UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM SD

Specialized Disclosure Report

 

EASTMAN KODAK COMPANY

(Exact name of registrant as specified in its charter)

 

 

Douglas Strong, 585-724-2131

(Name and telephone number, including area code, of the person to contact in connection with this report)

 

 

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:

_X_ Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1, 2017 to December 31, 2017.

 

 

 

 

 

 

 

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Section 1 – Conflict Minerals Disclosure

Item 1.01 Conflict Minerals Disclosure and Report

 

Conflict Minerals Disclosure:

 

The Conflict Minerals Report for the period from January 1, 2017 to December 31, 2017 is filed herewith as Exhibit 1.01 and is publicly available through Kodak’s investor center under the “Financial Information/SEC Filings” tabs on its website at www.kodak.com.

 

Item 1.02 Exhibit

 

The Conflict Minerals Report for the period from January 1, 2017 to December 31, 2017 is filed herewith as Exhibit 1.01.

 

Section 2 – Exhibits

Item 2.01 Exhibits

 

Exhibit 1.01 Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.

 

 

 

 

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Exhibit (1.01)

 

Eastman Kodak Company

Conflict Minerals Report

 

This is the Conflict Minerals Report of Eastman Kodak Company (“Kodak”) for the reporting period from January 1, 2017 to December 31, 2017, 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 (collectively, “3TG”).

 

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 be manufactured during 2017.  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 developing 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 to, or manufactured for Kodak.  Kodak focuses on collecting data from direct suppliers who are likely to supply Kodak with conflict minerals and requires suppliers to establish the necessary proactive due diligence programs that will enable greater long-term supply chain transparency through contract terms.

 

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.

 

 

 

 

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Kodak designed its overall conflict minerals policies and procedures to conform, in all material respects, to the five-step framework developed by the Organisation 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.

 

 

 

 

 

 

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 Kodak’s 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 publicly 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 and refiners which have been certified as conflict free.

 

Kodak was a member of Electronic Industry Citizenship Coalition (“EICC”) and the Conflict Free Sourcing Initiative (“CFSI”) in 2016.  Although no longer a member, Kodak continues to follow the industry guidance through Responsible Minerals Initiative (“RMI”) formerly Conflict-Free Sourcing Initiative (“CFSI”).  The Responsible Minerals Initiative contributes to a range of tools and resources including the Responsible Minerals Assurance Process, the Conflict Minerals Reporting Template, Reasonable Country of Origin Inquiry data and a range of guidance documents on responsible minerals sourcing. The Responsible Minerals Initiative also runs regular workshops on minerals supply chain issues and contributes to policy development and debates with leading civil society organizations and governments.  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 RMI is the Responsible Minerals Assurance Process (RMAP).  The RMAP 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 the minerals they process originate from conflict-free sources.  Kodak also utilizes the Conflict Minerals Reporting Template (“CMRT”) developed by RMI 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. https://www.kodak.com/corp/company/sustainability/conduct-guide/default.htm

 

 

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Step 2: Identify and Assess Risks in Our Supply Chain and Reasonable Country of Origin Inquiry:

Kodak, through its RCOI process, determined suppliers that were in scope by starting with a complete list of first tier suppliers and removing: service providers, indirect materials suppliers, and suppliers with whom Kodak spent no money in 2017.  In some instances, second tier suppliers (e.g., distributors) were also included in the scope of this initial list.  Based on a review of Kodak’s spending 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.  The remaining suppliers were identified as relevant or high priority suppliers, including suppliers with the potential to provide raw materials, components, parts, sub-assemblies and products that have the greatest likelihood of containing conflict minerals.  

 

The suppliers that were identified as relevant or high priority received an email containing a cover letter signed by Kodak’s Chief Procurement Officer and a conflict minerals questionnaire using the CMRT. 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. These communications were monitored and tracked for future reporting and transparency.  

 

Kodak received responses from the suppliers that were in scope.  Kodak’s minerals team reviewed and verified each completed questionnaire against expectations established by company policy. Kodak also engaged with Assent Compliance to review the supplier’s responses 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 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 from CFSI for the smelters and refiners identified in the questionnaire.

 

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-up 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:

 

 

 

 

 

If a supplier’s efforts to address concerns were determined to be deficient, it was 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.  

 

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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. Kodak has supported the execution of the RMAP and has relied on the RMAP to perform audits of smelters and to develop information on the country and mine or location of origin of conflict minerals in Kodak’s products. In order to assess the risk that any of these smelters posed to Kodak’s supply chain, Assent determined if the smelter had been audited against a standard in conformance with the OECD Guidance, such as the RMAP.  Smelters that have completed an RMAP audit are considered to be DRC-Conflict Free.

Step 5:  Annual Reports on Supply Chain Due Diligence:  

Kodak annually reports on its conflict minerals supply chain due diligence 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 approximately 85% of the suppliers surveyed.  Based on these responses, Kodak identified 314 smelters or refiners of 3TG that are known smelters or refiners based on the RMI’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.  

A majority of Kodak’s suppliers provided information at the company level, rather than information specific to the materials purchased by Kodak.  Kodak is unable to validate whether the smelters and refiners listed in the Appendix in fact contributed conflict minerals to its products.

Of the 314 smelters and refiners listed in the Appendix, 255 have been certified as compliant with the RMI’s RMAP, and an additional 8 are active in the RMAP third-party 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 RMAP assessment protocols or currently in the audit process:

 

Overall, 263 of 314, or 84% of the smelters and refiners are compliant with the RMI’s RMAP or are currently in the audit process.

 

The number of smelters and refiners in Kodak’s supply chain as of December 31, 2017 that were compliant with the RMAP’s CFSP has more than quadrupled since Kodak began the evaluation process in 2013.

RMAP Compliant smelters and refiners in Kodak’s supply chain:

 

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Given the fact that not all smelters and refiners identified by Kodak’s suppliers have been audited by the RMI’s RMAP 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 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.   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 its suppliers to take similar measures with their suppliers to ensure alignment throughout the supply chain.

 

In 2017, Kodak has partnered with Assent, a SaaS company, to assist in a data management solution to track regulatory compliance across Kodak’s supply chain. A solution such as this is needed to further strengthen Kodak’s due diligence process to ensure legal compliance across the product portfolio and to meet customer expectations. In addition to those above, Kodak will take 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:  

 

 

 

 

 

 

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APPENDIX

 

The table below lists the smelters and refiners as reported to Kodak by its suppliers that are known smelters or refiners based on the RMI’s standard smelter reference list as of April 2018 and may have processed the conflict minerals contained in Kodak’s products.  This information is as reported by the RMI as of May 1, 2018.

 

 

 

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* Denotes smelters and refiners which have received a “conflict-free” designation from an independent third party audit program as of May 1, 2018.

 

Country of Origin Information:

As a result of the reasonable country of origin inquiry conducted as described above, Kodak concluded that the aggregated countries of origin from which the smelters and refiners listed above are believed to have sourced conflict minerals include Australia, Austria, Belgium, Bolivia, Brazil, Canada, China, Czech Republic, Estonia, France, Germany, India, Indonesia, Italy, Japan, Kazakhstan, Korea (Republic Of), Kyrgyzstan, Macedonia (The Former Yugoslav Republic Of), Malaysia, Mexico, Netherlands, New Zealand, Peru, Philippines, Poland, Russian Federation, Rwanda, Saudi Arabia, Singapore, South Africa, Spain, Sudan, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, United States, Uzbekistan, Viet Nam, Zambia, Zimbabwe.

 

 

 

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