program, employees sign up before the start of the year and set a personal health goal. They also earn points each by completing a “health challenge”. Examples of these challenges are “eat this, not that”, “drink your weight in ounces of water each day for a month”, attend a gym or fitness facility on a regular basis, and eating five servings of fruits and vegetables each day for a month. By completing various levels of challenge points, they earn points that equate to a LuK Bucks that go into their personal “bank” and can be cashed out later.

27 | HEALTH AND SAFETY

LuK Wooster believes a strong and socially balanced individual is a productive employee. This begins with the employee benefits provided as part of their employment package. These benefits include health insurance, life insurance, wellness programs, day care services and paid personal time away from the facility.

LuK Wooster believes a diverse work force promotes a healthy community. Employees with handicaps are provi-ded enhanced services through wheel chair accessibility, handicap parking and rest room accessibility.

LuK is committed to worker quality of life through smoking cessation programs and employee assistance programs.

LuK also encourages outside involvement in community programs that engage the employee and their family. These have included Relay for Life, United Way services, volunteering, family sports and activities (soccer, base-ball, scouting, etc.).

LuK also believes company sponsored events can build relationships and team skills. These events have included golf events, softball leagues, company picnics and outings to local amusement parks.

Social Aspects

HEALTH AND SAFETY | 28

Key Indicators according EMAS III Wooster (LTL)

Absolute Relative*Database 2013 2014 2015 2013 2014 2015Reference dataAdded value in Mio. Dollar [Mio] 84.6 102 124General DataTotal headcount [EMP] 1,440 1,686 1,891Size of property [ac] 124 124 125Total sealed surface [ac] 31.2 32 33.7 0.369 0.311 0.271 [ac / Mio $]Biodiversity [%] 74.96 74.32 73.13

InputWater [gal] 14,443,497 22,190,976 25,567,887 170,724 215,447 205,323 [gal / Mio $]Electricity from external supply [kWh] 45,579,159 52,976,485 58,563,182 538,754 514,336 470,293 [kWh / Mio $]>> percentage of renewable energies

(only from external supply) [%] 4.5 4.5 4.5>> Amount of electricity from

renewable energy (only external supply) [kWh] 2,051,062 2,383,943 2,635,343 24,243 23,145 21,163 [kWh / Mio $]

>> Amount of electricity generated inhouse (conventional) [kWh] 0 0 0 0 0 0 [kWh / Mio $]

>> Amount of electricity generated inhouse from renewable energy [kWh] 0 0 0 0 0 0 [kWh / Mio $]

Electricity ∑ [kWh] 45,579,159 52,976,485 58,563,182 538,754 514,336 470,293 [kWh / Mio $]>> Percentage of renewable energy

with regard to overall consumption [%] 4.5 4.5 4.5Natural gas [kWh] 32,716,110 42,930,352 39,866,163 386,710 416,801 320,146 [kWh / Mio $]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio $]>> Percentage of renewable energies [%] 0 0 0Light fuel oil [gal] 0 0 0 0 0 0 [gal / Mio $]>> Amount from renewable energies [gal] 0 0 0 0 0 0 [gal / Mio $]>> Percentage of renewable energies [%] 0 0 0Fuels for internal logistics Diesel [gal] 0 0 0 0 0 0 [gal / Mio $]

>> Amount from renewable energies [gal] 0 0 0 0 0 0 [gal / Mio $]>> Percentage of renewable energies [%] 0 0 0 Gasoline [gal] 0 0 0 0 0 0 [gal / Mio $]

>> Amount from renewable energies [gal] 0 0 0 0 0 0 [gal / Mio $]>> Percentage of renewable energies [%] 0 0 0District heating [kWh] 0 0 0 0 0 0 [kWh / Mio $]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio $]>> Percentage of renewable energies [%] 0 0 0Propane / LPG [lbs] 327,937 442,391 482,351 3,876 4,295 3,873 [lbs / Mio $]Metanol [lbs] 0 0 0 0 0 0 [lbs / Mio $]Energy input ∑ [kWh] 80,208,240 98,487,458 101,273,693 948,076 956,192 813,282 [kWh / Mio $]>> Amount of renewable energy with

regard to total energy input [kWh] 2,051,062 2,383,943 2,635,343 24,243 23,145 21,163 [kWh / Mio $]>> Percentage of renewable energy with

regard to total energy input [%] 2.56 2.42 2.6

29 | KEY INDICATORS

Absolute Relative*Database 2013 2014 2015 2013 2014 2015Emulsion concentrates [lbs] 47,175 55,264 313,706 557 536 2,519 [lbs / Mio $]Processing oils [lbs] 593,378 693,425 411,892 7,013 6,732 3,307 [lbs / Mio $]Solvent - VOC [lbs] 8,717 10,822 13,558 103 105 108 [lbs / Mio $]Solvent - non VOC [lbs] 0 0 0 0 0 0 [lbs / Mio $]Metal raw materials [lbs] 165,856,802 187,325,241 217,554,777 1,960,459 1,818,698 1,747,082 [lbs / Mio $]Metal semi finished products(external supply) [lbs] 15,597,122 15,802,006 19,236,198 184,360 153,418 154,477 [lbs / Mio $]Other raw materials [lbs] 0 0 0 0 0 0 [lbs / Mio $]

OutputWaste ∑ [lbs] 79,975,341 85,811,216 100,775,317 945,323 833,121 809,280 [lbs / Mio $]non hazardous waste ∑ [lbs] 1,715,385 1,853,660 2,763,214 20,276 17,996 22,190 [lbs / Mio $]

>> normal waste [lbs] 869,131 434,000 986,968 10,273 4,213 7,925 [lbs / Mio $]>> waste wood [lbs] 354,000 181,566 530,743 4,184 1,762 4,262 [lbs / Mio $]>> Aluminium oxide [lbs] 139,172 606,872 531,621 1,645 5,891 4,269 [lbs / Mio $]>> cardboard, paper, plastic [lbs] 353,080 631,221 713,881 4,173 6,128 5,732 [lbs / Mio $]

hazardous waste ∑ [lbs] 5,893,814 7,085,203 9,118,042 69,666 68,788 73,222 [lbs / Mio $]>> lab pack [lbs] 85 232 1,892 1 2.25 15.1 [lbs / Mio $]>> waste emulsion [lbs] 5,839,229 7,031,811 9,008,403 69,020 68,270 72,342 [lbs / Mio $]>> waste oil [lbs] 54,500 53,160 107,747 644 516 865 [lbs / Mio $]>> other [lbs] 0 0 0 0 0 0 [lbs / Mio $]

Scrap (ferrous + non-ferrous) ∑ [lbs] 72,366,141 76,872,352 88,894,060 855,381 746,336 713,867 [lbs / Mio $]

>> Waste for recycling (without scrap)

[lbs] 761,581 865,947 1,352,371 9,002 8,407 10,860 [lbs / Mio $][%] 10 9.68 11.3

>> Waste for disposal / removal

[lbs] 6,847,395 8,073,247 10,545,139 80,937 78,381 84,683 [lbs / Mio $][%] 89.9 90.3 88.7

CO2-equivalents ∑ [lbs] 388,795 128,042 320,820 4,595 1,243 2,576 [lbs / Mio $]>> CO2-emissions from combustion

processes at this site [lbs] 15,622 20,542 19,341 184 199 155 [lbs / Mio $]>> CO2-emissions from electricity obtai-

ned from external sources [lbs] 0 0 0 0 0 0 [lbs / Mio $]>> CO2-emission factor per kWh

electricity obtained from external sources

[lbs / kWh] 0 0 0

>> CO2-emissions from district heating obtained from external sources [lbs] 0 0 0 0 0 0 [lbs / Mio $]

>> CO2-equivalent from the refrigerant agent amounts refilled due to leakages [lbs] 373,172 107,500 301,478 4,410 1,043 2,421 [lbs / Mio $]

SO2 - emissions from combustionprocesses at the site [lbs] 129 170 158 1.53 1.65 [lbs / Mio $]NOx - emissions from combustionprocesses at the site [lbs] 7,229 9,522 9,060 85.4 92.4 72.7 [lbs / Mio $]Particulate matter emissons ∑ [lbs] 21.7 27.1 29.6 0.256 0.263 0.238 [lbs / Mio $]>> from combustion processes

at the site [lbs] 10.7 14.1 13.6 0.126 0.137 0.109 [lbs / Mio $]>> from production an other

processes [lbs] 11 13 16 0.13 0.126 0.128 [lbs / Mio $]VOC-emissions [lbs] 36,610 24,953 49,064 432 242 394 [lbs / Mio $]* In relation to added valueSources for evaluation of emission factors are the ProBas data bank (http://www.probas.umweltbundesamt.de - status: September 22nd, 2011) as well as the GEMIS 4.8 data bank (http://www.oeko.de/service/gemis/).

KEY INDICATORS | 30

Input

Water KPI in gallons There has been a steady increase in production over the last three years so an increase in water would be expected. Over the last year and a half, there has been a conscious effort to use less water and find ways to reuse the water where possible. As long as quality is not impacted, water-based coolants will be used as long as they can. Also, chillers or cooling tower water allows for less fresh water to be used in the process. In 2014, a new Brazing furnace was installed but did not have proper cooling tower capability so more fresh water had to be used. Changes in the following year to include the cooling tower helped to decrease fresh water usage. Our future efforts will be to use the already heated process water to pre-heat the incoming fresh water prior to its use in washers where it has to be heated up first.

[gal/Mio$] Water Usage

250,000

200,000

150,000

100,000

50,000

0

2011 2012 2013 2014 2015

[kWh/Mio$] Electricity Usage

600,000

500,000

400,000

300,000

200,000

100,000

0

2011 2012 2013 2014 2015

[kWh/Mio$] Natural Gas Usage

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

2011 2012 2013 2014 2015

Electricity KPI in kWh and information on installed capacity With the increase in production over the years involved, an increase in electrical usage would be expected. However, continual efforts to run more efficiently and focus on conservation of electricity are demonstrated in this performance indicator. Purchasing more efficient machinery, controlling lighting usage (LED fixtures, motion detectors and light harvesting) and stronger sales has proven beneficial to our electrical performance. On top of this, LuK Wooster has also received awards and rebates from our electrical provider for all of our success in conservation.

Natural gas KPI in kWh The additional Brazing furnace in 2014 also increased our usage of Natural gas during that year. By 2015, we began a project to optimize our roof top HVAC units and decreased the office temperatures by 3°F. This lead to a decrease in natural gas consumption the following year. During 2015, additional furnaces and HVAC were added as part of business expansion which will be evident with our 2016 usage but projects have continued to optimize our equipment to be more efficient to limit the impact. Strong sales and a focus on efficiencies has helped LuK Wooster perform well in our usage of natural gas. We do not use propane or heating oils for heating or furnace operation.

31 | ENVIRONMENTAL INDICATORS

Output

Waste In 2015, production increased over previous years. Efforts were made to reduce total scrap metals and segregate more to increase our income from the scrap metal recycling. An effort was also made to switch from several cutting oils to emulsion concentrates to reduce our usage of oils.

Overall, the Key Indicators demonstrate that we are seeing improved performance in waste in relation to the additional production. We have also greatly improved our efforts to increase the amount of recycled materials where ever possible. Over the last year, we have added recycled plastic film/bags, drink containers (both plastic and aluminum), cardboard and paper. There is still more work to be done with what is currently going to a landfill but we are moving in the right direction.

[lbs/Mio$] Waste

1,000,000

900,000

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

2013 2014 2015

[lbs/Mio$] Scrap

900,000

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

2013 2014 2015

[lbs/Mio$] Recycle

12,000

10,000

8,000

6,000

4,000

2,000

0

2013 2014 2015

ENVIRONMENTAL INDICATORS | 32

Environmental goals Environmental program Completed? ActionsChemical Management >> Reduce chemicals where

possible>> Process changes have reduced corrosive and

chemical usage; implementation of procedure P170070 has limited the use of chemicals.

Waste Reduction >> Re-engineer all cardboard dunnage to plastic to minimize waste; reduce disposal cost

>> Reduced dunnage waste through re-enginee-ring; continued recycling effort which diverts waste from landfills.

Waste Reduction >> Increase amount of recycling through sorting of other wastes (bottles, cans, plastics, paper, etc.)

>> Receptacles for the various wastes have been placed throughout the plant and are sorted and shipped to a recycler.

Waste Reductions >> Decrease scrap through reuse of purchased components on convertors that did not pass quality checks

>> The Salvage work area disassembles convertors to retrieve purchased components that are still good and can be reused such as springs and stators.

Energy- Electric >> Identify opportunities and implement reductions as possible

>> Continued energy reduction efforts through re-lamping and lighting controls. Have added parking lot lighting controls through motion sensors as well as increased the use of LED lighting.

Energy-Nat. Gas >> Identify opportunities and implement reductions as possible

>> Continued with reductions through “free heat” project with com pressor room and optimizing burner configurations in heat treat furnaces.

Energy Management >> Develop a comprehensive and sustainable compressed air leak program.

>> Energy Team has been established

>> Improve employee awareness about programs completed for energy savings.

>> Upgrade pumps to more energy efficient types.

>> Apprentices log and repair at least 3 air leaks per week.

>> Team is now established and meets routinely to discuss other potential cost saving initiatives.

>> Energy Team members present energy topics du-ring the new hire process and as needed throug-hout the year to keep employees engaged. Energy promotion products added to the LuK Lights program. Residential energy awareness postings have been displayed in the canteen.

>> A variable frequency drive (VFD) pump was installed on the cooling tower side of the chilled water process. Investigating other opportunities for similar upgrades

Waste Reduction >> Perform a check by an outside party to ensure legal compliance.

>> A legal compliance audit for environmental, health and safety topics was completed by a third party in October 2014. Was repeated in 2016.

Goal has been achieved. Part of goal has been achieved. Additional actions planned. Goal not achieved.

Goals and Programs

Numerous environmental protection actions have been implemented at this location since the last complete environ-mental statement. Many small steps have helped to achieve our environmental goals, not all of which can be documented here. The list below includes only those actions that were published in the last environmental statement.

33 | GOALS AND PROGRAMS

Improvements not included in annual target planning

In recent years LuK Wooster has accomplished these additional improvements:

>> Minimized or eliminated hazardous wastes disposal through chemical use management. Through the process of reusing the blasting materials to its full potential, we do not have dispose of as much material as we did before. We were also able to test and profile this waste stream to be deemed as a non-hazardous waste and can dispose of it in non-regulated non-hazardous landfills. LuK has also been able to use the same process for some of the lab cleaning solutions to extend its useful life and use less raw materials.

>> Improved energy management with new systems to monitor outdoor light through our skylights and utilize that illumination at a decreased use of electricity.

>> Reduced energy through a free cooling project which utilizes the cooler outdoor air during 50+% of our Ohio weather to decrease the temperature of the water cycling through the Cooling Towers located on the roof.

GOALS AND PROGRAMS | 34

New goals 2016

Setting specific and realistic goals is the only way to protect the environment in the long run. Environmental programs must include actions that can be implemented. We have selected the most important actions for the next three years. Responsibilities for implementing these actions have been clearly defined.

Environmental goals Environmental programs Responsible CompletionEnergy Reduction of 4.5% from 2015 base year

>> Increase awareness to savings by turning off lights and equipment during breaks or off hours

>> Reduced weekend scheduling

>> Changing more parking lot lights to LED and motion controls

>> Continue with air compressor leak program>> Utilize heated exhaust gases to preheat

incoming natural gas to obtain higher efficiency in the furnaces

Plant Engineering

Production ManagementPlant EngineeringMaintenance Plant Engineering and Heat Treat Operations

Dec. 2018

April 2017

Dec 2017

Dec 2017Dec. 2017

Increase Recycling by 2% >> Identify more recycling outlets>> Improved waste segregation

EH&S Dec. 2017

Waste reduction for NORM dusts >> Determine recycle potentials for NORM waste dusts

>> Test use of lasers to clean off heat-treated metal parts to eliminate use of blasting media

EH&S and EngineeringQuality and Production

Dec. 2018

Dec 2017

Team Lead Training >> Increase awareness to the leadership on the manufacturing floor level related to proper dis-posals of waste as well as efforts for recycling

EH&S and Engineering

Dec. 2016

Reduction of Injury Rate >> Decrease workplace accidents through training and observations to meet or surpass the goal of a 3.5 Recordable Incident Rate

EH&S Dec 2017

35 | GOALS AND PROGRAMS

Validation and Responsibilities

VERIFIER‘S DECLARATION:

Dr.-Ing. Norbert Hiller , with EMAS environmental verifier registration number DE-V-0021, accredited or licensed for the scope 25 and v 29.32 (NACE Code), declares to have verified the site

LuK USA LLC | 3401 Old Airport Rd. | Wooster, OH

as indicated in the environmental statement: release 2 from 07 July 2016 of the a. m. organization and confirms that the site meets all requirements of Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25. November 2009 on the voluntary participation by organizations in a community eco-management and audit scheme (EMAS).

By signing this declaration, I declare that

>> the verification and validation has been carried out in full compliance with the requirements of Regulation (EC) No 1221/2009.

>> the outcome of the verification and validation confirms that there is no evidence of non-compliance with applicable legal requirements relating to the environment.

>> the data and information of the environmental statement: release 2 from 07 July 2016 of the site reflect a reliable, credible and correct image of all the sites activities, within the scope mentioned in the environmental statement.

This document is not equivalent to EMAS registration. EMAS registration can only be granted by a Competent Body un-der Regulation (EC) Nr. 1221/2009. This document shall not be used as a stand-alone piece of public communication.

VALIDATION | 36

The next consolidated (entire) Environmental Statement will be published in April 2019 at the latest.

In the years between, an annual update of the Environ-mental Statement will be compiled for validation by the environmental verifier.

Done at LuK Wooster, on 10/27/2016

Dr.-Ing. Norbert Hiller Environmental Verifier

Responsible for environmental protection at the LuK USA LLC location:

Mathias Hennrich Plant Manager

Responsible for environmental statement at the LuK USA LLC location:

Bruce Ubelhart Environmental, Health and Safety Representative

37 | VALIDATION

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Questions about environmental Protection at the LuK USA LLC.:

Bruce Ubelhart 3401 Old Airport Road Wooster, Ohio 44691

www.schaeffler.com ubelhbuc@schaeffler.com

USA: From other countries: 330 202-6277 +00-1 330 202-6277 330 264-4333 +00-1 330 264-4333

Questions about environmental protection by Schaeffler:

Norbert Hörauf Industriestraße 1-3 91074 Herzogenaurach

www.schaeffler.com Norbert.Hoerauf@Schaeffler.com

Germany: From other countries: 09132 822058 +49 9132 822058 09132 82452058 +49 9132 82452058

The structure and contents of this report correspond to the requirements stated in Annex IV of Regulation (EC) No. 1221 / 2009 of the E uropean Parliament and the Council dated November 25, 2009 regarding the voluntary participation of organizations in the eco-management and audit scheme (EMAS).

Moreover, the report contains information about issues pertaining to occupational safety, plant security and fire protection as well as general information on social benefits pr ovided by the company and this location.

© Schaeffler Technologies AG & Co. KG · 2016 This publication or parts thereof may not be reproduced without our permission.