Exhibit 1.01
DTS, Inc.
Conflict Minerals Report
For The Year Ended December 31, 2014
This Conflict Minerals Report (the “Report”) of DTS, Inc. (“DTS” or 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 January 1, 2014 to December 31, 2014. 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 referred to as “Conflict Minerals” are gold, columbite-tantalite (coltan), cassiterite and wolframite, or their derivatives which include tantalum, tin and tungsten (“3TG”). The “Covered Countries” for purposes of the Rule and this Report are the Democratic Republic of Congo, the Republic of Congo, the Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, Zambia and Angola.
As described in this Report, the Company has determined that certain Conflict Minerals are necessary to the functionality or production of products manufactured, or contracted to be manufactured, by DTS during the calendar year 2014. These products are referred to in this Report as “Covered Products.” As a result, we have conducted a reasonable country of origin inquiry (“RCOI”) designed to determine if any of these Conflict Minerals originated in the Covered Countries. Our RCOI primarily consisted of requesting a Conflict Minerals reporting questionnaire prepared by the Electronic Industry Citizenship Coalition and Global e-Sustainability Initiative (“EICC-GeSI”) from our contract manufacturers and suppliers of components received in 2014. Responses were reviewed for completeness and consistency, and we routinely followed up with our contract manufacturers and component suppliers for corrections and clarifications as needed. Based on our RCOI, we cannot absolutely determine if certain of the Conflict Minerals used in our products may have originated in the Covered Countries. Based on this information, we are performing additional due diligence on the source and chain of custody of these Conflict Minerals based on the Organisation for Economic Co-operation and Development (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (“Framework”) to determine if the Conflict Minerals may have originated in the Covered Countries, and if so, if the Conflict Minerals that may have originated in the Covered Countries benefited armed groups. As such, we believe our process is reasonably designed and is performed in good faith. In performing the RCOI and due diligence in conformity with the Framework, we were unable to comprehensively determine the origin of all Conflict Minerals used in our products, the facilities used to process them, their country of origin, and their mine or location of origin.
Product Descriptions of Covered Products
Product |
| Description |
Security Dongles |
| These are hardware devices that plug into a product that runs our proprietary software and is used to prevent piracy of the software, as the software will not operate without communication with the hardware dongle. |
Wireless Speakers and Modules |
| Wireless speakers are speakers in which the audio is transmitted wirelessly to the speaker or other distribution module. |
RCOI
Our RCOI primarily consisted of requesting the EICC-GeSI Conflict Minerals questionnaire from all of our contract manufacturers and suppliers of components purchased in 2014. We submitted this questionnaire to 3 contract manufacturers. Of the responses received, no supplier indicated that they source Conflict Minerals from the Covered Countries, however, in a number of cases our suppliers were not able to obtain conflict metals data/information for each metal from 100% of all relevant suppliers of the 3TG that they source from. While we do not believe that our products contain Conflict Minerals sourced from the Covered Countries, we do not have 100% confirmation from our suppliers of that fact. As such, we cannot unequivocally state that our products that contain Conflict Minerals are not sourced from the Covered Countries.
Due Diligence
DTS assembled a Conflict Minerals project team with representatives from Engineering, Legal, and Finance to develop and execute its Conflict Minerals program. We are currently developing a Conflict Minerals Policy in our commitment to minimizing the use of Conflict Minerals that finance or benefit armed groups and expect to establish such policy during the year ending December 31, 2015. We will post a copy of our policy, once established, to our website at www.dts.com. We have begun to engage our suppliers to promote responsible sourcing practices including promoting practices that avoid sources of Conflict Minerals that benefit armed groups. We are encouraging our suppliers to seek conflict-free sources for Conflict Minerals used in our products that are certified as conflict free. The project team reviewed the EICC-GeSI questionnaire responses supplied by the contract manufacturers and component suppliers, and the table below describes the smelters and refiners reported by our contract manufacturers and component suppliers on the EICC-GeSI questionnaire of the Conflict Minerals provided.
Tantalum
Smelters/Refiners Identified For Covered Products
Smelter/ Refiner Name |
| Sourcing Status |
Exotech Inc. |
| Unknown |
F&X Electro-Materials Ltd. |
| Unknown |
Global Advanced Metals |
| Unknown |
H.C. Starck Group |
| Unknown |
Mitsui Mining & Smelting |
| Unknown |
Ningxia Orient Tantalum Industry Co., Ltd. |
| Unknown |
Plansee |
| Unknown |
Ulba |
| Unknown |
Zhuzhou Cement Carbide |
| Unknown |
Tin
Smelters/Refiners Identified For Covered Products
Smelter/ Refiner Name |
| Sourcing Status |
Alpha |
| Unknown |
China Tin Group Co., Ltd. |
| Unknown |
CHINA TIN SMELTER CO.,LTD |
| Unknown |
CNMC (Guangxi) PGMA Co. Ltd. |
| Unknown |
CV United Smelting |
| Unknown |
Gejiu Non-Ferrous Metal Processing Co. Ltd. |
| Unknown |
Malaysia Smelting Corporation (MSC) |
| Unknown |
Mineração Taboca S.A. |
| Unknown |
Minmetals Ganzhou Tin Co. Ltd. |
| Unknown |
Minsur |
| Unknown |
Mitsubishi Materials Corporation |
| Unknown |
OMSA |
| Unknown |
PT Bangka Putra Karya |
| Unknown |
PT Bangka Tin Industry |
| Unknown |
PT Belitung Industri Sejahtera |
| Unknown |
PT Bukit Timah |
| Unknown |
PT DS Jaya Abadi |
| Unknown |
PT Stanindo Inti Perkasa |
| Unknown |
PT Tambang Timah |
| Unknown |
PT Timah |
| Unknown |
PT Timah (Persero), Tbk |
| Unknown |
Suzhou Xingrui Noble |
| Unknown |
Thaisarco |
| Unknown |
White Solder Metalurgia e Mineração Ltda. |
| Unknown |
Yunnan Chengfeng |
| Unknown |
Yunnan Chengfeng Non-ferrous Metals Co., Ltd. |
| Unknown |
Yunnan Tin Company Limited |
| Unknown |
Yunnan Tin Company, Ltd. |
| Unknown |
Tungsten
Smelters/Refiners Identified For Covered Products
Smelter/ Refiner Name |
| Sourcing Status |
Guangdong Xianglu Tungsten Industry Co., Ltd. |
| Unknown |
Wolfram Company CJSC |
| Unknown |
Xiamen Tungsten (H.C.) Co., Ltd. |
| Unknown |
Gold
Smelters/Refiners Identified For Covered Products
Smelter/ Refiner Name |
| Sourcing Status |
Allgemeine Gold-und Silberscheideanstalt A.G. |
| Unknown |
Asahi Pretec Corporation |
| Unknown |
Dowa |
| Unknown |
Heraeus Ltd. Hong Kong |
| Unknown |
Ishifuku Metal Industry Co., Ltd. |
| Unknown |
Japan Mint |
| Unknown |
Johnson Matthey Inc. |
| Unknown |
JX Nippon Mining & Metals Co., Ltd. |
| Unknown |
Kojima Chemicals Co., Ltd |
| Unknown |
LS-NIKKO Copper Inc. |
| Unknown |
Matsuda Sangyo Co., Ltd. |
| Unknown |
Metalor Technologies (Hong Kong) Ltd |
| Unknown |
Metalor Technologies SA |
| Unknown |
Metalor USA Refining Corporation |
| Unknown |
Mitsubishi Materials Corporation |
| Unknown |
Mitsui Mining and Smelting Co., Ltd. |
| Unknown |
Ohio Precious Metals, LLC |
| Unknown |
Rand Refinery (Pty) Ltd |
| Unknown |
Royal Canadian Mint |
| Unknown |
Shandong Zhaojin Gold & Silver Refinery Co. Ltd |
| Unknown |
Shanghai Gold exchange |
| Unknown |
Solar Applied Materials Technology Corp. |
| Unknown |
Sumitomo Metal Mining Co., Ltd. |
| Unknown |
Tanaka Kikinzoku Kogyo K.K. |
| Unknown |
Tokuriki Honten Co., Ltd |
| Unknown |
Valcambi SA |
| Unknown |
Western Australian Mint trading as The Perth Mint |
| Unknown |
Yunnan Tin Company Limited |
| Unknown |
Zhaoyuan Gold mine |
| Unknown |
Zhongyuan Gold Smelter of Zhongjin Gold Corporation |
| Unknown |
|
|
|
55 Smelters/Refiners Listed In The Conflict Free Smelter Program |
| Validated As Conflict Free |
Identified Countries Of Origin: Australia, Austria, Bolivia, Brazil, Canada, China, Germany, Hong Kong, Indonesia, Japan, Kazakhstan, Korea, Malaysia, Peru, Russian Federation, South Africa, Switzerland, Taiwan, Thailand and the United States | ||
As a downstream company in the supply chain, we rely on our contract manufacturers and component suppliers to provide us with the information needed to determine the mine or location of origin of Conflict Minerals with the greatest possible specificity.
Findings and Conclusions
We received responses from all of our contract manufacturers and component suppliers with no supplier indicating that they source Conflict Minerals from the Covered Countries. However, as previously stated, in a number of cases our suppliers were not able to obtain conflict metals data/information for each metal from 100% of all of their relevant suppliers of the 3TG that they source from. While we do not believe that our products contain Conflict Minerals sourced from the Covered Countries, we do not have 100% confirmation from our suppliers of that fact. As such, we cannot unequivocally state that our products that contain Conflict Minerals are not sourced from the Covered Countries. That being said, we are not aware of any product or component that contains Conflict Minerals from the Covered Countries that benefited armed groups. The prior table lists the smelter or refiner names and information provided by our contract manufacturers and component suppliers. We believe that requesting our contract manufacturers and component suppliers to provide us with a completed EICC-GeSI Conflict Minerals questionnaire represents a reasonable effort to determine the mines or location of origin of the Conflict Minerals in our supply chain. The amount of information available globally on the traceability and sourcing of the original ores is somewhat limited at this time.
Steps to Improve Due Diligence
We will continue to encourage our contract manufacturers and suppliers to provide us with the information needed to determine all of the facilities used to process the Conflict Minerals used in our Covered Products, as well as the mine or location of origin of these Conflict Minerals. We are currently developing a Conflict Minerals Policy to provide our commitment to minimizing the use of Conflict Minerals that finance or benefit armed groups and expect to establish such policy during the year ending December 31, 2015. We will post a copy of our policy, once established, to our website at www.dts.com. We believe that the quantity and quality of information related to sourcing and traceability of materials in the supply chain will continue to improve in the years to come. We are encouraging our contract manufacturers and suppliers to seek Conflict Minerals from smelters or refiners that participate in a Conflict-Free Smelter Program or similar certification program. We will continue to monitor our contract manufacturers and suppliers and perform risk assessments on our overall sourcing practices, including the procurement of Conflict Minerals.
Forward-Looking Statements
This Form SD contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause DTS’ results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words “planned,” “expects,” “believes,” “intends,” “strategy,” “opportunity,” “anticipates” and similar words. These statements may include, among others, plans, strategies and objectives of management for future operations; any statements regarding proposed new products, services or developments; statements regarding supply chain diligence and compliance activities; statements of belief and any statements of assumptions underlying any of the foregoing. The potential risks and uncertainties that could cause results to differ materially are fully described in DTS’ public filings with the Securities and Exchange Commission, including DTS’ most recent Forms 10-K and 10-Q, available at www.sec.gov. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of the filing of this Form SD. DTS does not intend to update any forward-looking statement contained in this Form SD to reflect events or circumstances arising after the date hereof.
