UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549   

 

 

 

Form SD  

 

Specialized Disclosure Report

 

DISH Network Corporation

(Exact name of registrant as specified in its charter)

 

 

 

 

Timothy A. Messner

Executive Vice President and General Counsel

(303) 723-1000

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

 

DISH DBS Corporation

(Exact name of registrant as specified in its charter)

 

 

 

 

Timothy A. Messner

Executive Vice President and General Counsel

(303) 723-1000

(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:

 

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

 

 

EXPLANATORY NOTE

 

DISH Network Corporation (“DISH”) and its subsidiary, DISH DBS Corporation (“DBS”), each has prepared this Specialized Disclosure Report on Form SD (“Form SD”) pursuant to Rule 13p-1 (the “Rule”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the reporting period of January 1 to December 31, 2017. Unless the context indicates otherwise, any reference in this Form SD to the “Company,” “we,” “us” and “our” refer to DISH, DBS and their respective subsidiaries through December 31, 2017. Each of DISH and DBS is filing this Form SD and the attached Conflict Minerals Report separately and on its own behalf.

 

Share Exchange Agreement

 

On January 31, 2017, we and certain of our indirect wholly-owned subsidiaries, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with EchoStar Corporation (“EchoStar”).  On February 28, 2017, we and EchoStar completed the transactions contemplated by the Share Exchange Agreement (the “Share Exchange”).

 

Pursuant to the Share Exchange Agreement, on February 28, 2017, among other things, EchoStar transferred to us 100% of the equity interests of certain EchoStar subsidiaries, consisting primarily of the businesses that design, develop, and distribute digital set-top boxes, provide satellite uplinking services, and develop and support streaming video technology, in exchange for shares of preferred tracking stock issued by both EchoStar and one if its wholly-owned subsidiaries.  Following consummation of the Share Exchange, effective February 28, 2017 through December 31, 2017, we operate the DISH Technologies business unit, which produces digital set-top boxes and Slingbox™ units.

 

SECTION 1—CONFLICT MINERALS DISCLOSURE

 

ITEM 1.01.  Conflict Minerals Disclosure and Report

 

Introduction

 

The Rule requires disclosure of certain information when a registrant manufactures, or contracts to manufacture, products whose manufacture was completed during the reporting period that contain certain minerals that are necessary to the functionality or production of such products (the “Covered Products”).  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”).  For the Covered Products, 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 certain adjoining countries (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 Conflict Minerals contained in its products originated or may have originated in a Covered Country and that such Conflict Minerals are not or 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 they directly or indirectly finance or benefit armed groups in the Covered Countries.

 

Conclusion Based on Reasonable Country of Origin Inquiry

 

In accordance with the Rule, for the reporting period of February 28 to December 31, 2017, the Company:

 

 

 

 

Based on the information obtained through our reasonable country of origin inquiry and our due diligence efforts, which significantly overlap, the Company has reasonably determined that countries of origin of the Conflict Minerals in the Covered Products, to the extent known, include the Covered Country of Zambia.

 

Conflict Minerals Disclosure

 

Based on the results of the procedures described above, the Company has filed this Form SD and the attached Conflict Minerals Report.  A copy of the Company’s Conflict Minerals Report is filed as Exhibit 1.01 to this Form SD, and is publicly available on the Company’s website at http://ir.dish.com/financial-information/sec-filings. Unless otherwise stated in this Form SD and the Conflict Minerals Report filed as Exhibit 1.01 hereto, any documents, third-party materials or references to websites, including the Company’s, are not incorporated by reference in, or considered to be a part of, this Form SD and the attached Conflict Minerals Report.

 

Forward-Looking Statements

 

This Form SD and the attached Conflict Minerals Report contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, including but not limited to statements about our estimates, expectations, plans, objectives, strategies, and financial condition, expected impact of regulatory developments and legal proceedings, opportunities in our industries and businesses and other trends and projections for the future.  All statements, other than statements of historical facts, may be forward-looking statements.  Forward-looking statements may also be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate,” “expect,” “predict,” “continue,” “future,” “will,” “would,” “could,” “can,” “may” and similar expressions that convey uncertainty of future events or outcomes and the negatives of those terms.  These forward-looking statements are based on information available to us as of the date of this Form SD and the attached Conflict Minerals Report and represent management’s current views and assumptions about future events.  Forward-looking statements are not guarantees of future performance, actions, events or results and involve potential known and unknown risks, uncertainties and other factors, many of which may be beyond our control and may pose a risk to our operating and financial condition.  Accordingly, actual performance, events or results could differ materially from those expressed or implied in the forward-looking statements due to a number of factors.  Important factors that could cause actual outcomes to differ materially from those contained in any forward-looking statement include those described in DISH’s and DBS’s respective reports, including DISH’s and DBS’s respective annual reports on Form 10-K for the fiscal year ended December 31, 2017, DISH’s and DBS’s respective quarterly reports on Form 10-Q and other documents that each of DISH and DBS files with or furnishes to the Securities and Exchange Commission from time to time. You should not put undue reliance on any forward-looking statements. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements. All cautionary statements made herein should be read as being applicable to all forward-looking statements wherever they appear. Investors should consider the risks and uncertainties described herein and should not place undue reliance on any forward-looking statements, which speak only as of the date hereof. We do not undertake, and specifically disclaim, any obligation to publicly release the results or any revisions that may be made to any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

ITEM 1.02.  Exhibit

 

As specified in Section 2, Item 2.01 of this Form SD, the Company is hereby filing our Conflict Minerals Report as Exhibit 1.01 to this Form SD.

 

 

SECTION 2—EXHIBITS

 

ITEM 2.01.  Exhibits

 

The following exhibit is filed as part of this Form SD.

 

 

 

 

 

SIGNATURES

 

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

 

 

 

Exhibit 1.01

 

DISH NETWORK CORPORATION

DISH DBS CORPORATION

 

Conflict Minerals Report

 

For the reporting period from February 28 to December 31, 2017

 

Introduction and Background

 

This Conflict Minerals Report (the “Report”) of DISH Network Corporation (“DISH”) and DISH DBS Corporation (“DBS” and, together with DISH and the respective subsidiaries of DISH and DBS through December 31, 2017, 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 from January 1 to December 31, 2017.  The Rule requires disclosure of certain information when a company manufactures or contracts to manufacture products and the minerals specified in the Rule are necessary to the functionality or production of those products.  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”) that originated in the Democratic Republic of the Congo (“DRC”) and certain adjoining countries (collectively with the DRC, the “Covered Countries”).

 

Pursuant to the Rule, the Company has concluded, in good faith, that during the reporting period from February 28 to December 31, 2017:

 

 

 

Therefore, the Company performed due diligence on the source and chain of custody of such Conflict Minerals in our Covered Products. The Company is filing this Report with its Specialized Disclosure Report on Form SD (the “Form SD”) to comply with the requirements of the Rule. This Report has not been subject to an independent private sector audit.

 

PART I. COMPANY OVERVIEW AND DESCRIPTION OF PRODUCTS COVERED BY THIS REPORT

 

Description of Products

 

During the reporting period, we engaged in the provision of pay-tv services in the United States of America.  We operate through Pay-TV and Wireless segments. The Pay-TV segment is offered under the DISH brand and Sling brand. The Wireless segment refers to the wireless spectrum licenses and related assets. This Report relates to our Covered Products under our Pay-TV business segment, which consist of:

 

Digital Set-Top Boxes — The Company’s digital set-top boxes during the reporting period included digital set-top boxes used by consumers for the viewing of television content delivered via satellite or cable or over the air.  Certain models of the Company’s digital set-top boxes also contained 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 designed and developed related products during the reporting period, including satellite dishes and remote controls.

 

Slingbox™ Units — The Company’s Slingbox units during the reporting period enabled “placeshifting” technology, which allowed a customer, at his or her option, to watch and control digital television content anywhere in the world via a broadband internet connection. 

Certain of our Covered Products were designed, developed, engineered, manufactured, assembled and/or distributed by us; however, we also outsourced a significant portion of these functions to third parties.  We worked with third-party vendors for the development and manufacture of components that are integrated into our Covered Products.  We developed dual sourcing capabilities for critical parts when practical and we evaluated outsourced subcontract vendors on a periodic basis.

 

Share Exchange Agreement

 

On January 31, 2017, we and certain of our indirect wholly-owned subsidiaries, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with EchoStar Corporation (“EchoStar”).  On February 28, 2017, we and EchoStar completed the transactions contemplated by the Share Exchange Agreement (the “Share Exchange”).

 

Pursuant to the Share Exchange Agreement, on February 28, 2017, among other things, EchoStar transferred to us 100% of the equity interests of certain EchoStar subsidiaries, consisting primarily of the businesses that design, develop, and distribute digital set-top boxes, provide satellite uplinking services, and develop and support streaming video technology, in exchange for shares of preferred tracking stock issued by both EchoStar and one if its wholly-owned subsidiaries.  Following consummation of the Share Exchange, effective February 28, 2017 through December 31, 2017, we operate the DISH Technologies business unit, which produces digital set-top boxes and Slingbox™ units.

 

 

PART II. DESIGN OF OUR DUE DILIGENCE MEASURES

 

We designed our due diligence measures based on the five-step framework laid out by the Organization for Economic Co-operation and Development in its OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Third Edition (2016), including the related supplements on gold, tin, tantalum and tungsten (collectively, the “OECD Guidance”).  Summarized below are the components of our due diligence measures as they relate to the five-step framework from the OECD Guidance.

 

Establish Strong Company Management Systems for Conflict Minerals Supply Chain Due Diligence

 

Designate Internal Corporate Team

 

The Company has an internal team, composed of senior members of the Company’s supply chain and procurement operations and the legal department, which evaluates the Company’s applicable supply chain processes and sourcing procedures and designs and supports the Company’s due diligence efforts.  The team meets periodically to develop and refine a due diligence process that:

 

 

 

 

Each existing and new supplier and manufacturer (collectively referred to as “suppliers”) is assigned to a specific employee within the supply chain department who reports to a senior supply chain manager.  A senior supply chain manager disseminates all necessary information and documentation to each employee in the supply chain department responsible for interfacing directly with suppliers.

 

Commit to a Supply Chain Policy for Minerals from Conflict-Affected and High-Risk Areas

 

The Company maintains a policy relating to Conflict Minerals (the “Policy”) stating that suppliers shall:

 

 

 

 

The Policy is incorporated into the Company’s supplier code of conduct, which is available to our suppliers on our websites.  All suppliers of the Company during the reporting period were obligated to comply with the supplier code of conduct.

 

Establish a System of Controls and Transparency over the Conflict Minerals Supply Chain

 

The Company employs a system of controls to promote transparency over our Conflict Minerals supply chain by utilizing the Conflict Minerals Reporting Template (“Conflict Minerals Reporting Template”), which is a supply chain survey designed to facilitate the transfer of information through the supply chain to identify the smelters and refiners that process the necessary Conflict Minerals in our Covered Products.  The Conflict Minerals Reporting Template was developed by the Responsible Minerals Initiative (“RMI”), formerly the Conflict-Free Sourcing Initiative, a Responsible Business Alliance and Global e-Sustainability Initiative. The Company maintains an automated database of the completed Conflict Minerals Reporting Templates submitted to the Company by our suppliers (the “Conflict Minerals Response Database”), which helps us process and analyze the information provided by our suppliers. Once in the Conflict Minerals Response Database, all completed Conflict Mineral Reporting Templates received from suppliers are stored electronically in a central location accessible to authorized employees involved in the due diligence process and are retained in accordance with the Company’s document retention guidelines.

 

The Company is a member of the RMI, an organization committed to the responsible sourcing of Conflict Minerals that currently has over 350 participating companies and associations from around the world. As a member, the Company has access to a variety of tools and resources to better assess Conflict Minerals in our supply chain, including the Responsible Minerals Assurance Process (“RMAP”), formerly the Conflict-Free Smelter Program, an audit program designed to validate smelters’ and refiners’ sourcing practices.

 

Strengthen the Company’s Engagement with Suppliers

 

We inform our suppliers of our Policy, our due diligence consistent with OECD Guidance and our compliance with the Rule. Moreover, the Company requires that suppliers expressly support the supply chain due diligence process employed by the Company and detailed in its code of conduct.

 

Establish a Company-Level Grievance Mechanism

 

The Company maintains an open reporting system through which employees and third parties may report concerns about potential or actual violations of the Policy. Concerns may be reported anonymously or for attribution through several channels, including through an employee’s immediate manager or the Company’s legal department.

 

Identify and Assess the Risks in the Company’s Supply Chain

 

The Company does not purchase Conflict Minerals directly from mines, smelters or refiners and does not have a direct relationship with any mines, smelters or refiners.  The Company’s supply chain with respect to our Covered Products is complex, and there are many third parties in the supply chain between the ultimate manufacturer of our Covered Products and the original sources of the Conflict Minerals.  As a result, the Company designed its due diligence to conform to the requirements of the Rule and the OECD Guidance as applicable for downstream companies. Because the Company believes that the smelters and refiners of the Conflict Minerals are best situated to identify the sources of Conflict Minerals, the Company relies on its communications with suppliers to identify the applicable smelters and refiners of Conflict Minerals in the Company’s supply chain. In particular, the Company performs the following measures to identify Conflict Minerals in our Covered Products.

 

Identify Company Suppliers

 

The Company identifies our first-tier suppliers by generating reports from the Company’s applicable manufacturing and procurement systems of all manufacturers who made, and all vendors who supplied components or products, for our Covered Products.  For components delivered to the Company by distributors, the Company adds the distributors to the supplier list.  Senior managers in the supply chain organization review and finalize the supplier list (the “Supplier List”) to create a list that includes all relevant suppliers for purposes of the Rule.

 

Request Conflict Minerals Reporting Templates from Suppliers

 

The Company uses good faith efforts to identify from the Conflict Minerals Reporting Templates the smelters and refiners used by our suppliers on the Supplier List.  Annually, the Company sends a letter and the Conflict Minerals Reporting Template to the suppliers on the Supplier List.  The letter (i) reiterates the requirements of the Rule and its applicability to the Company, (ii) requests that each supplier complete the Conflict Minerals Reporting Template for all Covered Products supplied to the Company for the reporting period, and (iii) encourages suppliers to use smelters and refiners which appear on the RMAP’s Conformant Smelter List (as described below).  The Company contacts suppliers that do not respond to the Company’s request by a specified date and suppliers that submit incomplete or inaccurate requests for follow-on discussions and to request additional information, as applicable.

 

As set forth in the Conflict Minerals Reporting Template and the OECD Guidance, suppliers make representations or provide information regarding, among other things, (i) the country of origin for the Conflict Minerals contained in components or products provided by the supplier to the Company, (ii) whether such Conflict Minerals directly or indirectly finance armed conflict in the Covered Countries, (iii) all smelters and refiners in the supplier’s supply chain for such Conflict Minerals, (iv) whether such smelters and refiners have been validated in compliance with the RMAP, (v) whether such supplier uses the Conflict Minerals Reporting Template with its own suppliers to gather information, and (vi) whether the supplier has its owns conflict mineral policy that requires its direct suppliers to be conformant.

 

Analyze Surveys for RMAP Conformant and Active Smelters and Refiners

 

If correctly completed, each Conflict Minerals Reporting Template identifies the smelters and refiners within the applicable supplier’s supply chain. The Company reviews the information in the completed Conflict Minerals Reporting Templates against the RMAP’s Conformant Smelter List to determine whether the smelters or refiners associated with the applicable supplier qualify as “conformant” or “active”. We rely upon third party audits of smelters and refiners as part of the RMI’s RMAP, an audit program designed to validate smelters’ and refiners’ sourcing practices as described below. Smelters and refiners receive a “conformant” designation from RMI if (i) the audited smelter or refiner adheres to the RMAP’s assessment protocols by disclosing to independent auditors the identities and locations of the mines from which it sources Conflict Minerals and (ii) the independent auditor verifies separately that the smelter’s or refiner’s Conflict Minerals originated from conformant sources. The RMAP’s Conformant Smelter List includes the names, locations and links to conflict minerals policies of all smelters and refiners deemed “conformant” with the RMAP’s assessment protocols. Smelters and refiners labeled as “RMAP Active” have committed to undergo a RMAP audit but have not yet completed their audit or are participating in other cross-recognized certification programs. “RMAP Active” smelters and refiners may be at various stages of the audit cycle, anywhere from completion of the necessary documents to scheduling the audit date to enacting corrective actions in the post-audit phase, but may not retain their “active” status if they are unresponsive to requests for re-audit or corrective action past a certain time.

 

The Company also uses good faith efforts to identify the country of origin information from the smelters and refiners provided by our suppliers on the Supply List through the Conflict Minerals Reporting Template.

 

Design and Implement Strategies to Respond to Identified Risks

 

Participate in Existing Industry Conflict Minerals Initiatives

 

In light of the complexity of the Company’s and our suppliers’ supply chains, the Company is currently unable to assess adequately the risk that Conflict Minerals exist in our Covered Products or whether they finance armed conflict in the DRC. However, the Company continues to engage with suppliers to obtain current, accurate and complete information about our supply chains through the use of the Conflict Minerals Reporting Template and to promote “conformant” supply chains through our RMI membership.

 

Report Findings to Designated Senior Management

 

The members of the Company’s internal Conflicts Minerals team (consisting of senior members of the Company’s supply chain and procurement operations and the legal department) provide progress reports summarizing the findings from our due diligence efforts to the senior management of the Company. 

 

Independent Third-Party Audits of Smelters/Refiners

 

Due to its downstream position in the supply chain, the Company does not have a direct relationship with smelters and refiners. Further, the complexity of our supply chain and the many third parties involved between the ultimate manufacturer of our Covered Products and the original sources of the Conflict Minerals hinders the Company’s ability to perform direct audits of smelters and refiners in our supply chain.  Instead, we rely upon third party audits of smelters and refiners as part of the RMI’s RMAP, an audit program designed to validate smelters’ and refiners’ sourcing practices. The RMAP’s audit process is discussed above in more detail in “Identify and Assess the Risks in the Company’s Supply Chain.”

 

Additionally, through our RMI membership, we support the further development and implementation of due diligence practices and tools, such as the Conflict Minerals Reporting Template and the RMAP.

 

Report Annually on Supply Chain Due Diligence

 

The Company has filed with the Securities and Exchange Commission its Form SD, which includes this Report as Exhibit 1.01, for the reporting period of February 28 to December 31, 2017. In accordance with the OECD Guidance and the Rule, this Report is available on our website at http://ir.dish.com/financial-information/sec-filings.

 

 

PART III. DESCRIPTION OF DUE DILIGENCE MEASURES PERFORMED;

RESULTS OF OUR DUE DILIGENCE MEASURES

 

Compilation and Analysis of Responses

 

For the reporting period of February 28 to December 31, 2017, the Company identified approximately 31 relevant suppliers.  In the fourth quarter of 2017 and the first quarter of 2018, the Company sent each such supplier on the Supplier List a letter requesting completion of the Conflict Minerals Reporting Template. The Company followed up with suppliers that did not respond to the Company’s request by the specified date or that submitted incomplete or inaccurate requests.

 

The Company received responses from approximately 31, or 100%, of the solicited suppliers, including completed Conflict Minerals Reporting Templates from 31, or approximately 100%, of the solicited suppliers. Through the use of the Conflict Minerals Response Database and access to the RMAP information, we were able to identify the smelters and refiners we believe were used to process the Conflict Minerals contained in our Covered Products as set forth in Annex 1 attached to this Report, as well as to identify which of those smelters and refiners were “RMAP Conformant” or “RMAP Active.”

 

Based on the information that was provided by the Company’s suppliers and information otherwise obtained by the Company during the due diligence process, the following table sets forth the number of “RMAP Conformant” and “RMAP Active” smelters and refiners in our supply chain as of the end of 2017 for each of the Conflict Minerals used in our Covered Products:

 

 

As discussed in “Part II. Design of Our Due Diligence Analysis” above, the Company relies on the completed Conflict Minerals Reporting Templates received from our suppliers as our main source of documentation supporting the representations made by such suppliers regarding the source and chain of custody of relevant Conflict Minerals in our Covered Products during the reporting period.  The smelters and refiners identified in Annex 1 to this Report were identified by our suppliers and the Company cannot be certain that these smelters and refiners were in fact in the Company’s supply chain.

 

Country of Origin of the Conflict Minerals in the Covered Products

 

Based on the information that was provided by the Company’s suppliers and information otherwise obtained by the Company during the due diligence process, the Company does not have sufficient information, with respect to our Covered Products, to determine the country of origin of all of the Conflict Minerals in all such 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, the Covered Country of Zambia.

 

Facilities Used to Process the Conflict Minerals in the Covered Products

 

Based on the information that was provided by the Company’s suppliers and information 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 our Covered Products.  However, based on the information that was provided by the Company’s suppliers and information otherwise obtained through the due diligence process, to the extent reasonably determinable by the Company, the facilities that were used to process the Conflict Minerals contained in our Covered Products are believed to include the smelters and refiners listed in Annex 1 attached to this Report. The smelters and refiners that the Company has been able to determine as “RMAP Conformant” and “RMAP Active” are identified in Annex 1. However, as discussed above, the smelters and refiners identified in Annex 1 to this Report were identified by our suppliers and the Company cannot be certain that these smelters and refiners were in fact in the Company’s supply chain.

 

PART IV. IMPLEMENTATION OF STRATEGIES TO RESPOND TO IDENTIFIED RISKS AND FUTURE STEPS

 

Due diligence is an ongoing, proactive and reactive process. The Company plans to continue engaging with our suppliers to obtain current, accurate and complete information about the supply chain and to continue our due diligence efforts. Further, reporting on Conflict Minerals is a contractual requirement for our suppliers through our supplier code of conduct.  The Company has used our RMI membership to gain a better understanding of the smelters and refiners in our supply chain and their RMAP compliance status, and we intend to continue to take advantage of the resources available to RMI members with regard to conformant sourcing.

 

 

 

Annex 1

 

CURRENTLY KNOWN SMELTER AND REFINERY LIST

 

 

*RMAP Conformant

**RMAP Active – in the process of becoming RMAP Conformant.