Exhibit 1.01
CDI Corp.
Conflict Minerals Report
CDI Corp. (“CDI”, the “Company”, “we”, “us” or “our”) has prepared this Conflict Minerals Report (this “Report”) for the calendar year 2016 (the “Reporting Period”) in accordance with Rule 13p-1 under the Securities Exchange Act of 1934.
Forward-Looking Statements
This Report contains one or more forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors including, among other things, our clients’ requirements to use certain suppliers, our suppliers’ responsiveness and cooperation with our due diligence efforts, our ability to implement improvements in our conflict minerals program, changes to the sourcing status of smelters and refiners in our supply chain, and our ability to identify and mitigate related risks in our supply chain. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances occurring after filing this Report with the U.S. Securities and Exchange Commission (“SEC”), except as required by law.
Background on the Rule
Rule 13p-1, through Form SD, requires the disclosure of certain information if a company manufactures or contracts to manufacture products for which certain “Conflict Minerals” (as defined below) are necessary to the functionality or production of such products. Form SD defines “Conflict Minerals” as: (i) (a) columbite-tantalite (or coltan, the metal ore from which tantalum is extracted), (b) cassiterite (the metal ore from which tin is extracted), (c) gold and (d) wolframite (the metal ore from which tungsten is extracted), or their derivatives, which are currently limited to tantalum, tin and tungsten; or (ii) any other mineral or its derivatives determined by the U.S. Secretary of State to be financing conflict in the Democratic Republic of the Congo or an “adjoining country,” as such term is defined in Form SD (collectively, the “Covered Countries”).
Overview of CDI’s Compliance with the Rule
CDI, to a limited extent, manufactures products for which Conflict Minerals are necessary to the functionality or production of those products (collectively, the “Products”). As required by Form SD, the Company has conducted in good faith a reasonable country of origin inquiry (“RCOI”) regarding the Conflict Minerals included in the Products during the Reporting Period, to determine whether any such Conflict Minerals originated in the Covered Countries and whether any of the Conflict Minerals were from recycled or scrap sources. Where applicable, the Company has conducted additional due diligence regarding the sources of the Conflict Minerals. The results of the Company’s RCOI regarding such Conflict Minerals, as well as its additional due diligence regarding the sources of the Conflict Minerals, are described below.
1
CDI Business Overview
CDI provides to clients engineering and information technology solutions encompassing managed, project and talent services. CDI’s clients are in multiple industries, including energy, chemicals, infrastructure, aerospace, industrial equipment, technology, as well as municipal and state governments, and the United States (U.S.) Department of Defense. CDI also provides recruiting and staffing services through its global MRINetwork of franchisees.
While CDI is predominantly a services company, one of our businesses – CDI Government Services – in connection with its design and engineering services, produces a limited amount of associated products. CDI Government Services, operating through our CDI Marine Company, LLC and CDI-M&T Company, LLC subsidiaries, provides ship design, naval engineering, aviation engineering, and professional services primarily to the U.S. Department of Defense, the Department of Homeland Security and prime contractors who serve government agencies.
Description of Products
The following is a description of the Products manufactured by CDI Government Services which give rise to this Form SD and Conflict Minerals Report. CDI Marine Company, LLC, at its facility in Norfolk, Virginia, in connection with its design and engineering services, designs, assembles and installs consoles for small boats and other watercraft. CDI-M&T Company, LLC, at its facility in Jacksonville, Florida, in connection with its design and engineering services, provides aviation repair and alteration services, which includes manufacturing electronic devices, cable assemblies, harnesses, circuit card assemblies and similar support equipment for planes and helicopters. Some of these Products contain Conflict Minerals which are necessary to the Products’ functionality or production.
Description of the Supply Chain for our Products
The supply chain for our Products is complex, and there are many third parties between us and the original sources of the Conflict Minerals contained in the Products. Our direct suppliers are typically distributors or resellers, rather than manufacturers of the products sold to us. Neither CDI nor our direct suppliers purchase Conflict Minerals from mines, smelters or refiners. The smelters and refiners of the Conflict Minerals are best situated to identify the sources of Conflict Minerals, and therefore we have taken the steps described below to identify the applicable smelters and refiners of Conflict Minerals in our supply chain.
Reasonable Country of Origin Inquiry (RCOI)
We designed and conducted in good faith an RCOI on the source of our Conflict Minerals for the Reporting Period. Our RCOI was reasonably designed to determine whether the Conflict Minerals contained in our Products originated from the Covered Countries or were from recycled
2
or scrap sources. As part of our RCOI, we contacted all of our suppliers that we believed or suspected sold products containing Conflict Minerals to us during the Reporting Period. We sent emails to our suppliers requesting that they complete the latest version of the Conflict Minerals Reporting Template (CMRT), a supply chain survey tool provided by the Conflict-Free Sourcing Initiative (CFSI), an industry group that works to address Conflict Minerals issues within supply chains. The CMRT requests suppliers to identify the smelters, refiners and countries of origin of the Conflict Minerals in their products.
We received responses from more than half of our direct suppliers and responses from some of our suppliers’ suppliers. Our RCOI was designed to receive responses from all of our direct suppliers, and we made a good faith effort, with follow-up communications, to receive responses from all of our direct suppliers.
Most of the respondents completed and returned the CMRT, while other suppliers provided statements regarding the origin of their Conflict Minerals and/or their Conflict Minerals policies, which prohibit the sourcing of Conflict Minerals from the Covered Countries or prohibit the sourcing of Conflict Minerals that directly or indirectly finance or benefit armed groups in the Covered Countries or state that the supplier is working towards those objectives. Approximately 52% of the respondents told us that their products do not contain Conflict Minerals. Approximately 12% of the respondents stated that their products contain Conflict Minerals but that the source of the Conflict Minerals was not the Covered Countries. Approximately 29% of respondents stated that their products contain Conflict Minerals but that the source of their Conflict Minerals was uncertain or unknown. This reflects the nature of the supply chain for our Products, which was described above. Nine of our suppliers, representing less than 7% of respondents, reported that the Conflict Minerals contained in the products sold to us originated in the Covered Countries.
Based on the responses to our RCOI, we have reason to believe that a small portion of the Conflict Minerals in our Products originated from the Covered Countries or may not be solely from recycled or scrap sources.
Due Diligence
We undertook due diligence on the source of the Conflict Minerals we use, focusing particularly on the suppliers who reported to us that the Conflict Minerals contained in the products sold to us originated in the Covered Countries. We conducted a significant portion of our due diligence using tools and relying on information provided by the CFSI. In addition to using the CMRT, which facilitates the collection of information on the source of Conflict Minerals, we also relied on information from the Conflict-Free Smelter Program (CFSP), a voluntary initiative managed by the CFSI in which an independent third party audits the procurement activities of a smelter or refiner to determine, with reasonable confidence, that the minerals it processes originated from conflict-free sources. Upon completion of a successful audit, the smelter or refiner is designated by the CFSI as “Compliant”. Some of the responses we received from our suppliers were unclear regarding the applicable smelters or the country of origin of the Conflict Minerals, and as part of our due diligence we posed follow-up questions to the suppliers. In some cases we received answers that clarified their disclosures and in some cases we did not.
3
Of the nine suppliers which reported that the Conflict Minerals contained in the products sold to us originated in the Covered Countries:
| • | Seven suppliers identified a total of 64 different smelters or refiners from which they obtained Conflict Minerals included in their products. Those smelters and refiners are listed in Appendix A to this Report. All but one of those smelters and refiners are currently designated as Compliant by the CFSI. One of the smelters (PT Wahana Perkit Jaya) appears on the CFSI list, but is not presently designated as Compliant, even though this supplier claimed that all of the smelters it sources from were compliant. |
| • | One supplier provided a long list of tantalum, tin and tungsten smelters and refiners (over 300 of them) but did not clearly identify which of the smelters provided Conflict Minerals included in its products sold to us. This supplier indicated that it was still working with a consultant to gather information from its supply chain. Therefore, Appendix A does not include smelters or refiners with respect to this supplier. |
| • | One supplier stated that, while gold included in the product sold to us was sourced from the Covered Countries, 100% of the gold originated from recycled or scrap sources. Therefore, under SEC rules, the gold in the products obtained from this supplier is considered to be “DRC conflict free” and no further due diligence was done. |
Some of the suppliers which reported that the Conflict Minerals contained in the products sold to us originated in the Covered Countries identified specific Covered Countries where the minerals were mined, at least for certain minerals and certain smelters or refiners. The Covered Countries named were the Democratic Republic of the Congo, Rwanda and Tanzania. However, we are not able to determine definitively the origin of all of the Conflict Minerals in our Products. Accordingly, we consider the Products to be “DRC conflict undeterminable,” as defined in applicable SEC rules.
Future Action and Steps to Mitigate Risk
Prior to the preparation and filing of our Form SD for the 2017 reporting period, we plan to review and determine additional steps that may be appropriate to further conform our due diligence to an internationally recognized due diligence framework, such as the Organization for Economic Co-operation and Development (OECD), Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
We are planning to take the following steps, among others, to improve our due diligence measures, increase supply chain transparency and mitigate the risk that the Conflict Minerals contained in our Products may finance or benefit armed groups in the Covered Countries:
| • | continue to collect information from our suppliers regarding the Conflict Minerals contained in our Products; |
4
| • | enhance communication with our suppliers to increase the response rate and improve the content of the information we receive from them about their supply chain, smelters and refiners; and |
| • | encourage our suppliers to implement responsible sourcing and request that their suppliers encourage smelters and refiners to obtain a “conflict-free” designation from an independent, third-party auditor. |
Public Availability of this Report on our Website
This Conflict Minerals Report is publicly available in the “Investor Relations” section of our website,www.cdicorp.com. While this Report and our Form SD each contain a reference to our website, other information on our website is not incorporated by reference into this Report or our Form SD.
5
Appendix A
| Metal | Smelter or Refiner Name | Facility Location Country | CFSI Smelter Identification Number | Compliant (as determined by CFSI)? | ||||
| Gold | Argor-Heraeus | SWITZERLAND | CID000077 | YES | ||||
| Tantalum | H.C. Starck Co. Ltd. | THAILAND | CID002544 | YES | ||||
| Tantalum | Changsha South Tantalum Niobium Co., Ltd. | CHINA | CID000211 | YES | ||||
| Tantalum | Conghua Tantalum and Nioblum Smeltry | CHINA | CID000291 | YES | ||||
| Tantalum | Duoluoshan | CHINA | CID000410 | YES | ||||
| Tantalum | F&X Electro-Materials Ltd. | CHINA | CID000460 | YES | ||||
| Tantalum | Ningxia Orient Tantalum Industry Co., Ltd. | CHINA | CID001277 | YES | ||||
| Tantalum | Ulba Metallurgical Plant JCS | KAZAKHSTAN | CID001969 | YES | ||||
| Tantalum | Global Advanced Metals Boyertown | UNITED STATES | CID002557 | YES | ||||
| Tantalum | Global Advanced Metals Aizu | JAPAN | CID002558 | YES | ||||
| Tin | Alpha | UNITED STATES | CID000292 | YES | ||||
| Tin | Cooperativa Metalurgica de Rondônia Ltda. | BRAZIL | CID000295 | YES | ||||
| Tin | PT Aries Kencana Sejahtera | INDONESIA | CID000309 | YES | ||||
| Tin | CV United Smelting | INDONESIA | CID000315 | YES | ||||
| Tin | EM Vinto | BOLIVIA | CID000438 | YES | ||||
| Tin | Fenix Metals | POLAND | CID000468 | YES | ||||
| Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd. | CHINA | CID000538 | YES | ||||
| Tin | Malaysia Smelting Corporation (MSC) | MALAYSIA | CID001105 | YES | ||||
| Tin | Mineração Taboca S.A. | BRAZIL | CID001173 | YES | ||||
| Tin | Minsur | PERU | CID001182 | YES | ||||
| Tin | Operaciones Metalurgical S.A. | BOLIVIA | CID001337 | YES | ||||
| Tin | PT Artha Cipta Langgeng | INDONESIA | CID001399 | YES | ||||
| Tin | PT Babel Inti Perkasa | INDONESIA | CID001402 | YES | ||||
| Tin | PT Bukit Timah | INDONESIA | CID001428 | YES | ||||
| Tin | PT Mitra Stania Prima | INDONESIA | CID001453 | YES | ||||
| Tin | PT Refined Bangka Tin | INDONESIA | CID001460 | YES | ||||
| Tin | PT Timah (Persero) Tbk Kundur | INDONESIA | CID001477 | YES | ||||
| Tin | PT Timah (Persero) Tbk Mentok | INDONESIA | CID001482 | YES | ||||
| Tin | PT Tinindo Inter Nusa | INDONESIA | CID001490 | YES | ||||
| Tin | Thaisarco | THAILAND | CID001898 | YES | ||||
| Tin | White Solder Metalurgia e Mineração Ltda. | BRAZIL | CID002036 | YES | ||||
| Tin | Yunnan Tin Company Limited | CHINA | CID002180 | YES | ||||
| Tin | PT Wahana Perkit Jaya | INDONESIA | CID002479 | NO |
6
| Metal | Smelter or Refiner Name | Facility Location Country | CFSI Smelter Identification Number | Compliant (as determined by CFSI)? | ||||
| Tin | PT ATD Makmur Mandiri Jaya | INDONESIA | CID002503 | YES | ||||
| Tin | CV Ayi Jaya | INDONESIA | CID002570 | YES | ||||
| Tin | Metallo-Chimique N.V. | BELGIUM | CID002773 | YES | ||||
| Tin | PT Sukses Inti Makmur | INDONESIA | CID002816 | YES | ||||
| Tungsten | A.L.M.T. TUNGSTEN Corp. | JAPAN | CID000004 | YES | ||||
| Tungsten | Kennametal Huntsville | UNITED STATES | CID000105 | YES | ||||
| Tungsten | Guangdong Xianglu Tungsten Co., Ltd. | CHINA | CID000218 | YES | ||||
| Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd. | CHINA | CID000258 | YES | ||||
| Tungsten | Fujian Jinxin Tungsten Co., Ltd. | CHINA | CID000499 | YES | ||||
| Tungsten | Global Tungsten & Powders Corp. | UNITED STATES | CID000568 | YES | ||||
| Tungsten | Hunan Chenzhou Mining Co., Ltd. | CHINA | CID000766 | YES | ||||
| Tungsten | Hunan Chunchang Nonferrous Metals Co., Ltd. | CHINA | CID000769 | YES | ||||
| Tungsten | Japan New Metals Co., Ltd. | JAPAN | CID000825 | YES | ||||
| Tungsten | Ganzhou Huaxing Tungsten Products Co., Ltd. | CHINA | CID000875 | YES | ||||
| Tungsten | Tejing (Vietnam) Tungsten Co., Ltd. | VIET NAM | CID001889 | YES | ||||
| Tungsten | Vietnam Youngsun Tungsten Industry Co., Ltd. | VIET NAM | CID002011 | YES | ||||
| Tungsten | Wolfram Bergbau und Hütten AG | AUSTRIA | CID002044 | YES | ||||
| Tungsten | Xiamen Tungsten Co., Ltd. | CHINA | CID002082 | YES | ||||
| Tungsten | Xinhai Rendan Shaoguan Tungsten Co., Ltd. | CHINA | CID002095 | YES | ||||
| Tungsten | Ganzhou Jiangwu Ferrotungsten Co., Ltd. | CHINA | CID002315 | YES | ||||
| Tungsten | Jiangxi Tonggu Non-ferrous Metallurgical & Chemical Co., Ltd. | CHINA | CID002318 | YES | ||||
| Tungsten | Malipo Haiyu Tungsten Co., Ltd. | CHINA | CID002319 | YES | ||||
| Tungsten | Xiamen Tungsten (H.C.) Co., Ltd. | CHINA | CID002320 | YES | ||||
| Tungsten | Jiangxi Gan Bei Tungsten Co., Ltd. | CHINA | CID002321 | YES | ||||
| Tungsten | Ganzhou Seadragon W & Mo Co., Ltd. | CHINA | CID002494 | YES | ||||
| Tungsten | Asia Tungsten Products Vietnam Ltd. | VIET NAM | CID002502 | YES | ||||
| Tungsten | Chenzhou Diamond Tungsten Products Co., Ltd. | CHINA | CID002513 | YES | ||||
| Tungsten | Jiangxi Xiushui Xianggan Nonferrous Metals Co., Ltd. | CHINA | CID002535 | YES | ||||
| Tungsten | H.C. Starck GmbH | GERMANY | CID002541 | YES | ||||
| Tungsten | H.C. Starck Smelting GmbH & Co.KG | GERMANY | CID002542 | YES | ||||
| Tungsten | Nui Phao H.C. Starck Tungsten Chemicals Manufacturing LLC | VIET NAM | CID002543 | YES |
7
