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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Lam Research Corp., economic profit calculation

US$ in thousands

12 months ended:	Jun 25, 2023	Jun 26, 2022	Jun 27, 2021	Jun 28, 2020	Jun 30, 2019	Jun 24, 2018
Net operating profit after taxes (NOPAT)¹	4,208,263)	5,632,304)	4,553,546)	2,400,750)	1,598,307)	2,483,755)
Cost of capital²	16.57%	16.29%	16.36%	15.61%	14.98%	15.43%
Invested capital³	14,988,170)	13,281,217)	10,857,876)	9,921,995)	7,950,916)	9,658,672)

Economic profit⁴	1,725,182)	3,468,784)	2,777,475)	851,591)	407,025)	993,355)

Based on: 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-24).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,208,263 – 16.57% × 14,988,170 = 1,725,182

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Lam Research Corp. economic profit increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Lam Research Corp., NOPAT calculation

US$ in thousands

12 months ended:	Jun 25, 2023	Jun 26, 2022	Jun 27, 2021	Jun 28, 2020	Jun 30, 2019	Jun 24, 2018
Net income	4,510,931)	4,605,286)	3,908,458)	2,251,753)	2,191,430)	2,380,681)
Deferred income tax expense (benefit)¹	(172,061)	(257,438)	(151,477)	(17,778)	(4,981)	3,046)
Increase (decrease) in allowance²	(262)	351)	(210)	444)	(322)	240)
Increase (decrease) in deferred revenue³	(213,500)	1,079,292)	581,380)	88,122)	(544,695)	28,000)
Increase (decrease) in product warranty reserves⁴	30,405)	64,500)	62,561)	1,265)	(64,548)	30,499)
Increase (decrease) in restructuring liability⁵	8,235)	—)	—)	—)	—)	—)
Increase (decrease) in equity equivalents⁶	(347,183)	886,705)	492,254)	72,053)	(614,546)	61,785)
Interest expense	186,462)	184,759)	208,597)	177,440)	117,263)	97,387)
Interest expense, operating lease liability⁷	9,028)	6,671)	3,765)	4,456)	8,825)	2,902)
Adjusted interest expense	195,490)	191,430)	212,362)	181,896)	126,088)	100,289)
Tax benefit of interest expense⁸	(41,053)	(40,200)	(44,596)	(38,198)	(26,479)	(28,352)
Adjusted interest expense, after taxes⁹	154,437)	151,230)	167,766)	143,698)	99,610)	71,937)
(Gain) loss on marketable securities	(158)	1,390)	786)	935)	(199)	43,086)
Interest income	(138,984)	(15,209)	(19,687)	(85,433)	(98,771)	(85,813)
Investment income, before taxes	(139,142)	(13,819)	(18,901)	(84,498)	(98,970)	(42,727)
Tax expense (benefit) of investment income¹⁰	29,220)	2,902)	3,969)	17,745)	20,784)	12,079)
Investment income, after taxes¹¹	(109,922)	(10,917)	(14,932)	(66,753)	(78,186)	(30,648)
Net operating profit after taxes (NOPAT)	4,208,263)	5,632,304)	4,553,546)	2,400,750)	1,598,307)	2,483,755)

Based on: 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-24).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in product warranty reserves.

⁵ Addition of increase (decrease) in restructuring liability.

⁶ Addition of increase (decrease) in equity equivalents to net income.

⁷ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 237,568 × 3.80% = 9,028

⁸ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 195,490 × 21.00% = 41,053

⁹ Addition of after taxes interest expense to net income.

¹⁰ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 139,142 × 21.00% = 29,220

¹¹ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Lam Research Corp. NOPAT increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Lam Research Corp., cash operating taxes calculation

US$ in thousands

12 months ended:	Jun 25, 2023	Jun 26, 2022	Jun 27, 2021	Jun 28, 2020	Jun 30, 2019	Jun 24, 2018
Provision for income taxes	598,279)	587,828)	462,346)	323,225)	255,141)	771,108)
Less: Deferred income tax expense (benefit)	(172,061)	(257,438)	(151,477)	(17,778)	(4,981)	3,046)
Add: Tax savings from interest expense	41,053)	40,200)	44,596)	38,198)	26,479)	28,352)
Less: Tax imposed on investment income	29,220)	2,902)	3,969)	17,745)	20,784)	12,079)
Cash operating taxes	782,173)	882,564)	654,450)	361,456)	265,817)	784,335)

Based on: 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-24).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Lam Research Corp. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Lam Research Corp., invested capital calculation (financing approach)

US$ in thousands

	Jun 25, 2023	Jun 26, 2022	Jun 27, 2021	Jun 28, 2020	Jun 30, 2019	Jun 24, 2018
Current portion of long-term debt and finance lease obligations	8,358)	7,381)	11,349)	839,877)	667,131)	610,030)
Long-term debt and finance lease obligations, less current portion	5,003,183)	4,998,449)	4,990,333)	4,970,848)	3,822,768)	1,806,562)
Operating lease liability¹	237,568)	218,723)	163,695)	173,369)	75,045)	65,810)
Total reported debt & leases	5,249,109)	5,224,553)	5,165,377)	5,984,094)	4,564,944)	2,482,402)
Stockholders’ equity	8,210,172)	6,278,366)	6,027,188)	5,172,494)	4,673,865)	6,501,851)
Net deferred tax (assets) liabilities²	(712,349)	(560,697)	(307,594)	(133,386)	(83,456)	(68,573)
Allowance³	5,344)	5,606)	5,255)	5,465)	5,021)	5,343)
Deferred revenue⁴	1,984,600)	2,198,099)	1,118,807)	537,427)	449,305)	994,000)
Product warranty reserves⁵	286,663)	256,258)	191,758)	129,197)	127,932)	192,480)
Restructuring liability⁶	8,235)	—)	—)	—)	—)	—)
Equity equivalents⁷	1,572,493)	1,899,266)	1,008,226)	538,703)	498,802)	1,123,250)
Accumulated other comprehensive (income) loss, net of tax⁸	100,706)	109,982)	64,128)	94,211)	64,030)	57,449)
Adjusted stockholders’ equity	9,883,371)	8,287,614)	7,099,542)	5,805,408)	5,236,697)	7,682,550)
Investments⁹	(144,310)	(230,950)	(1,407,043)	(1,867,507)	(1,850,725)	(506,280)
Invested capital	14,988,170)	13,281,217)	10,857,876)	9,921,995)	7,950,916)	9,658,672)

Based on: 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-24).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenue.

⁵ Addition of product warranty reserves.

⁶ Addition of restructuring liability.

⁷ Addition of equity equivalents to stockholders’ equity.

⁸ Removal of accumulated other comprehensive income.

⁹ Subtraction of investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Lam Research Corp. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Lam Research Corp., cost of capital calculations

Jun 25, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	86,905,149)	86,905,149)	÷	91,598,921)	=	0.95	0.95	×	17.31%	=	16.42%
Long-term debt and finance lease obligations³	4,456,204)	4,456,204)	÷	91,598,921)	=	0.05	0.05	×	3.57% × (1 – 21.00%)	=	0.14%
Operating lease liability⁴	237,568)	237,568)	÷	91,598,921)	=	0.00	0.00	×	3.80% × (1 – 21.00%)	=	0.01%
Total:	91,598,921)					1.00					16.57%

Based on: 10-K (reporting date: 2023-06-25).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Jun 26, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	63,426,718)	63,426,718)	÷	68,217,516)	=	0.93	0.93	×	17.31%	=	16.09%
Long-term debt and finance lease obligations³	4,572,075)	4,572,075)	÷	68,217,516)	=	0.07	0.07	×	3.57% × (1 – 21.00%)	=	0.19%
Operating lease liability⁴	218,723)	218,723)	÷	68,217,516)	=	0.00	0.00	×	3.05% × (1 – 21.00%)	=	0.01%
Total:	68,217,516)					1.00					16.29%

Based on: 10-K (reporting date: 2022-06-26).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Jun 27, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	82,189,762)	82,189,762)	÷	87,954,290)	=	0.93	0.93	×	17.31%	=	16.17%
Long-term debt and finance lease obligations³	5,600,833)	5,600,833)	÷	87,954,290)	=	0.06	0.06	×	3.57% × (1 – 21.00%)	=	0.18%
Operating lease liability⁴	163,695)	163,695)	÷	87,954,290)	=	0.00	0.00	×	2.30% × (1 – 21.00%)	=	0.00%
Total:	87,954,290)					1.00					16.36%

Based on: 10-K (reporting date: 2021-06-27).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Jun 28, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	54,546,841)	54,546,841)	÷	61,735,105)	=	0.88	0.88	×	17.31%	=	15.29%
Long-term debt and finance lease obligations³	7,014,895)	7,014,895)	÷	61,735,105)	=	0.11	0.11	×	3.50% × (1 – 21.00%)	=	0.31%
Operating lease liability⁴	173,369)	173,369)	÷	61,735,105)	=	0.00	0.00	×	2.57% × (1 – 21.00%)	=	0.01%
Total:	61,735,105)					1.00					15.61%

Based on: 10-K (reporting date: 2020-06-28).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Jun 30, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	29,883,643)	29,883,643)	÷	35,762,806)	=	0.84	0.84	×	17.31%	=	14.46%
Long-term debt and finance lease obligations³	5,804,118)	5,804,118)	÷	35,762,806)	=	0.16	0.16	×	3.90% × (1 – 21.00%)	=	0.50%
Operating lease liability⁴	75,045)	75,045)	÷	35,762,806)	=	0.00	0.00	×	11.76% × (1 – 21.00%)	=	0.02%
Total:	35,762,806)					1.00					14.98%

Based on: 10-K (reporting date: 2019-06-30).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Jun 24, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	27,842,807)	27,842,807)	÷	31,834,780)	=	0.87	0.87	×	17.31%	=	15.14%
Long-term debt and finance lease obligations³	3,926,163)	3,926,163)	÷	31,834,780)	=	0.12	0.12	×	3.23% × (1 – 28.27%)	=	0.29%
Operating lease liability⁴	65,810)	65,810)	÷	31,834,780)	=	0.00	0.00	×	4.41% × (1 – 28.27%)	=	0.01%
Total:	31,834,780)					1.00					15.43%

Based on: 10-K (reporting date: 2018-06-24).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Lam Research Corp., economic spread ratio calculation, comparison to benchmarks

	Jun 25, 2023	Jun 26, 2022	Jun 27, 2021	Jun 28, 2020	Jun 30, 2019	Jun 24, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	1,725,182)	3,468,784)	2,777,475)	851,591)	407,025)	993,355)
Invested capital²	14,988,170)	13,281,217)	10,857,876)	9,921,995)	7,950,916)	9,658,672)
Performance Ratio
Economic spread ratio³	11.51%	26.12%	25.58%	8.58%	5.12%	10.28%
Benchmarks
Economic Spread Ratio, Competitors⁴
Advanced Micro Devices Inc.	-19.23%	-18.95%	37.79%	11.53%	-6.60%	—
Analog Devices Inc.	-6.88%	-8.24%	-11.51%	-6.57%	-5.03%	-7.82%
Applied Materials Inc.	19.04%	28.91%	24.43%	12.60%	12.22%	20.30%
Broadcom Inc.	9.60%	8.02%	-1.36%	-6.91%	-6.61%	-2.40%
Intel Corp.	-13.29%	-6.86%	10.33%	16.00%	14.09%	—
KLA Corp.	25.21%	27.46%	16.12%	4.96%	6.46%	24.62%
Micron Technology Inc.	-25.51%	2.33%	-2.19%	-7.80%	2.38%	24.98%
NVIDIA Corp.	-8.89%	33.31%	13.74%	-0.26%	60.33%	—
ON Semiconductor Corp.	0.43%	2.33%	-2.02%	-13.34%	-9.89%	—
Qualcomm Inc.	3.74%	30.18%	27.59%	12.63%	14.02%	-30.65%
Texas Instruments Inc.	15.71%	36.38%	34.99%	30.14%	29.82%	—

Based on: 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-24).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,725,182 ÷ 14,988,170 = 11.51%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Lam Research Corp. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Lam Research Corp., economic profit margin calculation, comparison to benchmarks

	Jun 25, 2023	Jun 26, 2022	Jun 27, 2021	Jun 28, 2020	Jun 30, 2019	Jun 24, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	1,725,182)	3,468,784)	2,777,475)	851,591)	407,025)	993,355)

Revenue	17,428,516)	17,227,039)	14,626,150)	10,044,736)	9,653,559)	11,076,998)
Add: Increase (decrease) in deferred revenue	(213,500)	1,079,292)	581,380)	88,122)	(544,695)	28,000)
Adjusted revenue	17,215,016)	18,306,331)	15,207,530)	10,132,858)	9,108,864)	11,104,998)
Performance Ratio
Economic profit margin²	10.02%	18.95%	18.26%	8.40%	4.47%	8.95%
Benchmarks
Economic Profit Margin, Competitors³
Advanced Micro Devices Inc.	-49.07%	-46.98%	14.24%	5.15%	-3.34%	—
Analog Devices Inc.	-24.70%	-30.88%	-73.96%	-21.34%	-15.42%	-23.48%
Applied Materials Inc.	12.77%	16.69%	15.59%	9.59%	8.48%	11.98%
Broadcom Inc.	16.80%	15.01%	-3.20%	-19.07%	-17.56%	-5.13%
Intel Corp.	-22.57%	-9.65%	11.57%	16.85%	15.78%	—
KLA Corp.	20.03%	23.21%	15.89%	5.56%	9.01%	15.96%
Micron Technology Inc.	-87.76%	4.00%	-3.67%	-15.39%	3.95%	29.10%
NVIDIA Corp.	-7.04%	22.33%	10.74%	-0.33%	24.63%	—
ON Semiconductor Corp.	0.57%	2.62%	-2.27%	-17.49%	-12.29%	—
Qualcomm Inc.	3.29%	20.10%	16.62%	9.53%	12.38%	-25.36%
Texas Instruments Inc.	20.26%	31.90%	31.30%	27.02%	25.00%	—

Based on: 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-24).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 1,725,182 ÷ 17,215,016 = 10.02%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Lam Research Corp. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Lam Research Corp. (NASDAQ:LRCX)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin