Exhibit 1.01

 

CONFLICT MINERALS REPORT

 

May 20, 2016

 

Introduction

 

This Conflict Minerals Report is presented to comply with Securities and Exchange Commission Rule 13p-1 under the Securities Exchange Act of 1934 (“SEC Rule”). Deere & Company (“Company”) and its subsidiaries (collectively, “John Deere”) manufacture and distribute agriculture and turf and construction and forestry equipment and parts. For the period from January 1 to December 31, 2015 (“Reporting Period”), certain components and parts of John Deere’s equipment products contained columbite-tantalite (coltan) (or its derivative tantalum), gold, wolframite (or its derivative tungsten) and/or cassiterite (or its derivative tin) (collectively, “conflict minerals”) necessary to the production or functionality of such equipment. As part of its efforts, the Company has adopted a policy (“Conflict Minerals Policy”) providing a common set of principles for the sourcing of conflict minerals. In accordance with the SEC Rule, the Company implemented a Reasonable Country of Origin Inquiry (“RCOI”) to determine whether any conflict minerals necessary to the production or functionality of its products originated in the Democratic Republic of the Congo or an adjoining country (“Covered Countries”) or do not come from recycled or scrap sources. Based on the RCOI, the Company believes that certain of the conflict minerals necessary to the production or functionality of its equipment manufactured in the Reporting Period may have originated in the Covered Countries and may not be from recycled or scrap sources (the “Covered Minerals”).

 

As described in Part I below, the Company conducted an RCOI, which includes the Company’s Conflict Minerals Policy, initial component assessment and identification of suppliers providing In-Scope Components. The supplier survey used the conflict minerals reporting template (CMRT) which is the current standard for collecting conflict minerals RCOI data for downstream companies. Smelter data along with supplier responses indicated the need to execute due diligence as outlined in the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (“OECD Guidelines”).

 

The Company’s due diligence procedures conform, in all material respects, with the framework set forth in the OECD Guidelines and the related supplements for gold and for tin, tantalum and tungsten. In accordance with the SEC Rule and the OECD Guidelines, this Conflict Minerals Report is available on the Company’s website at www.JohnDeere.com/secfilings. The Company’s Conflict Minerals Policy is available on its website at www.JohnDeere.com/corpgov.

 

Part I of this report also describes the due diligence procedures performed by the Company on the source and chain of custody of In-Scope Components (as defined below) and the steps the Company has taken since December 31, 2015 or will take to improve its due diligence process. Part II of this report describes the Company’s products that contain In-Scope Components, the facilities used to process the Covered Minerals in those In-Scope Components if known to the Company, the country of origin of the Covered Minerals in those In-Scope Components if known to the Company and the efforts to determine the mine or location of origin with the greatest possible specificity.

 

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Part I                                                         Reasonable Country of Origin Inquiry and Due Diligence Procedures

 

Certain components and parts of John Deere’s equipment manufactured during the Reporting Period contain conflict minerals necessary to the production or functionality of such equipment (“In-Scope Components”). The Company’s due diligence procedures are implemented and maintained throughout its supply chain. In accordance with the Company’s Conflict Minerals Policy, the SEC Rule and the OECD Guidelines, the Company has established a due diligence process with the following key components: (1) internal supply management systems and controls; (2) identification and assessment of conflict minerals risk in the supply chain; (3) strategies to address identified risks within the supply chain; and (4) independent audit procedures as required by the SEC Rule. The Company performs due diligence procedures described below on its In-Scope Components.

 

a.            Internal Supply Management Systems and Controls

The Company’s Conflict Minerals Policy establishes the principles with regard to the responsible sourcing of conflict minerals against which the Company can assess itself and its suppliers. In order to enforce the Conflict Minerals Policy, the Company has put in place internal supply management systems and controls. The Company’s management structure consists of three levels of oversight. In accordance with the OECD Guidelines, at the top of the management structure is an executive sponsor. The executive sponsor is a member of the Company’s senior management team. The second level of management is a steering committee comprised of executive-level officers from supply management, environmental, energy and product sustainability, electronic solutions, internal audit and legal. This committee provided guidance and oversight to the third level of the management system for conflict minerals. The committee received periodic updates on the design and implementation of the due diligence procedures conducted for the Reporting Period. The third level of the management system is a team of subject matter experts (“CM Team”) from relevant functions within the Company, including supply management, environmental, quality, information technology, internal audit and legal. The CM Team was responsible for designing and implementing the Company’s due diligence procedures. In accordance with the Company’s Conflict Minerals Policy and the OECD Guidelines, the Company will maintain, and will require In-Scope Suppliers (as defined below) to maintain, conflict minerals records for five years.

 

b.            Identification and Assessment of Conflict Mineral Risk in the Supply Chain

Due to the size and complexity of John Deere’s global supply chain as well as its considerable number of suppliers, products, parts and components, a process was developed to assess and remove parts not containing conflict minerals from the inquiry. The RCOI pertained only to suppliers with In-Scope Components (“In-Scope Suppliers”) introduced into John Deere’s supply chain during the Reporting Period. Any part, component or product that did not contain conflict minerals was excluded from further inquiry.

 

The risk that In-Scope Components are present in the Company’s electronics parts was considered higher than the risk that the In-Scope Components are present in the Company’s equipment or after-market parts products. As a result, the Company split the RCOI into three processes. The first process collected information on the Company’s equipment components (“Equipment Survey”). The second process collected information on the Company’s electronics components (“Electronics Survey”). The third process collected information on the Company’s after-market parts division (“All-Makes Survey” and,

 

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collectively with the Equipment Survey and the Electronics Survey, the “Surveys”). In each case, the survey related only to In-Scope Suppliers of In-Scope Components during the Reporting Period.

 

The Equipment Survey randomly selected In-Scope Suppliers based on volume of parts provided to the Company during the Reporting Period. These suppliers were ranked based on the total volume of In-Scope Components supplied or forecasted to be supplied to the Company for the Reporting Period. The In-Scope Suppliers were then separated into groups according to volume of parts supplied to the Company: high volume, mid-volume and low volume. The In-Scope Suppliers were then randomly selected from these groups such that the survey covered 80 percent of volume from high volume suppliers, 15 percent of volume from mid-volume suppliers and 5 percent of volume from low volume suppliers. The All-Makes Survey followed a similar selection process to the Equipment Survey.

 

Due to the higher risk associated with electronics components, the Electronics Survey surveyed nearly all of the Company’s electronics In-Scope Suppliers. The In-Scope Suppliers were separated into groups according to volume of parts supplied to the Company: high volume, representing 99.9 percent of volume of the In-Scope Components, and low volume, representing 0.1 percent of volume of the In-Scope Components. The In-Scope Suppliers were randomly selected such that the Electronics Survey covered 100 percent of volume from high volume suppliers and 5 percent of low volume suppliers. As a result of the Surveys, the Company surveyed approximately 71 percent of all of its volume of In-Scope Components during the Reporting Period.

 

c.             Survey of In-Scope Suppliers

The Company collected conflict minerals data from In-Scope Suppliers for each unique part supplied to the Company during the Reporting Period. Each In-Scope Supplier surveyed was required to make part-specific declarations to the Company. The Equipment Survey used the standard industry reporting template, the Conflict Minerals Reporting Template (“CMRT”), published by the Conflict-Free Sourcing Initiative (“CFSI”), to review conflict minerals risk within the supply chain and identify smelters of origin. The Company also developed proprietary software to conduct the Equipment Survey. The system enabled the Company to communicate with In-Scope Suppliers, to make an initial risk assessment and to assist In-Scope Suppliers in completing the CMRT accurately.

 

The Electronics Survey was conducted with the assistance of a third party survey protocol. The Electronics Survey also utilized the CMRT, although the third party was contracted to procure the responses. In all cases, In-Scope Suppliers were asked to complete the survey within five weeks after receipt of the request. Additionally, In-Scope Suppliers were required automatically to update their responses with a new CMRT should an In-Scope Component that is the subject of an CMRT change during the Reporting Period. In accordance with the OECD Guidelines, the Company relies on third party audits by the Conflict Free Smelter Program (“CFS”) to validate the conflict free status of mineral smelters. The Company relies on the list of third party verified CFS smelters to determine the conflict status of the smelters identified in the supplier CMRT responses.

 

The Equipment Survey received complete CMRTs from approximately 82 percent of the In-Scope Suppliers surveyed, representing approximately 94 percent of the volume of the In-Scope Components of those suppliers. The All-Makes Survey received complete CMRTs from approximately 97 percent of the In-Scope Suppliers surveyed, representing approximately 100 percent of the volume of the In-Scope Components of those suppliers. The Electronics Survey received complete CMRTs from approximately

 

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97 percent of the In-Scope Suppliers surveyed, representing approximately 100 percent of the volume of the In-Scope Components of those suppliers. On a combined basis, the Company received complete CMRTs from approximately 87 percent of its In-Scope Suppliers surveyed, representing approximately 95 percent of the volume of the Company’s In-Scope Components of those suppliers.

 

The CM Team evaluated the CMRTs and assessed a risk level for each In-Scope Supplier response. The risk evaluation was based on the risks outlined in the OECD Guidelines. Based on the risk evaluation, the CM Team determined whether further due diligence was required on any In-Scope Supplier. The CM Team contacted certain In-Scope Suppliers to verify the information provided on the CMRT. The results from the Surveys were combined after completing the due diligence procedures.

 

d.            Strategies to Address Identified Risks within the Supply Chain

In preparation for the due diligence performed for the Reporting Period, the Company improved the processes implemented last year. The Company refined its data collection process to improve the response rate to the Surveys. The Company is a member of the CFSI and supports its effort to certify smelters as conflict-free, including the Conflict Free Smelter Program (“CFSP”) that identifies smelters and refiners that have systems in place to assure sourcing of conflict free materials. The Company intends to continue its due diligence efforts on its conflict minerals supply chain. The Company’s due diligence procedures will continue to develop by engaging In-Scope Suppliers to improve transparency throughout the supply chain. In accordance with the Company’s Conflict Minerals Policy, the Company will continue incorporating conflict minerals obligations into our supplier contracts. This year, the Company incorporated the Conflict Minerals Supplier Response in to the supplier evaluation process. The Company’s due diligence procedures will also continue to enforce its Conflict Minerals Policy and its Supplier Code of Conduct.

 

Part II                                                   Product Description

 

a.            Products Containing In-Scope Components

The Company’s equipment operations are categorized into two major business segments. The agriculture and turf segment primarily manufactures and distributes a full line of agriculture and turf equipment and related service parts — including large, medium and utility tractors; loaders; combines, corn pickers, cotton and sugarcane harvesters and related front-end equipment and sugarcane loaders; tillage, seeding and application equipment, including sprayers, nutrient management and soil preparation machinery; hay and forage equipment, including self-propelled forage harvesters and attachments, balers and mowers; turf and utility equipment, including riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements; integrated agricultural management systems technology and solutions; and other outdoor power products. The construction and forestry segment primarily manufactures and distributes a broad range of machines and service parts used in construction, earthmoving, material handling and timber harvesting — including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; and log skidders, feller bunchers, log loaders, log forwarders, log harvesters and related attachments.

 

As a result of the due diligence procedures described in Part I above, the Company believes that the equipment products described above contain In-Scope Components.

 

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b.            Facilities Known to Process the Covered Minerals

Attached hereto as Schedule A is a list of the facilities that, based on the due diligence process described above, are known to the Company and that the Company believes processed the Covered Minerals in the Company’s products during the Reporting Period. During the due diligence process described above, the In-Scope Suppliers identified many entities that the Company could not validate as smelters or refiners and therefore are not listed in Schedule A. A significant number of smelters that may or may not have processed the Covered Minerals in the Company’s products have not participated in the CFS and, therefore, have not yet established their conflict status.

 

c.             Country of Origin of the Covered Minerals

As a result of the due diligence procedures described in Part I above, the Company does not have sufficient information to determine conclusively the countries of origin of all Covered Minerals.

 

d.            Efforts to Determine the Mine or Location of Origin

As discussed above in Part I, the Company relies on third parties to validate the conflict status of smelter sources. The Company’s due diligence procedures are designed to identify risks within the supply chain. During the due diligence process described above, the In-Scope Suppliers identified the Covered Minerals processed by CFSP smelters may be from the countries of origin listed on Schedule B attached hereto.

 

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Schedule A

 

Facilities Known to process Covered Minerals during the Reporting Period

 

 

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Schedule B

 

Countries of Origin

 

Angola

Argentina

Austria

Belgium

Bolivia

Brazil

Burundi

Cambodia

Canada

Central African Republic

Chile

China

Colombia

Cote D’Ivoire

Czech Republic

Democratic Republic of Congo

Djibouti

Ecuador

Egypt

Estonia

Ethiopia

France

Germany

Guyana

Hungary

India

Indonesia

Ireland

Israel

Japan

Kazakhstan

Kenya

Laos

Luxembourg

Madagascar

Malaysia

Mongolia

Mozambique

Myanmar

Namibia

Netherlands

Nigeria

Peru

Portugal

Republic of Congo

Russia

Rwanda

Sierra Leone

Singapore

Slovakia

South Africa

South Korea

South Sudan

Spain

Suriname

Switzerland

Taiwan

Tanzania

Thailand

Uganda

United Kingdom

United States of America

Vietnam

Zambia

Zimbabwe

 

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