Goodwill

Throughout fiscal 2017, the Company undertook a series of integration activities related to the Carve-Out Business. These integration activities included system conversions, the build-out of our U.S. Manufacturing Organization in Phoenix, insourcing of embedded sensor products manufacturing previously outsourced, retirement of legacy internal controls related to the Carve-Out Business, and integration of the acquired sites into the legacy control environment. Significant work was done through the fourth quarter of fiscal 2017 to complete these integration activities. The conclusion of these integration efforts resulted in a reorganization of the Company's reporting unit structure from MCE, MDS and the Carve-Out Business to: Sensor and Mission Processing (“SMP”), Advanced Microelectronic Solutions (“AMS”) and Mercury Defense Systems (“MDS”). This change had no effect on the Company’s operating segment, as the Chief Operating Decision Maker (“CODM”) continues to evaluate and manage the Company on the basis of one reportable segment.

The following table summarizes the changes in goodwill at the Company's three reporting units for the year ended June 30, 2016, prior to the reorganization of the Company's reporting unit structure in fiscal 2017:



	MCE		MDS		Carve-Out Business		Total
Balance at June 30, 2015	$	134,378	$	33,768	$	—	$	168,146
Goodwill arising from the LIT acquisition	—		5,638		—		5,638
Goodwill arising from the Carve-Out Business Acquisition	—		—		170,243		170,243
Balance at June 30, 2016	$	134,378	$	39,406	$	170,243	$	344,027

The following table summarizes the changes in goodwill at the Company's three reporting units from June 30, 2016 through May 31, 2017, immediately before the reorganization of the Company's reporting unit structure:



	MCE		MDS		Carve-Out Business			Total
Balance at June 30, 2016	$	134,378	$	39,406	$	170,243		$	344,027
Goodwill adjustment for the Carve-Out Business acquisition	—		—		(1,487		)	(1,487		)
Goodwill arising from the CES acquisition	20,346		—		—			20,346
Goodwill arising from the Delta acquisition	17,960		—		—			17,960
Balance at May 31, 2017	$	172,684	$	39,406	$	168,756		$	380,846

In accordance with FASB ASC 350, Intangibles-Goodwill and Other (“ASC 350”), the Company determines its reporting units based upon whether discrete financial information is available, if management regularly reviews the operating results of the component, the nature of the products offered to customers and the market characteristics of each reporting unit. A reporting unit is considered to be an operating segment or one level below an operating segment also known as a component.

The Company reviewed its analysis of its internally reorganized business in order to determine its reporting units in accordance with ASC 350. Component level financial information is now reviewed by management at SMP, AMS and MDS. Accordingly, these were determined to be the Company’s new reporting units.

In fiscal 2017, after its reorganization, the Company reassigned goodwill to the businesses in the affected reporting units based on their relative fair values in accordance with ASC 350. There were no changes in the total carrying amount of goodwill for the one month ended June 30, 2017 after reallocation. The carrying amounts of goodwill by reporting unit at June 30, 2017 are $116,003, $217,956, and $46,887 for SMP, AMS and MDS, respectively.

The change in reporting units qualified as a triggering event and required goodwill to be tested for impairment. As required by ASC 350, the Company analyzed goodwill for impairment immediately prior to and immediately subsequent to the reorganization. As a result of these analyses, it was determined that goodwill was not impaired either prior to or subsequent to the reorganization.