Stock Analysis on Net
Stock Analysis on Net

Lam Research Corp. (NASDAQ:LRCX)

Analysis of Goodwill and Intangible Assets

Microsoft Excel LibreOffice Calc

Goodwill and Intangible Asset Disclosure

Lam Research Corp., balance sheet: goodwill and intangible assets

US$ in thousands

Microsoft Excel LibreOffice Calc
Jun 27, 2021 Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016
Goodwill 1,490,134  1,484,436  1,484,597  1,484,904  1,385,673  1,386,276 
Customer relationships 630,303  630,137  630,165  630,220  615,164  615,272 
Existing technology 669,359  668,992  669,399  669,520  643,196  643,433 
Patents and other intangible assets 132,774  98,342  126,235  99,767  73,067  72,167 
Intangible assets, gross 1,432,436  1,397,471  1,425,799  1,399,507  1,331,427  1,330,872 
Accumulated amortization (1,300,071) (1,228,939) (1,208,849) (1,081,671) (920,432) (765,951)
Intangible assets, net 132,365  168,532  216,950  317,836  410,995  564,921 
Goodwill and intangible assets 1,622,499  1,652,968  1,701,547  1,802,740  1,796,668  1,951,197 

Based on: 10-K (filing date: 2021-08-17), 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Lam Research Corp.’s goodwill decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Intangible assets, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Lam Research Corp.’s intangible assets, net decreased from 2019 to 2020 and from 2020 to 2021.
Goodwill and intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Lam Research Corp.’s goodwill and intangible assets decreased from 2019 to 2020 and from 2020 to 2021.

Adjustments to Financial Statements: Removal of Goodwill

Lam Research Corp., adjustments to financial statements

US$ in thousands

Microsoft Excel LibreOffice Calc
Jun 27, 2021 Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016
Adjustment to Total Assets
Total assets (as reported) 15,892,152  14,559,047  12,001,333  12,479,478  12,122,765  12,271,528 
Less: Goodwill 1,490,134  1,484,436  1,484,597  1,484,904  1,385,673  1,386,276 
Total assets (adjusted) 14,402,018  13,074,611  10,516,736  10,994,574  10,737,092  10,885,252 
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 6,027,188  5,172,494  4,673,865  6,501,851  6,817,451  5,894,517 
Less: Goodwill 1,490,134  1,484,436  1,484,597  1,484,904  1,385,673  1,386,276 
Stockholders’ equity (adjusted) 4,537,054  3,688,058  3,189,268  5,016,947  5,431,778  4,508,241 

Based on: 10-K (filing date: 2021-08-17), 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17).


Lam Research Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Lam Research Corp., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Jun 27, 2021 Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016
Total Asset Turnover
Reported total asset turnover 0.92 0.69 0.80 0.89 0.66 0.48
Adjusted total asset turnover 1.02 0.77 0.92 1.01 0.75 0.54
Financial Leverage
Reported financial leverage 2.64 2.81 2.57 1.92 1.78 2.08
Adjusted financial leverage 3.17 3.55 3.30 2.19 1.98 2.41
Return on Equity (ROE)
Reported ROE 64.85% 43.53% 46.89% 36.62% 24.90% 15.51%
Adjusted ROE 86.15% 61.06% 68.71% 47.45% 31.26% 20.28%
Return on Assets (ROA)
Reported ROA 24.59% 15.47% 18.26% 19.08% 14.00% 7.45%
Adjusted ROA 27.14% 17.22% 20.84% 21.65% 15.81% 8.40%

Based on: 10-K (filing date: 2021-08-17), 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Lam Research Corp.’s adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Lam Research Corp.’s adjusted financial leverage ratio increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Lam Research Corp.’s adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Lam Research Corp.’s adjusted ROA deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Lam Research Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Jun 27, 2021 Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016
As Reported
Selected Financial Data (US$ in thousands)
Revenue 14,626,150  10,044,736  9,653,559  11,076,998  8,013,620  5,885,893 
Total assets 15,892,152  14,559,047  12,001,333  12,479,478  12,122,765  12,271,528 
Activity Ratio
Total asset turnover1 0.92 0.69 0.80 0.89 0.66 0.48
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenue 14,626,150  10,044,736  9,653,559  11,076,998  8,013,620  5,885,893 
Adjusted total assets 14,402,018  13,074,611  10,516,736  10,994,574  10,737,092  10,885,252 
Activity Ratio
Adjusted total asset turnover2 1.02 0.77 0.92 1.01 0.75 0.54

Based on: 10-K (filing date: 2021-08-17), 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17).

2021 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= 14,626,150 ÷ 15,892,152 = 0.92

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 14,626,150 ÷ 14,402,018 = 1.02

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Lam Research Corp.’s adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Jun 27, 2021 Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016
As Reported
Selected Financial Data (US$ in thousands)
Total assets 15,892,152  14,559,047  12,001,333  12,479,478  12,122,765  12,271,528 
Stockholders’ equity 6,027,188  5,172,494  4,673,865  6,501,851  6,817,451  5,894,517 
Solvency Ratio
Financial leverage1 2.64 2.81 2.57 1.92 1.78 2.08
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets 14,402,018  13,074,611  10,516,736  10,994,574  10,737,092  10,885,252 
Adjusted stockholders’ equity 4,537,054  3,688,058  3,189,268  5,016,947  5,431,778  4,508,241 
Solvency Ratio
Adjusted financial leverage2 3.17 3.55 3.30 2.19 1.98 2.41

Based on: 10-K (filing date: 2021-08-17), 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17).

2021 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 15,892,152 ÷ 6,027,188 = 2.64

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 14,402,018 ÷ 4,537,054 = 3.17

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Lam Research Corp.’s adjusted financial leverage ratio increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Jun 27, 2021 Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income 3,908,458  2,251,753  2,191,430  2,380,681  1,697,763  914,049 
Stockholders’ equity 6,027,188  5,172,494  4,673,865  6,501,851  6,817,451  5,894,517 
Profitability Ratio
ROE1 64.85% 43.53% 46.89% 36.62% 24.90% 15.51%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income 3,908,458  2,251,753  2,191,430  2,380,681  1,697,763  914,049 
Adjusted stockholders’ equity 4,537,054  3,688,058  3,189,268  5,016,947  5,431,778  4,508,241 
Profitability Ratio
Adjusted ROE2 86.15% 61.06% 68.71% 47.45% 31.26% 20.28%

Based on: 10-K (filing date: 2021-08-17), 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17).

2021 Calculations

1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 3,908,458 ÷ 6,027,188 = 64.85%

2 Adjusted ROE = 100 × Net income ÷ Adjusted stockholders’ equity
= 100 × 3,908,458 ÷ 4,537,054 = 86.15%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Lam Research Corp.’s adjusted ROE deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jun 27, 2021 Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income 3,908,458  2,251,753  2,191,430  2,380,681  1,697,763  914,049 
Total assets 15,892,152  14,559,047  12,001,333  12,479,478  12,122,765  12,271,528 
Profitability Ratio
ROA1 24.59% 15.47% 18.26% 19.08% 14.00% 7.45%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income 3,908,458  2,251,753  2,191,430  2,380,681  1,697,763  914,049 
Adjusted total assets 14,402,018  13,074,611  10,516,736  10,994,574  10,737,092  10,885,252 
Profitability Ratio
Adjusted ROA2 27.14% 17.22% 20.84% 21.65% 15.81% 8.40%

Based on: 10-K (filing date: 2021-08-17), 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17).

2021 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 3,908,458 ÷ 15,892,152 = 24.59%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 3,908,458 ÷ 14,402,018 = 27.14%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Lam Research Corp.’s adjusted ROA deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.