Sustainability Report 2008/2009
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Sustainability Report 2008/2009 www.analog.com A Message from Our CEO Innovating to make a difference is a tenet motivated and committed to solving challenges, innovating to provide that has always been at the heart of what we differentiation, and making a real difference. Our employees bring do here at Analog Devices, Inc. (ADI). In fact, exceptional drive and focus, not only to ADI’s business, but also to their nearly 45 years ago, ADI was founded on the role of improving the world around them. belief that we could make a difference by providing innovative technology to solve our In this, our second sustainability report, we are pleased to share with customers’ engineering challenges. Today, you the many examples of how we continue to create sustainable value this principle transcends everything we do. through our environmental stewardship, social responsibility, and eco- We apply innovative thinking across every nomic development activities in the communities within which we do dimension of our business, all with the goal of making a difference for our business. We will describe each element of our program as defined by stakeholders — customers, employees, investors, and communities alike. the Electronic Industry Code of Conduct (EICC) and the Global Reporting Initiative, highlight some of our more significant accomplishments in Our approach to sustainability is no exception. At ADI, we believe that 2008 and 2009, and share our sustainability goals for 2010. being a trusted and valued partner, creating a rewarding workplace, being an environmental steward and a contributor to our communities, For example, during the time frame covered by this report, we began and producing solid financial results are all key to ensuring the participating in the Electronic Industry Citizenship Coalition (EICC) and continued success of our company. have started utilizing the EICC’s Electronic Industry Code of Conduct (Code), to more fully integrate sustainability into our operations. Our This starts with our technology. We design integrated circuits that existing environmental, health, and safety management system will play an integral role in enabling critical features in a wide range of serve as the foundation for a sustainability management system that electronics, including reducing power consumption, which, in turn, is required by this code. creates a competitive advantage for our customers. Whether it’s our converters and amplifiers making medical diagnosis equipment We are proud of our accomplishments to date — but, true to our culture more accurate or more portable, our accelerometers keeping of continuous improvement, we realize that there is always more to drivers safe through automotive stability control electronics, or our be done. We look forward to sharing our future achievements with you radio frequency transceivers enabling smart grid technology to as we continue to make sustainability an integral part of our business monitor energy consumption, we are making these and many other moving forward. applications more productive, safer, and greener. Our employees are 2 | Analog Devices Sustainability Report 2008/2009 • A Message from Our CEO Analog Devices Sustainability Report 2008/2009 • A Message from Our CEO | Contents A Message from Our CEO. 2 Company Profile. 4 Corporate Governance . ..................... 6 Business Ethics at ADI. 8 Sustainability at ADI. 10 Sustainability Management System. 13 Economic Impacts . ....................... 14 Environment, Health, and Safety . ............ 16 Employees . ............................. 23 Stakeholder Engagement. 26 Products, Suppliers, and Customers . ......... 27 Global Reporting Initiative . .................. 29 Analog Devices Sustainability Report 2008/2009 • A Message from Our CEO | 3 Company Profile Analog Devices, Inc., is a world leader in the design, manufacture, and marketing of high performance analog, mixed-signal, and digital signal processing integrated circuits used in industrial, automotive, healthcare, communications, computer, and consumer applications. Since our inception in 1965, we have focused on solving the engineering challenges associated with signal processing in electronic equipment. Our signal processing products translate real-world phenomena such as light, sound, temperature, motion, and pressure into electrical signals to be used in a wide array of electronic equipment. Business Operations Revenue by Geographic Region1 ADI is headquartered near Boston, in Norwood, Massachusetts, and has Region % of 2009 Revenue Direct Sales Offices manufacturing facilities in Massachusetts, Ireland, and the Philippines. United States 20% 12 We employ approximately 8300 individuals as of October 2009. Rest of North/South America 5% — Europe 25% 12 At the top level, our organization is comprised of two groups: Japan 17% 1 Core Products and Technologies (CPT) Group — focused on core China 19% 2 technology development and leadership in converters, linear, radio Rest of Asia 14% 5 frequency, microelectromechanical systems, power, and digital signal 1Based upon point of sale. processing. Products Overview Strategic Market Segments (SMS) Group — focused on applying the Used by more than 60,000 customers worldwide, our products are full expanse of ADI’s broad technology portfolio to more integrated and embedded inside many types of electronic equipment including targeted product strategies for the automotive, industrial, healthcare, industrial process controls, factory automation systems, instrumentation, consumer, and communications infrastructure markets. energy management systems, defense electronics, automobiles, medical imaging equipment, portable wireless communications devices, Our products are manufactured in our own wafer fabrication facili- cellular base stations, central office networking equipment, computers, ties using proprietary processes and at third-party wafer fabrication digital cameras, and digital televisions, among other applications. facilities, primarily Taiwan Semiconductor Manufacturing Company. We operate wafer fabrication facilities in Wilmington, Massachusetts, Across the entire range of our product portfolio are both general- and Limerick, Ireland. We also operate test facilities located in the purpose products used by a broad range of customers and applications Philippines and use third-party subcontractors for the assembly and as well as application-specific products designed for specific clusters testing of our products. of customers in key target markets. By using readily available, high performance, general-purpose products in their systems, our We sell our products worldwide through a direct sales force, third-party customers can reduce the time they need to bring new products to distributors, and independent sales representatives, as well as through market. Our standard products often provide a cost-effective solution our website. We have direct sales offices in 17 countries, including the for many low to medium volume applications. In some industrial, United States. We also have sales representatives and/or distributors automotive, communications, consumer, and computer products, we in over 40 countries outside North America. Through subsidiaries and focus on working with leading customers to design application-specific affiliates, we conduct business in numerous countries outside the solutions. We begin with our existing core technologies in data United States. During fiscal 2009, we derived approximately 80% of conversion, amplification, power management, radio frequency, MEMS, our revenue from customers in international markets. and digital signal processing (DSP) and devise a solution to more closely meet the needs of a specific customer or group of customers. 4 | Analog Devices Sustainability Report 2008/2009 • Company Profile Revenue by End Market Financial Overview % of 2009 % of 2008 % of 2007 % of 2006 Analog Devices common stock is listed on the New York Stock Markets Served 1 2 Revenue Revenue Revenue Revenue Exchange under the symbol ADI and is included in the Standard & Industrial 52 54 54 56 Poor’s 500 Index. As of October 31, 2009, the company had a market Communications 25 23 20 19 value of approximately $7.2 billion. ADI’s 2009 revenue totaled Consumer 20 20 22 20 approximately $2 billion. At the end of 2009, ADI had approximately Computer 3 4 4 5 $1.8 billion in cash. See more detailed data about Analog Devices’ 1The sum of the individual percentages does not equal 100% due to rounding. financial performance atinvestor.analog.com. 2 The year ended November 3, 2007, was a 53-week year. We follow a 52-week, or 364-day fiscal calendar that results in a 53-week year approximately every seventh year, as occurred in fiscal 2007. Financial Performance 2006 –2009 (Million $U.S.) Revenue by Product Category Continuing Operations 2009 2008 2007 2006 % of 2009 % of 2008 % of 2007 % of 2006 Product Revenue 2015 2583 2430 2250 Product Category Revenue1 Revenue Revenue2 Revenue Net Income 247 525 502 519 Converters 48 46 45 45 Amplifiers/RF 25 26 25 24 Other Analog 13 12 14 14 Power Management 6 6 5 6 and Reference DSP 9 10 10 11 1The sum of the individual percentages do not equal 100% due to rounding 2 The year ended November 3, 2007 was a 53-week year. We follow a 52-week, or 364-day fiscal calendar that results in a 53-week year approximately every seventh year, as occurred in fiscal 2007. Analog Devices Sustainability Report 2008/2009 • Company Profile | 5 Corporate Governance Good corporate governance is essential to ensuring