Company: OC
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0001370946-25-000077
Chunk: 170

Company: Owens Corning
Filing Date: 2025-02-24
Form: 10-K
Item: Item 1
Chunk 170
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 Key assumptions under this method are the revenue growth rate, adjusted EBITDA margin (including the adjusted terminal EBITDA margin), customer attrition rate, discount rate, tax rate and contributory asset charges. 

The principal considerations for our determination that performing procedures relating to the valuation of certain customer relationships acquired in the acquisition of Masonite is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rates, adjusted terminal EBITDA margin, customer attrition rate, discount rate, tax rate and contributory asset charges; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of certain customer relationships acquired. These procedures also included, among others, (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the customer relationships acquired; (iii) evaluating the appropriateness of the multi-period excess earnings method used by management; (iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings method; and (v) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates, adjusted terminal EBITDA margin, customer attrition rate, discount rate, tax rate, and contributory asset charges. Evaluating management’s assumptions related to the revenue growth rates, adjusted terminal EBITDA margin, and tax rate involved considering (i) the current and past performance of the Masonite business; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the customer attrition rate, discount rate, and contributory asset charges assumptions.

Interim Goodwill Impairment Test – Composites Reporting Unit

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s goodwill balance was $2.8 billion as of December 31, 2024, and the goodwill associated with