LEAPFROG ENTERPRISES, INC.
Conflict Minerals Report
For the reporting period from 1 January to 31 December 2013
This Conflict Minerals Report (the “Report”) of LeapFrog Enterprises, Inc. (the “Company”) has been prepared pursuant to Rule 13p-1 and Form SD (the “Rule”) promulgated under the Securities Exchange Act of 1934, as amended, for the reporting period from January 1 to December 31, 2013.
The Rule requires disclosure of certain information when a company manufactures or contracts to manufacture products and the minerals specified in the Rule are necessary to the functionality or production of those products. The specified minerals, which we collectively refer to in this Report as the “Conflict Minerals,” are gold, columbite-tantalite (coltan), cassiterite and wolframite, including their derivatives, which are limited to tantalum, tin and tungsten. The “Covered Countries” for the purposes of the Rule and this Report are the Democratic Republic of the Congo, the Republic of the Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola. As described in this Report, the Company contracts to manufacture products for which the Conflict Minerals are necessary to the functionality or production of those products.
Company Products Covered by this Report
This Report relates to products: (i) for which Conflict Minerals are necessary to the functionality or production of that product; (ii) that were manufactured, or contracted to be manufactured, by the Company; and (iii) for which the manufacture was completed during the period from January 1 to December 31, 2013.
These products, which are referred to in this Report collectively as the “Covered Products,” are the following:
LeapPad Learning Tablet Systems . The LeapPad learning tablets are a line of children’s learning tablets designed for children ages three to nine and are used with game cartridges as well as digital content available in the Company’s App Center.
Leapster Learning Game Systems . Our line of Leapster handheld learning game systems are handheld gaming consoles designed for children ages four to nine and are used with game cartridges as well as digital content available in the Company’s App Center.
LeapReader Learning Systems . The LeapReader learning systems line of products consists of the LeapReader reading and writing system, a stylus-based learn-to-read-and-write product, designed for children ages four to eight, and the LeapReader Junior reading system, a ready-to-read system for children ages one to four.
Cartridges . We sell over 50 educational learning games in cartridge format, which are compatible with our LeapPad and Leapster systems. Our cartridges cover educational cornerstones such as math, reading, writing, geography and sciences, as well as other topics such as life skills, creativity through art, music and imaginative play.
Learning Toys . We have a variety of learning toys designed for children from birth to age four that support a wide variety of important educational skills for infants and young children, including phoneme, letter, number and color recognition, musical awareness and fine motor skills.
The Company’s Due Diligence Process
The Company conducted a good faith reasonable country of origin inquiry (the “RCOI”) regarding the Conflict Minerals. The RCOI was reasonably designed to determine whether any of the Conflict Minerals originated in the Covered Countries and whether any of the Conflict Minerals may be from recycled or scrap sources. The result of the RCOI was that the Company determined that it had reason to believe that the Conflict Minerals may have originated in the Covered Countries and were not from recycled or scrap sources.
As a result of this determination, as required by the Rule, the Company then exercised due diligence on the source and chain of custody of the Conflict Minerals used in the Covered Products. The Company’s due diligence measures were designed to conform to the framework in the OECD Due Diligence Guidance for Responsible Supply Chain of Minerals from Conflict-Affected and High Risk Areas: Second Edition , including the related supplements on gold, tin, tantalum and tungsten (the “OECD Guidance”), published by the Organisation for Economic Co-operation and Development (the “OECD”).
The due diligence process was divided into three phases, consistent with the OECD Guidance: Establishment of Company Management Systems, Risk Identification and Risk Assessment.
Establishment of Company Management Systems
The Company developed and adopted a policy relating to Conflict Minerals, incorporating the standards set forth in the OECD Guidance. The policy provides that the Company is committed to identifying any Conflict Minerals contained in our products as a part of our social responsibility and in order to achieve compliance with the Rule. In addition, the policy states that LeapFrog supports, contributes to and will rely on industry initiatives, such as the Conflict Free Smelter Program, to validate that the metals used in our products are not contributing to conflict. The policy is posted on our website at www.leapfrog.com/en-us/legal/conflict-minerals.
Next, the Company identified the key stakeholders within the Company, which included a cross-functional team of employees from various departments, in order to structure internal management to support supply chain due diligence. Members of the Company’s Legal, Internal Audit and Global Supply Chain departments in the United States and Hong Kong were assigned roles and responsibility for supply chain due diligence and compliance with the Rule. The Company conducted awareness training and education to members of this team regarding the key regulatory, environmental and human rights issues involved in the Rules.
The Company then sought to establish a system of controls and transparency over its Conflict Mineral supply chain. The Company’s supply chain with respect to the Covered Products is complex, and there are many third parties in the supply chain between the Company and the original sources of Conflict Minerals. The Company contracts to manufacture all of the Covered Products from contract manufacturers (“Contract Manufacturers”) and does not manufacture any of the Covered Products directly.
Similarly, the Company does not purchase the majority of the components of the Covered Products directly since it does not manufacture the Covered Products. However, the Company does negotiate for and purchase certain limited key components directly from suppliers (“Key Suppliers” and, together with the Contract Manufacturers, the “Covered Suppliers”). However, the vast majority of the components of the Covered Products are sourced and purchased by our Contract Manufacturers. The Company does not purchase any Conflict Minerals directly from mines, smelters or refiners.
The Company must therefore rely on the Covered Suppliers to provide information regarding the origin of Conflict Minerals that are included in the Covered Products. Moreover, the Company believes that the smelters and refiners of such Conflict Minerals are best situated to identify the sources of Conflict Minerals, and therefore has taken steps to identify the applicable smelters and refiners of Conflict Minerals in the Company’s supply chain.
For these reasons, the Company adopted the Conflict Minerals Reporting Survey Template (version 2.03a, the “EICC-GeSI Survey”), co-published by the Electronic Industry Citizen Coalition and the Global e-Sustainability Initiative (“EICC-GeSI”). The EICC-GeSI Survey is a standardized reporting template developed by the Conflict-Free Sourcing Initiative that facilitates the transfer of information through the supply chain regarding mineral country of origin and smelters and refiners being utilized. The EICC-GeSI survey enables the Company to obtain greater control and transparency over its mineral supply chain.
Next, the Company communicated information regarding the Company’s supply chain due diligence process to the Covered Suppliers. This consisted of the distribution of written material to the Covered Suppliers, providing: (i) an introduction to and overview of the Rule, (ii) LeapFrog’s commitment to ensuring that the Conflict Minerals contained in the Covered Products were sourced with due respect for human rights, and (iii) the due diligence process the Company was going to undertake to comply with the Rule. After the initial communication was distributed, the Company conducted training on the topic for its Covered Suppliers.
Next, the Company drafted legal provisions to include in its contractual agreements with its Contract Manufacturers. These provisions required Contract Manufacturers to agree to (i) adopt policies and establish systems to procure Conflict Minerals to be used in the Covered Products from sources that have been verified as conflict free, (ii) communicate and enforce such conflict minerals policy on their sub-suppliers, and (iii) assist LeapFrog in conducting its due diligence on its supply chain.
After these initial steps, the Company sent the EICC-GeSI survey to all of its Covered Suppliers. The Company reviewed and verified the completeness of the survey responses. In numerous instances the Company received, even after repeated inquires, conflicting or incomplete information regarding those facilities utilized to process the Conflict Minerals, as well as insufficient information regarding the mine(s) or source(s) of origin of the Conflict Minerals. The Company rejected incomplete or incorrectly completed surveys and instructed suppliers on the correct manner to complete the survey. The Company received a response rate of 65% of its Covered Suppliers.
Risk Identification
The next step in the due diligence process involved the identification of risks in the supply chain, beginning with the identification of the smelters and refiners in the Company’s supply chain. Based on the information that was provided by the Covered Suppliers and otherwise obtained through the due diligence process, the Company believes that, to the extent reasonably determinable by the Company, the facilities that were used to process the Conflict Minerals contained in the Covered Products included the smelters and refiners listed below in the table below.
Metal - Smelter or Refiner Facility Name
Gold - Aida Chemical Industries Co. Ltd.
Gold - Allgemeine Gold - und Silberscheideanstalt A.G.
Gold - Almalyk Mining and Metallurgical Complex (AMMC)
Gold - AngloGold Ashanti Mineração Ltda
Gold - Argor - Heraeus SA
Gold - Asahi Pretec Corporation
Gold - Asaka Riken Co Ltd
Gold - Asarco
Gold - Atasay Kuyumculuk Sanayi Ve Ticaret A.S.
Gold - Aurubis AG
Gold - Bangko Sentral ng Pilipinas (Central Bank of the Philippines)
Gold - Boliden AB
Gold - Caridad
Gold - Cendres & Métaux SA
Gold - Central Bank of the DPR of Korea
Gold - Chimet SpA
Gold - Chugai Mining
Gold - Codelco
Gold - Cooson Sempsa
Gold - Daejin Indus Co. Ltd
Gold - DaeryongENC
Gold - Do Sung Corporation
Gold - Dowa
Gold - Eco - System Recycling Co. Ltd.
Gold - FSE Novosibirsk Refinery
Gold - Guangdong Jinding Gold Co.,Ltd
Gold - Harima Smelter
Gold - Harmony Gold Refinery
Gold - Heimerle + Meule GmbH
Gold - Heraeus Ltd Hong Kong
Gold - Heraeus Materials Technology GMBH&CO.KG
Gold - Heraeus Zhaoyuan Precious Metal Materials Co.,Ltd.
Gold - Hisikari Mine
Gold - Hwasung CJ Co. Ltd
Gold - Inner Mongolia Qiankun Gold and Silver Refinery Share Company Limited
Gold - Ishifuku Metal Industry Co., Ltd.
Gold - Istanbul Gold Refinery
Gold - Japan Mint
Gold - Japan Pure Chemical
Gold - Jiangxi Copper Company Limited
Gold - Jinlong Copper Co., Ltd.
Gold - Johnson Matthey Inc
Gold - Johnson Matthey Limited
Gold - JSC Ekaterinburg Non - Ferrous Metal Processing Plant
Gold - JSC Uralectromed
Gold - JX Nippon Mining & Metals Co., Ltd
Gold - Kanfort Industrial (Yantai) Co. Ltd.
Gold - Kazzinc Ltd
Gold - Kennecott Utah Copper
Gold - Kojima Chemicals Co. Ltd
Gold - Korea Metal Co. Ltd
Gold - Kyrgyzaltyn JSC
Gold - L' azurde Company For Jewelry
Gold - London Bullion Market Association
Gold - LS - Nikko Copper Inc
Gold - Materion
Gold - Matsuda Sangyo Co. Ltd
Gold - Metalor Technologies (Hong Kong) Ltd
Gold - Metalor Technologies SA
Gold - Metalor USA Refining Corporation
Gold - Met - Mex Peñoles, S.A.
Gold - Mitsubishi Materials Corporation
Gold - Mitsui & Co. Precious Metals Inc. Hong Kong Branch
Gold - Mitsui Mining and Smelting Co., Ltd.
Gold - MKE
Gold - Moscow Special Alloys Processing Plant
Gold - Nadir Metal Rafineri San. Ve Tic. A.Ş.
Gold - Navoi Mining and Metallurgical Combinat
Gold - Nihon Material Co. LTD
Gold - Niihama Nickel Refinery
Gold - Ohio Precious Metals LLC.
Gold - OJSC Kolyma Refinery
Gold - PAMP SA
Gold - Pan Pacific Copper Co. LTD
Gold - Prioksky Plant of Non - Ferrous Metals
Gold - PT Aneka Tambang (Persero) Tbk
Gold - PX Précinox SA
Gold - Rand Refinery (Pty) Ltd
Gold - Royal Canadian Mint
Gold - Sabin Metal Corp.
Gold - SAMWON METALS Corp.
Gold - Schone Edelmetaal
Gold - SEMPSA Joyeria Plateria SA
Gold - Senju Metal Industry Co., Ltd.
Gold - Shandong Zhaojin Gold & Silver Refinery Co. Ltd
Gold - Shanghai Gold Exchange
Gold - So Accurate Refing Group
Gold - SOE Shyolkovsky Factory of Secondary Precious Metals
Gold - Solar Applied Materials Technology Corp.
Gold - Sumitomo Metal Mining Co. Ltd.
Gold - Suzhou Xingrui Noble
Gold - Tanaka Kikinzoku Kogyo K.K.
Gold - The Great Wall Gold and Silver Refinery of China
Gold - Timah Company
Gold - Tokuriki Honten Co. Ltd
Gold - Tongling nonferrous holding group co. ltd.
Gold - Torecom
Gold - Umicore Brasil Ltda
Gold - United Precious Metal Refining, Inc.
Gold - VALCAMBI SA
Gold - Western Australian Mint trading as The Perth Mint
Gold - Wuxi Middle Treasure Materials
Gold - Xstrata Canada Corporation
Gold - Yamamoto Precious Metal Co. Ltd.
Gold - Yantai Zhaojin Lifu Precious Metals Co., Ltd.
Gold - Yokohama Metal Co Ltd
Gold - Zhaojin Gold Argentine refining company limited
Gold - Zhongyuan Gold Smelter of Zhongjin Gold Corporation
Gold - Zijin Mining Group Co. Ltd
Tantalum - CIF
Tantalum - Conghua Tantalum and Niobium Smeltry
Tantalum - Ethiopian Minerals Development Share Company
Tantalum - Exotech Inc.
Tantalum - F&X
Tantalum - Fujian Nanping
Tantalum - Global Advanced Metals
Tantalum - H.C. Starck GmbH
Tantalum - Jiangxi Rare Earth Metals Tungsten Group Corp.
Tantalum - JiuJiang JinXin Nonferrous Metals Co. Ltd.
Tantalum - Metal Do
Tantalum - Metallurgical Products India Pvt. Ltd.
Tantalum - Mitsui Mining & Smelting
Tantalum - Ningxia Orient Tantalum Industry Co., Ltd.
Tantalum - Nippon Mining & Metals Co.,Ltd.
Tantalum - NTET, Thailand
Tantalum - PT Putra Karya
Tantalum - Solikamsk Metal Works
Tantalum - Taki Chemicals
Tantalum - Ulba
Tantalum - Zhuzhou Cement Carbide
Tin - AIM
Tin - Alpha Metals Korea Ltd.
Tin - Amalgamet Inc
Tin - American Iron and Metal
Tin - An Xin Xuan Xin Yue You Se Jin Shu Co. Ltd.
Tin - Aoki Labatories Ltd.
Tin - Asahi Solder Tech (Wuxi) Co. Ltd.
Tin - ATI Metalworking Products
Tin - Best Metals
Tin - Butterworth
Tin - Chengfeng Metals Co Pte Ltd
Tin - CNMC ( Guangxi) PGMA Co. Ltd.
Tin - Cookson
Tin - Cooper Santa
Tin - CV Duta Putra Bangka
Tin - CV Jus Tindo
Tin - CV Makmur Jaya
Tin - CV Nurjanah
Tin - CV Prima Timah Utama
Tin - CV Serumpun Sebalai
Tin - CV United Smelting
Tin - Dae Kil
Tin - Daewoo International
Tin - Electroloy Sdn Bhd
Tin - EM Vinto
Tin - F&X Electro - Materials Limited
Tin - Feinhütte Halsbrücke GmbH
Tin - FSE Novosibirsk Refinery
Tin - Furukawa Electric
Tin - Ganzhou Huaxing Tungsten
Tin - Gejiu Non - ferrous Metal Processing Co. Ltd.
Tin - Gejiu Yunxi Croup Corp
Tin - Gejiu Zi - Li
Tin - Gold Bell Group
Tin - Goodway
Tin - GRANDE
Tin - Guang Xi Hua Xi Corp
Tin - Hana - High Metal
Tin - Heesung Metal Ltd.
Tin - Heraeus Materials Singapore Pte, Ltd.
Tin - Heraeus Oriental Hitec Co., Ltd.
Tin - Heraeus Precious Metals GmbH & Co. KG
Tin - Heraeus Technology Center
Tin - Heraeus Zhaoyuan Changshu Electronic Material Co.,Ltd
Tin - High Quality Technology Co., Ltd
Tin - Hitachi Cable
Tin - Huaxi Guangxi Group
Tin - Huichang Shun Tin Kam Industries, Ltd.
Tin - Hyundai - Steel
Tin - IBF IND Brasileira de Ferroligas Ltda
Tin - Indonesian State Tin Corporation
Tin - Ishihara Chemical Co. Ltd.
Tin - JalanPantai/Malaysia
Tin - Jean Goldschmidt International
Tin - Jiangxi Nanshan
Tin - Jiangxi Shunda Huichang Kam Tin Co., Ltd.
Tin - Kaimeng(Gejiu) Industry and Trade Co., Ltd.
Tin - Ketabang
Tin - Koba
Tin - Koki Japan
Tin - KOVOHUTĚ PŘÍBRAM NÁSTUPNICKÁ, A.S.
Tin - Kupol
Tin - Laibin Smeltery of Liuzhou China Tin Group Co., Ltd.
Tin - Lingbao Jinyuan Tonghui
Tin - Linwu Xianggui Smelter Co
Tin - Liuzhou China Tin
Tin - Malaysia Smelting Corp oration (MSC)
Tin - MCP Metal Specialist Inc.
Tin - Metallo Chimique
Tin - Mineração Taboca S.A.
Tin - Ming Li Jia Smelt Metal Factory
Tin - Minsur
Tin - Mits - Tec (Shanghai) Co. Ltd.
Tin - Mitsubishi Materials Corporation
Tin - Nankang Nanshan Tin Manufactory Co., Ltd.
Tin - Nathan Trotter & Co
Tin - Nghe Tin Non - Ferrous Metal One Member State company Ltd.
Tin - Nihon Superior Co. Ltd
Tin - Nihon Genma MFG Co., Ltd.
Tin - Nihon Kagaku Sangyo Co., Ltd
Tin - Nippon Filler Metals Ltd
Tin - Novosibirsk Integrated Tin Works
Tin - OMSA
Tin - PL Timah Tbk
Tin - Poongsan
Tin - Posco
Tin - PT Alam Lestari Kencana
Tin - PT Artha Cipta Langgeng
Tin - PT Babel Inti Perkasa
Tin - PT Babel Surya Alam Lestari
Tin - PT Bangka Kudai Tin
Tin - PT Bangka Putra Karya
Tin - PT Bangka Timah Utama Sejahtera
Tin - PT Belitung Industri Sejahtera
Tin - PT BilliTin Makmur Lestari
Tin - PT Bukit Timah
Tin - PT DS Jaya Abadi
Tin - PT Eunindo Usaha Mandiri
Tin - PT Fang Di MulTindo
Tin - PT HP Metals Indonesia
Tin - PT Koba Tin
Tin - PT Mitra Stania Prima
Tin - PT Refined Banka Tin
Tin - PT Sariwiguna Binasentosa
Tin - PT Stanindo Inti Perkasa
Tin - PT Sumber Jaya Indah
Tin - PT Tambang Timah
Tin - PT Timah
Tin - PT Timah Nusantara
Tin - PT Tinindo Inter Nusa
Tin - PT Yinchendo Mining Industry
Tin - PT. Supra Sukses Trinusa
Tin - Pure Technology
Tin - Rahman Hydrulic Tin Sdn Bhd
Tin - RBT
Tin - REDSUN
Tin - Rohm & Hass
Tin - Rui Da Hung
Tin - S Company
Tin - Samhwa Non - Ferrorus Metal Ind. Co. Ltd.
Tin - Seirenngyousya
Tin - Senju Metal Industry Co. Ltd.
Tin - SGS Bolivia S.A.
Tin - Shan Tou Shi Yong Yuan Jin Shu Zai Sheng Co. Ltd.
Tin - Shanghai Yuanhao Surface Finishing Co. Ltd.
Tin - ShangHai YueQiang Metal Products Co., LTD
Tin - Shuer Der Industry (Jiangsu) Co. Ltd.
Tin - Sinitron, Shenmao Solder (M) Sdn. Bhd.
Tin - Soft Metals Ltda
Tin - Taicang Nancang Metal Materials Co., Ltd
Tin - Taiwan Total Co. Ltd.
Tin - Tamura
Tin - Tanaka Kikinzoku Kogyo K.K
Tin - Thailand Smelting and Refining Co. Ltd.
Tin - Tong Ding Metal Company. Ltd.
Tin - Traxys
Tin - Umicore Precious Metal (S) Pte. Ltd.
Tin - Unit Metalurgi PT Timah (Persero ) Tbk
Tin - Unit Timah Kundur PT Tambang
Tin - Unvertical International(Suzhou)Co.,Ltd
Tin - White Solder Metalurgia
Tin - Wilhelm Westmetall
Tin - Wu Xi Shi Yi Zheng Ji Xie She Bei Company
Tin - XiHai - Liuzhou China Tin Group Co ltd - list as "China Tin"
Tin - Xin Wang copper smelter
Tin - Yifeng Tin Industry (Chenzhou) Co Ltd
Tin - Yokohama Metal Co Ltd
Tin - YQ
Tin - YTMM
Tin - Yunnan Chengfeng
Tin - Yunnan Tin Company Limited
Tin - Yuntinic Chemical GmbH
Tin - YunXi
Tin - Yutinic Resources
Tin - Zhejiang Huangyan Xinqian Electrical Parts Factory
Tin - Zhongjin Gold Corporation Limited
Tin - Zhuhai Horyison Solder Co.,Ltd
Tin - Zhuzhou Smelter Group Co. Ltd.
Tungsten - A.L.M.T. Corp.
Tungsten - Air Products
Tungsten - Alldyne Powder Technologies
Tungsten - Alta Group
Tungsten - Altlantic Metals
Tungsten - ATI Tungsten Materials
Tungsten - Axis Material Limited
Tungsten - Beijing Zenith Materials
Tungsten - Buffalo Tungsten
Tungsten - ChangChun up - optech
Tungsten - Chaozhou Xianglu Tungsten Industry Co Ltd
Tungsten - China Minmetals Non - ferrous Metals Co Ltd
Tungsten - China National Non - ferrous
Tungsten - Chongyi Zhangyuan Tungsten Co Ltd
Tungsten - CWB Materials
Tungsten - Dayu Weiliang Tungsten Co., Ltd.
Tungsten - Fujian Jinxin Tungsten Co., Ltd.
Tungsten - Ganzhou Grand Sea W & Mo Group Co Ltd
Tungsten - Ganzhou Hongfei W&Mo MATERIALS CO.,LTD.
Tungsten - Global Tungsten & Powders Corp
Tungsten - Golden Egret
Tungsten - HC Starck GmbH
Tungsten - Hitachi Ltd.
Tungsten - Hunan Chenzhou Mining Group Co
Tungsten - Hunan Chun - Chang Nonferrous Smelting & Concentrating Co., Ltd.
Tungsten - IES Technical Sales
Tungsten - Jada Electronic limited (JX Nippon Mining&Matel Co., Ltd)
Tungsten - Japan New Metals Co Ltd
Tungsten - Jiangxi Rare Earth & Rare Metals Tungsten Group Corp
Tungsten - Jiangxi Tungsten Industry Group Co Ltd
Tungsten - Kanto Denka Kogyo Co., Ltd.
Tungsten - Kennaemetal Inc .
Tungsten - Meterion Advanced Materials Thin Film Products
Tungsten - Midwest Tungsten Wire Co.
Tungsten - Nanchang Cemented Carbide Limited Liability Company
Tungsten - NingHua XingLuoKeng TungSten Mining CO.,LID
Tungsten - North American Tungsten
Tungsten - Plansee
Tungsten - Sichuan Metals & Materials Imp & Exp Co
Tungsten - Sincemat Co, Ltd
Tungsten - Solar Applied Materials Technology Corp.
Tungsten - Sumitomo Metal Mining Co., Ltd.
Tungsten - Sylham
Tungsten - Taegutec
Tungsten - Tejing (Vietnam) Tungsten Co Ltd
Tungsten - Triumph Northwest
Tungsten - Wolfram Bergbau und Hütten AG
Tungsten - Wolfram Company CJSC
Tungsten - Wort Wayne Wire Die
Tungsten - Xiamen Golden Egret Special Alloy Co. Ltd.
Tungsten - Xiamen Honglu Tungsten Molybdenum Industry Co., Ltd.
Tungsten - Xiamen Tungsten Co Ltd
Tungsten - Zhuzhou Cemented Carbide Group Co Ltd
Based on the information obtained pursuant to the due diligence process, the Company does not have sufficient information, with respect to the Covered Products, to determine the country of origin of all of the Conflict Minerals in the Covered Products. However, based on the information that has been obtained, the Company has reasonably determined that countries of origin of the Conflict Minerals include the following countries: American Samoa, Australia, Austria, Belgium, Bolivia, Brazil, Canada, Chile, China, Czech Republic, Ethiopia, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Kazakhstan, Republic of Korea, Kyrgyzstan, Malaysia, Mexico, Netherlands, Peru, Philippines, Russian Federation, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States of America, Uzbekistan and Vietnam.
Next, the Company identified the scope of the risk assessment of the mineral supply chain by establishing a 5-step framework for a risk assessment of the due diligence of the supply chain. As part of its 5-step framework, the Company prepared a risk inventory, in which it sought to identify the potential risks of Conflict Minerals from the Covered Countries entering into the supply chain. The Company established risk rating criteria, to determine whether the identified risks were “High,” “Medium” or “Low” and it rated each of the risks identified in the risk inventory pursuant to this criteria. The risk assessment also included the establishment of key risk indicators, with threshold levels for each of the identified risks and a risk dashboard for the tracking of those risks. Finally, the Company established a mechanism of risk monitoring and reporting.
Risk Assessment – DRC Conflict Undeterminable
Based on the information obtained pursuant to the due diligence process, including the risk assessment, the Company believes there is a risk that the Covered Products contain Conflict Minerals from the Covered Countries. The Company’s due diligence into the supply chain did not determine conclusively whether any of the Covered Products did or did not contain any Conflict Minerals from any Covered Country which directly or indirectly financed or benefitted armed groups, as defined in the Rules. Accordingly, the Company has reasonably determined that each of the Covered Products is “DRC Conflict Undeterminable” as defined in the Rule.
Efforts to Locate Specific Mines of Origin
Our efforts to determine the mine or location of origin of the Conflict Minerals in the Covered Products with the greatest possible specificity consisted of the due diligence measures described in this Report. In particular, due to the complex nature of the Company’s supply chain, we relied on the information made available by our Covered Suppliers, who were in a better position than the Company to identify the smelters and refiners in the Company’s supply chain.
Remediation
The Company intends to further mitigate the risk that the necessary Conflict Minerals contained in the Company’s products finance or benefit armed groups in the Covered Countries by continuing to improve its due diligence processes. In particular, the Company intends to continue to engage its suppliers to improve the transparency of its supply chain and to explore the feasibility of working with suppliers who are able to obtain a “conflict free” designation for their components. In addition, the Company intends to begin an independent third party audit program to audit its supply chain due diligence practices within the next two years.
Websites Not Incorporated by Reference
The content of any website referred to in this Report is included for general information only and is not incorporated by reference in this Report.