SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Specialized Disclosure Report
NUANCE COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of
(Commission File Number)
(IRS Employer Identification Number)
1 Wayside Road Burlington, Massachusetts 01803
(Address of Principal Executive Offices)
Kenneth M. Siegel
Executive Vice President and Chief Legal Officer
(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:
Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1, 2017 to December 31, 2017.
Section 1 - Conflict Minerals Disclosure
Item 1.01 Conflict Minerals Disclosure and Report
A copy of the Company’s Conflict Minerals Report filed for the calendar year ended December 31, 2017 is publicly available at www.Nuance.com under “Corporate Governance.”
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 1.01 to this report.
Section 2 - Exhibits
Item 2.01 Exhibit
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.
NUANCE COMMUNICATIONS, INC.
By: /s/ Kenneth M. Siegel
Kenneth M. Siegel
Executive Vice President and
Chief Legal Officer
Dated: May 31, 2018
Nuance Communications, Inc.
Conflict Minerals Report
For The Year Ended December 31, 2017
This Conflict Minerals Report for the year ended December 31, 2017 (this “CMR”) is presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934, as amended (the “Rule”), which requires certain reporting and disclosure related to conflict minerals. “Conflict minerals” are currently defined as columbite-tantalite, cassiterite, gold, wolframite, or their derivatives, which are limited to tin, tantalum, tungsten and gold (collectively, “3TGs”) for the purpose of this assessment. These requirements apply to registrants whatever the geographic origin of their conflict minerals and whether their conflict minerals fund armed conflict. Please refer to the Rule, Form SD, and SEC Release No. 34-67716 for definitions to the terms used in this CMR, unless otherwise defined herein.
Statements in this CMR are based on our due diligence activities performed in good faith for the calendar year 2017 and are based on information available at the time of this filing, unless otherwise indicated. Factors that could affect the accuracy of these statements include,
but are not limited to, incomplete supplier data or available smelter and refiner (collectively referred to as “smelters”) data, errors or omissions by suppliers or smelters, ongoing certifications of suppliers or smelters, continued guidance or amendments to the Rule, and other factors. Additionally, this CMR may contain forward-looking statements that reflect what we strive to achieve in the future as we continue to improve our due diligence program. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties.
References to our websites and information available through these websites are not incorporated into this CMR.
Throughout this CMR, we use “Nuance,” “we,” “our,” “us” and similar terms to refer to Nuance Communications. Inc. and its subsidiaries (collectively, “Nuance”).
We are a leading provider of voice recognition solutions and natural language understanding technologies. We work with companies around the world, from banks and hospitals to airlines, carriers, and car manufacturers, who use our solutions and technologies to create better experiences for their customers and their users by enhancing the users' experience, increasing productivity and customer satisfaction. We offer our customers high accuracy in automated speech recognition, capabilities for natural language understanding, dialog and information management, biometric speaker authentication, text-to-speech, optical character recognition ("OCR") capabilities, and domain knowledge, along with professional services and implementation support. Using advanced analytics and algorithms, our technologies create personalized experiences and transform the way people interact with information and the technology around them.
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.
Supply Chain Overview
Our supply chain contains multiple levels between Nuance and the smelter or refiner (“SOR”) of any “conflict minerals, and their derivatives (“3TGs”). Our suppliers are numerous, complex, and include both manufacturing and component suppliers. In order to determine the source of materials mined and smelted which become discrete or raw materials in components or products provided to us, 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.
Due to the complexity of our supply chain, it will take a continuous and significant amount of additional effort for many of our suppliers to verify the origin of all the 3TGs used in the components or products provided to us. Because of the complexity of our own products, and the constant evolution of our multi-tiered supply chain, it is difficult to identify multiple levels of sub-tier suppliers from our direct suppliers. We continue to perform our supply chain due diligence processes, driving accountability within the supply chain by leveraging the Conflict Free Sourcing Initiative (“CFSI”) and the Conflict Free Smelter Program (“CFSP”), investigating alternative suppliers and parts, while continuing our outreach efforts to further develop deeper transparency in our supply chain. We do not have a direct relationship with 3TG SORs, nor do we perform direct audits of these entities that provide our supply chain with 3TGs. We rely upon the CFSI’s efforts and our sub-tier supply chain partners to influence smelters and refineries to get audited and certified through the CFSI’s CFSP.
Reasonable Country of Origin Inquiry
We conducted several reasonable country of origin inquiries (RCOI) regarding 3TGs utilized in our products and product components to determine whether those 3TGs present in the Company’s products originated in the Democratic Republic of the Congo (“DRC”).
We performed an analysis of our products and/or product components and determined that more than 3,000 suppliers provide products and product components to us. We analyzed the responses of these suppliers and publicly available information to identify those that may have products or product components containing 3TGs. From this analysis, we identified 86 suppliers that merited additional analysis. Through product evolution 36 suppliers were eliminated from ongoing analysis as they no longer supply parts or materials to us. Of the remaining 50 suppliers further analyzed for determination of whether their products or components contained 3TGs, we eliminated 29 suppliers from further analysis based on our assessment that the products they supplied to us were not covered by Rule 13p-1 (the “Rule”) under the Securities Exchange Act of 1934 (the “1934 Act”).
For the remaining 21 suppliers, we surveyed each supplier using the Conflict Minerals Reporting Template (“CMRT”). Of the 21 suppliers so identified and surveyed, 8 responded with written confirmation that they do not use 3TGs, 8 responses were incomplete, and 5 responses indicated use of 3TGs in the products and components supplied to us.
We communicated with these suppliers to educate them regarding the relevant SEC requirements, our expectations, and training resources. We surveyed these 21 suppliers using the CMRT, version 5.10 established by the CFSI. We followed up with additional communications with those suppliers that did not respond to the survey or provided an incomplete response. We encourage our suppliers to source from smelters that have undergone an audit in accordance with the CFSP. We have relied on these supplier’s responses to provide us with information about the source of 3TGs contained in the products and components supplied to us. These direct suppliers are similarly reliant upon information provided to them by their suppliers.
Our Conflict Minerals Policy is available on our website and is communicated to our suppliers. Our cross functional working group oversees the RCOI, 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.
Nuance’s company web site provides access to our company legal notices page, which includes our Conflict Minerals Policy, and provides information on how to report any violation of our Code of Ethics, or applicable laws and regulations, or other company policies, for interested parties to report concerns regarding legal matters, including our sourcing of 3TGs. Our legal team investigates reported matters and takes remedial action, as necessary.
Due Diligence Design
The design of the Company’s due diligence process conforms with the due diligence related steps 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, second edition, and the related supplements.
Due Diligence Measures Performed
We compared SOR information received from our suppliers to the CFSI’s conflict free SOR list.
We have filed our Form SD and Conflict Minerals Report with the Securities and Exchange Commission and made it publicly available via our website.
At this point in our due diligence process, we are unable to identify all the smelters, refineries or recyclers and scrap supplier sources or the country of origin for the 3TGs in our products and components. The efforts to determine the mine or location of origin with the greatest possible specificity include the RCOI and due diligence procedures noted above.
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:
Engaged with a third party professional services firm to assist us in reviewing our due diligence program;
Enhance supplier communication and escalation procedures to improve due diligence data accuracy and completion at various points in the supply chain process;
Enhance the processes in our due diligence program to increase our confidence in the credibility and reliability of the information received from our suppliers to position us at a future date to disclose smelters or refiners of 3TGs contained in our products or components;
Continue to encourage the use of conflict-free smelters by our supply chain, where possible;
Continue to work with our suppliers who may be sourcing from non-conflict-free smelters or smelters relying on uncertain sources of raw materials, 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, the availability of alternative suppliers, and the time required to requalify a product with any new component or material; and
Establish a management escalation procedure with respect to 3TGs to provide a mechanism for escalating issues and concerns regarding 3TG transparency and elimination of non-conflict-free minerals from the products and components provided to us.