Exhibit 1.01
Conflict Minerals Report
This is the Conflict Minerals Report (the “Report”) of J. C. Penney Company, Inc. for calendar year 2017 in accordance with Rule 13p-1 (“Rule 13p-1”) under the Securities Exchange Act of 1934, as amended.
J. C. Penney Company, Inc. is a holding company whose principal operating subsidiary is J. C. Penney Corporation, Inc. (“JCPenney” or the “Company”). Our business consists of selling merchandise and services to consumers through our approximately 871 department stores in the United States and Puerto Rico (as of May 5, 2018) and through our Internet website at jcpenney.com, which utilizes fully optimized applications for desktop, mobile and tablet devices. We primarily sell family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside JCPenney, home furnishings and large appliances. In addition, our department stores provide our customers with services such as styling salon, optical, portrait photography, custom decorating and home services.
The products in our department stores and online fall into three broad categories: JCPenney Private Brand products made specifically for us, Exclusive Brand products designed for JCPenney with licensed trademarks and sometimes sourced by us, and National Brand products made by other companies and sold in JCPenney department stores and online. For certain Private Brand and certain licensed Exclusive Brand products, JCPenney creates the product design and provides product specifications including materials, fabrics, trims, notions and components. JCPenney also manufactures certain Private Brand window coverings according to customer specifications as part of our custom decorating services.
We are filing this Report because, based on a reasonable country of origin inquiry (“RCOI”), certain products that we manufacture or contract to manufacture contain cassiterite, columbite-tantalite (coltan), gold or wolframite or their derivatives tin, tantalum and tungsten (collectively, “3TG”) that may have originated in the Democratic Republic of the Congo or an adjoining country (the “Covered Countries”), which minerals may be considered necessary to the functionality or production of such products (the “Conflict Minerals”).
As is required, we have conducted in good faith a RCOI reasonably designed to determine whether the Conflict Minerals originated in the Covered Countries or came from recycled or scrap sources. Our RCOI process included conducting an inquiry of certain high-risk suppliers for our Private Brand and Exclusive Brand products and our custom decorating suppliers using a Conflict Minerals Survey which was developed based on the Electronic Industry Citizenship Coalition - Global E-Sustainability Initiative’s (“EICC-GeSI”) Conflict Minerals Reporting Template (“CMRT”). We relied upon our suppliers' representations regarding the origin of Conflict Minerals used in their products as well as their smelter data to determine the source of Conflict Minerals within our supply chain. Based on the results of our RCOI, as is required, we performed due diligence on the source and chain of custody of the Conflict Minerals.
The following product categories in certain of our Private Brands and licensed Exclusive Brands may contain 3TG: apparel containing certain trim such as zippers, handbags, window coverings and certain home décor (the “Covered Products”).
Part I. Due Diligence
We conducted due diligence on the source and chain of custody of 3TG in our Covered Products in accordance with the Organisation for Economic Co-operation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (the “OECD Guidance”), an internationally recognized due diligence framework.
We purchase our merchandise from a broad base of domestic and foreign suppliers. As a retail company who purchases goods from suppliers, JCPenney is several levels removed from the actual mining of Conflict Minerals.
JCPenney does not make purchases of raw ore or unrefined 3TG. Our implementation of the OECD Guidance is discussed below.
OECD Guidance Step One: Establish Strong Company Management System
JCPenney has an internal Conflict Minerals team led by the Global Trade Compliance Team, which coordinates and oversees the implementation of the Company’s compliance with the Conflict Minerals rules and regulations. The Conflict Minerals team works with members from Product Development & Design, Sourcing, Legal and Internal Audit. The working group evaluates product categories for potential 3TG, routinely educates members of the sourcing organization regarding the Company’s Conflict Minerals program, and provides regular updates on the program to an oversight leadership committee.
The Conflict Minerals team employs a system of controls through the use of a due diligence tool created by the EICC-GeSI’s Responsible Minerals Initiative (“RMI”). JCPenney is an active member of RMI and utilizes the tools made available to members to vet and confirm smelters reported by suppliers.
JCPenney’s Conflict Minerals Policy establishes the following expectations for suppliers:
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| • | Suppliers may not include in any products sold to JCPenney any 3TG mined in the Covered Countries that fund armed conflict. |
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| • | Suppliers are required to develop Conflict Minerals policies, due diligence frameworks and management systems consistent with the OECD Guidance and to drive those efforts throughout their supply chain. |
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| • | Suppliers of certain JCPenney products will be required to provide written evidence of due diligence documentation including completion of a CMRT. |
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| • | Suppliers must use smelters or refiners that are conformant with RMI’s Responsible Minerals Assurance Process (“RMAP”) assessment protocols as the source for any of the Conflict Minerals used in the products sold to JCPenney. |
JCPenney’s Conflict Minerals Policy is publicly available on the Company’s website at https://www.jcpenney.com/dotcom/images/2018_ConflictMineralsPolicyv2.pdf and includes information regarding how questions can be addressed or policy violations may be reported.
JCPenney publishes its Conflict Minerals Bulletin to Suppliers through its online Supplier Portal. The 2017 Supplier Bulletin reiterated JCPenney’s Conflict Minerals Policy and provided instructions for submitting a CMRT. As outlined in the Bulletin, certain Private Brand, Exclusive Brand and custom decorating suppliers identified as high risk based on the Company’s risk matrix were required to submit a CMRT to JCPenney. All Private Brand, Exclusive Brand and custom decorating suppliers that indicated their products contained 3TG were also required to complete an online training course on Conflict Minerals.
JCPenney has a mechanism for suppliers and associates to report any Conflict Minerals issues or concerns including a unique e-mail address for Conflict Minerals. This e-mail address is published in the Company’s Conflict Minerals Policy as well as in the Supplier Bulletin.
OECD Guidance Step Two: Identify and Assess Risk in the Supply Chain
The Conflict Minerals team developed a formal interview questionnaire that was used to discuss design process and development with the associates involved in sourcing for all categories in order to identify whether JCPenney contracts to manufacture any products. After narrowing the Company’s products to those which the Company contracts to manufacture, our due diligence process involved all identified high-risk suppliers for the identified Private Brand and Exclusive Brand products and all identified custom decorating suppliers. We developed our supplier list for our due diligence process by compiling and comparing supplier information from several sources and developed a risk matrix based on likelihood of products containing 3TG. A supplier was identified as high risk if there was a high likelihood that products supplied by such supplier would contain 3TG.
During 2017, JCPenney identified 100 Private Brand and Exclusive Brand suppliers considered high risk and 4 custom decorating suppliers. All of these suppliers completed a CMRT for 2017. Based on the suppliers’ initial responses to the CMRT, JCPenney identified suppliers from whom additional information was required. JCPenney requested that these suppliers provide clarifications to the information submitted on their CMRT. In addition, JCPenney obtained certifications (“Conflict Minerals Certifications”) from all of the identified suppliers in which each such supplier certified that (i) all products sold to JCPenney and its subsidiaries comply with JCPenney’s Supplier Principles, (ii) such supplier has developed or will develop appropriate Conflict Minerals policies and (iii) such supplier has developed, or will develop, a due diligence framework and management system consistent with the OECD Guidance.
Based on the survey responses, 96 (or 96%) of the Private Brand and Exclusive Brand suppliers indicated that their products supplied to the Company do not contain 3TG. There were 8 surveyed suppliers who reported that their products contain 3TG. Those 8 suppliers identified a total of 138 different smelters, of which 131 (or 95%) were determined by RMI to be conformant with RMAP assessment protocols. Of the remaining 7 smelters, we believe that 4 are no longer in operation.
OECD Guidance Step Three: Design and Implement a Strategy to Respond to Identified Risks
The Company has identified several initiatives to reduce the risk that its products may contain Conflict Minerals that benefit armed groups, including the following:
Conduct additional Conflict Minerals training for suppliers
JCPenney has developed an exclusive interactive online course on Conflict Minerals. The online Conflict Minerals course is required to be completed by all new direct import Private Brand and Exclusive Brand suppliers, any indirect Private Brand and Exclusive Brand suppliers and any custom decorating suppliers where there is a high likelihood that products supplied by such supplier would contain 3TG. Nearly all of the surveyed 2017 suppliers that identified 3TG in their products completed the Conflict Minerals course.
Continue active participation in industry initiatives.
JCPenney is an active member of RMI and is currently serving on the Steering Committee. RMI is an industry initiative that audits smelters’ and refiners’ due diligence activities. In addition, RMI provides its members with a range of tools and resources including the CMRT and RCOI data as well as a wide range of guidance documents on conflict minerals.
JCPenney intends to continue its efforts in the following areas:
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| • | Drive compliance through education and training |
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| • | Continue to require a Conflict Minerals Certification as part of the onboarding requirements for new direct import and certain indirect import Private Brand and Exclusive Brand suppliers |
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| • | Continue participation in industry initiatives and third-party audit programs |
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| • | Engage with suppliers to seek further development of Conflict Minerals programs |
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| • | Continue engagement with internal audit partners to evaluate internal controls related to Conflict Minerals |
OECD Guidance Step Four: Carry out Independent Third-Party Audit of Supply Chain Due Diligence at Identified Points in the Supply Chain
JCPenney does not carry out its own independent audit of smelters. As outlined in the OECD Guidance, the internationally recognized standard on which the Company’s Conflict Minerals due diligence is based, the Company supports RMI, an industry initiative that audits smelters’ and refiners’ due diligence activities. The data on which the Company relied for certain statements in this Report was obtained through the Company’s membership in RMI.
JCPenney compared the smelters identified by suppliers for 2017 with RMI’s RMAP Conformant Smelter & Refiners list. Of the 138 smelters identified by suppliers, 131 (or 95%) were determined by RMI to be conformant with RMAP assessment protocols. Of the remaining 7 smelters, we believe that 4 are no longer in operation.
A list of the 138 smelters that process Conflict Minerals and were identified by the Company’s suppliers for 2017 is attached to this Report as Appendix A. A list of the countries of origin of the Conflict Minerals processed by the smelters listed on Appendix A that are known to the Company is attached to this Report as Appendix B. The listed countries of origin are derived from information provided by RMI.
OECD Guidance Step Five: Report on Supply Chain Due Diligence
JCPenney filed its Form SD and Conflict Minerals Report for the calendar year ended December 31, 2017, which is available at https://www.jcpenney.com/m/company-info?&pageId=pg40036000011.
Part II. Product Description
Our in-scope products included:
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| • | Apparel that contains certain trim, such as zippers |
With respect to these product categories, significant efforts were made to obtain further information on the origin of 3TG used therein. As described in this Report, additional information was requested and clarifications to responses on the supplier’s CMRT.
Part III. Audit Report
This Report has not been subject to an independent private sector audit as allowed under applicable Securities and Exchange Commission guidance.
Appendix A
Smelter List As Provided by JCPenney Suppliers
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| Metal | Smelter Name | Smelter Country |
| Gold | Aida Chemical Industries Co., Ltd.* | JAPAN |
| Gold | Argor-Heraeus S.A.* | SWITZERLAND |
| Gold | Asahi Pretec Corporation* | JAPAN |
| Gold | Asaka Riken Co., Ltd.* | JAPAN |
| Gold | Aurubis AG* | GERMANY |
| Gold | CCR Refinery - Glencore Canada Corporation* | CANADA |
| Gold | Chimet S.p.A.* | ITALY |
| Gold | Heraeus Metals Hong Kong Ltd.* | CHINA |
| Gold | Heraeus Precious Metals GmbH & Co. KG* | GERMANY |
| Gold | Istanbul Gold Refinery* | TURKEY |
| Gold | LS-NIKKO Copper Inc.* | KOREA, REPUBLIC OF |
| Gold | Matsuda Sangyo Co., Ltd.* | JAPAN |
| Gold | Metalor Technologies (Hong Kong) Ltd.* | CHINA |
| Gold | Metalor Technologies S.A.* | SWITZERLAND |
| Gold | Metalor USA Refining Corporation* | UNITED STATES OF AMERICA |
| Gold | Metalurgica Met-Mex Penoles S.A. De C.V.* | MEXICO |
| Gold | Mitsubishi Materials Corporation* | JAPAN |
| Gold | Nadir Metal Rafineri San. Ve Tic. A.ª.* | TURKEY |
| Gold | Nihon Material Co., Ltd.* | JAPAN |
| Gold | Ohio Precious Metals, LLC | UNITED STATES |
| Gold | Ohura Precious Metal Industry Co., Ltd.* | JAPAN |
| Gold | Royal Canadian Mint* | CANADA |
| Gold | SEMPSA Joyeria Plateria S.A.* | SPAIN |
| Gold | Shandong Zhaojin Gold & Silver Refinery Co., Ltd.* | CHINA |
| Gold | Solar Applied Materials Technology Corp.* | TAIWAN, PROVINCE OF CHINA |
| Gold | Sumitomo Metal Mining Co., Ltd.* | JAPAN |
| Gold | Tanaka Kikinzoku Kogyo K.K.* | JAPAN |
| Gold | Umicore Brasil Ltda* | BRAZIL |
| Gold | Umicore S.A. Business Unit Precious Metals Refining* | BELGIUM |
| Gold | United Precious Metal Refining, Inc.* | UNITED STATES |
| Gold | Western Australian Mint trading as The Perth Mint* | AUSTRALIA |
| Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation* | CHINA |
| Gold | Gold Refinery of Zijin Mining Group Co., Ltd.* | CHINA |
| Gold | Republic Metals Corporation* | UNITED STATES OF AMERICA |
| Gold | WIELAND Edelmetalle GmbH* | GERMANY |
| Gold | Safimet S.p.A* | ITALY |
| Tantalum | Mitsui Mining & Smelting* | JAPAN |
| Tantalum | F&X Electro-Materials Ltd.* | CHINA |
| Tantalum | Guangdong Zhiyuan New Material Co., Ltd.* | CHINA |
| Tantalum | JiuJiang JinXin Nonferrous Metals Co., Ltd.* | CHINA |
| Tantalum | Jiujiang Tanbre Co., Ltd.* | CHINA |
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| Tantalum | Ningxia Orient Tantalum Industry Co., Ltd.* | CHINA |
| Tantalum | H.C. Starck Co., Ltd.* | THAILAND |
| Tantalum | H.C. Starck GmbH Goslar* | GERMANY |
| Tantalum | H.C. Starck Smelting GmbH & Co. KG* | GERMANY |
| Tantalum | LSM Brasil S.A.* | BRAZIL |
| Tantalum | Mineração Taboca S.A.* | BRAZIL |
| Tantalum | Telex Metals* | UNITED STATES |
| Tantalum | Hengyang King Xing Lifeng New Materials Co., Ltd.* | CHINA |
| Tantalum | H.C. Starck Hermsdorf GmbH* | GERMANY |
| Tantalum | H.C. Starck Inc.* | UNITED STATES |
| Tantalum | H.C. Starck Ltd.* | JAPAN |
| Tin | Jiangxi Ketai Advanced Material Co., Ltd.* | CHINA |
| Tin | CNMC (Guangxi) PGMA Co., Ltd. | CHINA |
| Tin | Alpha* | UNITED STATES OF AMERICA |
| Tin | Cooperativa Metalurgica de Rondônia Ltda. | BRAZIL |
| Tin | CV United Smelting* | INDONESIA |
| Tin | Dowa* | JAPAN |
| Tin | EM Vinto* | BOLIVIA |
| Tin | Fenix Metals* | POLAND |
| Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd.* | CHINA |
| Tin | Gejiu Zili Mining And Metallurgy Co., Ltd. | CHINA |
| Tin | Huichang Jinshunda Tin Co., Ltd.* | CHINA |
| Tin | Gejiu Kai Meng Industry and Trade LLC* | CHINA |
| Tin | China Tin Group Co., Ltd.* | CHINA |
| Tin | Malaysia Smelting Corporation (MSC)* | MALAYSIA |
| Tin | Metallo-Chimique N.V.* | BELGIUM |
| Tin | Mineração Taboca S.A.* | BRAZIL |
| Tin | Minsur* | PERU |
| Tin | Mitsubishi Materials Corporation* | JAPAN |
| Tin | Nankang Nanshan Tin Manufactory Co., Ltd.* | CHINA |
| Tin | O.M. Manufacturing (Thailand) Co., Ltd.* | THAILAND |
| Tin | Operaciones Metalurgical S.A.* | BOLIVIA |
| Tin | Operaciones Metalurgical S.A.* | BOLIVIA (PLURINATIONAL STATE OF) |
| Tin | PT Babel Inti Perkasa* | INDONESIA |
| Tin | PT Bangka Tin Industry* | INDONESIA |
| Tin | PT Belitung Industri Sejahtera* | INDONESIA |
| Tin | PT Bukit Timah* | INDONESIA |
| Tin | PT DS Jaya Abadi* | INDONESIA |
| Tin | PT Eunindo Usaha Mandiri* | INDONESIA |
| Tin | PT Mitra Stania Prima* | INDONESIA |
| Tin | PT Prima Timah Utama* | INDONESIA |
| Tin | PT Refined Bangka Tin* | INDONESIA |
| Tin | PT Sariwiguna Binasentosa* | INDONESIA |
| Tin | PT Stanindo Inti Perkasa* | INDONESIA |
| Tin | PT Timah (Persero) Tbk Kundur* | INDONESIA |
| Tin | PT Timah (Persero) Tbk Mentok* | INDONESIA |
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| Tin | PT Tinindo Inter Nusa* | INDONESIA |
| Tin | PT Tommy Utama* | INDONESIA |
| Tin | Rui Da Hung* | TAIWAN, PROVINCE OF CHINA |
| Tin | Soft Metais Ltda.* | BRAZIL |
| Tin | Thaisarco* | THAILAND |
| Tin | Gejiu Yunxin Nonferrous Electrolysis Co., Ltd.* | CHINA |
| Tin | VQB Mineral and Trading Group JSC | VIET NAM |
| Tin | White Solder Metalurgia e Mineração Ltda.* | BRAZIL |
| Tin | Yunnan Chengfeng Non-ferrous Metals Co., Ltd.* | CHINA |
| Tin | Yunnan Tin Company Limited* | CHINA |
| Tin | CV Venus Inti Perkasa* | INDONESIA |
| Tin | Magnu's Minerais Metais e Ligas LTDA* | BRAZIL |
| Tin | Melt Metais e Ligas S.A.* | BRAZIL |
| Tin | PT ATD Makmur Mandiri Jaya* | INDONESIA |
| Tin | PT Inti Stania Prima* | INDONESIA |
| Tin | CV Tiga Sekawan* | INDONESIA |
| Tin | PT Bangka Prima Tin* | INDONESIA |
| Tin | PT Sukses Inti Makmur* | INDONESIA |
| Tin | PT Menara Cipta Mulia* | INDONESIA |
| Tungsten | Vietnam Youngsun Tungsten Industry Co., Ltd.* | VIET NAM |
| Tungsten | Xiamen Tungsten (H.C.) Co., Ltd.* | CHINA |
| Tungsten | Wolfram Bergbau und Hütten AG* | AUSTRIA |
| Tungsten | ATC(Asia Tungsten Product Co., Ltd)* | VIET NAM |
| Tungsten | A.L.M.T. TUNGSTEN Corp.* | JAPAN |
| Tungsten | Kennametal Huntsville* | UNITED STATES |
| Tungsten | Guangdong Xianglu Tungsten Co., Ltd.* | CHINA |
| Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd.* | CHINA |
| Tungsten | Fujian Jinxin Tungsten Co., Ltd.* | CHINA |
| Tungsten | Global Tungsten & Powders Corp.* | UNITED STATES |
| Tungsten | Hunan Chenzhou Mining Co., Ltd.* | CHINA |
| Tungsten | Hunan Chunchang Nonferrous Metals Co., Ltd.* | CHINA |
| Tungsten | Japan New Metals Co., Ltd.* | JAPAN |
| Tungsten | Ganzhou Huaxing Tungsten Products Co., Ltd.* | CHINA |
| Tungsten | Kennametal Fallon* | UNITED STATES |
| Tungsten | Tejing (Vietnam) Tungsten Co., Ltd.* | VIET NAM |
| Tungsten | Xiamen Tungsten Co., Ltd.* | CHINA |
| Tungsten | Xinhai Rendan Shaoguan Tungsten Co., Ltd.* | CHINA |
| Tungsten | Jiangxi Minmetals Gao'an Non-ferrous Metals Co., Ltd. | CHINA |
| Tungsten | Ganzhou Jiangwu Ferrotungsten Co., Ltd.* | CHINA |
| Tungsten | Jiangxi Yaosheng Tungsten Co., Ltd.* | CHINA |
| Tungsten | Jiangxi Xinsheng Tungsten Industry Co., Ltd.* | CHINA |
| Tungsten | Jiangxi Tonggu Non-ferrous Metallurgical & Chemical Co., Ltd.* | CHINA |
| Tungsten | Jiangxi Gan Bei Tungsten Co., Ltd.* | CHINA |
| Tungsten | Ganzhou Seadragon W & Mo Co., Ltd.* | CHINA |
| Tungsten | Chenzhou Diamond Tungsten Products Co., Ltd.* | CHINA |
| Tungsten | H.C. Starck GmbH* | GERMANY |
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| Tungsten | H.C. Starck Smelting GmbH & Co.KG* | GERMANY |
| Tungsten | Nui Phao H.C. Starck Tungsten Chemicals Manufacturing LLC* | VIET NAM |
| Tungsten | Jiangwu H.C. Starck Tungsten Products Co., Ltd.* | CHINA |
| Tungsten | Jiangxi Dayu Longxintai Tungsten Co., Ltd. | CHINA |
| Tungsten | ACL Metais Eireli* | BRAZIL |
* Denotes smelters which have been determined by RMI to be conformant with RMAP assessment protocols as of January 31, 2018.
Appendix B
Countries of Origin
Based on our due diligence, the identified countries of origin of the Conflict Minerals processed by the smelters and refiners listed in Appendix A may have included the countries listed below. The listed countries of origin are derived from information provided by RMI.
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| Argentina | Ghana | Nigeria |
| Australia | Guatemala | Panama |
| Austria | Guinea | Peru |
| Benin | Guyana | Portugal |
| Bolivia (Plurinational State of) | Honduras | Russian Federation |
| Brazil | India | Rwanda |
| Burkina Faso | Indonesia | Senegal |
| Burundi | Japan | Sierra Leone |
| Cambodia | Kazakhstan | Spain |
| Canada | Laos | Thailand |
| Chile | Madagascar | Togo |
| China | Malaysia | Uganda |
| Colombia | Mali | United Kingdom of Great Britain and Northern Ireland |
| Democratic Republic of the Congo | Mexico | United States of America |
| Ecuador | Mongolia | Uzbekistan |
| Eritrea | Mozambique | Viet Nam |
| Ethiopia | Myanmar | Zimbabwe |
| France | Namibia | |
| Germany | Nicaragua | |
