Exhibit 1.01
Conflict Minerals Report
Sonos, Inc. has included this Conflict Minerals Report as an exhibit to its Form SD as contemplated by Rule 13p-1 under the Securities Exchange Act of 1934, as amended, and Form SD (the “Conflict Minerals Rule”). The date of filing of this Conflict Minerals Report is May 29, 2020.
Unless the context indicates otherwise, the terms “Sonos,” “we,” “its,” “us” and “our” refer to Sonos and its consolidated subsidiaries.
As used herein and consistent with the Conflict Minerals Rule, “Conflict Minerals” or “3TG” are columbite-tantalite (coltan), cassiterite, gold, wolframite and the derivatives tantalum, tin and tungsten, without regard to the location of origin of the minerals or derivative metals.
Forward-Looking Statements
All statements other than statements of historical facts contained in this Conflict Minerals Report are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements concerning the additional steps that we intend to take to mitigate the risk that our necessary 3TG benefit armed groups.
We have based these forward-looking statements largely on our current expectations and these forward-looking statements are subject to a number of risks, uncertainties and assumptions, including (1) the continued implementation of satisfactory traceability and other compliance measures by our direct and indirect suppliers on a timely basis or at all, (2) whether smelters and refiners (“SORs”) and other market participants responsibly source 3TG and (3) political and regulatory developments, whether in the Democratic Republic of the Congo (“DRC”) or an adjoining country (collectively, the “Covered Countries”), the United States or elsewhere. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Conflict Minerals Report or to conform these statements to actual results or revised expectations.
Applicability of the Conflict Minerals Rule to our Business
Sonos is one of the world's leading sound experience brands. Known for delivering unparalleled sound experience, thoughtful design aesthetic, simplicity of use and an open platform, Sonos
makes the breadth of audio content available to anyone. Our sound system provides an immersive listening experience created by our thoughtfully designed speakers and components, our proprietary software platform and the ability to wirelessly stream the content our customers love from the services they prefer.
Our electronics products contain tin, tantalum, tungsten and/or gold. However, the 3TG in the products constitutes a small portion of their total materials content. For a further discussion of our products, see our Form 10-K for the fiscal year ended September 28, 2019. The information contained in our Form 10-K is not incorporated by reference into this Conflict Minerals Report or our Form SD and should not be considered part of this Conflict Minerals Report or the Form SD.
Our products are manufactured for us by third party manufacturers. In addition, we do not directly source 3TG from SORs and believe that we are in most cases many levels removed from these market participants. However, through the efforts described in this Conflict Minerals Report, and as part of our reasonable country of origin inquiry and due diligence processes, we seek to ensure that our suppliers source responsibly. Specifically, we endeavor in good faith to determine if any of the 3TG necessary to the functionality or production of the products that we contract to manufacture originated in a Covered Country and, if so, whether it directly or indirectly financed or benefited an armed group.
Our Conflict Minerals Policy and Our Supplier Code of Conduct
Sonos is committed to corporate social responsibility and responsible sourcing and is opposed to human rights abuses. We also take seriously our compliance obligations under the Conflict Minerals Rule. To these ends, we have adopted and communicate to our suppliers and the public a company policy (the “Conflict Minerals Policy”) regarding the use of 3TG in our products. Our Conflict Mineral Policy indicates that we require that our suppliers source 3TG only from SORs that are conformant with the Responsible Minerals Initiative's (“RMI”) Responsible Minerals Assurance Process (“RMAP”), which requires a third-party sourcing audit of such SORs. We also require all suppliers to sign a Supplier Code of Conduct based on the Responsible Business Alliance industry standard. As set forth in Supplier Code of Conduct, we expect our supplier to share our commitment to corporate social responsibility and reserve the right to request corrective action for any non-compliance, including termination of the relationship with the supplier.
Reasonable Country of Origin Inquiry Information
As required by the Conflict Minerals Rule, for 2019, we conducted a “reasonable country of origin inquiry” (“RCOI”). We designed our RCOI in good faith to determine the origin of the 3TG that are necessary to the functionality or production of products that we contracted to manufacture. For purposes of the RCOI, we treated all suppliers, except service and packaging suppliers, as potentially in scope.
Our outreach included 155 potentially in-scope suppliers (the “Suppliers”). The results of our RCOI are discussed on Annex A to this Conflict Minerals Report. For our RCOI, to the extent applicable, we utilized the same processes and procedures as for our due diligence, in particular Steps 1 and 2 of the OECD Guidance design framework, which are described below in this Conflict Minerals Report.
As indicated on Annex A, 103, or 99% of the SORs identified to us by the Suppliers were listed as Conformant (as defined below) by the Responsible Minerals Initiative (the “RMI”).
Based on the results of our RCOI, we conducted due diligence for 2019. These due diligence efforts are discussed below.
Due Diligence Measures
Design Framework
We have designed our due diligence measures relating to 3TG to conform with, in all material respects, the criteria set forth in the OECD Guidance (Third Edition).
Selected Elements of Design Framework and Due Diligence Program Execution
The OECD Guidance has established a five-step framework for due diligence as a basis for responsible global supply chain management of minerals from conflict-affected and high-risk areas. Selected elements of our due diligence program are discussed below. The headings below conform to the headings used in the OECD Guidance for each of the five steps.
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| 1. | OECD Guidance Step One: “Establish strong company management systems” |
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| a. | We have a cross-functional team that is responsible for our 3TG compliance program. Leadership of the compliance program resides with senior members of our legal and sustainability teams. In addition, we utilize specialist outside counsel to advise us in connection with our Conflict Minerals Rule compliance and a service provider (the “Service Provider”) to, on our behalf, engage in supplier outreach and follow-up, validation of supplier responses and electronic storage of supplier responses. Some of the compliance activities described in this Conflict Minerals Report were performed by the Service Provider on our behalf. |
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| b. | We communicate our Conflict Minerals Policy internally and externally to suppliers, in each case in writing. The Conflict Minerals Policy is available on our website at https://www.sonos.com/en-us/sustainability. |
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| c. | We use the Conflict Minerals Reporting Template (the “CMRT”) developed by the RMI to identify SORs in our supply chain. |
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| d. | We maintain business records relating to 3TG due diligence, including records of due diligence processes, findings and resulting decisions, on a computerized database. Under our business records policy, this information is to be retained for at least five years. |
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| e. | We have a mechanism for employees and other interested parties to anonymously report violations of our Conflict Minerals Policy or other policy violations and issues, online or by telephone, and encourage our suppliers to have such mechanism as well. |
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| 2. | OECD Guidance Step Two: “Identify and assess risk in the supply chain” |
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| a. | For 2019, the Service Provider sent requests to 155 Suppliers to provide us with a completed CMRT. We or the Service Provider followed up by email or phone with the Suppliers that did not provide a response within the time frame specified in the request. Approximately 92% of our Suppliers responded to the Service Provider’s request for information. |
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| b. | We and the Service Provider reviewed the responses received from the Suppliers. The Service Provider reviewed the responses received for plausibility, consistency and gaps. It followed up by email or phone with Suppliers that submitted a response that triggered any one of seven specified quality control flags. |
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| c. | To the extent that a completed CMRT identifies a SOR, the Service Provider reviewed the information provided against the list of Conformant SORs published in connection with the RMI’s Responsible Minerals Assurance Process (the “RMAP”), the London Bullion Market Association (“LBMA”) Good Delivery List and the Responsible Jewellery Council’s (“RJC”) Chain-of-Custody Certification. |
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| d. | To the extent that a SOR identified by a Supplier was not listed as Conformant, the Service Provider attempted to contact that SOR to gain information about its sourcing practices, including origin and transfer, and to determine the source and chain of custody of the 3TG. Internet research was also performed to determine whether there are any outside sources of information regarding the SORs sourcing practices. |
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| e. | If a Supplier was unable to provide information concerning the processors of 3TG in its supply chain, the Service Provider requested information on the Supplier’s suppliers of products or components which may have required 3TG for their functionality or production (“Tier 2 suppliers”). The Tier 2 suppliers, and subsequent tiers of suppliers as identified to the Service Provider, were then contacted by the Service Provider. |
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| 3. | OECD Guidance Step Three: “Design and implement a strategy to respond to identified risks” |
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| a. | Our 3TG compliance team reported the findings of its supply chain risk assessment to our Chief Legal Officer. |
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| b. | Our risk mitigation strategy allows for a flexible response that is commensurate with the risks identified. |
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| 4. | OECD Guidance Step Four: “Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain” |
In connection with our due diligence, we utilized and relied on information made available by the RMI concerning independent third-party audits of SORs to assess SOR due diligence and to determine whether SORs are conformant.
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| 5. | OECD Guidance Step Five: “Report on supply chain due diligence” |
We file a Form SD and a Conflict Minerals Report with the Securities and Exchange Commission and make these filings available on our website.
Product and Smelter and Refiner Information
Our in-scope products for 2019 consisted of speakers, components and related accessories.
In connection with our RCOI or due diligence, as applicable, the Suppliers identified to us the SORs listed on Appendix A as having processed the necessary 3TG contained in our in-scope products for 2019. Due to our position in the supply chain, we rely on our suppliers for accurate SOR information. Our due diligence measures cannot provide absolute certainty regarding the source and chain of custody of the 3TG contained in our products.
We endeavored to determine the mine or location of origin of the 3TG contained in our in-scope products by requesting that the Suppliers provide us with a completed CMRT and through the other measures described in this Conflict Minerals Report.
For 2019, none of our in-scope products were determined by us to support conflict (i.e., to contain necessary 3TG that directly or indirectly financed or benefited an armed group in a Covered Country). However, we did not conclude that any of our in-scope products were “DRC conflict free.”
Future Risk Mitigation Efforts
During 2020, we intend to continue to engage in the activities described above, including our efforts to engage with suppliers that provide incomplete responses or do not provide responses to our inquiries. We also intend to (1) review the adequacy of our due diligence measures to assess the source and chain of custody of the 3TG in our in-scope products, (2) encourage suppliers to enhance the transparency of their supply chain and to source responsibly and (3) update our Conflict Minerals Policy as applicable.
Annex A
Capitalized terms used and not otherwise defined in this Annex have the meanings indicated in our Conflict Minerals Report.
In connection with our RCOI and due diligence, as applicable, our Suppliers identified to us the SORs listed below as having processed the 3TG contained in our in-scope products for 2019.
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| Metal | Smelter Name | Country | Status |
| Gold | Aida Chemical Industries Co., Ltd. | Japan | Conformant |
| Gold | Argor-Heraeus S.A. | Switzerland | Conformant |
| Gold | Asahi Pretec Corp. | Japan | Conformant |
| Gold | Asaka Riken Co., Ltd. | Japan | Conformant |
| Gold | Dowa | Japan | Conformant |
| Gold | Heraeus Metals Hong Kong Ltd. | China | Conformant |
| Gold | Heraeus Precious Metals GmbH & Co. KG | Germany | Conformant |
| Gold | Ishifuku Metal Industry Co., Ltd. | Japan | Conformant |
| Gold | Jiangxi Copper Co., Ltd. | China | Conformant |
| Gold | JX Nippon Mining & Metals Co., Ltd. | Japan | Conformant |
| Gold | Kojima Chemicals Co., Ltd. | Japan | Conformant |
| Gold | LS-NIKKO Copper Inc. | Korea | Conformant |
| Gold | Matsuda Sangyo Co., Ltd. | Japan | Conformant |
| Gold | Metalor Technologies (Suzhou) Ltd. | China | Conformant |
| Gold | Metalor Technologies S.A. | Switzerland | Conformant |
| Gold | Mitsubishi Materials Corporation | Japan | Conformant |
| Gold | Mitsui Mining and Smelting Co., Ltd. | Japan | Conformant |
| Gold | Nihon Material Co., Ltd. | Japan | Conformant |
| Gold | Shandong Zhaojin Gold & Silver Refinery Co., Ltd. | China | Conformant |
| Gold | Sumitomo Metal Mining Co., Ltd. | Japan | Conformant |
| Gold | Tanaka Kikinzoku Kogyo K.K. | Japan | Conformant |
| Gold | The Refinery of Shandong Gold Mining Co., Ltd. | China | Conformant |
| Gold | Tokuriki Honten Co., Ltd. | Japan | Conformant |
| Gold | Umicore Brasil Ltda. | Brazil | Conformant |
| Gold | Umicore S.A. Business Unit Precious Metals Refining | Belgium | Conformant |
| Gold | United Precious Metal Refining, Inc. | United States | Conformant |
| Gold | Valcambi S.A. | Switzerland | Conformant |
| Gold | Western Australian Mint (T/a The Perth Mint) | Australia | Conformant |
| Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corp | China | Conformant |
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| Tantalum | Taki Chemical Co., Ltd. | Japan | Conformant |
| Tin | Chenzhou Yunxiang Mining and Metallurgy Co., Ltd. | China | Conformant |
| Tin | Alpha | United States | Conformant |
| Tin | CV Gita Pesona | Indonesia | Conformant |
| Tin | PT Aries Kencana Sejahtera | Indonesia | Conformant |
| Tin | PT Premium Tin Indonesia | Indonesia | Conformant |
| Tin | CV United Smelting | Indonesia | Conformant |
| Tin | Dowa | Japan | Conformant |
| Tin | EM Vinto | Bolivia | Conformant |
| Tin | Fenix Metals | Poland | Conformant |
| Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd. | China | Conformant |
| Tin | Huichang Jinshunda Tin Co., Ltd. | China | Conformant |
| Tin | Gejiu Kai Meng Industry and Trade LLC | China | Conformant |
| Tin | China Tin Group Co., Ltd. | China | Conformant |
| Tin | Malaysia Smelting Corporation (MSC) | Malaysia | Conformant |
| Tin | Metallic Resources, Inc. | United States | Conformant |
| Tin | Mineracao Taboca S.A. | Brazil | Conformant |
| Tin | Minsur | Peru | Conformant |
| Tin | Mitsubishi Materials Corporation | Japan | Conformant |
| Tin | Jiangxi New Nanshan Technology Ltd. | China | Conformant |
| Tin | O.M. Manufacturing (Thailand) Co., Ltd. | Thailand | Conformant |
| Tin | Operaciones Metalurgicas S.A. | Bolivia | Conformant |
| Tin | PT Artha Cipta Langgeng | Indonesia | Conformant |
| Tin | PT Babel Inti Perkasa | Indonesia | Conformant |
| Tin | PT Bangka Tin Industry | Indonesia | Conformant |
| Tin | PT Belitung Industri Sejahtera | Indonesia | Conformant |
| Tin | PT Bukit Timah | Indonesia | Conformant |
| Tin | PT DS Jaya Abadi | Indonesia | Conformant |
| Tin | PT Karimun Mining | Indonesia | Conformant |
| Tin | PT Mitra Stania Prima | Indonesia | Conformant |
| Tin | PT Panca Mega Persada | Indonesia | Conformant |
| Tin | PT Prima Timah Utama | Indonesia | Conformant |
| Tin | PT Refined Bangka Tin | Indonesia | Conformant |
| Tin | PT Sariwiguna Binasentosa | Indonesia | Conformant |
| Tin | PT Stanindo Inti Perkasa | Indonesia | Conformant |
| Tin | PT Sumber Jaya Indah | Indonesia | Conformant |
| Tin | PT Timah Tbk Kundur | Indonesia | Conformant |
| Tin | PT Timah Tbk Mentok | Indonesia | Conformant |
| Tin | PT Tinindo Inter Nusa | Indonesia | Conformant |
| Tin | PT Tommy Utama | Indonesia | Conformant |
| Tin | Rui Da Hung | Taiwan | Conformant |
| Tin | Soft Metais Ltda. | Brazil | Conformant |
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| Tin | Thaisarco | Thailand | Conformant |
| Tin | Gejiu Yunxin Nonferrous Electrolysis Co., Ltd. | China | Conformant |
| Tin | White Solder Metalurgia e Mineracao Ltda. | Brazil | Conformant |
| Tin | Yunnan Chengfeng Non-ferrous Metals Co., Ltd. | China | Conformant |
| Tin | Yunnan Tin Company Limited | China | Conformant |
| Tin | CV Venus Inti Perkasa | Indonesia | Conformant |
| Tin | Magnu's Minerais Metais e Ligas Ltda. | Brazil | Conformant |
| Tin | Melt Metais e Ligas S.A. | Brazil | Conformant |
| Tin | PT ATD Makmur Mandiri Jaya | Indonesia | Conformant |
| Tin | O.M. Manufacturing Philippines, Inc. | Philippines | Conformant |
| Tin | PT Inti Stania Prima | Indonesia | Conformant |
| Tin | CV Ayi Jaya | Indonesia | Conformant |
| Tin | CV Dua Sekawan | Indonesia | Conformant |
| Tin | Resind Industria e Comercio Ltda. | Brazil | Conformant |
| Tin | Metallo Belgium N.V. | Belgium | Conformant |
| Tin | Metallo Spain S.L.U. | Spain | Conformant |
| Tin | PT Bangka Prima Tin | Indonesia | Conformant |
| Tin | PT Sukses Inti Makmur | Indonesia | Conformant |
| Tin | PT Kijang Jaya Mandiri | Indonesia | Conformant |
| Tin | PT Menara Cipta Mulia | Indonesia | Conformant |
| Tin | Gejiu Fengming Metallurgy Chemical Plant | China | Conformant |
| Tin | Guanyang Guida Nonferrous Metal Smelting Plant | China | Conformant |
| Tin | Modeltech Sdn Bhd | Malaysia | On Smelter Look-Up Tab Only |
| Tin | Guangdong Hanhe Non-Ferrous Metal Co., Ltd. | China | Conformant |
| Tin | PT Bangka Serumpun | Indonesia | Conformant |
| Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd. | China | Conformant |
| Tungsten | Global Tungsten & Powders Corp. | United States | Conformant |
| Tungsten | Hunan Chunchang Nonferrous Metals Co., Ltd. | China | Conformant |
| Tungsten | Japan New Metals Co., Ltd. | Japan | Conformant |
| Tungsten | Xiamen Tungsten Co., Ltd. | China | Conformant |
| Tungsten | Xiamen Tungsten (H.C.) Co., Ltd. | China | Conformant |
| Tungsten | Ganzhou Seadragon W & Mo Co., Ltd. | China | Conformant |
| Tungsten | H.C. Starck Tungsten GmbH | Germany | Conformant |
We note the following in connection with the information in the table:
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| 1. | The SORs listed in the table were identified by the Suppliers as being part of our 2019 supply chain. However, the SORs listed above were not necessarily the only SORs in our |
2019 supply chain, since most of our Suppliers provided information at a “company” level (meaning for all of their products, rather than specific to the products that they sold to us), and because not all of our Suppliers responded to our inquiries.
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| 2. | All information in the table is as of April 20, 2020. |
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| 3. | “Conformant” means that a SOR has successfully completed an assessment against the applicable RMAP standard or an equivalent cross-recognized assessment. Included SORs were not necessarily conformant for all or part of 2019 and may not continue to be conformant for any future period. |
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| 4. | A SOR is listed as “On Smelter Look-up Tab Only” if it was not Conformant or listed as “Active” but appears on the Smelter Look-up tab list of the CMRT. |
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| 5. | The conformant status reflected in the table is based solely on information made publicly available by the RMI, without independent verification by us. |
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| 6. | Country location is the location of the SOR and is based solely on information made publicly available by the RMI without independent verification by us. |
Country of Origin Information
Based on information provided by the Suppliers and the Service Provider, the countries of origin of the 3TG processed by the SORs listed above may have included countries listed below.
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| Angola* | Estonia | Luxembourg | Singapore |
| Argentina | Ethiopia | Madagascar | Slovakia |
| Armenia | Finland | Malaysia | South Africa |
| Australia | France | Mali | South Sudan* |
| Austria | Germany | Mexico | Spain |
| Belarus | Ghana | Mongolia | Suriname |
| Belgium | Guinea | Morocco | Sweden |
| Bermuda | Guyana | Mozambique | Switzerland |
| Bolivia | Hungary | Myanmar | Taiwan |
| Brazil | India | Namibia | Tajikistan |
| Burundi* | Indonesia | Netherlands | Tanzania* |
| Cambodia | Ireland | Niger | Thailand |
| Canada | Israel | Nigeria | Turkey |
Central African Republic* | Italy | Papua New Guinea | Uganda* |
| Chile | Ivory Coast | Peru | United Arab Emirates |
| China | Japan | Philippines | United Kingdom |
| Colombia | Jersey | Poland | United States |
| Czech Republic | Kazakhstan | Portugal | Uzbekistan |
| Djibouti | Kenya | Russia | Vietnam |
Democratic Republic of the Congo* | Korea | Rwanda* | Zambia* |
| Ecuador | Kyrgyzstan | Saudi Arabia | Zimbabwe |
| Egypt | Laos | Sierra Leone | |
* Represents a Covered Country
In addition, the listed conformant SORs may have processed 3TG originating from recycled or scrap sources.
