Exhibit 1.01
Multi-Color Corporation
Conflict Minerals Report
For The Year Ended December 31, 2018
This report for the year ended December 31, 2018 (the “Reporting Period”) is presented to comply with Rule13p-1 under the Securities Exchange Act of 1934 (the “Rule”) and the Public Statement on the Effect of the Recent Court of Appeals Decision on the Conflict Minerals Rule issued by the Director of the Division of Corporation Finance of the Securities and Exchange Commission on April 29, 2014 and the Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule issued on April 7, 2017 (collectively, the “SEC Statements”). The Rule was adopted by the Securities and Exchange Commission (“SEC”) to implement reporting and disclosure requirements related to conflict minerals as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The Rule imposes certain reporting obligations on SEC registrants whose manufactured products contain conflict minerals which are necessary to the functionality or production of their products. Conflict minerals are defined as cassiterite, columbite-tantalite, gold, wolframite, and their derivatives, which are limited to tin, tantalum, tungsten, and gold (collectively, “3TG”) for the purposes of this assessment. These requirements apply to all registrants whatever the geographic origin of the conflict minerals and whether or not they fund armed conflict.
If a registrant can establish that the conflict minerals originated from sources other than the Democratic Republic of the Congo (“DRC”) or an adjoining country (collectively, the “Covered Countries”), or from recycled and scrap sources, they must submit a Form SD which describes the Reasonable Country of Origin Inquiry (“RCOI”) completed.
If a registrant has reason to believe that any of the conflict minerals in its supply chain may have originated in the Covered Countries, or if it is unable to determine the country of origin of those conflict minerals, then the issuer must exercise due diligence on the conflict minerals’ source and chain of custody. The registrant must annually submit a Conflict Minerals Report (“CMR”) to the SEC that includes a description of those due diligence measures.
Forward-Looking Statements
Forward-looking statements contained in this CMR are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. Statements in this CMR which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements, including statements related to the Company’s compliance efforts and expected actions identified in this CMR. These forward-looking statements are subject to various risks, uncertainties and assumptions, including, among other matters, the Company’s customers’ requirements to use certain suppliers, the Company’s suppliers’ responsiveness and cooperation with the Company’s due diligence efforts, the Company’s ability to implement improvements in its conflict minerals program and the Company’s ability to identify and mitigate related risks in its supply chain. If one or more of these or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risk factors, see the Company’s other filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form10-K and subsequent Quarterly Reports on Form10-Q. The Company makes these statements as of the date of this disclosure, and undertakes no obligation to update them unless otherwise required by law.
| 1. | Company Overview |
Multi-Color Corporation (“Multi-Color” or the “Company”), which was incorporated in 1985 and is headquartered near Cincinnati, Ohio, is a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. Multi-Color serves international brand owners in the North American, Latin American, EMEA (Europe, Middle East and Africa) and Asia Pacific regions with a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack,In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed, and Aluminum Labels.
| 2. | Products and Facilities Overview |
The Company manufactures a comprehensive range of the latest label technologies in Pressure Sensitive, Cut and Stack,In-Mold, Shrink Sleeve, Heat Transfer, Roll Fed and Aluminum Labels. An analysis of Multi-Color products found that 3TG can be found in a small amount of Multi-Color’s labels. Therefore, the products that Multi-Color manufactures or contracts to manufacture are subject to the reporting obligations of Rule13p-1.
As of December 31, 2018, the Company owned and leased over 70 manufacturing facilities in the North American, Latin American, EMEA (Europe, Middle East and Africa) and Asia Pacific regions.
Multi-Color does not have direct business relationships with any smelters or refiners that process 3TG, and the Company does not directly source any products from the Covered Countries. In light of the Company’s remote position in the supply chain, the Company must rely upon its suppliers, and their multiple lower tier suppliers, to comply with Multi-Color’s conflict mineral policy, engage in due diligence of their respective supply chains and to provide information on and verification of the chain of custody of conflict minerals in Multi-Color’s products.
| 3. | Reasonable Country of Origin Inquiry (“RCOI”) |
Multi-Color’s due diligence program includes a reasonable country of origin inquiry (“RCOI”). An RCOI is an inquiry regarding the origin of conflict minerals that is designed to determine where the minerals used by Multi-Color’s suppliers originated or if they are from recycled or scrap sources. In light of Multi-Color’s position in the supply chain as a remote downstream purchaser, the Company is several layers removed from the smelters and refiners who may process 3TG in our products, which requires us to depend heavily on the cooperation of our suppliers andsub-suppliers.
| 4. | Due Diligence Process and Findings |
In response to the Rule, Multi-Color designed due diligence measures relating to the Rule and conflict minerals. The Company has looked to industry guidelines to help establish its programs such as the Conflict Minerals Reporting Template developed by the Conflict-Free Sourcing Initiative (“CFSI”) that facilitates the transfer of information through the supply chain regarding mineral country of origin and smelters and refiners being utilized. The Company intends to further develop transparency into its supply chain by further leveraging the industry standard CFSI program and continuing outreach efforts to suppliers, but it will take time for some of Multi-Color’s suppliers to verify the origin of all the minerals due to the breadth and complexity of the supply chain.
The Company’s due diligence efforts have been developed in conjunction with the 2nd edition of The Organization for EconomicCo-operation and Development (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and the related supplements for gold and for tin, tantalum, and tungsten. The Company introduced and continues to develop a supply chain transparency process to attempt to identify the sources of the 3TG used in its products and to gather information about supplier conflict-free policies.
Conflict Minerals Disclosure
The Company’s Form SD and Conflict Mineral Report for calendar year 2018 are posted on the Company’s website at www.mcclabel.com.
For the Reporting Period, the Company conducted a survey of certain suppliers where the nature of the component indicated that those components may contain 3TG. As noted above, the Company does not have direct relationships with the smelters and refiners of minerals or metals used in the Company’s products, and the Company’s due diligence processes are subject to inherent limitations given the complexity of the Company’s supply chain and the inherent limitations based on the necessity to seek information from direct suppliers, and those suppliers seeking information from their lower tiered suppliers. After exercising the due diligence process described above, the Company received responses from 98% of its surveyed suppliers. Of these results, one supplier indicated that one of its smelters sourced from the Covered Countries but indicated that thesub-supplier has been certified as conflict-free pursuant to the CFSI Conflict-Free Smelter Program Assessment. The remaining suppliers confirmed that their products manufactured or contracted to be manufactured by such suppliers orsub-suppliers did not contain conflict minerals.
This Report has not been subject to an independent private sector audit in accordance with the SEC Statements.
The Company will continue to implement commercially reasonable processes to improve the quantity and quality of supplier responses and to verify supplier responses.
