Company: CHD
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000950170-25-019801
Chunk: 263

Company: CHURCH & DWIGHT CO INC /DE/
Filing Date: 2025-02-13
Form: 10-K
Item: Item 8
Chunk 263
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 future cash flows, eroding a substantial portion of the excess between the fair and carrying value of the trade name.  The carrying value of the WATERPIK trade name is $644.7 million and the fair value represented 135% of the carrying value as of October 1, 2024.  

Management estimates the fair value of these trade names based on an “excess earnings” discounted cash flow method.  The determination of fair value requires management to make significant estimates and assumptions related to future performance, such as revenue growth rates, as well as the selection of appropriate valuation assumptions, such as discount rates.  Changes in these assumptions could have a significant impact on the fair value of the trade names, leading to an impairment or a change in an identified impairment.  

Given the significant judgments made by management to estimate the trade names’ fair value, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the revenue growth rates and the selection of the discount rates involved a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination of revenue growth rates and the selection of discount rates for the trade names included the following, among others: 

•We tested the effectiveness of controls over the account balance, including those over the revenue growth rates and the selection of the discount rates. 

•We evaluated management’s ability to accurately forecast revenue growth by comparing actual performance to management’s historical forecasts.

•We evaluated the reasonableness of management’s forecasted revenue growth by comparing the forecasts to: 

-   Historical performance.

-   Internal communications to management and the Board of Directors.

-   Forecasted information included in analyst and industry reports for the Company and certain of its peer companies. 

•With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates by:

-   Testing the source information underlying the determination of the discount rates and the mathematical accuracy of the calculation.

-   Developing a range of independent estimates and comparing those to the discount rates selected by management. 

/s/ DELOITTE & TOUCHE LLP 

Morristown, NJ

February 13, 2025

We have served as the Company's auditor since 1968.

53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Church & Dwight Co., Inc.

Ewing,