UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SD
SPECIALIZED DISCLOSURE REPORT
DRESSER-RAND GROUP INC.
(Exact name of the registrant as specified
in its charter)
| Delaware |
001-32586 |
20-1780492 |
| |
|
|
| (State or other jurisdiction of |
(Commission |
(IRS Employer |
| incorporation or organization) |
File Number) |
Identification No.) |
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West 8 Tower, Suite 1000
10205 Westheimer Road
Houston, TX, U.S.A.
112 Avenue Kleber
Cedex 16, Paris, France |
|
77042
75784 |
| (Address of principal executive offices) |
(Zip codes) |
Mark F. Mai 713-973-5356
(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 to December 31, 2014.
Item 1.01. Conflict Minerals Disclosure
and Report.
Conflict Minerals Disclosure
The Conflict Minerals Report filed for the
calendar year ended December 31, 2014, is available at http://investor.dresser-rand.com/sec.cfm.
Item 1.02. Exhibit.
The Conflict Minerals Report filed for the
calendar year ended December 31, 2014, is filed as Exhibit 1.01 hereto.
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.
| DRESSER-RAND GROUP INC. |
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| |
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| |
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| /s/ Mark F. Mai |
|
May 29, 2015 |
| Mark F. Mai |
Date |
| Vice President, General Counsel & Secretary |
|
Exhibit 1.01
Dresser-Rand Group
Inc.
Conflict Minerals Report
For the Year Ended
December 31, 2014
Dresser-Rand Group Inc. (unless the context
otherwise indicates, as used in this report, the terms “we,” “our,” “us,” the “Company,”
“Dresser-Rand” and similar terms refer to Dresser-Rand Group Inc.) is filing this report because we believe that, or
are unable to determine whether certain product(s) that we manufactured and/or contracted to manufacture in 2014 contain tin, tantalum,
tungsten or gold (collectively, “conflict minerals”) that originated in the Democratic Republic of the Congo or an
adjoining country (the “Covered Countries”), which conflict minerals may be considered necessary to the functionality
or production of such products (the “Covered Conflict Minerals”). These products (collectively, the “Covered
Products”) are: (i) Turbo Products, (ii) Reciprocating Compressors, (iii) Steam Turbines, (iv) Engines and (v) Control Systems,
are described below.
Dresser-Rand conducted due diligence on the
source and chain of custody of the Covered Conflict Minerals in the Covered Products that, based on our reasonable country of origin
inquiry (the “RCOI”), we had reason to believe may have originated in the Covered Countries and may not have come from
recycled or scrap sources. Our due diligence measures were designed to conform, in all material respects, to the OECD’s Due
Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, including the related
supplements for gold and for tin, tantalum and tungsten (the “OECD Guidance”). In accordance with the OECD Guidance,
we took the following measures as part of our due diligence process.
Our Conflict Minerals Policy and Program
| A. | The Company’s Conflict Minerals Policy. Dresser-Rand has adopted the Dresser-Rand Conflict Minerals Policy Statement
(the “Policy Statement”), which reflects the Company’s expectations that its suppliers will exercise due diligence
on, and provide documentation concerning, the source and chain of custody of the conflict minerals used in the components or products
they supply to Dresser-Rand. The stated long term goal of the Policy Statement is to promote, to the fullest extent feasible, only
“conflict free” materials and components are used in products that Dresser-Rand procures. The Policy Statement was
communicated to all Company employees in September 2013 through internal electronic communications and in April 2015 to Supply
Chain employees. In addition, certain selected individuals in the Company Supply Chain and Law departments have received more extensive
briefing on the Policy Statement through face-to-face meetings. |
| B. | The Company’s Internal Management Team. Dresser-Rand’s management has established a Conflict Minerals Working
Group comprised of representatives of the Supply Chain, Law, Finance and Compliance Departments, led by a Sourcing Specialist (the
“Working Group”). The Working Group has responsibility for (i) developing the Company’s Policy Statement; (ii)
identifying and categorizing the Company’s suppliers based on the level of conflict minerals risk; (iii) developing
the processes for the Company’s RCOI and any related due diligence; (iv) conducting the RCOI and any related due diligence,
including gathering and analyzing conflict minerals data from suppliers; and (v) preparing all necessary public disclosures, including
this Form SD and Conflict Minerals Report. |
The Working Group reports periodically to the Company’s
Chief Financial Officer and the General Counsel, and the Company’s management periodically reports to the Board of Directors
concerning the progress of the Working Group.
Our Due Diligence Process
| C. | Due Diligence. Dresser-Rand is a largely decentralized organization
with facilities worldwide that use disparate systems. Based on this dispersed organizational structure, the Company undertook a
targeted process to determine what suppliers on its global list should be contacted as part of the due diligence process. Importantly,
the Company continued to take a conservative outlook by removing a supplier from the global supplier list only if the products
that the supplier provided were known not to contain conflict minerals based on product data. This process resulted in less than
two thousand remaining suppliers on the global supplier list, and as in 2013, the Company determined to contact all of these suppliers
(the “Targeted Suppliers”). |
After the Targeted Suppliers were identified, the Company
engaged in several internal processes to determine the Company’s Covered Products. First, the Dresser-Rand Engineering Teams
were engaged to identify known Company products that contain conflict minerals. Next, the Company’s material specification
database was reviewed to identify which Company products contain conflict minerals. In addition, Dresser-Rand’s Supply Chain
Management reviewed 2014 procurement history data to identify which suppliers provided product made from a Dresser-Rand material
specification containing a conflict mineral. Those suppliers were identified as higher risk, since their products likely contain
conflict minerals. Dresser-Rand also continued to follow the definitions and assumptions document developed by the Dresser-Rand
Metallurgical Team regarding what conflict minerals are necessary to the functionality or production of Company products, based
on the conflict minerals rules and the guidance provided by the Securities and Exchange Commission.
Once the Company identified its Targeted Suppliers
and Covered Products, the Company engaged a third party vendor to assist the Company with data collection and reporting. The vendor’s
online platform offered a training guide for suppliers that explained the conflict minerals issues, and detailed the Company’s
diligence process. Information was collected using the Conflict Free Sourcing Initiative’s (“CFSI”) Conflict
Minerals Reporting Template.
The Targeted Supplier responses were reviewed and analyzed
for completeness and any “red flags” indicating that the Targeted Supplier’s conflict minerals may have originated
in the Covered Countries. Where any incompleteness or red flags were identified, follow-up was conducted with those suppliers via
email and telephone calls. As outlined in the OECD Guidance with respect to the recommendations for “downstream” companies
with no direct relationships to smelters or refiners, we support an industry initiative that audits smelters’ and refiners’
due diligence activities, rather than performing direct audits of the due diligence activities of these facilities. That industry
initiative is the EICC and GeSI’s CFSI, which we support through our membership and participation.
| D. | Supplier Engagement. Supplier engagement in the due diligence process was, and continues to be, a key priority
for Dresser-Rand. First, information was collected and stored using an online platform provided by our third party vendor. Our
Supplier engagement efforts were as follows: |
| · | The Company sent an email to the Target Suppliers providing an introduction to the Conflict Minerals program and third party
vendor. |
| · | Following the initial introduction, at least three reminder emails were sent to each non-responsive supplier requesting survey
completion. |
| · | Suppliers which remained non-responsive and noted as “high risk” were contacted by phone and offered assistance.
The assistance included, but was not limited to, further information about the Conflict Minerals Compliance Program, an explanation
of why the information was being collected, a review of how the information would be used and clarification regarding how the information
needed could be provided. |
Second, the Company focused on preparing Company employees
to engage with suppliers by global email notification. In addition, copies of all materials provided to the suppliers, and a “Question
& Answer List” for new or potential suppliers, were posted to the internal Company intranet.
Third, members of the Working Group participated in
various conflict minerals webinars and industry-driven training programs to review Company obligations under the conflict minerals
rules, and assist the Working Group in facilitating supplier engagement in the due diligence process. In 2014 Dresser-Rand also
joined CFSI.
Our Strategy to Address Identified Risks
| E. | Company Risk Management Strategy. Dresser-Rand is continuing to develop its strategy to manage identified risks in the
supply chain (i.e. those suppliers that are unable to indicate that their minerals are conflict free). The Company’s risk-management
strategy will continue to be tailored to the specific risks that are identified through increased future supplier disclosure; however,
such strategy may include (1) engaging with our Targeted Suppliers to improve their understanding of and participation in Company
information gathering, (2) developing an internal Company policy with respect to suppliers that source from Covered Countries,
and (3) continuing to support the development of the CFSI Conflict Free Smelter Program and other industry-specific initiatives. |
| F. | Reporting Mechanism. Dresser-Rand takes seriously the importance of an open reporting mechanism for communications about
conflict minerals. Therefore, the Company has established a confidential Ethics Hotline for the reporting of violations of law,
Company policies or other concerns, including concerns related to the Company’s conflict minerals policies. The Ethics Hotline
is currently available in most countries in which the Company operates. Reports submitted to the Ethics Hotline, as well as communications
received directly by management, are reviewed quarterly by the Audit Committee of the Board of Directors, and annually by the full
Board. |
| Part II. | Product Description |
Covered Products
Dresser-Rand identified the following categories of Covered
Products that we manufactured or contracted to manufacture during the 2014 reporting period:
| (i) | Turbo Products: Include centrifugal compressors, gas turbines and power turbines. Centrifugal compressors utilize turbo machinery
technology that employs a series of graduated impellers to increase pressure dynamically. Generally, these centrifugal compressors
are used to move a variety of gases through gas processing, refining, and petrochemical facilities; gather gas in oil and gas fields;
export gas from main gathering or processing facilities; move gas in pipelines from production to processing, distribution and/or
consumption centers; re-inject natural gases into petroleum fields to maintain or increase reservoir pressure and aid production
or increase petroleum recovery; or re-inject CO2 to meet regulatory requirements or enhance recovery. Applications for our turbo
products include gas gathering, lift, export and injection; CO2 compression for enhanced oil recovery; storage and transmission;
synthetic fuels; ethylene and fertilizer production; refineries and chemical production; CCS and CAES. |
| (ii) | Reciprocating Compressors: Use a traditional piston and cylinder engine design to increase gas pressure. Applications for our
reciprocating compressors include upstream production (gas lift, boil-off/residue gas, export, gathering, processing, LNG and natural
gas liquids (“NGL”); midstream services (gas transport, storage, fuel gas and CO2 injection) and downstream processing
(gas-to-liquids (GTL), hydrogen (H2) production, various other refining applications, cool gas, methanol and ethylene, ammonia
(NH3), nitric acid and urea). |
| (iii) | Steam Turbines: Use steam from power plant or process facilities or renewable or waste energy sources, and expand it through
nozzles and fixed and rotating vanes, converting the steam energy into mechanical energy of rotation. These units are used primarily
as mechanical drives for water and oil pumps, fans, compressors and generations, and process
industries, generator sets for on-site power and distributed energy for simple cycle, and cogeneration applications. |
| (iv) | Engines: Include diesel, gas and dual fuel internal combustion reciprocating engines. The Company’s engines cover
a power range of up to 1.5 MW. These engines are used in 1) industrial applications and power generation, 2) marine propulsion
and auxiliary generation, and 3) environmental solutions, CHP and bioenergy (waste water treatment plant, landfill and biogas generation). |
| (v) | Control Systems: a device, or set of devices, that manages, commands, directs or regulates the behavior of other device(s)
or system(s). |
Results of our Due Diligence Measures
As a downstream purchaser of conflict minerals,
our due diligence measures can provide only reasonable, not absolute, assurance regarding the source and chain of custody of the
necessary conflict minerals. Our due diligence processes are primarily based on requesting information from our direct suppliers,
and those suppliers requesting similar information within their supply chains to identify the original sources of the necessary
conflict minerals. As such, our efforts are dependent on the information provided by our suppliers, which may be inaccurate, incomplete
or subject to fraud. We also rely on the country of origin and other data that is available to us through our membership in the
CFSI.
We reviewed the information reported to us
by our Targeted Suppliers through the CFSI Conflict Minerals Reporting Template. In total, conflict mineral surveys were sent to
1,662 Targeted Suppliers, estimated to represent over $345M in spend for 2014. The response rate among these suppliers represented
over 47% ($163M) of the Targeted Suppliers, by spend. Of the responding suppliers, 43% indicated one or more of the conflict minerals
as necessary to the functionality or production of the products they supply to Dresser-Rand. Our efforts to determine the mine
or location of origin of necessary conflict minerals with the greatest possible specificity focused on a review of whether the
smelter and refiner facilities reported to be in the supply chain of our Targeted Suppliers were compliant with the Conflict Free
Smelter Program or similar certification program. At this time 120 smelter and refiner facilities are reported to be in the combined
supply chains of our Targeted Suppliers. Overall, 67% (80) of the 120 smelters and refiner facilities were certified as conflict
free by the Conflict Free Smelter Program or similar certification program.
Based on the Targeted Suppliers’ responses, many of our
suppliers are still contacting their sub-tier suppliers to determine the origin of their conflict minerals. Almost all supplier
responses provided information at a company or division level, rather than at a product level for the facilities that contributed
conflict minerals used in the Covered Products, and therefore, the information provided was not necessarily limited to the facilities
confirmed to be in the Company’s supply chain. As a result, we do not have conclusive information regarding the country of
origin of, or facilities used to process, the conflict minerals used in the Covered Products for the 2014 reporting period.
Product Determination
Based on our due diligence measures described above, we do
not have sufficient information regarding the smelters and refiners that processed the necessary conflict minerals in the Covered
Products to determine whether those necessary conflict minerals originated in the Covered Countries and, if so, came from recycled
or scrap sources or were or were not from other conflict free sources.
Future Risk Mitigation Strategy
In order to reduce the risk that the conflict minerals contained
in our products are benefitting armed groups in the Covered Countries, Dresser-Rand intends to follow the Company Risk Management
Strategy outlined in Part I.E above. In the future, Dresser-Rand expects to take appropriate actions, as feasible, to transition
from non-conflict-free sources to conflict-free sources.