Exhibit 1.01
Conflict Minerals Report of American Eagle Outfitters, Inc.
In accord with Rule13p-1 under the Securities Exchange Act of 1934
This is the Conflict Minerals Report of American Eagle Outfitters, Inc. (“The Company”) for calendar year 2018 in accordance with Rule13p-1 under the Securities Exchange Act of 1934 (“Rule13p-1”). The intent of this Conflict Minerals Report (“CMR”) is to describe the Company’s due diligence process following Rule13p-1 requirements.
1. Design of Due Diligence Measures
The Company’s due diligence process is based on the Organization for Economic Cooperation and Development’s (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (3rd Edition) and accompanying Supplements. The Company engaged Assent Compliance, a third-party service provider, to assist in designing and implementing due diligence measures, including supply chain scoping, supplier engagement, data collection and reporting.
2. Due Diligence Measures Implemented
The Company took the following Due Diligence measures:
Adopt a conflict minerals policy
The Company’s conflict minerals policy is publicly available athttps://www.aeo-inc.com/. It states:
POLICY ON CONFLICT MINERALS LAW COMPLIANCE
I. SCOPE
This policy applies to all American Eagle Outfitters, Inc. (“AEO”) suppliers of branded andco-branded products.
II. BACKGROUND
AEO is committed to ensuring that metals and other minerals contained in its branded andco-branded products are obtained, produced and used in an environmentally and socially responsible manner.
Under the “conflict minerals” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, AEO is required to conduct due diligence regarding its use of four metals: gold, columbite-tantalite (tantalum), cassiterite (tin) and wolframite (tungsten) (collectively, the “Conflict Minerals”) and whether those Conflict Minerals originated in the Democratic Republic of Congo or adjoining countries1 (collectively, the “Covered Countries.”) The goal of these regulations is to end the violent conflict in the region, which has been partially financed by the exploitation and trade of Conflict Minerals originating in the Covered Countries. As a publicly traded company, AEO is required to request certain information from its suppliers and report on its inquiries and due diligence to the U.S. Securities and Exchange Commission.
1 | Angola, Burundi, Central African Republic, Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and Zambia |
III. POLICY
Each AEO Supplier will be required to provide information each year regarding the origin of any Conflict Minerals that are necessary to the functionality or production of AEO products. This inquiry should be reasonably designed to determine whether any such minerals originated in the Covered Countries or are from recycled or scrap sources. The required information will be collected by AEO via a survey, which will be facilitated by a third party company.
Verification efforts will be led by AEO and/or a designated third party company who will also be available to assist suppliers in their efforts to ensure that AEO products are Conflict Minerals free.
AEO does not ban the use of minerals that originate in the Covered Countries. However, suppliers must be able to show proof that the minerals can be traced back to registered conflict-free smelters.
In the event that our suppliers have a reason to believe that Conflict Minerals used in AEO products may have originated in the Covered Countries, we will assist in performing due diligence on our supply chain in a manner consistent with the guidance issued by the Organization for Economic Cooperation and Development (“OECD”) to ensure that they are Conflict Minerals free. For more information on the OECD guidelines, please visithttp://www.oecd.org/daf/inv/mne/GuidanceEdition2.pdf.
Assemble an internal team to support supply chain due diligence
The management of our Conflict Minerals policy lies within our Responsible Sourcing department, which reports into our Production department. The Responsible Sourcing team worked closely with Assent Compliance to design and implement the diligence activities surrounding our minerals supply chain. Additional oversight and input was provided by our Conflict Minerals cross-functional team, which includes representatives from Finance, Legal, and Internal Audit departments.
Establish a system of controls and transparency over the mineral supply chain
To provide transparency within the Company’s mineral supply chains and to facilitate communication of policies and expectations, the Company engaged Assent Compliance to complement internal management processes. Assent Compliance’s online system is used to identify suppliers in our mineral supply chains and the relationships between them, collect, store and review information on 3TG mineral sourcing practices, track information on smelters and refiners (“SORs”), and flag risks based on SOR sourcing practices. This system utilized the RBA’s and Globale-Sustainability Initiative (“GeSI”) Conflict Minerals Reporting Template (“CMRT”) version 5.11 for data collection. This system is designed to allow collection and storage of data on supply chain circumstances, which can be updated to reflect changing realities within the supply chain, such as new customer-supplier relationships, new products, etc.
Assent Compliance helped us to engage with our manufacturing suppliers as part of its Conflict Minerals management system. Engagement consisted of multiple communication outreaches to educate suppliers on our expectations for sourcing and Conflict Minerals policy, and the SEC Rule13p-1 rule requirements.
Supplier engagement followed these steps:
1) | All tier 1 apparel andnon-apparel suppliers that shipped product to AEO during the 2018 calendar year were included in the supplier engagement process. Contact information was provided to Assent for upload into their online platform. |
2) | Assent requested that all suppliers complete a CMRT and offered online training and education to guide suppliers on best practices and the use of the template. Assent monitored and tracked all communications for future reporting and transparency. |
3) | Suppliers that responded as being out of scope of the reporting requirements were removed from the survey process upon review. |
4) | Non-responsive suppliers were contacted a minimum of 3 times. If the supplier remained unresponsive, then additional communication attempts via email and phone calls were conducted in order to determine why a response was not provided and to offer assistance in completing the request. |
Supplier responses were evaluated for plausibility, consistency, and gaps both in terms of which products were stated to contain or not contain necessary 3TG minerals, as well as the origin of those materials. Additional supplier outreach was conducted to address issues including implausible statements regarding no presence of 3TG minerals, incomplete data on CMRTs, responses that did not identify smelters or refiners, responses which indicated sourcing location without complete supporting information from the supply chain, and organizations that were identified as smelter or refiners, but not verified as such through further analysis and research.
A total of 184 suppliers were identified through the filtering procedures described above as beingin-scope for conflict mineral regulatory purposes and were contacted by Assent as part of the “reasonable country of origin inquiry” (“RCOI”) process. The survey response rate among these suppliers was 77%. Of these responding suppliers, 5% responded yes as to having one or more of the 3TG minerals as necessary to the functionality or production of the products they supply to the Company. The Company has not received sufficient additional information from the responding suppliers to determine the origin of all of their 3TG minerals. We will continue our due diligence efforts in this regard.
SORs were matched against the Responsible Minerals Initiative’s (RMI) Standard Smelter List. SORs sourcing practices and “conflict-free” sourcing statuses were cross-referenced with the RMI’s Responsible Minerals Assurance Process (“RMAP”), which includes cross-recognized programs with the London Bullion Market Association (“LBMA”) Good Delivery Program and the Responsible Jewelry Council Chain of Custody Certification.
Since most of the CMRTs we received from our suppliers were made on a company level, rather than on a product or user-defined scope, we are not able to identify which smelters or refiners listed on Appendix A actually processed the 3TGs contained in our products. Therefore, our list of processing smelters and refiners disclosed in Appendix A may contain more facilities than those that actually processed the conflict minerals contained in our products.
Set forth below is the list of SORs identified in our supply chain so far and their conflict-free status:
Appendix A
Metal | Standard Smelter Name | Smelter ID | RMI Audit Status | |||
Gold | Aida Chemical Industries Co., Ltd. | CID000019 | Conformant | |||
Gold | Asahi Pretec Corp. | CID000082 | Conformant | |||
Gold | Asaka Riken Co., Ltd. | CID000090 | Conformant | |||
Gold | Aurubis AG | CID000113 | Conformant | |||
Gold | CCR Refinery - Glencore Canada Corporation | CID000185 | Conformant | |||
Gold | Chimet S.p.A. | CID000233 | Conformant | |||
Gold | Gold Refinery of Zijin Mining Group Co., Ltd. | CID002243 | Conformant | |||
Gold | Heimerle + Meule GmbH | CID000694 | Conformant | |||
Gold | Heraeus Metals Hong Kong Ltd. | CID000707 | Conformant | |||
Gold | Heraeus Precious Metals GmbH & Co. KG | CID000711 | Conformant | |||
Gold | �� | Istanbul Gold Refinery | CID000814 | Conformant | ||
Gold | Jiangxi Copper Co., Ltd. | CID000855 | Conformant | |||
Gold | JX Nippon Mining & Metals Co., Ltd. | CID000937 | Conformant | |||
Gold | LS-NIKKO Copper Inc. | CID001078 | Conformant | |||
Gold | Matsuda Sangyo Co., Ltd. | CID001119 | Conformant | |||
Gold | Metalor Technologies (Hong Kong) Ltd. | CID001149 | Conformant | |||
Gold | Metalor Technologies (Singapore) Pte., Ltd. | CID001152 | Conformant | |||
Gold | Metalor Technologies (Suzhou) Ltd. | CID001147 | Conformant | |||
Gold | Metalor Technologies S.A. | CID001153 | Conformant | |||
Gold | Metalor USA Refining Corporation | CID001157 | Conformant | |||
Gold | MetalúrgicaMet-Mex Peñoles S.A. De C.V. | CID001161 | Conformant | |||
Gold | Mitsubishi Materials Corporation | CID001188 | Conformant | |||
Gold | Nihon Material Co., Ltd. | CID001259 | Conformant | |||
Gold | Ohura Precious Metal Industry Co., Ltd. | CID001325 | Conformant | |||
Gold | PAMP S.A. | CID001352 | Conformant | |||
Gold | Royal Canadian Mint | CID001534 | Conformant | |||
Gold | Safimet S.p.A | CID002973 | Conformant | |||
Gold | SEMPSA Joyería Platería S.A. | CID001585 | Conformant | |||
Gold | Shandong Zhaojin Gold & Silver Refinery Co., Ltd. | CID001622 | Conformant | |||
Gold | Sumitomo Metal Mining Co., Ltd. | CID001798 | Conformant | |||
Gold | Tanaka Kikinzoku Kogyo K.K. | CID001875 | Conformant | |||
Gold | The Refinery of Shandong Gold Mining Co., Ltd. | CID001916 | Conformant |
Gold | Umicore Brasil Ltda. | CID001977 | Conformant | |||
Gold | Umicore S.A. Business Unit Precious Metals Refining | CID001980 | Conformant | |||
Gold | Valcambi S.A. | CID002003 | Conformant | |||
Gold | Western Australian Mint trading as The Perth Mint | CID002030 | Conformant | |||
Gold | WIELAND Edelmetalle GmbH | CID002778 | Conformant | |||
Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation | CID002224 | Conformant | |||
Tin | Alpha | CID000292 | Conformant | |||
Tin | Chenzhou Yunxiang Mining and Metallurgy Co., Ltd. | CID000228 | Conformant | |||
Tin | China Tin Group Co., Ltd. | CID001070 | Conformant | |||
Tin | CV Ayi Jaya | CID002570 | Conformant | |||
Tin | CV Dua Sekawan | CID002592 | Conformant | |||
Tin | CV Tiga Sekawan | CID002593 | Conformant | |||
Tin | CV United Smelting | CID000315 | Conformant | |||
Tin | CV Venus Inti Perkasa | CID002455 | Conformant | |||
Tin | Dowa | CID000402 | Conformant | |||
Tin | EM Vinto | CID000438 | Conformant | |||
Tin | Fenix Metals | CID000468 | Conformant | |||
Tin | GejiuNon-Ferrous Metal Processing Co., Ltd. | CID000538 | Conformant | |||
Tin | Gejiu Yunxin Nonferrous Electrolysis Co., Ltd. | CID001908 | Conformant | |||
Tin | Guangdong HanheNon-ferrous Metal Limited Company | CID003116 | Conformant | |||
Tin | Huichang Jinshunda Tin Co., Ltd. | CID000760 | Conformant | |||
Tin | Jiangxi New Nanshan Technology Ltd. | CID001231 | Conformant | |||
Tin | Malaysia Smelting Corporation (MSC) | CID001105 | Conformant | |||
Tin | Metallic Resources, Inc. | CID001142 | Conformant | |||
Tin | Metallo Belgium N.V. | CID002773 | Conformant | |||
Tin | Mineracao Taboca S.A. | CID001173 | Conformant | |||
Tin | Minsur | CID001182 | Conformant | |||
Tin | Mitsubishi Materials Corporation | CID001191 | Conformant | |||
Tin | O.M. Manufacturing (Thailand) Co., Ltd. | CID001314 | Conformant | |||
Tin | Operaciones Metalurgical S.A. | CID001337 | Conformant | |||
Tin | PT Aries Kencana Sejahtera | CID000309 | Conformant | |||
Tin | PT Artha Cipta Langgeng | CID001399 | Conformant | |||
Tin | PT ATD Makmur Mandiri Jaya | CID002503 | Conformant | |||
Tin | PT Bangka Prima Tin | CID002776 | Conformant | |||
Tin | PT Bangka Serumpun | CID003205 | Conformant | |||
Tin | PT Bangka Tin Industry | CID001419 | Conformant | |||
Tin | PT Belitung Industri Sejahtera | CID001421 | Conformant | |||
Tin | PT Bukit Timah | CID001428 | Conformant |
Tin | PT DS Jaya Abadi | CID001434 | Conformant | |||
Tin | PT Menara Cipta Mulia | CID002835 | Conformant | |||
Tin | PT Mitra Stania Prima | CID001453 | Conformant | |||
Tin | PT Panca Mega Persada | CID001457 | Conformant | |||
Tin | PT Prima Timah Utama | CID001458 | Conformant | |||
Tin | PT Refined Bangka Tin | CID001460 | Conformant | |||
Tin | PT Sariwiguna Binasentosa | CID001463 | Conformant | |||
Tin | PT Stanindo Inti Perkasa | CID001468 | Conformant | |||
Tin | PT Sukses Inti Makmur | CID002816 | Conformant | |||
Tin | PT Timah (Persero) Tbk Kundur | CID001477 | Conformant | |||
Tin | PT Timah (Persero) Tbk Mentok | CID001482 | Conformant | |||
Tin | PT Tinindo Inter Nusa | CID001490 | Conformant | |||
Tin | PT Tommy Utama | CID001493 | Conformant | |||
Tin | Rui Da Hung | CID001539 | Conformant | |||
Tin | Soft Metais Ltda. | CID001758 | Conformant | |||
Tin | Thaisarco | CID001898 | Conformant | |||
Tin | White Solder Metalurgia e Mineração Ltda. | CID002036 | Conformant | |||
Tin | Yunnan ChengfengNon-ferrous Metals Co., Ltd. | CID002158 | Conformant | |||
Tin | Yunnan Tin Company Limited | CID002180 | Conformant |
* Conflict-free status refers to the facility’s RMI audit status. Smelters that are Conformant to RMAP assessment protocols are considered DRC conflict-free. These designations are current as of April 26, 2019.
Appendix B
The following is a list of potential countries of origin. It is populated based on publicly available information, our RCOI and due diligence. It is important to note that this is also based on company-level responses and therefore, it is not certain which of these countries of origin can be linked to our products:
Argentina, Botswana, Brazil, Burkina Faso, Canada, Colombia, Congo, Democratic Republic of the, Cyprus, Dominican Republic, Honduras, India, Indonesia, Ivory Coast, Kyrgyzstan, Laos, Lebanon, Madagascar, Nicaragua, Niger, Nigeria, Peru, Puerto Rico, Russian Federation, Rwanda, Saudi Arabia, Tanzania, Thailand, Togo, Uganda, United States of America, Uruguay, Uzbekistan, Venezuela
Report findings to senior management
All supply chain assessment findings are reported to American Eagle Outfitters’ Executive Vice President, Chief Operating Officer.
Devise and adopt a risk management plan
In addition to the system of controls previously described in this report, we have put in place several procedures to help mitigate the risk of Conflict Minerals entering our supply chain. First, our Conflict Minerals policy is listed in our Corporate Vendor Manual, which our suppliers agree to adhere to when they sign our master purchase agreement. The master purchase agreement is required of each supplier before any production can begin. The Corporate Vendor Manual is available to our suppliers through our Bamboo Rose sourcing system and is updated on a semi-annual basis.
Our suppliers are further reminded of this policy through emails from the Company and through the suppliers’ interaction with Assent Compliance.
In the event that 3TG minerals used in AEO products have been sourced in the DRC or surrounding areas, we work with the supplier to ensure that the minerals are sourced from registered conflict free smelters or are eliminated from use.
3. Steps to Improve Due Diligence
The Company will endeavor to continuously improve upon its supply chain due diligence efforts via the following measures:
• | Increase the response rate for its RCOI process; |
• | Continue to compare RCOI results to information collected via independent conflict free smelter validation programs such as RMI’s Responsible Minerals Assurance Process (“RMAP”); and |
• | Contact smelters identified as a result of the RCOI process and request their participation in obtaining a “conflict free” designation from an industry program such as the RMAP audit program. |
4. Product Determination
Based upon its RCOI and due diligence efforts, the Company has been unable to determine the origin of all of the 3TG minerals used in its products.