Exhibit 1.02
Conflict Minerals Report of DreamWorks Animation SKG, Inc.
For the Year Ended December 31, 2013
Section 1:Introduction
This is the Conflict Minerals Report of DreamWorks Animation SKG, Inc. (“DreamWorks” or the “Company”) for the year ended December 31, 2013 in accordance with Rule 13p-1 under the Securities and Exchange Act of 1934. Any defined terms used in this Report and not otherwise defined herein have the meanings set forth in Rule 13p-1 or in the Company’s Form SD to which this Report is attached.
The Company creates branded family entertainment, including animated feature films, television series and specials, live entertainment properties and related consumer products. The Company has the following reportable segments: Feature Films, Television Series and Specials, Consumer Products and All Other.
In accordance with Rule 13p-1, DreamWorks undertook due diligence efforts to determine the source and chain of custody of the conflict minerals in its products, as described in the attached Form SD. The Company determined that conflict minerals were necessary for the functionality or production of certain products in its Consumer Products segment. For purposes of Rule 13p-1, conflict minerals are defined as cassiterite, columbite-tantalite, gold, wolframite and their derivatives, which are limited to tin, tantalum and tungsten. The Company’s policy with respect to the sourcing of conflict minerals can be found at http://ir.dreamworksanimation.com/governance.cfm.
Section2: Due Diligence
Design of the due diligence framework
DreamWorks designed its due diligence framework to be in conformity with the internationally recognized due diligence framework as set forth in the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (the “OECD Framework”) and related Supplements on Tin, Tantalum and Tungsten and on Gold (“3TG”), specifically as it related to the Company’s position in the minerals supply chain as a “downstream” purchaser.
As a downstream purchaser of conflict minerals, the Company does not purchase conflict minerals directly from miners, smelters or refiners, and there are many third parties in the supply chain between the ultimate manufacture of the Company’s products and the original sources of the conflict minerals. Product supply chains are often long and complex, with many different entities involved prior to the
receipt of finished products by the Company or its direct suppliers. Accordingly, the Company’s due diligence measures can provide only reasonable, and not absolute, assurance regarding the source and chain of custody of the necessary conflict minerals. The Company’s due diligence processes involve the Company seeking information from its direct suppliers, which in turn may seek similar information within their supply chains in the attempt to identify the original sources of necessary conflict minerals. Due to the Company’s relative location within the supply chain in relation to the actual extraction and transport of conflict minerals, however, the Company’s ability to verify the accuracy of information reported by suppliers is limited. The Company’s various sources of information may yield inaccurate or incomplete information.
Description of the due diligence measures performed
Summarized below are the design components of DreamWorks’ due diligence efforts as they relate to the five-step framework set forth in the OECD Framework:
Establish company management systems
DreamWorks performed the following:
| • | Designated a representative from Corporate Legal to direct the overall efforts of the conflict minerals compliance program. |
| • | Engaged an outside consultant to assist in the design and implementation of such program. |
| • | Established a policy with respect to sourcing of conflict minerals and published this statement online at the following link: http://ir.dreamworksanimation.com/governance.cfm. |
| • | Developed a grievance mechanism to allow parties to contact DreamWorks with conflict minerals related concerns via email at conflictminerals@dreamworksanimation.com. |
Identify and assess risks in the supply chain
DreamWorks performed the following:
| • | DreamWorks’ reasonable country of origin inquiry (“RCOI”) consisted of identifying the direct suppliers of products that contained conflict minerals, sending a notification to these suppliers informing them about the requirements of Rule 13p-1, and requesting they complete a conflict minerals survey based on the standard template designed by the Electronic Industry Citizenship Coalition® (EICC®) and The Global e-Sustainability Initiative (GeSI), known as the Conflict Minerals Reporting Template. |
| • | The Company sent notifications to a total of eight suppliers, which constituted 100% of the identified suppliers. |
| • | Three suppliers were non-responsive to the Company’s request and were sent reminder letters as part of the Company’s supplier engagement plan. |
| • | The five responses that were received were reviewed for inconsistencies or apparent errors as part of the Company’s supplier engagement plan. |
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Design and implement a strategy to respond to identified risks
DreamWorks performed the following:
| • | Developed a conflict minerals risk mitigation plan that outlined scenarios whereby conflict minerals could be introduced into DreamWorks’ supply chain and the strategy for identifying and responding to such scenarios. |
| • | Developed a conflict minerals corrective action plan that outlined DreamWorks’ strategy for handling suppliers that are non-responsive or fail to provide the Company with accurate or actionable information regarding the presence or sourcing of conflict minerals in DreamWorks’ products. |
| • | For this reporting period, the risk mitigation steps undertaken consisted of sending reminder notifications to non-responsive suppliers and sending follow-up letters requesting clarification to those suppliers with inconsistent or incomplete survey responses. |
Carry out independent third-party audit of smelter/refiner due diligence practices
DreamWorks does not have a direct relationship with smelters or refiners that process conflict minerals, and DreamWorks does not perform or direct audits of these entities within its supply chain.DreamWorks relies on the audits of smelters and refiners conducted by the Conflict-Free Sourcing Initiative (the “CFSI”). The CFSI developed the Conflict-Free Smelter Program, which uses an independent third-party audit to identify smelters and refiners that have systems in place to assure sourcing of only conflict-free materials.
Report annually on supply chain due diligence
DreamWorks’ conflict mineral policy states that the Company will comply with Section 1502 of the Dodd-Frank Act, which includes filing a Form SD and this Conflict Minerals Report with the U.S. Securities and Exchange Commission (the “SEC”) and posting them publicly on the Internet athttp://ir.dreamworksanimation.com/sec.cfm.
Independent private sector audit
Under SEC guidance issued on April 29, 2014, no independent private sector audit was required.
Section 3:Due Diligence results and productdescription
Based on the information obtained through the due diligence process, DreamWorks does not have sufficient information to determine the facilities used to produce the conflict minerals in its products, or the country of origin or the mine or location of origin of conflict minerals in its products.
DreamWorks has concluded that the following products contain necessary conflict minerals:
| • | Consumer products, such as light-up toys, novelty items and other character-related merchandise, with simple electronic components that typically contain 3TG. |
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Section4:Future due diligence measures
The Company intends to keep improving its due diligence measures, including by periodically reviewing its due diligence procedures. The Company also intends to continue engaging with suppliers with the goal of increasing supplier response rates. Finally, DreamWorks expects to work directly with suppliers to validate the content of supply survey responses that are received and, where appropriate, direct suppliers to appropriate training resources in order to obtain more complete and accurate information.
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