Exhibit 1.01
Eastman Kodak Company
Conflict Minerals Report
I Introduction
This is the Conflict Minerals Report of Eastman Kodak Company (“Kodak”) for the reporting period from January 1, 2015 to December 31, 2015, provided in accordance with Rule 13p-1 (“Rule 13p-1”) under the Securities Exchange Act of 1934 (the “1934 Act”). Please refer to Rule 13p-1, Form SD and the 1934 Act Release No. 34-67716 for definitions of the terms used in this report, unless otherwise defined herein.
Rule 13p-1 imposes certain reporting obligations on United States Securities and Exchange Commission (“SEC”) registrants that manufacture or contract to manufacture products containing conflict minerals that are necessary to the functionality or production of their products. Conflict minerals are defined by the SEC as cassiterite, columbite-tantalite, gold, wolframite, or their derivatives, which are limited to tin, tantalum and tungsten.
Kodak has determined that conflict minerals as defined by the SEC were necessary to the functionality or production of certain products that Kodak manufactured or contracted to manufacture during 2015. Kodak conducted a good faith reasonable country of origin inquiry (“RCOI”) to determine the origin of the conflict minerals used in its products. In accordance with the Rule, Kodak undertook due diligence on the source and chain of custody of its Conflict Minerals.
Company Overview
Kodak is a global commercial printing and imaging company with proprietary technologies in materials science, digital imaging science and software, and deposition processes (methods whereby one or more layers of various materials in gaseous, liquid or small particle form are deposited on a substrate in precise quantities and positions). Kodak leverages its core technology products and services to develop solutions for the product goods packaging and graphic communications markets, and is commercializing products for the functional printing market. Kodak also offers brand licensing and intellectual property opportunities, provides products and services for motion pictures and other commercial films, and sells ink to its existing installed consumer inkjet printer base.
Supply Chain Overview
Kodak’s global supply chain is complex given that it has over 2,500 material suppliers and the fact that most of its suppliers are located far downstream from the mineral smelters and associated mines. Kodak relies on its suppliers to assist in the reasonable country of origin inquiry and due diligence efforts for the conflict minerals contained in the materials supplied, or manufactured for Kodak. Kodak focuses on collecting data from direct suppliers where there is the likelihood of conflict minerals and requires through contract language the establishment of the necessary proactive due diligence programs that will enable greater long term supply chain transparency.
Kodak performed an analysis of its product components and determined that conflict minerals, which are regularly used in electronics and electrical equipment, are contained in certain components used in the products manufactured for or by Kodak. Kodak determined that conflict minerals that are contained in certain products were necessary to the functionality or production of the product manufactured or contracted to be manufactured for Kodak, while consumables such as inks, digital and flexographic print plates and chemicals do not contain these minerals.
II Design of Due Diligence Measures
Kodak designed its overall conflict minerals policies and procedures to conform, in all material respects, to the five step framework developed by the Organization for Economic Co-operation and Development (“OECD”), OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, and the supplements on tin, tantalum, tungsten and gold.
Kodak’s implementation of the five step framework consists of the following activities which are discussed in further detail below.
| 1. | Established a management system |
| 2. | Established a process to identify and assess risks in Kodak's supply chain |
| 3. | Respond to identified risks |
| 4. | Auditing of smelters/refiners sourcing |
| 5. | Reporting of supply chain due diligence |
Kodak, as a purchaser of component parts, is many steps removed from the mining of conflict minerals. Kodak does not purchase raw ore or unrefined conflict minerals and conducts no purchasing activities directly in the Covered Countries. Because Kodak does not typically have direct relationships with smelters and refiners, Kodak’s efforts utilized multi-industry initiatives with the smelters and refiners of minerals that may provide those minerals to companies in Kodak’s supply chain.
Step 1: Management Systems
The management system includes a multidisciplinary Conflict Minerals Team consisting of representation from Health Safety Environment organization, Worldwide Procurement and Corporate Finance. This team is responsible for the design, implementation and continued administration of Kodak’s conflict minerals program. Senior management (including the Director and VP for Purchasing, the Assistant Controller and the General Counsel) is briefed about the results of the team’s due diligence efforts. It is Kodak’s policy to refrain from purchasing, directly or indirectly from any sources, conflict minerals that may finance or benefit armed groups. Kodak’s conflict minerals policy is publically available on Kodak’s website at www.kodak.com\go\hsesupplier.
Kodak requires its suppliers to implement a conflict minerals due diligence management system, including a system of controls, to determine the sources of conflict minerals in all products that are supplied to, or manufactured on behalf of, Kodak. Kodak’s suppliers are required to exercise due diligence on the source and chain of custody of these minerals and to cooperate in providing Kodak its due diligence information to work toward sourcing only from smelters which have been certified as conflict free.
In 2015, Kodak was a member of Electronic Industry Citizenship Coalition (“EICC”) and the Conflict Free Sourcing Initiative (“CFSI”). Through these affiliations, Kodak collaborates with industry peers to support the development and use of tools, programs and mineral traceability schemes that help enable companies to source DRC conflict-free minerals. One of the programs developed by the CFSI is the Conflict Free Smelter Program (“CFSP”). The CFSP is a voluntary initiative in which independent third party audits are conducted of a smelter’s or refiner’s procurement processes to determine if the smelter or refiner can demonstrate that all of the minerals they process originate from conflict-free sources. Kodak also utilizes the Conflict Minerals Reporting Template (“CMRT”) developed by the CFSI to collect supplier data. Kodak’s support of these programs demonstrates its commitment to conflict free sources for the metals used in Kodak’s products. Kodak also has a Business Conduct phone number and website for employees to report concerns about violations of Kodak’s Conflict Minerals policy and other policies.
Step 2: Identify and Assess Risks in Kodak's Supply Chain and Reasonable Country of Origin Inquiry (“RCOI”):
Kodak’s RCOI process started with a complete list of first tier suppliers from which the following were removed: service providers, indirect materials suppliers, and suppliers with no spend in 2015. In some instances (e.g. distributors) second tier suppliers also were included in Kodak’s scope. Based on a review of the procurement data and known product compositions, suppliers providing services or products that contain no conflict minerals were excluded from Kodak’s scope. The exclusions included suppliers providing commodities such as travel, employee benefits, facility maintenance, stationery, office supplies and chemicals with a known composition. Relevant or high priority suppliers were identified as those remaining and included suppliers with the potential to provide raw materials, components, parts, sub-assemblies and products that have the greatest likelihood of containing conflict minerals. Procurement data was used to identify and select the suppliers that represent over 80% of materials spend to be included in Kodak’s scope.
The suppliers that were in scope received an email containing a cover letter signed by the Chief Procurement Officer and a conflict minerals questionnaire using the CMRT developed by the CFSI. The cover letter provided an explanation for the request including the regulatory background and the expected timing for a response. Non-responsive suppliers were contacted a minimum of three times. All of these communications were monitored and tracked for future reporting and transparency.
Kodak received responses from over 75% of the suppliers that were in scope. Kodak's conflict minerals team reviewed and verified each completed questionnaire against expectations established by company policy. Kodak also reviewed the supplier’s website to determine if it had a conflict minerals policy describing its due-diligence program and how it was being applied to the suppliers in the chain. Further, any smelters and refiners identified in the questionnaire were compared against the CFSI’s standard smelter reference list and the U.S. Department of Commerce list of known smelters and refiners to verify that the identified facilities are smelters or refiners of conflict minerals. Kodak also reviewed country of origin information available to it as a member of CFSI for the smelters and refiners identified in the questionnaire.
III. Due Diligence Measures Performed
Step 3: Strategy to Respond to Identified Risks:
Kodak compared smelters and refiners identified by suppliers in the questionnaire against the list of facilities that have received a “conflict free” designation from CFSI. In addition, Kodak reviewed the responses against criteria developed to determine which responses required follow and further engagement. These criteria included categories for untimely or incomplete responses as well as inconsistencies within the data reported in the template. Kodak worked directly with these suppliers to provide revised responses. Specifically, Kodak followed up with suppliers who provided any of the following negative or incomplete responses to the questionnaire:
| • | The response did not appear justified by the product category or composition of the product. |
| • | The supplier did not indicate that it had implemented a management system or due-diligence program to obtain information from its suppliers. |
| • | The response was incomplete or necessary information was not provided by the supplier. |
| • | The smelter list included problematic smelters (smelters that are not on either the CFSI list or the U.S Department of Commerce list of known smelters). |
If supplier’s efforts to address concerns were determined to be deficient, they are flagged for further action, ranging from education to discontinuing purchases. The project team reports annually on its progress to relevant senior executives of the company.
Step 4: Auditing of Smelters/Refiners Sourcing
Due to the complexity of Kodak’s products, and the depth, breadth and constant evolution of its supply chain, it is difficult to identify actors upstream from Kodak’s direct suppliers. Kodak does not typically have a direct relationship with 3TG smelters and refiners and does not perform or direct audits of these entities within its supply chain. As a member of the CFSI, Kodak has supported the execution of the CFSP and has relied on the CFSP to perform audits of smelters and to develop information on the country and mine or location of origin of conflict minerals in the Company’s products.
IV. Reporting and Results
Step 5: Annual Reports on Supply Chain Due Diligence:
Kodak annually reports to the SEC through its Form SD and Conflict Minerals Report, and publishes the same information on its public website.
Results of Supply Chain Due Diligence
Reviewing information about 3TG smelters and refiners in Kodak’s supply chain represents the most reasonable effort Kodak can make to determine the mines or locations of origin of the 3TG in its supply chain. Kodak received responses from over 75% of the suppliers surveyed. Based on these responses, Kodak identified 313 smelters or refiners of 3TG that are known smelters or refiners based on the CFSI’s standard smelter reference list and may have processed the conflict minerals contained in Kodak’s products. These smelters are listed in the Appendix. The Appendix also includes an aggregated list of the countries of origin from which the listed smelters and refiners are believed to have sourced conflict minerals, in addition to recycled and scrap sources.
However, a majority of Kodak’s suppliers provided information at the company level, rather than information specific to the materials purchased by Kodak. As a result, Kodak is unable to validate whether the smelters and refiners listed in the Appendix in fact contributed conflict minerals to its products.
Of the 313 smelters and refiners listed in the Appendix, 213 have been certified as compliant with the CFSI’s CFSP, and an additional 45 have begun the audit process. Kodak was unable to determine the conflict status of the remaining smelters and refiners.
Smelters and refiners that are compliant with the relevant CFSP assessment protocols or currently in the audit process:
| Tantalum: | 47 of 49 (96%) |
| Tin: | 76 of 91 (84%) |
| Tungsten: | 40 of 43 (93%) |
| Gold: | 95 of 130 (73%) |
Total 258 of 313 or 82% of the smelters and refiners are compliant with the CFSI’s CFSP or are currently in the audit process.
The number of smelters and refiners in Kodak’s supply chain as of December 31, 2015 that were compliant with the CFSI’s CFSP has almost quadrupled since Kodak began the evaluation process in 2013.
CFSP Compliant smelters and refiners in Kodak’s supply chain:
| 2013 | 55 Compliant smelters and refiners |
| 2014 | 126 Compliant smelters and refiners |
| 2015 | 214 Compliant Smelters and refiners |
V. Product Description:
Given the fact that not all smelters and refiners identified by Kodak’s suppliers have been audited by the CFSI’s CFSP list and many suppliers are still collecting information from their supply chain, Kodak’s products containing or using conflict minerals are considered DRC conflict undeterminable.
The Kodak products determined to be DRC conflict undeterminable are as follows:
| KODAK PROSPER Press Platform | KODAK VERSAMARK Printing Systems |
| KODAK PROSPER Imprinting Systems | KODAK VERSAMARK Imprinting Systems |
| KODAK NEXPRESS Digital Production Color Press Platform | KODAK DIGIMASTER HD Digital Production Platform |
| KODAK FLEXCEL NX Imager and Laminator | Kodak FLEXCEL Direct Imager |
| Print on Demand Solutions | |
| MAGNUS Platesetters | TRENDSETTER Platesetters |
| ACHIEVE Platesetters | GENERATION NEWS Platesetter |
| TRENDSETTER NEWS Platesetter | MERCURY P-HD Plate Processor |
| S Plate Processor | P-LD Plate Processor |
| T-HDX and T-HDE Plate Processors | Entertainment Motion Picture Film |
Kodak will continue to communicate its expectations and information requirements to its direct suppliers. Kodak will also continue to monitor changes in circumstances that may impact the facts or its determination. Over time, Kodak anticipates that the amount of information globally on the traceability and sourcing of these ores will increase and improve Kodak’s knowledge. Kodak will continue to make inquiries to its direct suppliers and undertake additional fact and risk assessments where potentially relevant changes in facts or circumstances are identified. New suppliers will be reviewed for conflict minerals conformance during initial business reviews. If Kodak becomes aware of a supplier whose due diligence needs improvement, Kodak intends to continue the trade relationship while that supplier improves its performance. However, if Kodak identifies an upstream supplier is sourcing from or linked to any party providing direct or indirect support to non-state armed groups, Kodak will work with its supply chain to suspend or discontinue engagement with that upstream supplier. Kodak expects our suppliers to take similar measures with their suppliers to ensure alignment throughout the supply chain.
In addition to those above, Kodak will undertake the following steps during the next compliance period to improve the due diligence conducted to further mitigate the risk that its necessary conflict minerals do not benefit armed groups, including:
The table below lists the smelters and refiners as reported to Kodak by its suppliers that are known smelters or refiners based on the CFSI’s standard smelter reference list as of April 2016 and may have processed the conflict minerals contained in Kodak’s products. This information is as reported by the CFSI as of May 1, 2016.
Country of Origin Information:
As a result of the reasonable country of origin inquiry conducted as described above, Kodak concluded that the countries of origin from which the smelters and refiners listed above are believed to have sourced conflict minerals include Albania, Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Canada, Chile, China, Czech Republic, Estonia, Ethiopia, France, Germany, Hong Kong, India, Indonesia, Italy Japan, Kazakhstan, Korea, Kyrgyzstan, Malaysia, Mexico, Mozambique, Netherlands, New Zealand, Panama, Peru, Philippines, Poland, Russian Federation, Rwanda, South Africa, Spain, Sudan, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, United Kingdom, United States, Uruguay, Uzbekistan, Vietnam, Zimbabwe.
