UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SD
Specialized Disclosure Report
EchoStar Corporation
(Exact name of registrant as specified in its charter)
Nevada |
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001-33807 |
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26-1232727 |
(State or Other Jurisdiction of Incorporation or Organization) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
100 Inverness Terrace East, Englewood, Colorado |
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80112-5308 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Dean A. Manson
Executive Vice President, General Counsel and Secretary
(303) 706-4000
(Name and telephone number, including area code, of 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, 2013 to December 31, 2013.
SECTION 1CONFLICT MINERALS DISCLOSURE
ITEM 1.01. Conflict Minerals Disclosure and Report
Conflict Minerals Disclosure
This Specialized Disclosure Report on Form SD (Form SD) of EchoStar Corporation (the Company) is filed pursuant to Rule 13p-1 (the Rule) promulgated under the Securities Exchange Act of 1934, as amended, for the reporting period January 1, 2013 to December 31, 2013.
The Rule was adopted by the Securities and Exchange Commission (SEC) to implement reporting and disclosure requirements related to certain specified minerals as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The specified minerals are gold, columbite-tantalite (coltan), cassiterite and wolframite, including their derivatives, which are limited to tantalum, tin and tungsten (the Conflict Minerals). The Rule requires disclosure of certain information when a registrant manufactures or contracts to manufacture products that contain Conflict Minerals that are necessary to the functionality or production of such products. For products that contain such necessary Conflict Minerals, the registrant must conduct in good faith a reasonable country of origin inquiry designed to determine whether any of the Conflict Minerals originated in the Democratic Republic of the Congo or an adjoining country (each, a Covered Country and collectively, the Covered Countries). If based on such inquiry, a registrant knows or has reason to believe that any of the necessary Conflict Minerals contained in its products originated or may have originated in a Covered Country and that such necessary Conflict Minerals may not be solely from recycled or scrap sources, the registrant must conduct due diligence with respect to the source and chain of custody of the Conflict Minerals to determine if the necessary Conflict Minerals directly or indirectly finance or benefit armed groups in the Covered Countries.
In accordance with the Rule, for the reporting period January 1, 2013 to December 31, 2013, the Company:
· Determined that the Company manufactured, or contracted to manufacture, products (the Covered Products) for which the Conflict Minerals are necessary to the functionality or production of those products.
· Conducted a good faith reasonable country of origin inquiry regarding the Conflict Minerals, which was reasonably designed to determine whether any of the Conflict Minerals originated in the Covered Countries or whether any of the Conflict Minerals may be from recycled or scrap sources. Based on that inquiry, the Company has reason to believe that the Conflict Minerals may have originated in the Covered Countries and that such Conflict Minerals may not be from recycled or scrap sources.
· Conducted due diligence with respect to the source and chain of custody of the Conflict Minerals.
Based on the results of these procedures, the Company has filed this Form SD and the associated Conflict Minerals Report. A copy of the Companys Conflict Minerals Report is filed as Exhibit 1.02 to this Form SD, and is publicly available on the Companys website at http://sats.client.shareholder.com/sec.cfm.
ITEM 1.02. Exhibit
As specified in Section 2, Item 2.01 of this Form SD, the Company is hereby filing its Conflict Minerals Report as Exhibit 1.02 to this report.
SECTION 2EXHIBITS
ITEM 2.01. Exhibit
The following exhibit is filed as part of this report.
Exhibit No. |
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Description |
1.02 |
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Conflict Minerals Report of EchoStar Corporation |
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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ECHOSTAR CORPORATION | |
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By: |
/s/ Dean A. Manson |
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Dean A. Manson |
June 2, 2014 |
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Executive Vice President, General Counsel and Secretary |
EXHIBIT INDEX
Exhibit No. |
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Description |
1.02 |
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Conflict Minerals Report of EchoStar Corporation. |
Exhibit 1.02
ECHOSTAR CORPORATION
Conflict Minerals Report
For the reporting period from January 1, 2013 to December 31, 2013
This Conflict Minerals Report (the Report) of EchoStar Corporation (the Company, we, our, and/or us) has been prepared pursuant to Rule 13p-1 (the Rule) promulgated under the Securities Exchange Act of 1934, as amended, for the reporting period January 1, 2013 to December 31, 2013.
The Rule was adopted by the Securities and Exchange Commission (SEC) to implement reporting and disclosure requirements related to certain specified minerals as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The specified minerals are gold, columbite-tantalite (coltan), cassiterite and wolframite, including their derivatives, which are limited to tantalum, tin and tungsten (collectively, the Conflict Minerals).
COMPANY OVERVIEW AND DESCRIPTION OF PRODUCTS COVERED BY THIS REPORT
We are a global provider of satellite operations, video delivery solutions, digital set-top boxes, and broadband satellite technologies and services for home and office, delivering innovative network technologies, managed services, and solutions for enterprises and governments. This Report relates to products: (i) for which Conflict Minerals are necessary to the functionality or production of such products; (ii) that were manufactured or contracted to be manufactured, by the Company; and (iii) for which the manufacture was completed during calendar year 2013.
These products, which are collectively referred to in this Report as Covered Products, include:
Digital Set-Top Boxes The Companys digital set-top boxes include high definition and standard definition digital set-top boxes, used by consumers for the viewing of television content delivered via satellite, cable or over the air. Certain models of the Companys digital set-top boxes also contain certain internal hard drives to enable digital video recorder features as well as software enabled advanced capabilities and functionalities. In addition to digital set-top boxes, the Company also designs and develops related products, including satellite dishes and remote controls.
Slingbox The Companys Slingbox, which is sold directly to consumers, enables placeshifting technology, which allows a customer, at his or her option, to watch and control their digital television content anywhere in the world via a broadband internet connection.
Broadband Satellite Systems The Companys broadband and satellite products include broadband systems and terminals. Our advanced broadband satellite systems support the delivery of a wide range of bandwidth-intensive services as well as privately-branded service offerings, including high-speed internet/intranet access, video conferencing, distance learning, telemedicine, newsgathering, fleet operations and broadband on planes, trains and maritime. In addition, we design and manufacture mobile satellite systems, handheld devices and IP data terminals for mobile satellite operators.
With respect to our digital set-top boxes, although the Company designs, engineers and distributes digital set-top boxes and related products, it is not directly engaged in the manufacturing process. Rather, the Company outsources the manufacturing of its digital set-top boxes and related products to third parties who manufacture its products according to specifications supplied by the Company. With respect to our broadband and satellite products, certain products are assembled at the Companys facilities in Maryland; however, the Company also outsources a significant portion of the manufacturing of its products to third parties. We also work with third-party vendors for the development and manufacture of components that are integrated into our products. We develop dual sourcing capabilities for critical parts when practical and we evaluate outsourced subcontract vendors on a periodic basis.
REASONABLE COUNTRY OF ORIGIN INQUIRY
Pursuant to the Rule, the Company conducted a good faith reasonable country of origin inquiry (RCOI) regarding the Conflict Minerals. This good faith RCOI was reasonably designed to determine whether any of the Conflict Minerals originated in the Democratic Republic of the Congo (DRC) or an adjoining country (each, a Covered Country and collectively, the Covered Countries) or whether any of the Conflict Minerals may be from recycled or scrap sources. Following this inquiry, the Company had reason to believe that the Conflict Minerals necessary to the functionality or production of the Covered Products may have originated in the Covered Countries and that such Conflict Minerals may not be from recycled or scrap sources. Therefore, the Company performed due diligence on the source and chain of custody of the Conflict Minerals. There is significant overlap between the Companys RCOI efforts and its due diligence measures performed. The due diligence measures performed by the Company are discussed below.
DUE DILIGENCE PROCESS
The Companys supply chain with respect to the Covered Products is complex, and there are many third parties in the supply chain between the ultimate manufacture of the Covered Products and the original sources of the Conflict Minerals. The Company does not purchase Conflict Minerals directly from mines, smelters or refiners. The Company must therefore rely on its suppliers to provide information regarding the origin of the Conflict Minerals that are included in the Covered Products. Moreover, the Company believes that the smelters and refiners of the Conflict Minerals are best situated to identify the sources of Conflict Minerals, and therefore has taken steps to identify the applicable smelters and refiners of Conflict Minerals in the Companys supply chain.
Design of Due Diligence Measures
The Companys due diligence measures have been designed to be consistent with the framework in the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Supply Chain of Minerals from Conflict-Affected and High Risk Areas: Second Edition, including the related supplements on gold, tin, tantalum and tungsten (the OECD Guidance). In addition, the Company conducted an initial survey of its suppliers using the supplier engagement approach outlined in the OECD Guidance which included distributing letters to the Companys direct suppliers in the first quarter of 2013 that described the Rule and provided an example of the Electronic Industry Citizenship Coalition (EICC) Conflict Minerals Reporting Template (the Conflict Mineral Reporting Template) that the Company planned to use as part of its due diligence procedures to ensure each supplier understood the requirements of the Conflict Minerals Reporting Template and to identify any preliminary concerns.
Due Diligence Measures Performed
The Companys due diligence measures for the reporting period January 1, 2013 to December 31, 2013 were comprised of activities consistent with the OECD Guidance. The OECD Guidance consists of a five step due diligence framework which includes: (i) establishment of strong company management systems; (ii) identification and assessment of risks in the supply chain; (iii) design
and implementation of strategies to respond to identified risks; (iv) carry out independent third-party audit of smelter/refiner due diligence practices; and (v) report annually on supply chain due diligence.
Establishment of Strong Company Management Systems
In the third quarter of 2012, the Company created an internal team composed of senior members of the Companys supply chain and procurement operations and the legal department to evaluate the Companys supply chain processes and sourcing procedures and to design and support the Companys due diligence efforts. The team met regularly to develop a due diligence process that: (i) was consistent with the OECD Guidance, (ii) conformed to the requirements of the Rule, and (iii) was appropriate given the structure and operations of the Companys supply chain departments. Once the due diligence process was developed, each supplier was assigned to a specific employee within the supply chain department that reported to a senior supply chain manager. A system of communication was established among the members of the team and a senior supply chain manager disseminated all necessary information and documentation to each employee in the supply chain department responsible for interfacing directly with suppliers.
In addition, the Company adopted a policy relating to the Conflict Minerals (the Policy), incorporating the standards set forth in the EICC Code of Conduct. The Policy states:
Suppliers shall have a policy to reasonably assure that the tantalum, tin, tungsten and gold in the products they manufacture does not directly or indirectly finance or benefit armed groups that are perpetrators of serious human rights abuses in the Democratic Republic of the Congo or an adjoining country. Suppliers shall exercise due diligence on the source and chain of custody of these minerals and make their due diligence measures available to customer upon customer request. Suppliers must be prepared to assist customer in meeting the conflict minerals reporting requirements of the Dodd-Frank Act, as well as other national or international mineral reporting regimes that may arise in the future.
The Policy is incorporated into the Companys supplier code of conduct, which is available on our supplier websites. All suppliers of the Company are obligated to comply with the supplier code of conduct.
The Company established a system of controls to promote transparency over its conflict minerals supply chain by utilizing the Conflict Minerals Reporting Template, which is designed to facilitate the transfer of information through the supply chain regarding each minerals country of origin and the smelters and refiners being utilized for the mineral. All completed Conflict Mineral Reporting Templates received from suppliers were stored electronically in a central location accessible to authorized employees involved in the due diligence process and will be retained in accordance with our document retention guidelines. In addition, the Companys internal audit department reviewed the due diligence process and results at multiple stages in the process.
Identification and Assessment of the Risks in the Companys Supply Chain
Based on the knowledge of the senior executives in the supply chain organizations, the Company determined that all of the products manufactured or contracted to be manufactured and sold by the Company contained at least one of the Conflict Minerals. As a result, the Company performed the following measures for the reporting period to identify and assess the risks in the Companys supply chain.
· Identify All Company Suppliers. The Companys first-tier suppliers were identified by generating a report from the Companys manufacturing and procurement systems of all vendors who supplied components or products between January 1, 2013 and December 31, 2013 that were used to manufacture products sold by the Company that contained Conflict Minerals. For components delivered to the Company by distributors, the manufacturer of the component (i.e., the supplier of the distributor or the Companys second-tier supplier) was identified and added to the supplier list. The supplier list was reviewed by three senior managers or directors in the supply chain department to ensure that each supplier met the appropriate criteria. The suppliers appearing on the confirmed supplier list, each an in-scope supplier, was assigned to a supply chain department employee.
· Request Conflict Minerals Reporting Template. The Company performed due diligence to identify the risks in its supply chain by utilizing the Conflict Minerals Reporting Template to determine, using good faith efforts, the smelters and refiners in its supply chain. The Conflict Minerals Reporting Template requires suppliers to
make representations regarding (i) the country of origin for the Conflict Minerals contained in the components or products it provides to the Company; (ii) whether such Conflict Minerals directly or indirectly finance armed conflict in the DRC; (iii) all of the smelters in the suppliers supply chain for such Conflict Minerals; (iv) whether such smelters have been validated as in compliance with the Conflict Free Smelter Program; (v) whether the supplier has its own Conflict Minerals policy that requires its own direct suppliers to be conflict-free; and (vi) whether the supplier uses the Conflict Minerals Reporting Template with its own suppliers to gather similar information.
In the first quarter of 2014, the Company sent a letter and the Conflict Minerals Reporting Template to each in-scope supplier included on the confirmed supplier list. The letter (i) reiterated the requirements of the Rule and its applicability to the Company, (ii) requested that each supplier complete the Conflict Minerals Reporting Template for all products supplied to the Company in 2013 and (iii) encouraged suppliers to use smelters which appeared on the Compliant Smelter List. The Company contacted suppliers that did not respond to the Companys request by the specified date and suppliers that submitted incomplete or inaccurate requests for follow-on discussions and to request additional information, as applicable.
· Compile and Assess Responses. For the reporting period of January 1, 2013 to December 31, 2013, the Company identified approximately 356 in-scope suppliers. As of May 23, 2014, the Company received responses from approximately 351, or 98.5%, of the in-scope suppliers, including completed Conflict Mineral Reporting Templates from 281, or approximately 83.6%, of the in-scope suppliers.
The Company relied on the completed Conflict Mineral Reporting Templates it received from its suppliers as the main source of documentation supporting the representations made by such suppliers regarding the source and chain of custody of relevant Conflict Minerals.
Design and Implementation of Strategies to Respond to Identified Risks
The members of the Companys internal conflicts minerals team provided progress reports to the senior management of the Company, including the Companys General Counsel and Chief Financial Officer, as well as the Audit Committee of the Companys Board of Directors. In light of the complexity of the Companys and its suppliers supply chain, the Company is currently unable to adequately assess all of the risks in its supply chain. Based on the results of the Companys due diligence efforts for the reporting period of January 1, 2013 to December 31, 2013, the Company is in the process of designing and implementing a strategy to respond to risks identified in the supply chain.
Carry Out Independent Third-Party Audit of Smelter/Refiner Due Diligence Practices
Due to our position in the supply chain, the Company does not have a direct relationship with smelters and refiners, nor do we perform direct audits of these entities that provide our supply chain with the minerals that are contained in our Covered Products. Instead, we rely upon industry efforts to influence smelters and refiners to get audited and become certified through the Conflict-Free Sourcing Initiatives Conflict-Free Smelter Program.
Report Annually on Supply Chain Due Diligence
In accordance with the OECD Guidance and the Rule, this Conflict Minerals Report is available on our website at http://sats.client.shareholder.com/sec.cfm.
Due Diligence Results
Country of Origin of the Conflict Minerals in the Covered Products
Based on the information obtained by the Company during the due diligence process, the Company does not have sufficient information, with respect to the Covered Products, to determine the country of origin of the Conflict Minerals in the all Covered Products. However, based on the information that has been obtained, to the extent reasonably determinable by the Company, with respect to the smelters and refineries identified by the Company, such countries of origin are believed to include, to the extent known, the Central African Republic and Rwanda.
Facilities Used to Process the Conflict Minerals in the Covered Products
Based on the information that was provided by the Companys suppliers and otherwise obtained through the due diligence process, the Company was unable to identify with certainty, all of the facilities used to process the Conflict Minerals in the Covered Products. However, based on the information that has been obtained, to the extent reasonably determinable by the Company, the facilities that were used to process the Conflict Minerals contained in the Covered Products are believed to include the smelters and refiners listed below, each of which is included on or sources from, smelters on the Conflict-Free Smelter Initiative certified smelter list:
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Metal | |
AVX |
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Tantalum |
F&X Electro-Materials Ltd. |
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Tantalum |
H.C. Starck Group |
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Tantalum |
Malaysia Smelting Corporation |
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Tin |
Ningxia Orient Tantalum Industry Co., Ltd. |
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Tantalum |
Tantalite Resources |
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Tantalum |
Ulba |
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Tantalum |
Zhuzhou Cement Carbide |
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Tantalum |
Steps to Be Taken to Mitigate Risk
We have taken, and intend to continue to take, steps to improve our due diligence processes and to minimize the risk that our necessary conflict minerals benefit armed groups. The Company plans to continue to engage with its suppliers to obtain current, accurate and complete information about the supply chain and will continue to improve its due diligence efforts to ensure responsible sourcing in compliance with the Policy. The Company will monitor and track the performance and efficiency of its due diligence efforts and will put in place procedures designed to incorporate any new risks into the risk management plan. In addition, we currently expect to make conflict minerals reporting a contractual requirement for our suppliers. We also plan to continue to encourage our suppliers to use conflict free smelters and refiners as capacity becomes available.