DELAWARE | 001-15461 | 73-1352174 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
5100 E. Skelly Dr., Suite 700, Tulsa, OK | 74135 | |||
(Address of Principal Executive Offices) | (Zip Code) |
¬ | Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1, 2013 to December 31, 2013. |
Section 1 | Conflict Minerals Disclosure |
Section 2 | Exhibits |
Exhibit No. | Description | |
1.02 | Conflict Minerals Report of Matrix Service Company |
By: | /s/ Kevin S. Cavanah, | Dated: June 2, 2014 | |
Kevin S. Cavanah, Vice President and Chief Financial Officer |
Exhibit No. | Description | |
1.02 | Conflict Minerals Report of Matrix Service Company |
• | Aboveground storage tanks, including cone roof, open top floating roof, internal floating roof, dome roof, knuckle roof and sloped/dished bottom tanks |
• | Liquified natural gas, or "LNG", and liquid nitrogen/liquid oxygen, or "LIN/LOX" tanks |
• | Refrigerated and cryogenic tanks |
• | Thermal energy storage tanks |
• | Digesters and clarifiers |
• | Spheres |
• | ASME pressure vessels |
• | Standpipes |
• | In March of 2013, a team was formed to consider whether the Rule is applicable to the Company's operations and, if so, to implement the necessary procedures to comply with the Rule. Included in the team were personnel from financial reporting, procurement, legal and engineering. The personnel assigned included both management and subject matter experts. |
• | The team's initial tasks were to : 1) evaluate whether the Company manufactures or contracts to manufacture any products within the meaning of the Rule so that the Company could determine the extent and areas of focus of the diligence procedures; and 2) to assess whether the Company believed any Conflict Minerals were included in the products and whether any Conflict Minerals were necessary to the functionality the products. |
◦ | Regarding whether an activity constituted a manufacturing activity or the provision of construction services, the Company concluded that the products where some of the component parts were created in the Company's fabrication facilities were generally manufactured products. Activities completed in the fabrication facilities generally include purchasing carbon steel and modifying the steel for field erection. The Company also considered whether product specifications and design was determined by the customer or the Company. Based on these criteria, the Company determined that substantially all of the new tank construction within its Storage Solutions segment would be considered a manufactured product and that material handling services would also be considered a manufactured product because the Company typically has a high degree of control over the design and material specifications of the product. |
◦ | Regarding whether Conflict Minerals were included in the manufactured products and were necessary to the functionality of the manufactured products the Company's initial conclusion was that, although the Company wasn't aware of any Conflict Minerals, some degree of uncertainty remained. The only use of Conflict Minerals initially identified was tungsten, which is used as a heat source for welding, and tantalum which can sometimes be used as a surface hardener for equipment used in the manufacturing process. Since neither the tungsten nor the tantalum are included in the finished product, the Company's initial conclusion was that its manufactured products do not constitute Covered Products. |
• | The Company then identified all significant vendors and subcontractors who provide materials included in the manufactured products. For these vendors, the Company distributed EEIC-GeSI Conflict Minerals Template on December 4, 2013. The Company requested that each supplier determine (i) if any of their materials and supplies contain Conflict Minerals, and (ii) if the products do contain Conflict Minerals, to identify the smelters from which the Conflict Minerals were sourced. If they did not source directly from the smelter, the suppliers were instructed to engage their vendors to determine the source of the Conflict Mineral. These templates were due back the Company on January 31, 2014. |
• | As a construction contractor, the Company's operations are geographically diverse. It is common to select suppliers based on the location of the work relative to the physical location of the supplier. Therefore, the number of suppliers is significant and many are used on a very limited or one-time basis. The Company's approach in selecting vendors was to identify suppliers that are routinely used in the manufacture its products. In selecting, the Company considered both the dollar value of the materials purchased and the number and frequency of invoices that were processed. Based on this |
• | As mentioned above, the Company distributed the template to approximately 100 suppliers on December 4, 2013. The communication was sent to the address included in the vendor master file. The vendor's response was due to the Company on January 31, 2014. The Company selected this timing for the following reasons: 1) so that the vendor could report on the period covered by the Conflict Minerals Report (January 1, 2013 to December 31, 2013); 2) the Company would have sufficient time to follow up if no response was received or if the response received was incomplete; and 3) the Company would have sufficient time to analyze and report on the responses received. |
• | The initial response rate was approximately 15%. Of the responses received, two suppliers reported that they purchased materials and supplies that contained Conflict Minerals. One of the suppliers stated they require that their suppliers certify that the Conflict Mineral contained in their products are not sourced from a Covered Country while the other supplier stated that the letters received from their suppliers certified that the Conflict Mineral did not originate in a Covered Country. Neither supplier specified the country of origin or the specific smelter of the Conflict Minerals. One other supplier noted that their product did contain a Conflict Mineral and the the origin of the Conflict Mineral was unknown. The Company is currently assessing what steps, if any, to take with this supplier regarding future business. The remaining vendors stated that there were no Conflict Minerals included in their products. |
• | The Company performed follow-up procedures with the vendors who did not respond to the initial request. The follow up procedures were conducted in February and March of 2014. The procedures consisted of the Company's purchasing agents and operational personnel contacting the vendor and requesting that the vendors complete the Conflict Minerals Template. After the additional procedures, the Company received additional responses of approximately 10% of the total group. The Company received one response that stated that no Conflict Minerals were intentionally added to the vendor's products and if they were unintentionally added they would have been from scrap sources or from locations that are not Covered Countries. Another vendor stated that their products did contain Conflict Minerals but were sourced from scrap and recycle suppliers. The remaining vendors stated that there were no Conflict Minerals included in their products. |
• | The Company will continue to work with suppliers who provided incomplete or insufficient information in an effort to obtain complete and accurate information in 2014. |
• | The Company will again request information and supporting data from each supplier providing materials to the Company by utilizing the EEIC-GeSI Conflict Minerals Reporting Template; and will pursue a completed template response that identifies material down to the smelter or mine. |
• | The Company will again follow its due diligence process to review and validate supplier responses that are obtained in support of the Company's 2014 conflict minerals reporting. |
• | The Company will provide its Conflict Minerals Policy to suppliers as part of its EEIC-GeSI Conflict Minerals Reporting Template based supplier inquiry process for 2014. |
• | The Company is adding a Conflict Minerals clause to its purchase order and standard subcontract agreement. |