UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SD
Specialized
Disclosure Report
NUANCE COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE |
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001-36056 |
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94-3156479 |
(State or Other Jurisdiction of
Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification Number) |
1 Wayside Road Burlington, Massachusetts 01803
(Address of Principal Executive Offices)
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Thomas L. Beaudoin |
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(781) 565-5000 |
(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:
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Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2014. |
Section 1- Conflict Minerals Disclosure
Item 1.01 Conflict Minerals Disclosure and Report
Nuance Communications, Inc. (the Company) has determined that tantalum, tin, tungsten and/or gold, collectively 3TGs are necessary to
the functionality or production of certain of the Companys products.
The Company conducted a Reasonable Country of Origin Inquiry regarding 3TGs
utilized in its products. That Reasonable Country of Origin Inquiry was designed to determine whether those 3TGs present in the Companys products originated in the Democratic Republic of the Congo or an adjoining country or arose from recycled
or scrap sources. That Reasonable Country of Origin Inquiry revealed that the Companys 3TGs did not likely arise from scrap or recycled sources but may have originated in the Democratic Republic of the Congo or an adjoining country,
collectively DRC.
The Company exercised due diligence regarding the source and chain of custody of its 3TGs through utilization of a
nationally recognized due diligence framework, as more particularly described in the Companys Conflict Minerals Report filed as Exhibit 1.01 hereto. The Company, however, is unable, after exercising due diligence, to determine whether its
products contain 3TGs that directly or indirectly finance or benefit armed groups in the DRC. As such, the Companys products produced in calendar year 2014 are DRC Conflict Undeterminable.
Item 1.02 Exhibit
A copy of the Companys
Conflict Minerals Report is filed as Exhibit 1.01 hereto and is also publicly available at www.Nuance.com under Corporate Governance.
Section 2- Exhibits
Exhibit 1.01-
Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.
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SIGNATURE
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 undersigned hereunto duly authorized.
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NUANCE COMMUNICATIONS, INC. |
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By: |
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/s/ Thomas L. Beaudoin |
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Thomas L. Beaudoin, Executive Vice President
and Chief Financial Officer
Dated: June 1, 2015 |
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Exhibit 1.01
Nuance Communications Inc., Inc.
Conflict Minerals Report
For The Year Ended December 31, 2014
This report for the year ended December 31, 2014 is presented to comply with Rule 13p-1 (the Rule) under the Securities Exchange Act of 1934
(the 1934 Act). The Rule was adopted by the Securities and Exchange Commission (SEC) to implement reporting and disclosure requirements related to conflict minerals as directed by the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (Dodd-Frank Act). The Rule imposes certain reporting obligations on SEC registrants whose manufactured products (including products contracted to be made for the registrant) contain conflict minerals which
are necessary to the functionality or production of their products. The Rule defines conflict minerals as cassiterite, columbite-tantalite, gold, wolframite, and their derivatives, which are limited to tin, tantalum, tungsten and gold
(collectively, 3TGs) for the purposes of this assessment. These requirements apply to registrants whatever the geographic origin of the conflict minerals and whether or not they fund armed conflict.
If a registrant can establish that the 3TGs originated from sources other than the Democratic Republic of the Congo or an adjoining country (the Covered
Countries), or from recycled and scrap sources, they must submit a Form SD which describes the Reasonable Country of Origin Inquiry completed.
If a
registrant has reason to believe that any of the 3TGs in their supply chain may have originated in the Covered Countries, or if they are unable to determine the country of origin of those 3TGs, then the issuer must exercise due diligence on the
3TGs source and chain of custody. The registrant must annually submit a report, Conflict Minerals Report (CMR), to the SEC that includes a description of those due diligence measures.
This CMR has not been subject to an independent private sector audit. The Rule provides that if a registrants products are DRC Conflict
Undeterminable in 2014, the CMR is not subject to an independent private sector audit.
Company Overview
Nuances solutions are used in the healthcare, mobile, consumer, enterprise customer service, and imaging markets. Our solutions are based on our
proprietary voice and language platforms and are used every day by millions of people and thousands of businesses for tasks and services such as requesting information from a phone-based self-service solution, dictating medical records, searching
the mobile Web by voice, entering a destination into a navigation system, or working with PDF documents. We offer our solutions to our customers in a variety of ways, including through products, hosting, professional services and maintenance and
support.
Products Overview
Our product lines are
classified in the following categories: software, information technology, computer hardware and other audio-electronics products, including without limitation microphones and headsets. The information set forth in Item 1, Business; of our most
recent annual report on Form 10-K filed with the SEC on November 28, 2014, is incorporated herein by reference.
Supply Chain Overview
Our supply chain contains multiple levels between Nuance and the smelter of any 3TGs. Our suppliers are numerous, complex, and include both manufacturing
partners and component suppliers. In order to determine the source of materials mined and smelted which become component materials in components or products provided to us or our customers, we necessarily rely on our direct suppliers to provide
information on the origin of the 3TGs contained in the components and materials manufactured by them and supplied to or for us, including the sources of 3TGs that are supplied to them from sub-tier suppliers.
We performed an analysis of our products and/or product components, and the suppliers that provide products and
components to us. We also communicated with our suppliers to educate them regarding the relevant SEC requirements and our supplier expectations. Our analysis was based on supplier survey responses to the items identified in the standard Conflict
Minerals reporting templates (CMRT) established by the Conflict-Free Sourcing Initiative (CFSI).
We have more than 3,000
suppliers that provide products, components, software and services across our various business units. We analyzed the responses of these suppliers and publicly available information to identify those that may have products or components containing
3TGs. From this analysis, we identified 119 suppliers that merited additional analysis. Of the 119 suppliers further analyzed for determination of whether their products or components contained 3TGs, we eliminated 36 suppliers based on our
assessment that their products were not covered by the Rule.
For the remaining 83 suppliers, we surveyed each supplier using the CMRT. Of the 83
suppliers so identified and surveyed, 27 responded with written confirmation that they do not use 3TGs, 6 responses were incomplete and 50 indicated use of 3TGs in the products or components supplied to us.
We have also established a Conflict Minerals Policy and communicated our expectation that our suppliers will determine whether or not the products or
components supplied to us contain 3TGs and the source of such raw materials and ultimately provide us certified Conflict Free finished products or components.
Reasonable Country of Origin Inquiry
We conducted a
Reasonable Country of Origin Inquiry regarding 3TGs utilized in our products. That Reasonable Country of Origin Inquiry was designed to determine whether those 3TGs present in the Companys products originated in the Democratic Republic of the
Congo or an adjoining country or arose from recycled or scrap sources. For the purpose of the required Reasonable Country of Origin Inquiry, we identified 50 suppliers of products that contain 3TGs. We provided these suppliers with the
Electronic Industry Citizen Coalition (EICC) questionnaire to assess their conflict minerals policy and the extent to which 3TGs were used in their processes. Based upon the response received, and our internal assessment of supplier
responses, we have determined that products manufactured for us contain 3TGs that did not likely arise from scrap or recycled sources but may have originated in the Democratic Republic of the Congo or an adjoining country, collectively
DRC.
Due to the breath and complexity of our supply chain, it will take a significant amount of additional effort for many of our suppliers
to verify the origin of all of the 3TGs. Using our supply chain due diligence processes, driving accountability within the supply chain by leveraging the industry standard CFSI program, investigating alternative suppliers, and continuing our
outreach efforts we hope to further develop transparency into our supply chain.
Despite having conducted a good faith Reasonable Country of Origin
Inquiry, we are unable to determine whether our products contain 3TGs that directly or indirectly finance or benefit armed groups in the DRC. As such, the Companys products produced in calendar year 2014 are DRC Conflict Undeterminable.
Due Diligence Process
Design of Our Due Diligence and
Description of the Due Diligence Process
Our due diligence processes and efforts have been developed in conjunction with standard industry practices
and guidelines using the EICC Conflict Minerals Template and with further guidance from the 2nd edition of The Organization for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals
from Conflict-Affected and High-Risk Areas and the related supplements for 3TGs. We designed our due diligence process, management and measures to conform in all material respects with the guidelines.
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Our 3TG due diligence process included: the development of a Conflict Minerals Policy, establishment of a cross
functional working group, under the oversight of our Vice President, Procurement, to oversee 3TG due diligence, compliance, record keeping, and supplier management and a robust due diligence exercise to determine the efforts of our suppliers to
identify the source of 3TGs.
Conflict Minerals Team
We have established a cross functional working group to oversee 3TG due diligence, compliance, record keeping, and supplier management. This working group,
under the oversight our Vice President, Procurement, includes members of our finance, legal, procurement, operations, research and development and operations teams and is responsible for ensuring compliance with the Rule and reporting on our
activities in this area.
Supplier Engagement
We
have continued to engage with our suppliers to gain a greater understanding of supplier compliance with the Rule. We will continue to push for 3TG transparency and elimination of conflict minerals from the products and components provided to us. We
are verifying with our suppliers if a supplier has an existing conflict minerals policy and if such policy is publically available, and are encouraging our suppliers to undergo an audit to verify if they are conflict free smelter program
(CFSP) compliant.
Escalation Procedure
We anticipate the need to establish a management escalation procedure with respect to 3TGs. This policy will provide a mechanism for escalating any issues and
concerns regarding our compliance with these requirements. We have also created additional management processes to identify and escalate any issues associated with non-responsive suppliers or problematic responses from suppliers to our qualitative
survey.
Maintain Records
We have established our
due diligence compliance process and record maintenance system to ensure the retention of relevant documentation in a structured electronic database.
Steps to be Taken to Mitigate Risk and Improve the Due Diligence Program
As we move towards improving our due diligence program, we intend to take the following steps to continue to mitigate any possible risk that the 3TGs in our
products and components could benefit armed groups in the DRC or adjoining countries:
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Enhance supplier communication and escalation procedures to improve due diligence data accuracy and completion. |
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Continue to influence the use of Conflict Free smelters to obtain CFSP status through our supply chain, where possible. |
Identify and Assess Risk in the Supply Chain
Because of
our size, the breadth and complexity of our products, and the constant evolution of our complex supply chain, it is difficult to identify multiple levels of sub-tier suppliers downstream from our direct suppliers.
We have identified more than 3,000 suppliers to our Company that provide products, components, software and services across our various business units; of
these, 119 have been identified to be within the scope of our RCOI. We have performed our initial due diligence of these suppliers and have determined that 50 suppliers have confirmed the use of 3TGs in the products and components they provide us.
We have relied on these suppliers responses to provide us with information about the source of 3TGs contained in the products and components supplied to us. Our direct suppliers are similarly reliant upon information provided by their
suppliers.
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Design and Implementation of a Strategy to Respond to Risks
We intend to continue to work with our suppliers who may be sourcing from non-Conflict Free smelters to move towards using Conflict Free smelters within a
reasonable time frame. The time frame will be dependent on the criticality of the specific component and the availability of alternative suppliers.
Carry out Independent Third Party Audit of Supply Chain Due Diligence at Identified Points in the Supply Chain
We do not have a direct relationship with 3TG smelters and refiners, nor do we perform direct audits of these entities that provide our supply chain with 3TGs.
However, we do rely upon industry (for example, EICC and CFSI) efforts to influence smelters and refineries to get audited and certified through CFSIs CFSP.
Report on Supply Chain Due Diligence and Results
Due
Diligence Process
We conducted a survey of our active suppliers using the template developed jointly by the EICC and the Global e-Sustainability
Initiative, known as the CFSI Reporting Template (the Template). The Template was developed to facilitate disclosure and communication of information regarding smelters that provide materials to a companys supply chain. It includes
questions regarding a companys conflict-free policy, engagement with its direct suppliers, and a listing of the smelters the company and its suppliers use. In addition, the template contains questions about the origin of 3TGs included in their
products, as well as supplier due diligence. The Template is being widely adopted by many companies in their due diligence processes related to 3TGs. We have also developed a secondary survey that addresses a more qualitative understanding of our
suppliers compliance approach with respect to utilizing any 3TGs from non-Conflict areas.
Efforts to Determine Country of Origin of Mine or
Conflict Minerals
Tracing materials back to their mine of origin is a complex aspect of responsible sourcing in our supply chain. By adopting the
methodology outlined by the CFSIs joint industry programs and outreach initiatives we anticipate that our suppliers and their sub-tier suppliers will conform to the standards and guidelines set forth therein.
Smelters or Refiners Identified
At this point in our due
diligence process, Nuance is unable to identify all of its smelters, refineries or recyclers and scrap supplier sources for the 3TGs in its products and components and therefore, cannot provide an opinion as whether or not the minerals procured from
smelters and refineries originate from the DRC or surrounding countries.
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