Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2018	Jul. 25, 2018
Document and Entity Information
Entity Registrant Name	CPI Card Group Inc.
Entity Central Index Key	0001641614
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		11,159,714
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 17,750	$ 23,205
Accounts receivable, net	43,601	32,531
Inventories	10,455	13,799
Prepaid expenses and other current assets	3,901	3,681
Income taxes receivable	6,718	8,208
Assets of discontinued operation	8,016	20,651
Total current assets	90,441	102,075
Plant, equipment and leasehold improvements, net	40,038	44,436
Intangible assets, net	37,765	40,093
Goodwill	47,150	47,150
Other assets	205	251
Total assets	215,599	234,005
Current liabilities:
Accounts payable	15,678	13,239
Accrued expenses	15,705	12,789
Income taxes payable	678
Deferred revenue and customer deposits	509	3,342
Liabilities of discontinued operation	7,807	5,669
Total current liabilities	40,377	35,039
Long-term debt	304,841	303,869
Deferred income taxes	7,925	12,168
Other long-term liabilities	2,716	2,503
Total liabilities	355,859	353,579
Commitments and contingencies (Note 13)
Stockholders' deficit:
Common Stock; $0.001 par value—100,000,000 shares authorized; 11,159,714 and 11,134,714 shares issued and outstanding at June 30, 2018 and December 31, 2017	11	11
Capital deficiency	(112,377)	(113,081)
Accumulated loss	(22,571)	(1,366)
Accumulated other comprehensive loss	(5,323)	(5,138)
Total stockholders' deficit	(140,260)	(119,574)
Total liabilities and stockholders' deficit	$ 215,599	$ 234,005

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets
Common shares, par value (in dollars per share)	$ 0.001	$ 0.001
Common shares, authorized shares (in shares)	100,000,000	100,000,000
Common shares, issued shares (in shares)	11,159,714	11,134,714
Common shares, outstanding shares (in shares)	11,159,714	11,134,714

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net sales:
Total net sales	$ 61,454	$ 54,836	$ 116,311	$ 105,257
Cost of sales:
Depreciation and amortization	3,501	2,694	6,949	5,393
Total cost of sales	41,579	38,170	82,009	73,943
Gross Profit	19,875	16,666	34,302	31,314
Operating expenses:
Selling, general and administrative (exclusive of depreciation and amortization shown below)	15,756	14,304	31,084	29,228
Depreciation and amortization	1,465	1,641	2,927	3,277
Total operating expenses	17,221	15,945	34,011	32,505
Income (loss) from operations	2,654	721	291	(1,191)
Other expense, net
Interest, net	(5,586)	(5,165)	(11,092)	(10,228)
Foreign currency (loss) gain	(466)	153	(264)	172
Other income, net	3	4	7	6
Total other expense, net	(6,049)	(5,008)	(11,349)	(10,050)
Loss from continuing operations before income taxes	(3,395)	(4,287)	(11,058)	(11,241)
Income tax benefit	2,593	1,014	4,578	3,371
Net loss from continuing operations	(802)	(3,273)	(6,480)	(7,870)
Net (loss) income from a discontinued operation, net of taxes (Note 3)	(15,907)	1,112	(17,521)	1,202
Net loss	$ (16,709)	$ (2,161)	$ (24,001)	$ (6,668)
Basic and diluted loss per share:
Continuing operations (in dollars per share)	$ (0.07)	$ (0.30)	$ (0.58)	$ (0.71)
Discontinued operation (in dollars per share)	(1.43)	0.10	(1.57)	0.11
Net loss per share (in dollars per share)	$ (1.50)	$ (0.20)	$ (2.15)	$ (0.60)
Basic and diluted weighted-average shares outstanding (in shares)	11,143,230	11,122,436	11,138,972	11,103,655
Dividends declared per common share		$ 0.225		$ 0.45
Comprehensive loss
Net loss	$ (16,709)	$ (2,161)	$ (24,001)	$ (6,668)
Currency translation adjustment	(495)	586	(185)	787
Total comprehensive loss	(17,204)	(1,575)	(24,186)	(5,881)
Products
Net sales:
Total net sales	31,494	26,640	56,238	52,866
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	18,962	17,943	35,280	35,106
Services
Net sales:
Total net sales	29,960	28,196	60,073	52,391
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	$ 19,116	$ 17,533	$ 39,780	$ 33,444

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (24,001)	$ (6,668)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss (income) from discontinued operation	17,521	(1,202)
Depreciation and amortization expense	9,876	8,670
Stock-based compensation expense	784	860
Amortization of debt issuance costs and debt discount	972	975
Deferred income tax	(4,782)	(540)
Other, net	158	94
Changes in operating assets and liabilities:
Accounts receivable	(6,577)	(6,964)
Inventories	(2,466)	(1,776)
Prepaid expenses and other assets	(299)	(31)
Income taxes	2,284	(3,987)
Accounts payable	2,271	3,399
Accrued expenses	3,093	(1,228)
Deferred revenue and customer deposits	25	555
Other liabilities	(212)	422
Cash used in operating activities - continuing operations	(1,353)	(7,421)
Cash used in operating activities - discontinued operations	(1,152)	(841)
Investing activities
Acquisitions of plant, equipment and leasehold improvements	(2,109)	(4,343)
Cash used in investing activities - continuing operations	(2,109)	(4,343)
Cash used in investing activities - discontinued operation	(536)	(1,440)
Financing activities
Payments on capital lease obligations	(306)
Dividends paid on common stock		(5,026)
Taxes withheld and paid on stock-based compensation awards		(339)
Cash used in financing activities	(306)	(5,365)
Effect of exchange rates on cash	1	386
Net decrease in cash and cash equivalents	(5,455)	(19,024)
Cash and cash equivalents, beginning of period	23,205	36,955
Cash and cash equivalents, end of period	17,750	17,931
Supplemental disclosures of cash flow information
Cash paid during the period for: Interest	9,783	9,096
Cash paid during the period for: Income taxes, net (refunds) payments	(1,504)	1,068
Capital lease obligations incurred for certain machinery and equipment leases	821
Accounts payable for acquisitions of plant, equipment and leasehold improvements	$ 970	$ 1,233

Business Overview and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Business Overview and Summary of Significant Accounting Policies

Business Overview and Summary of Significant Accounting Policies

CPI Card Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands, Except Share and Per Share Amounts or as Otherwise Indicated)

(Unaudited)

1. Business Overview and Summary of Significant Accounting Policies

Business Overview

CPI Card Group Inc. (which, together with its subsidiaries, is referred to herein as “CPI” or the “Company”) is engaged in the design, production, data personalization, packaging and fulfillment of Financial Payment Cards, which the Company defines as credit cards, debit cards and prepaid debit cards issued on the networks of the Payment Card Brands (Visa, MasterCard, American Express, Discover and Interac (in Canada)) in the United States and Canada. The Company also is engaged in the design, production, data personalization, packaging and fulfillment of retail gift and loyalty cards (primarily in Canada).

As a producer and provider of services for Financial Payment Cards, each of the Company’s secure facilities must be certified by one or more of the Payment Card Brands and is therefore subject to specific requirements and conditions. Noncompliance with these requirements would prohibit the individual facilities of the Company from producing Financial Payment Cards for these entities’ payment card issuers.

During February 2018, the Company made the decision to consolidate three personalization operations in the United States into two facilities to better enable the Company to optimize operations and achieve market-leading quality and service with a cost-competitive business model. In conjunction with this decision, the Company accelerated the depreciation of certain related assets, which totaled $1,332 for the three months ended June 30, 2018 and $2,132 for the six months ended June 30, 2018, and recorded severance charges of $223 and $552 for these same respective time periods. The Company recorded a lease termination charge of $432 in the three months ended June 30, 2018. The charges were recorded in the U.S. Debit and Credit segment and primarily included in “Cost of sales” on the Condensed Consolidated Statement of Operations.

Basis of Presentation

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of the results of the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2017 is derived from the audited financial statements as of that date. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

During the second quarter of 2018, the Company met the criteria to report a probable business sale of the UK Limited segment as a discontinued operation. On August 3, 2018, the Company completed the sale. See Note 16 “Subsequent Event” for further information. The Company has restated the comparative financial information in conformity with GAAP. Unless otherwise indicated, information in these notes to the unaudited condensed consolidated financial statements relate to continuing operations. See Note 3.

On December 20, 2017, the Company effected a one-for-five reverse stock split of its common stock, whereby each lot of five shares of common stock issued and outstanding immediately prior to the reverse stock split was converted into and became one share of common stock. Share and per share amounts reflect the one-for-five reverse stock split for all periods presented.

Use of Estimates

Management uses estimates and assumptions relating to the reporting of assets and liabilities in its preparation of the condensed consolidated financial statements. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets, valuation allowances for inventories and deferred tax assets, debt, discontinued operations, revenue recognized for period-end work in process and stock-based compensation expense. Actual results could differ from those estimates.

Machinery and Equipment Financing

The Company leases certain machinery and equipment under capital leases. The assets and liabilities under these capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. Once ready for their intended use, the assets are depreciated over the lower of their related lease term or their estimated productive lives.

Adoption of New Accounting Standard

As of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, as amended (“ASU 2014-09”), which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires an entity to disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASU 2014-09 as of January 1, 2018 to all its contracts using the modified retrospective method and recognized the cumulative effect of adoption as an adjustment to the opening balance of “Accumulated loss” on the Condensed Consolidated Balance Sheet. Under the new guidance, the Company recognizes certain performance obligations over time as the goods are produced, since those products provide value to only a specified customer, have no alternative use and the Company has the right to payment for work completed on such items. This accelerates the timing of revenue recognition for these arrangements, as revenue is recognized as goods are produced rather than upon shipment or delivery of goods. In addition, as a result of adopting the new guidance, the Company has recorded decreases to deferred revenue, and work in process and finished goods inventories, and an increase to accounts receivable. These changes are reflected in the adoption adjustments table below. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods.

See Note 2 “Revenue” for revenue recognition timing and methodology under ASU 2014-09.

The cumulative effects of the adjustments made to the Company’s January 1, 2018 Condensed Consolidated Balance Sheet upon adoption of ASU 2014-09 were as follows:


	December 31,		Adoption		January 1,
	2017		Adjustments		2018
Assets:
Accounts receivable, net	$	32,531	$	5,991	$	38,522
Inventories		13,799		(5,929)		7,870
Assets of discontinued operation		20,651		(357)		20,294

Liabilities:
Deferred revenue and customer deposits		3,342		(3,063)		279
Liabilities of discontinued operation		5,669		(535)		5,134
Deferred income taxes		12,168		479		12,647


Stockholders' deficit:
Accumulated (loss) earnings		(1,366)		2,824		1,458

In accordance with ASU 2014-09, the impact on the Company’s Condensed Consolidated Balance Sheet and Statement of Operations and Comprehensive Loss was as follows:


					Balances
	As Reported				Without
	June 30,				Adoption of
Balance Sheet	2018		Adjustments		ASU 2014-09
Assets:
Accounts receivable, net	$	43,601	$	(7,115)	$	36,486
Inventories		10,455		5,217		15,672
Assets of discontinued operation		8,016		229		8,245

Liabilities:
Deferred revenue and customer deposits		509		—		509
Liabilities of discontinued operation		7,807		390		8,197
Deferred income taxes		7,925		(479)		7,446

Stockholders' deficit:
Accumulated loss		(22,571)		(1,580)		(24,151)


	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
					Balances						Balances
	As Reported				Without		As Reported				Without
Statement of Operations and	June 30,				Adoption of		June 30,				Adoption of
Comprehensive Loss	2018		Adjustments		ASU 2014-09		2018		Adjustments		ASU 2014-09
Net sales:
Products	$	31,494	$	158	$	31,652	$	56,238	$	(656)	$	55,582
Services		29,960		(588)		29,372		60,073		(365)		59,708
Cost of sales:
Products (exclusive of depreciation and amortization)		18,962		1		18,963		35,280		(918)		34,362
Services (exclusive of depreciation and amortization)		19,116		(248)		18,868		39,780		(68)		39,712

Gross profit		19,875		(183)		19,692		34,302		(35)		34,267

Income tax benefit		2,593		38		2,631		4,578		7		4,585

Net loss from continuing operations		(802)		(145)		(947)		(6,480)		(28)		(6,508)
Net loss from discontinued operation, net of tax		(15,907)		(28)		(15,935)		(17,521)		(19)		(17,540)

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 (the Company’s fiscal year 2019) with early adoption permitted. The new guidance requires the recognition and measurement of leases at the beginning of the earliest comparative period presented in the financial statements using a modified retrospective approach, with an option to apply the transition provisions of the new guidance at the adoption date without adjusting the comparative periods presented. The Company is considering the method of transition upon adoption of this guidance. The Company is in the process of assessing the impact of ASU 2016-02 on its results of operations, financial position and consolidated financial statements.

During 2017, the Company early adopted ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) in conjunction with its annual impairment testing effective October 1, 2017. In accordance with ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value.

Revenue

6 Months Ended

Jun. 30, 2018

Revenue

Revenue

2. Revenue

The Company disaggregates its revenue by major source as follows:


	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	Products		Services		Total		Products		Services		Total
U.S. Debit and Credit	$	30,444	$	13,399	$	43,843	$	54,164	$	26,827	$	80,991
U.S. Prepaid Debit		—		15,427		15,427		—		30,938		30,938
Other		1,625		1,355		2,980		3,000		2,679		5,679
Intersegment eliminations		(575)		(221)		(796)		(926)		(371)		(1,297)
Total	$	31,494	$	29,960	$	61,454	$	56,238	$	60,073	$	116,311

For periods after January 1, 2018, the Company accounts for its revenue as follows:

Products Revenue

“Products” revenue is recognized when obligations under the terms of a contract with a customer are satisfied. In most instances, this occurs over time as cards are manufactured for specific customers and have no alternative use and the Company has an enforceable right to payment for work performed. For work performed but not completed and unbilled, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts. Items included in “Products” revenue are manufactured Financial Payment Cards, including in contact-EMV®, Dual-Interface EMV®, contactless and magnetic stripe cards, private label credit cards and retail gift cards. Card@Once® printers and consumables are also included in “Products” revenue, and their associated revenues are recognized at the time of shipping.

Services Revenue

Revenue is recognized for “Services” as the services are performed. Items included in “Services” revenue include the personalization and fulfillment of Financial Payment Cards, providing tamper-evident secure packaging and fulfillment services to Prepaid Debit Card program managers and software as a service personalization of instant issuance debit cards. For work performed but not completed and unbilled, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts.

Customer Contracts

The Company often enters into Master Services Agreements (“MSAs”) with its customers. Generally, an MSA requires a customer to place subsequent purchase orders or statements of work to obtain goods or services, thus creating enforceable rights and obligations for goods and services for the parties. The contract term as defined by ASU 2014-09 is the length of time it takes to deliver the goods or services promised under the purchase order or statement of work. As such, the Company's contracts are generally short term in nature.

Discontinued Operation

6 Months Ended

Jun. 30, 2018

Discontinued Operation

Discontinued Operation

3. Discontinued Operation

During the second quarter of 2018, the Company met the criteria to report a probable business sale in the U.K. Limited segment as a discontinued operation. On August 3, 2018, the Company completed the sale. See Note 16 “Subsequent Event” for further information. The financial position, results of operations and cash flows have been restated for all periods to conform with the discontinued operation presentation. The Company is not expected to retain significant continuing involvement with the discontinued operation subsequent to the disposal. In connection with the planned sale, the Company performed a goodwill impairment test and recorded a charge of $6,366. The impairment was a result of continued market softness in the U.K. Limited segment, resulting in lower sales and margins and an expected sales price below the carrying value of the segment. The Company also recorded an impairment charge of $1,249 to customer relationship intangible assets related to the U.K. Limited segment. The Company measured the net assets of the discontinued operation at their fair values less costs to sell, and recorded an additional $7,244 loss on the discontinued operation classification.

The balances of assets and liabilities as presented in the table below are comprised primarily of the discontinued operation. The carrying amounts of the major classes of assets and liabilities of the discontinued operation as of June 30, 2018 were as follows:


	June 30, 2018		December 31, 2017

Assets:
Accounts receivable	$	5,244	$	5,006
Inventories		1,626		2,438
Other assets		506		506
Plant, equipment and leasehold improvements		7,884		4,864
Intangible assets		—		1,379
Goodwill		—		6,458
Loss recognized on discontinued operation classification		(7,244)		—
Total assets of discontinued operation		8,016		20,651

Liabilities:
Accounts payable		3,754		3,307
Other current liabilities		1,499		1,866
Other long-term liabilities		2,554		496
Total liabilities of discontinued operation	$	7,807	$	5,669

The major line items constituting the (loss) income of the discontinued operation for the three and six months ended June 30, 2018 and 2017 were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Total net sales	$	4,587	$	11,010	$	8,799	$	16,597
Total cost of sales		4,300		8,391		8,498		12,530
Selling, general and administrative		1,446		1,373		3,066		2,716
Impairments		7,615		—		7,615		—
Other expense (income), net		21		(31)		29		(85)
Pretax (loss) income from discontinued operation		(8,795)		1,277		(10,409)		1,436
Pretax loss on discontinued operation classification		(7,244)		—		(7,244)		—
Total pretax (loss) income on discontinued operation		(16,039)		1,277		(17,653)		1,436
Income tax benefit (expense)		132		(165)		132		(234)
Net (loss) income from discontinued operation	$	(15,907)	$	1,112	$	(17,521)	$	1,202

Accounts Receivable

6 Months Ended

Jun. 30, 2018

Accounts Receivable

Accounts Receivable

4. Accounts Receivable

Accounts receivable consisted of the following:


	June 30, 2018		December 31, 2017

Trade accounts receivable	$	37,049	$	32,579
Unbilled accounts receivable		6,699		—
		43,748		32,579
Less allowance for doubtful accounts		(147)		(48)
	$	43,601	$	32,531

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details

Inventories

6 Months Ended

Jun. 30, 2018

Inventories

Inventories

5. Inventories

Inventories are summarized below:


	June 30, 2018		December 31, 2017

Raw materials	$	7,974	$	5,718
Work-in-process		—		5,107
Finished goods		2,481		2,974
	$	10,455	$	13,799

Plant, Equipment and Leasehold Improvements

6 Months Ended

Jun. 30, 2018

Plant, Equipment and Leasehold Improvements

Plant, Equipment and Leasehold Improvements

6. Plant, Equipment and Leasehold Improvements

Plant, equipment and leasehold improvements consisted of the following:


	June 30, 2018		December 31, 2017

Machinery and equipment	$	54,722	$	58,595
Machinery and equipment under capital leases		821		—
Furniture, fixtures and computer equipment		3,960		6,288
Leasehold improvements		18,158		19,601
Construction in progress		2,318		1,512
		79,979		85,996
Less accumulated depreciation		(39,941)		(41,560)
	$	40,038	$	44,436

Depreciation of plant, equipment and leasehold improvements, including depreciation of assets under capital leases, was $3,802 and $3,163 for the three months ended June 30, 2018 and 2017, respectively, and $7,548 and $6,327 for the six months ended June 30, 2018 and 2017, respectively.

Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

7. Goodwill and Other Intangible Assets

The Company reports all of its goodwill in its U.S. Debit and Credit segment at June 30, 2018 and December 31, 2017.

Intangible assets consist of customer relationships, technology and software, non-compete agreements and trademarks. The changes in the cost basis of the intangibles from December 31, 2017 to June 30, 2018 were related to foreign currency translation adjustments. Intangible amortization expense was $1,164 and $1,172 for the three months ended June 30, 2018 and 2017, respectively, and $2,328 and $2,343 for the six months ended June 30, 2018 and 2017, respectively.

At June 30, 2018 and December 31, 2017, intangible assets, excluding goodwill, were comprised of the following:


				June 30, 2018						December 31, 2017
	Average Life					Accumulated		Net Book				Accumulated		Net Book
	(Years)			Cost		Amortization		Value		Cost		Amortization		Value

Customer relationships	12	to	20	$	55,454	$	(23,949)	$	31,505	$	55,454	$	(22,311)	$	33,143
Technology and software	7	to	10		7,101		(3,560)		3,541		7,101		(3,095)		4,006
Trademarks	7.5	to	10		3,330		(682)		2,648		3,330		(487)		2,843
Non-compete agreements	5	to	8		491		(420)		71		491		(390)		101
Intangible assets subject to amortization				$	66,376	$	(28,611)	$	37,765	$	66,376	$	(26,283)	$	40,093

The estimated future aggregate amortization expense for the identified amortizable intangibles noted above as of June 30, 2018 was as follows:


2018 (remaining 6 months)	$	2,343
2019		4,620
2020		4,595
2021		4,352
2022		3,867
Thereafter		17,988
	$	37,765

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2018

Fair Value of Financial Instruments

Fair Value of Financial Instruments

8. Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In determining fair value, the Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

 Level 2— Observable inputs other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities.

 Level 3— Valuations based on unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The Company’s financial assets and liabilities that are not required to be remeasured at fair value in the Condensed Consolidated Balance Sheets were as follows:


	Carrying
	Value as of		Fair Value as of		Fair Value Measurement at June 30, 2018
	June 30,		June 30,		(Using Fair Value Hierarchy)
	2018		2018		Level 1		Level 2		Level 3
Liabilities:
First Lien Term Loan	$	312,500	$	196,875	$	—	$	196,875	$	—


	Carrying
	Value as of		Fair Value as of		Fair Value Measurement at December 31, 2017
	December 31,		December 31,		(Using Fair Value Hierarchy)
	2017		2017		Level 1		Level 2		Level 3
Liabilities:
First Lien Term Loan	$	312,500	$	228,125	$	—	$	228,125	$	—

The aggregate fair value of the Company’s First Lien Term Loan, as defined in Note 9 “Long-Term Debt and Credit Facility,” was based on bank quotes.

The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable each approximate fair value.

Nonrecurring fair value measurements include the Company’s goodwill and intangible asset impairments recognized during the quarter ended June 30, 2018 as determined based on unobservable Level 3 inputs. Refer to Note 3 “Discontinued Operation.”

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Long-Term Debt and Credit Facility

6 Months Ended

Jun. 30, 2018

Long-Term Debt and Credit Facility

Long-Term Debt and Credit Facility

9. Long-Term Debt and Credit Facility

At June 30, 2018 and December 31, 2017, long-term debt and credit facilities consisted of the following:


	Interest		June 30,		December 31,
	Rate (1)		2018		2017
First Lien Term Loan (1)	6.36	%	$	312,500	$	312,500
Unamortized discount				(2,786)		(3,122)
Unamortized deferred financing costs				(4,873)		(5,509)
Long-term debt			$	304,841	$	303,869

(1) Interest rate at June 30, 2018. Interest rate at December 31, 2017 was 5.96%.

First Lien Credit Facility

On August 17, 2015, the Company entered into a first lien credit facility (the “First Lien Credit Facility”) with a syndicate of lenders providing for a $435,000 first lien term loan (the “First Lien Term Loan”) and a $40,000 revolving credit facility (the “Revolving Credit Facility”). The First Lien Term Loan and the Revolving Credit Facility have maturity dates of August 17, 2022 and August 17, 2020, respectively.

The First Lien Credit Facility is secured by a first-priority security interest in substantially all of the Company’s assets constituting equipment, inventory, receivables, cash and other tangible and intangible property.

Interest rates under the First Lien Credit Facility are based, at the Company’s election, on a Eurodollar rate, subject to an interest rate floor of 1.0%, plus a margin of 4.50%, or a base rate plus a margin of 3.50%.

The First Lien Credit Facility contains customary nonfinancial covenants, including among other things, restrictions on indebtedness, issuance of liens, investments, dividends, redemptions and other distributions to equity holders, asset sales, certain mergers or consolidations, sales, transfers, leases or dispositions of substantially all of the Company’s assets and affiliate transactions. The First Lien Credit Facility also contains a requirement that, as of the last day of any fiscal quarter, if the amount the Company has drawn under the Revolving Credit Facility is greater than 50% of the aggregate principal amount of all commitments of the lenders thereunder, the Company maintain a first lien net leverage ratio not in excess of 7.0 times trailing twelve month Adjusted EBITDA, as defined in the agreement. As of June 30, 2018, the Company was in compliance with all covenants under the First Lien Credit Facility.

The First Lien Credit Facility also requires prepayment in advance of the maturity date upon the occurrence of certain customary events, including based on an annual excess cash flow calculation, pursuant to the terms of the agreement, with any required payments to be made after the issuance of the Company’s annual financial statements. As of June 30, 2018, the Company did not expect to have a required excess cash flow payment related to 2018.

At June 30, 2018, the Company did not have any outstanding amounts under the Revolving Credit Facility and has $19,950 available for borrowing. Additional amounts may be available for borrowing under the term of the Revolving Credit Facility, up to the full $40,000, to the extent the Company’s net leverage ratio does not exceed 7.0 times Adjusted EBITDA, as defined in the agreement. The Company has one outstanding letter of credit for $50 relating to the security deposit on a real property lease agreement. The Company pays a fee on outstanding letters of credit at the applicable margin, which was 4.50% as of June 30, 2018 and December 31, 2017, in addition to a fronting fee of 0.125% per annum. In addition, the Company is required to pay an unused commitment fee ranging from 0.375% per annum to 0.50% per annum of the average unused portion of the revolving commitments. The unused commitment fee is determined on the basis of a grid that results in a lower unused commitment fee as the Company’s total net leverage ratio declines. The Company recorded accrued interest of $4,526 and $4,296 within “Accrued expenses” on the Condensed Consolidated Balance Sheets at June 30, 2018 and December 31, 2017, respectively.

Deferred Financing Costs

Certain costs incurred with borrowings or the establishment or modification of credit facilities are reflected as a reduction to the long-term debt balance. These costs are amortized as an adjustment to interest expense over the life of the borrowing using the effective-interest rate method.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2018
Income Taxes
Income Taxes	10. Income Taxes – Continuing Operations During the three months ended June 30, 2018, the Company recognized an income tax benefit of $2,593 on a pre-tax loss of $3,395, representing an effective income tax rate of 76.4%, compared to an income tax benefit of $1,014 on a pre-tax loss of $4,287, representing an effective tax rate of 23.7% during the three months ended June 30, 2017. During the six months ended June 30, 2018, the Company recognized an income tax benefit of $4,578 on a pre-tax loss of $11,058, representing an effective income tax rate of 41.4%, compared to an income tax benefit of $3,371 on a pre-tax loss of $11,241, representing an effective tax rate of 30.0% during the six months ended June 30, 2017. On December 22, 2017, the U.S. government enacted comprehensive tax reform legislation ( the “Tax Act”). In conjunction with the Tax Act, the U.S. federal tax rate reduced from 35.0% in 2017 to 21.0% in 2018. The effective tax rate differs from the federal U.S. statutory rate primarily due to the impact of a tax benefit recorded in the second quarter of 2018 in connection with the U.K. Limited discontinued operation. Partially offsetting the increased tax benefit in the second quarter of 2018 was the establishment of a partial valuation allowance on certain U.S. deferred tax assets primarily related to the limitation on the deductibility of business interest expense. On March 30, 2018, the Company received a proposed determination regarding a previously unrecognized tax benefit related to state income tax matters. Based on this proposal, the Company expects to pay $678 in the next 12 months and has included this item in “Income taxes payable” in its Condensed Consolidated Balance Sheet as of June 30, 2018. 2017 Tax Reform The Tax Act includes significant changes to taxation of business entities. These changes include, among others, (i) a permanent reduction to the corporate income tax rate, (ii) a partial limitation on the deductibility of business interest expense, (iii) elimination of deduction for income attributable to domestic production activities and (iv) a partial shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a territorial system (along with a transitional rule that taxes certain historic foreign accumulated earnings and certain rules that aim to prevent erosion of U.S. income tax base). In conjunction with the Tax Act’s reduction of the U.S. federal tax rate from 35.0% to 21.0%, the Company accrued a $7,057 tax benefit during the year ended December 31, 2017 related to the net change in deferred tax liabilities. Due to the complexities involved in accounting for the recently enacted Tax Act, the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 118 requires that the Company include in its financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. Accordingly, the Company is currently estimating a zero tax liability on foreign unremitted earnings due to a net earnings and profits (“E&P”) deficit on accumulated post-1986 deferred foreign income. Therefore, as of June 30, 2018, the Company has not accrued any amount of tax expense for the Tax Act’s one-time transition tax on the foreign subsidiaries’ accumulated, unremitted earnings going back to 1986. The Company will continue to analyze historical E&P on accumulated post-1986 deferred foreign income and will record any resulting tax adjustment during 2018.

Stockholders' Deficit	6 Months Ended
Stockholders' Deficit	Jun. 30, 2018
Stockholders’ Deficit
Stockholders’ Deficit	11. Stockholders’ Deficit During the three and six months ended June 30, 2017, the Company paid dividends of $2,499 and $5,026, respectively, representing $0.225 and $0.45 per share, respectively. During August 2017, the Company discontinued its quarterly dividend of $0.225 per share.

Loss per Share

6 Months Ended

Jun. 30, 2018

Loss per Share

Loss per Share

12. Loss per Share

Basic and diluted loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.

The following table sets forth the computation of basic and diluted loss per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Numerator:
Net loss from continuing operations	$	(802)	$	(3,273)	$	(6,480)	$	(7,870)
Net (loss) income from discontinued operation		(15,907)		1,112		(17,521)		1,202
Net loss	$	(16,709)	$	(2,161)	$	(24,001)	$	(6,668)
Denominator:
Basic and diluted weighted-average common shares outstanding		11,143,230		11,122,436		11,138,972		11,103,655
Basic and diluted loss per share:
Continuing operations	$	(0.07)	$	(0.30)	$	(0.58)	$	(0.71)
Discontinued operation		(1.43)		0.10		(1.57)		0.11
Net loss	$	(1.50)	$	(0.20)	$	(2.15)	$	(0.60)

The Company reported a net loss for the three and six months ended June 30, 2018 and 2017. Accordingly, the potentially dilutive effect of 957,840 and 417,418 stock options and 98,535 and 54,610 restricted stock units were excluded from the computation of diluted earnings per share as of June 30, 2018 and 2017, respectively, as their inclusion would be anti-dilutive.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies.

Commitments and Contingencies

13. Commitments and Contingencies

Commitments

The Company incurred rent expense under non-cancellable operating leases of $908 and $880 for the three months ended June 30, 2018 and 2017, respectively, and $1,776 and $1,770 for the six months ended June 30, 2018 and 2017, respectively. During the first quarter of 2018, the Company leased certain machinery and equipment under capital lease obligations, which consisted of the following at June 30, 2018:


	June 30,
	2018
Machinery and equipment	$	748
Less current portion of capital lease obligations		(147)
Total long-term capital lease obligations	$	601

In its Condensed Consolidated Balance Sheet at June 30, 2018, the Company has recorded the current portion of capital lease obligations in “Accrued expenses” and the long-term capital lease obligations in “Other long-term liabilities”.

Contingencies

In accordance with applicable accounting guidance, the Company establishes an accrued liability when loss contingencies are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. As a matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. Once the loss contingency is deemed to be both probable and estimable, the Company will establish an accrued liability and record a corresponding amount of litigation-related expense. The Company expenses professional fees associated with litigation claims and assessments as incurred.

In Re CPI Card Group Inc. Securities Litigation, Case No. 1:16-CV-04531 (S.D.N.Y.) (the “Class Action”)

On June 15, 2016, two purported CPI stockholders filed putative class action lawsuits captioned Vance, et al. v. CPI Card Group Inc., et al. and Chipman, et al. v. CPI Card Group Inc. in the United States District Court for the Southern District of New York (the “Court”) against CPI, certain of its former officers and current and former directors, along with the sponsors of and the financial institutions who served as underwriters for CPI’s October 2015 initial public offering (“IPO”). The complaints, purportedly brought on behalf of all purchasers of CPI common stock pursuant to the October 8, 2015 Registration Statement filed in connection with the IPO, assert claims under §§11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) and seek, among other things, damages and costs. In particular, the complaints allege that the Registration Statement contained false or misleading statements or omissions regarding CPI’s customers’ (i) purchases of Europay, MasterCard and VISA chip cards (collectively, “EMV® cards”) during the first half of fiscal year 2015 and resulting EMV® card inventory levels; and (ii) capacity to purchase additional EMV® cards in the fourth quarter of fiscal year 2015, and the remainder of the fiscal year ended December 31, 2015. The complaints allege that these actions artificially inflated the price of CPI common stock issued pursuant to the IPO.

On August 30, 2016, the Court consolidated the Vance and Chipman actions and appointed lead plaintiff and lead counsel pursuant to the Private Securities Litigation Reform Act (the “PSLRA”). On October 17, 2016, lead plaintiff filed a consolidated amended complaint, asserting the same claims for violations of §§11 and 15 of the Securities Act. The amended complaint is based principally on the same theories as the original complaints, but adds allegations that the Registration Statement contained inadequate risk disclosures and failed to disclose (i) small and mid-size issuers’ slower-than-anticipated conversion to EMV® technology and (ii) increased pricing pressure and competition CPI faced in the EMV® market.

On November 16, 2016, the Company filed a motion to dismiss the amended complaint, which was denied by the Court on October 30, 2017. On January 12, 2018, the Company filed an answer to the amended complaint. On March 23, 2018, lead plaintiff filed his motion for class certification. On June 11, 2018, the Company filed an opposition to lead plaintiff’s motion for class certification.

On July 31, 2018, the parties notified the Court that they had reached an agreement in principle to settle the Class Action. The agreement in principle is subject to confirmatory discovery by the plaintiff, execution of a definitive settlement agreement and supporting documentation and final approval by the Court. The Company recorded an accrued liability as of June 30, 2018, which is not material to the financial statements, and reflects our estimate of the probable loss pursuant to an allocation of the total agreed settlement amount. There was no liability recorded as of December 31, 2017.

Heckermann v. Montross et al., Case No. 1:17-CV-01673 (D. Del.) (the “Derivative Suit”)

On November 20, 2017, a purported CPI stockholder filed a stockholder derivative complaint in the United States District Court for the District of Delaware (the “Court”) against certain of CPI’s former officers and current and former directors, along with the sponsors of the IPO. CPI is also named as a nominal defendant. The derivative complaint asserts claims under §§10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 and seeks, among other things, injunctive relief, damages and costs. It alleges false or misleading statements and omissions in the Registration Statement filed by CPI in connection with its IPO and subsequent public filings and statements. The derivative complaint also asserts claims for purported breaches of fiduciary duties, unjust enrichment, mismanagement and waste of corporate assets.

On March 28, 2018, the Court entered the parties’ stipulated order staying the Derivative Suit pending final determination of the Class Action.

The Company believes these claims are without merit and is defending the Derivative Suit vigorously. Given the current stage of these matters, the range of any potential loss is not probable or estimable and no liability has been recorded as of June 30, 2018 or December 31, 2017.

In addition to the matters described above, the Company is subject to routine legal proceedings in the ordinary course of business. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on its business, financial condition or results of operations.

Stock-Based Compensation

6 Months Ended

Jun. 30, 2018

Stock-Based Compensation

Stock-Based Compensation

14. Stock-Based Compensation

CPI Card Group Inc. Omnibus Incentive Plan

On December 20, 2017, the Company effected a one-for-five reverse stock split of its common stock, whereby each lot of five shares of common stock issued and outstanding immediately prior to the reverse stock split was converted into and became one share of common stock. Share and per share amounts below reflect the one-for-five reverse stock split for all periods presented.

During October 2015, the Company adopted the CPI Card Group Inc. Omnibus Incentive Plan (the “Omnibus Plan”) pursuant to which cash and equity based incentives may be granted to participating employees, advisors and directors. The Company had reserved 800,000 shares of common stock for issuance under the Omnibus Plan. Effective September 25, 2017, the Omnibus Plan was amended and restated, providing for an increase in the number of shares of common stock authorized for issuance thereunder by 400,000. The increase was made effective in the fourth quarter of 2017 by stockholder approval in accordance with applicable law, after which the Company had reserved 1,200,000 shares of common stock for issuance. As of June 30, 2018, there were 87,346 shares available for grant under the Omnibus Plan.

During the six months ended June 30, 2018, the Company granted awards of non-qualified stock options for 52,755 shares of common stock. All stock option grants have a 10-year term and will generally vest ratably over a three-year period beginning on the first anniversary of the grant date.

The following is a summary of the activity in outstanding stock options under the Omnibus Plan:


				Weighted-
		Weighted-		Average
		Average		Remaining
		Exercise		Contractual Term
	Options	Price		(in Years)
Outstanding as of December 31, 2017	937,310	$	17.11
Granted	52,755		4.16
Forfeited	(38,825)		19.72
Outstanding as of June 30, 2018	951,240	$	16.28	8.75
Options vested and exercisable as of June 30, 2018	116,897		34.53	7.90
Options vested and expected to vest as of June 30, 2018	951,240		16.28	8.75

The following is a summary of the activity in non-vested stock options under the Omnibus Plan:


		Weighted-Average
	Number	Grant-Date Fair Value

Non-vested as of December 31, 2017	876,903	$	4.08
Granted	52,755		1.65
Forfeited	(26,616)		4.75
Vested	(68,699)		4.60
Non-vested as of June 30, 2018	834,343	$	3.86

Unvested options as of June 30, 2018 will vest as follows:


2018		238,126
2019		315,036
2020		262,538
2021		18,643
Total unvested options as of June 30, 2018		834,343

The fair value of the stock option awards granted during the six months ended June 30, 2018 was determined at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:


	Three Months
	Ended
	June 30,
	2018
Expected term in years (1)	6.0
Volatility (2)	48.8	%
Risk-free interest rate (3)	2.5	%
Dividend yield (4)	—	%

(1)

The Company estimated the expected term based on the average of the weighted-average vesting period and the contractual term of the stock option awards by utilizing the “simplified method”, as the Company does not have sufficient available historical data to estimate the expected term of these stock option awards.

(2)

During the first half of 2018, the Company considered the volatility of its own common stock in determining the fair value of stock option awards, in addition to a peer group average historical volatility over the expected option term. The peer group was based on financial technology companies that completed an initial public offering of common stock within the last 10 years.

(3)

The risk-free interest rate was determined by using the United States Treasury rate for the period that coincided with the expected option term.

(4)

The Company discontinued its quarterly dividend program during August 2017.

The weighted-average grant-date fair value of options granted was as follows:

The following table summarizes the changes in the number of outstanding restricted stock units for the six-month period ended June 30, 2018:


				Weighted-
				Average
		Weighted-		Remaining
		Average		Amortization
		Grant-Date		Period
	Units	Fair Value		(in Years)
Outstanding as of December 31, 2017	49,677	$	16.20
Granted	75,188		2.66
Vested	(25,000)		10.00
Forfeited	(1,330)		22.44
Outstanding as of June 30, 2018	98,535	$	7.36	1.35

During the six months ended June 30, 2018, the Company granted awards of restricted stock units for 75,188 shares of common stock. The restricted stock units contain conditions associated with continued employment or service and generally vest one year from the date of grant. On the vesting dates, shares of common stock will be issued to the award recipients.

Unvested restricted stock units as of June 30, 2018 will vest as follows:


2018		—
2019		75,188
2020		23,347
Total unvested restricted stock units as of June 30, 2018		98,535

The following table summarizes the changes in the number of outstanding cash performance units for the six-month period ended June 30, 2018:


		Units
Outstanding as of December 31, 2017		822,915
Granted		—
Vested		(260,093)
Forfeited		(42,636)
Outstanding as of June 30, 2018		520,186

There were no awards of cash performance units during the six months ended June 30, 2018. These awards will settle in cash in three annual payments on the first, second and third anniversaries of the date of grant. The cash performance units are based on the performance of the Company’s stock, measured based on the Company’s stock price at each of the first, second and third anniversaries of the grant date compared to the Company’s stock price on the date of grant. During the first half of 2018, the first tranche of the cash performance units vested. Accordingly, the Company made a cash payment of $137 to the award recipients.

The Company recognizes compensation expense on a straight-line basis for each annual performance period. The cash performance units are accounted for as a liability and remeasured to fair value at the end of each reporting period. As of June 30, 2018, the Company recognized a liability of $83 in “Accrued expenses” and $55 in “Other long-term liabilities” in the Condensed Consolidated Balance Sheet for unsettled cash performance units.

Compensation expense for the Omnibus Plan for the three months ended June 30, 2018 and 2017 was $389 and $546, respectively, and $784 and $860 for the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, the total unrecognized compensation expense related to unvested options, restricted stock units and cash performance unit awards under the Omnibus Plan was $1,558, which the Company expects to recognize over an estimated weighted-average period of 1.4 years.

CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan

In 2007, the Company’s Board of Directors adopted the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”). Under the provisions of the Option Plan, stock options may be granted to employees, directors and consultants at an exercise price greater than or equal to (and not less than) the fair market value of a share on the date the option is granted.

As a result of the Company’s adoption of the Omnibus Plan, as further described above, no further awards will be made under the Option Plan. The outstanding stock options under the Option Plan are non-qualified, have a 10-year life and are fully vested as of June 30, 2018.

During the six months ended June 30, 2018, there was no activity under the Option Plan. As such, total shares outstanding and exercisable were 6,600 shares with a weighted-average exercise price of $0.002 per share and a weighted-average remaining contract term of 4.91 years at June 30, 2018.

Compensation expense and unrecorded compensation expense related to options previously granted under the Option Plan, for the three and six months ended June 30, 2018 and 2017, were de minimis.

Other Stock-Based Compensation Awards

During June 2015, the Company issued 38,332 restricted shares of common stock to certain executives of the Company at a weighted-average grant-date fair value of $47.40. There were no outstanding unvested restricted shares of common stock as of June 30, 2018. There was no compensation expense recorded for these awards during the three or six months ended June 30, 2018. During the first quarter of 2017, the executive holding the restricted shares changed employment status to a consultant and the Company remeasured the awards and reduced stock-based compensation expense by $143. Compensation expense recorded for these awards for the three and six months ended June 30, 2017 was $(228) and $(371), respectively.

Segment Reporting

6 Months Ended

Jun. 30, 2018

Segment Reporting

Segment Reporting

15. Segment Reporting

The Company has identified reportable segments as those consolidated subsidiaries that represent 10% or more of its revenue, EBITDA (as defined below) or total assets, or when the Company believes information about the segment would be useful to the readers of the financial statements. The Company’s chief operating decision maker is its Chief Executive Officer who is charged with management of the Company and is responsible for the evaluation of operating performance and decision making about the allocation of resources to operating segments based on measures, such as revenue and EBITDA.

EBITDA is the primary measure used by the Company’s chief operating decision maker to evaluate segment operating performance. As the Company uses the term, EBITDA is defined as income before interest expense, income taxes, depreciation and amortization. The Company’s chief operating decision maker believes EBITDA is a meaningful measure and is superior to available GAAP measures as it represents a transparent view of the Company’s operating performance that is unaffected by fluctuations in property, equipment and leasehold improvement additions. The Company’s chief operating decision maker uses EBITDA to perform periodic reviews and comparison of operating trends and identify strategies to improve the allocation of resources amongst segments.

During the second quarter of 2018, the Company met the criteria to report a probable business sale in the U.K. Limited segment as a discontinued operation. On August 3, 2018, the Company completed the sale. See Note 16 “Subsequent Event” for further information. The Company no longer includes U.K. Limited as a reportable segment, and has restated all periods presented within these financial statements.

During the first quarter of 2018, the Company reorganized its United States business operations and realigned its United States reporting segments to correspond with the manner with which the Company’s chief operating decision maker evaluates operating performance and makes decisions as to the allocation of resources. As a result of this realignment, the Company’s CPI on Demand business operations have been moved from the U.S. Prepaid Debit segment into the U.S. Debit and Credit reporting segment, consistent with the other related personalization operations. Segment information for previous periods has been restated to conform with this realignment and current period presentation. The restatement of the segment information for the three- and six-month periods ended June 30, 2017 was not material.

As of June 30, 2018, the Company’s reportable segments were as follows:

 U.S. Debit and Credit,

 U.S. Prepaid Debit, and

 Other.

The Other category includes the Company’s corporate headquarters and a less significant operating segment that derives its revenue from the production of Financial Payment Cards and retail gift cards in Canada.

Performance Measures of Reportable Segments

Revenue and EBITDA of the Company’s reportable segments for the three and six months ended June 30, 2018 and 2017 were as follows:


	Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S. Debit and Credit	$	43,843	$	42,369	$	80,991	$	82,120
U.S. Prepaid Debit		15,427		12,258		30,938		21,757
Other		2,980		3,226		5,679		5,729
Intersegment eliminations		(796)		(3,017)		(1,297)		(4,349)
Total	$	61,454	$	54,836	$	116,311	$	105,257


	EBITDA
	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S. Debit and Credit	$	9,933	$	7,943	$	15,651	$	15,346
U.S. Prepaid Debit		4,687		3,636		9,506		5,649
Other		(7,463)		(6,366)		(15,247)		(13,338)
Total	$	7,157	$	5,213	$	9,910	$	7,657

The following table provides a reconciliation of total segment EBITDA from continuing operations to net loss for the three and six months ended June 30, 2018 and 2017:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Total segment EBITDA from continuing operations	$	7,157	$	5,213	$	9,910	$	7,657
Interest, net		(5,586)		(5,165)		(11,092)		(10,228)
Income tax benefit		2,593		1,014		4,578		3,371
Depreciation and amortization		(4,966)		(4,335)		(9,876)		(8,670)
Net (loss) income from discontinued operation		(15,907)		1,112		(17,521)		1,202
Net loss	$	(16,709)	$	(2,161)	$	(24,001)	$	(6,668)

Balance Sheet Data of Reportable Segments

Total assets of the Company’s reportable segments at June 30, 2018 and December 31, 2017 were as follows:


	June 30, 2018		December 31, 2017

U.S. Debit and Credit	$	162,554	$	164,397
U.S. Prepaid Debit		34,352		33,130
Other		10,677		15,827
Total assets - reportable segments		207,583		213,354
Assets of discontinued operation		8,016		20,651
Total assets	$	215,599	$	234,005

Plant, Equipment and Leasehold Improvement Additions of Geographic Locations

Plant, equipment and leasehold improvement additions of the Company’s geographical locations for the three and six months ended June 30, 2018 and 2017 were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

U.S.	$	2,191	$	2,775	$	3,773	$	5,050
Canada		44		51		46		123
Total plant, equipment and leasehold improvement additions	$	2,235	$	2,826	$	3,819	$	5,173

Net Sales to Geographic Locations

Net sales to geographic locations for the three and six months ended June 30, 2018 and 2017 were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

U.S.	$	58,643	$	52,339	$	111,726	$	100,150
Other (a)		2,811		2,497		4,585		5,107
Total net sales	$	61,454	$	54,836	$	116,311	$	105,257

(a) Amounts in Other include sales to various countries that individually are not material.

Long-Lived Assets of Geographic Segments

Long-lived assets of the Company’s geographic segments at June 30, 2018 and December 31, 2017 were as follows:


	June 30, 2018		December 31, 2017

U.S.	$	124,402	$	130,768
Canada		551		911
Total long-lived assets	$	124,953	$	131,679

Net Sales by Products and Services

Net sales from products and services sold by the Company for the three and six months ended June 30, 2018 and 2017 were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

Products net sales (a)	$	31,494	$	26,640	$	56,238	$	52,866
Services net sales (b)		29,960		28,196		60,073		52,391
Total net sales	$	61,454	$	54,836	$	116,311	$	105,257

(a) “Products” net sales include the design and production of Financial Payment Cards in contact-EMV®, Dual-Interface EMV®, contactless and magnetic stripe card formats. The Company also generates “Products” revenue from the sale of Card@Once® instant issuance systems, private label credit cards and retail gift cards.

(b) “Services” net sales include revenue from the personalization and fulfillment of Financial Payment Cards, providing tamper-evident security packaging and fulfillment services to Prepaid Debit Card program managers and software as a service personalization of instant issuance debit cards. The Company also generates “Services” revenue from personalizing retail gift cards (primarily in Canada) and from click-fees generated from the Company’s patented card design software, known as MYCA, which provides customers and cardholders the ability to design cards on the internet and customize cards with individualized digital images.

Subsequent Event	6 Months Ended
Subsequent Event	Jun. 30, 2018
Subsequent Event
Subsequent Event	16. Subsequent Event On August 3, 2018, the Company completed the sale of its United Kingdom facilities that comprised the U.K. Limited reporting segment, which is reported as a discontinued operation in these financial statements. The Company sold all of the outstanding shares of CPI U.K. Limited to an affiliate of SEA Equity Limited, a private investment firm focused in the United Kingdom and Europe. See Note 3 for further information and financial statement impact from the discontinued operation.

Business Overview and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Business Overview and Summary of Significant Accounting Policies

Basis of Presentation

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of the results of the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2017 is derived from the audited financial statements as of that date. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

During the second quarter of 2018, the Company met the criteria to report a probable business sale of the UK Limited segment as a discontinued operation. On August 3, 2018, the Company completed the sale. See Note 16 “Subsequent Event” for further information. The Company has restated the comparative financial information in conformity with GAAP. Unless otherwise indicated, information in these notes to the unaudited condensed consolidated financial statements relate to continuing operations. See Note 3.

On December 20, 2017, the Company effected a one-for-five reverse stock split of its common stock, whereby each lot of five shares of common stock issued and outstanding immediately prior to the reverse stock split was converted into and became one share of common stock. Share and per share amounts reflect the one-for-five reverse stock split for all periods presented.

Use of Estimates

Management uses estimates and assumptions relating to the reporting of assets and liabilities in its preparation of the condensed consolidated financial statements. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets, valuation allowances for inventories and deferred tax assets, debt, discontinued operations, revenue recognized for period-end work in process and stock-based compensation expense. Actual results could differ from those estimates.

Machinery and Equipment Financing

The Company leases certain machinery and equipment under capital leases. The assets and liabilities under these capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. Once ready for their intended use, the assets are depreciated over the lower of their related lease term or their estimated productive lives.

Adoption of and Recently Issued Accounting Pronouncements

Adoption of New Accounting Standard

As of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, as amended (“ASU 2014-09”), which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires an entity to disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASU 2014-09 as of January 1, 2018 to all its contracts using the modified retrospective method and recognized the cumulative effect of adoption as an adjustment to the opening balance of “Accumulated loss” on the Condensed Consolidated Balance Sheet. Under the new guidance, the Company recognizes certain performance obligations over time as the goods are produced, since those products provide value to only a specified customer, have no alternative use and the Company has the right to payment for work completed on such items. This accelerates the timing of revenue recognition for these arrangements, as revenue is recognized as goods are produced rather than upon shipment or delivery of goods. In addition, as a result of adopting the new guidance, the Company has recorded decreases to deferred revenue, and work in process and finished goods inventories, and an increase to accounts receivable. These changes are reflected in the adoption adjustments table below. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods.

See Note 2 “Revenue” for revenue recognition timing and methodology under ASU 2014-09.

The cumulative effects of the adjustments made to the Company’s January 1, 2018 Condensed Consolidated Balance Sheet upon adoption of ASU 2014-09 were as follows:


	December 31,		Adoption		January 1,
	2017		Adjustments		2018
Assets:
Accounts receivable, net	$	32,531	$	5,991	$	38,522
Inventories		13,799		(5,929)		7,870
Assets of discontinued operation		20,651		(357)		20,294

Liabilities:
Deferred revenue and customer deposits		3,342		(3,063)		279
Liabilities of discontinued operation		5,669		(535)		5,134
Deferred income taxes		12,168		479		12,647


Stockholders' deficit:
Accumulated (loss) earnings		(1,366)		2,824		1,458

In accordance with ASU 2014-09, the impact on the Company’s Condensed Consolidated Balance Sheet and Statement of Operations and Comprehensive Loss was as follows:


					Balances
	As Reported				Without
	June 30,				Adoption of
Balance Sheet	2018		Adjustments		ASU 2014-09
Assets:
Accounts receivable, net	$	43,601	$	(7,115)	$	36,486
Inventories		10,455		5,217		15,672
Assets of discontinued operation		8,016		229		8,245

Liabilities:
Deferred revenue and customer deposits		509		—		509
Liabilities of discontinued operation		7,807		390		8,197
Deferred income taxes		7,925		(479)		7,446

Stockholders' deficit:
Accumulated loss		(22,571)		(1,580)		(24,151)


	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
					Balances						Balances
	As Reported				Without		As Reported				Without
Statement of Operations and	June 30,				Adoption of		June 30,				Adoption of
Comprehensive Loss	2018		Adjustments		ASU 2014-09		2018		Adjustments		ASU 2014-09
Net sales:
Products	$	31,494	$	158	$	31,652	$	56,238	$	(656)	$	55,582
Services		29,960		(588)		29,372		60,073		(365)		59,708
Cost of sales:
Products (exclusive of depreciation and amortization)		18,962		1		18,963		35,280		(918)		34,362
Services (exclusive of depreciation and amortization)		19,116		(248)		18,868		39,780		(68)		39,712

Gross profit		19,875		(183)		19,692		34,302		(35)		34,267

Income tax benefit		2,593		38		2,631		4,578		7		4,585

Net loss from continuing operations		(802)		(145)		(947)		(6,480)		(28)		(6,508)
Net loss from discontinued operation, net of tax		(15,907)		(28)		(15,935)		(17,521)		(19)		(17,540)

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 (the Company’s fiscal year 2019) with early adoption permitted. The new guidance requires the recognition and measurement of leases at the beginning of the earliest comparative period presented in the financial statements using a modified retrospective approach, with an option to apply the transition provisions of the new guidance at the adoption date without adjusting the comparative periods presented. The Company is considering the method of transition upon adoption of this guidance. The Company is in the process of assessing the impact of ASU 2016-02 on its results of operations, financial position and consolidated financial statements.

During 2017, the Company early adopted ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) in conjunction with its annual impairment testing effective October 1, 2017. In accordance with ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value.

Business Overview and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

ASU 2014-09, Revenue from Contracts with Customers

Adoption of New Accounting Standards

Schedule of adoption of new accounting standards


	December 31,		Adoption		January 1,
	2017		Adjustments		2018
Assets:
Accounts receivable, net	$	32,531	$	5,991	$	38,522
Inventories		13,799		(5,929)		7,870
Assets of discontinued operation		20,651		(357)		20,294

Liabilities:
Deferred revenue and customer deposits		3,342		(3,063)		279
Liabilities of discontinued operation		5,669		(535)		5,134
Deferred income taxes		12,168		479		12,647


Stockholders' deficit:
Accumulated (loss) earnings		(1,366)		2,824		1,458

In accordance with ASU 2014-09, the impact on the Company’s Condensed Consolidated Balance Sheet and Statement of Operations and Comprehensive Loss was as follows:


					Balances
	As Reported				Without
	June 30,				Adoption of
Balance Sheet	2018		Adjustments		ASU 2014-09
Assets:
Accounts receivable, net	$	43,601	$	(7,115)	$	36,486
Inventories		10,455		5,217		15,672
Assets of discontinued operation		8,016		229		8,245

Liabilities:
Deferred revenue and customer deposits		509		—		509
Liabilities of discontinued operation		7,807		390		8,197
Deferred income taxes		7,925		(479)		7,446

Stockholders' deficit:
Accumulated loss		(22,571)		(1,580)		(24,151)


	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
					Balances						Balances
	As Reported				Without		As Reported				Without
Statement of Operations and	June 30,				Adoption of		June 30,				Adoption of
Comprehensive Loss	2018		Adjustments		ASU 2014-09		2018		Adjustments		ASU 2014-09
Net sales:
Products	$	31,494	$	158	$	31,652	$	56,238	$	(656)	$	55,582
Services		29,960		(588)		29,372		60,073		(365)		59,708
Cost of sales:
Products (exclusive of depreciation and amortization)		18,962		1		18,963		35,280		(918)		34,362
Services (exclusive of depreciation and amortization)		19,116		(248)		18,868		39,780		(68)		39,712

Gross profit		19,875		(183)		19,692		34,302		(35)		34,267

Income tax benefit		2,593		38		2,631		4,578		7		4,585

Net loss from continuing operations		(802)		(145)		(947)		(6,480)		(28)		(6,508)
Net loss from discontinued operation, net of tax		(15,907)		(28)		(15,935)		(17,521)		(19)		(17,540)

Revenue (Tables)

6 Months Ended

Jun. 30, 2018

Revenue

Schedule of disaggregation of revenue by major source


	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	Products		Services		Total		Products		Services		Total
U.S. Debit and Credit	$	30,444	$	13,399	$	43,843	$	54,164	$	26,827	$	80,991
U.S. Prepaid Debit		—		15,427		15,427		—		30,938		30,938
Other		1,625		1,355		2,980		3,000		2,679		5,679
Intersegment eliminations		(575)		(221)		(796)		(926)		(371)		(1,297)
Total	$	31,494	$	29,960	$	61,454	$	56,238	$	60,073	$	116,311

Discontinued Operation (Tables)

6 Months Ended

Jun. 30, 2018

Discontinued Operation

Schedule of assets, liabilities and operations of discontinued operations


	June 30, 2018		December 31, 2017

Assets:
Accounts receivable	$	5,244	$	5,006
Inventories		1,626		2,438
Other assets		506		506
Plant, equipment and leasehold improvements		7,884		4,864
Intangible assets		—		1,379
Goodwill		—		6,458
Loss recognized on discontinued operation classification		(7,244)		—
Total assets of discontinued operation		8,016		20,651

Liabilities:
Accounts payable		3,754		3,307
Other current liabilities		1,499		1,866
Other long-term liabilities		2,554		496
Total liabilities of discontinued operation	$	7,807	$	5,669

The major line items constituting the (loss) income of the discontinued operation for the three and six months ended June 30, 2018 and 2017 were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Total net sales	$	4,587	$	11,010	$	8,799	$	16,597
Total cost of sales		4,300		8,391		8,498		12,530
Selling, general and administrative		1,446		1,373		3,066		2,716
Impairments		7,615		—		7,615		—
Other expense (income), net		21		(31)		29		(85)
Pretax (loss) income from discontinued operation		(8,795)		1,277		(10,409)		1,436
Pretax loss on discontinued operation classification		(7,244)		—		(7,244)		—
Total pretax (loss) income on discontinued operation		(16,039)		1,277		(17,653)		1,436
Income tax benefit (expense)		132		(165)		132		(234)
Net (loss) income from discontinued operation	$	(15,907)	$	1,112	$	(17,521)	$	1,202

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 205
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-Topic 205
-SubTopic 20
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=84176398&loc=SL51724579-110230

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5C
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
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-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84176398&loc=d3e2941-110230

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
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-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
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-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
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-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760

+ Details

Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2018

Accounts Receivable

Schedule of accounts receivable


	June 30, 2018		December 31, 2017

Trade accounts receivable	$	37,049	$	32,579
Unbilled accounts receivable		6,699		—
		43,748		32,579
Less allowance for doubtful accounts		(147)		(48)
	$	43,601	$	32,531

Inventories (Tables)

6 Months Ended

Jun. 30, 2018

Inventories

Schedule of inventories


	June 30, 2018		December 31, 2017

Raw materials	$	7,974	$	5,718
Work-in-process		—		5,107
Finished goods		2,481		2,974
	$	10,455	$	13,799

Plant, Equipment and Leasehold Improvements (Tables)

6 Months Ended

Jun. 30, 2018

Plant, Equipment and Leasehold Improvements

Schedule of plant, equipment and leasehold improvements


	June 30, 2018		December 31, 2017

Machinery and equipment	$	54,722	$	58,595
Machinery and equipment under capital leases		821		—
Furniture, fixtures and computer equipment		3,960		6,288
Leasehold improvements		18,158		19,601
Construction in progress		2,318		1,512
		79,979		85,996
Less accumulated depreciation		(39,941)		(41,560)
	$	40,038	$	44,436

Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Other Intangible Assets

Schedule of intangible assets excluding goodwill


				June 30, 2018						December 31, 2017
	Average Life					Accumulated		Net Book				Accumulated		Net Book
	(Years)			Cost		Amortization		Value		Cost		Amortization		Value

Customer relationships	12	to	20	$	55,454	$	(23,949)	$	31,505	$	55,454	$	(22,311)	$	33,143
Technology and software	7	to	10		7,101		(3,560)		3,541		7,101		(3,095)		4,006
Trademarks	7.5	to	10		3,330		(682)		2,648		3,330		(487)		2,843
Non-compete agreements	5	to	8		491		(420)		71		491		(390)		101
Intangible assets subject to amortization				$	66,376	$	(28,611)	$	37,765	$	66,376	$	(26,283)	$	40,093

Schedule of future aggregate amortization expense for identified amortizable intangibles


2018 (remaining 6 months)	$	2,343
2019		4,620
2020		4,595
2021		4,352
2022		3,867
Thereafter		17,988
	$	37,765

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value of Financial Instruments

Schedule of financial assets and liabilities subject to fair value measurements


	Carrying
	Value as of		Fair Value as of		Fair Value Measurement at June 30, 2018
	June 30,		June 30,		(Using Fair Value Hierarchy)
	2018		2018		Level 1		Level 2		Level 3
Liabilities:
First Lien Term Loan	$	312,500	$	196,875	$	—	$	196,875	$	—


	Carrying
	Value as of		Fair Value as of		Fair Value Measurement at December 31, 2017
	December 31,		December 31,		(Using Fair Value Hierarchy)
	2017		2017		Level 1		Level 2		Level 3
Liabilities:
First Lien Term Loan	$	312,500	$	228,125	$	—	$	228,125	$	—

Long-Term Debt and Credit Facility (Tables)

6 Months Ended

Jun. 30, 2018

Long-Term Debt and Credit Facility

Schedule of long-term debt


	Interest		June 30,		December 31,
	Rate (1)		2018		2017
First Lien Term Loan (1)	6.36	%	$	312,500	$	312,500
Unamortized discount				(2,786)		(3,122)
Unamortized deferred financing costs				(4,873)		(5,509)
Long-term debt			$	304,841	$	303,869

(1) Interest rate at June 30, 2018. Interest rate at December 31, 2017 was 5.96%.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

+ Details

Loss per Share (Tables)

6 Months Ended

Jun. 30, 2018

Loss per Share

Computation of basic and diluted (loss) EPS


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Numerator:
Net loss from continuing operations	$	(802)	$	(3,273)	$	(6,480)	$	(7,870)
Net (loss) income from discontinued operation		(15,907)		1,112		(17,521)		1,202
Net loss	$	(16,709)	$	(2,161)	$	(24,001)	$	(6,668)
Denominator:
Basic and diluted weighted-average common shares outstanding		11,143,230		11,122,436		11,138,972		11,103,655
Basic and diluted loss per share:
Continuing operations	$	(0.07)	$	(0.30)	$	(0.58)	$	(0.71)
Discontinued operation		(1.43)		0.10		(1.57)		0.11
Net loss	$	(1.50)	$	(0.20)	$	(2.15)	$	(0.60)

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies.

Schedule of equipment under capital leases


	June 30,
	2018
Machinery and equipment	$	748
Less current portion of capital lease obligations		(147)
Total long-term capital lease obligations	$	601

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Summary of changes in outstanding restricted stock units


				Weighted-
				Average
		Weighted-		Remaining
		Average		Amortization
		Grant-Date		Period
	Units	Fair Value		(in Years)
Outstanding as of December 31, 2017	49,677	$	16.20
Granted	75,188		2.66
Vested	(25,000)		10.00
Forfeited	(1,330)		22.44
Outstanding as of June 30, 2018	98,535	$	7.36	1.35

Schedule of vesting for unvested restricted stock units


2018		—
2019		75,188
2020		23,347
Total unvested restricted stock units as of June 30, 2018		98,535

Summary of changes in number of outstanding cash performance units


		Units
Outstanding as of December 31, 2017		822,915
Granted		—
Vested		(260,093)
Forfeited		(42,636)
Outstanding as of June 30, 2018		520,186

Omnibus Plan

Summary of outstanding and exercisable stock options


				Weighted-
		Weighted-		Average
		Average		Remaining
		Exercise		Contractual Term
	Options	Price		(in Years)
Outstanding as of December 31, 2017	937,310	$	17.11
Granted	52,755		4.16
Forfeited	(38,825)		19.72
Outstanding as of June 30, 2018	951,240	$	16.28	8.75
Options vested and exercisable as of June 30, 2018	116,897		34.53	7.90
Options vested and expected to vest as of June 30, 2018	951,240		16.28	8.75

Summary of activity in non-vested stock options


		Weighted-Average
	Number	Grant-Date Fair Value

Non-vested as of December 31, 2017	876,903	$	4.08
Granted	52,755		1.65
Forfeited	(26,616)		4.75
Vested	(68,699)		4.60
Non-vested as of June 30, 2018	834,343	$	3.86

Schedule of vesting for unvested options


2018		238,126
2019		315,036
2020		262,538
2021		18,643
Total unvested options as of June 30, 2018		834,343

Schedule of valuation assumptions


	Three Months
	Ended
	June 30,
	2018
Expected term in years (1)	6.0
Volatility (2)	48.8	%
Risk-free interest rate (3)	2.5	%
Dividend yield (4)	—	%

(1)

The Company estimated the expected term based on the average of the weighted-average vesting period and the contractual term of the stock option awards by utilizing the “simplified method”, as the Company does not have sufficient available historical data to estimate the expected term of these stock option awards.

(2)

During the first half of 2018, the Company considered the volatility of its own common stock in determining the fair value of stock option awards, in addition to a peer group average historical volatility over the expected option term. The peer group was based on financial technology companies that completed an initial public offering of common stock within the last 10 years.

(3)

The risk-free interest rate was determined by using the United States Treasury rate for the period that coincided with the expected option term.

(4)

The Company discontinued its quarterly dividend program during August 2017.

Weighted average grant date fair value of options granted

Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting

Schedule of revenue and EBITDA of the company's reportable segments


	Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S. Debit and Credit	$	43,843	$	42,369	$	80,991	$	82,120
U.S. Prepaid Debit		15,427		12,258		30,938		21,757
Other		2,980		3,226		5,679		5,729
Intersegment eliminations		(796)		(3,017)		(1,297)		(4,349)
Total	$	61,454	$	54,836	$	116,311	$	105,257


	EBITDA
	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
U.S. Debit and Credit	$	9,933	$	7,943	$	15,651	$	15,346
U.S. Prepaid Debit		4,687		3,636		9,506		5,649
Other		(7,463)		(6,366)		(15,247)		(13,338)
Total	$	7,157	$	5,213	$	9,910	$	7,657

Schedule of reconciliation of total segment EBITDA to income before taxes


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Total segment EBITDA from continuing operations	$	7,157	$	5,213	$	9,910	$	7,657
Interest, net		(5,586)		(5,165)		(11,092)		(10,228)
Income tax benefit		2,593		1,014		4,578		3,371
Depreciation and amortization		(4,966)		(4,335)		(9,876)		(8,670)
Net (loss) income from discontinued operation		(15,907)		1,112		(17,521)		1,202
Net loss	$	(16,709)	$	(2,161)	$	(24,001)	$	(6,668)

Schedule of total assets of the company's reportable segments


	June 30, 2018		December 31, 2017

U.S. Debit and Credit	$	162,554	$	164,397
U.S. Prepaid Debit		34,352		33,130
Other		10,677		15,827
Total assets - reportable segments		207,583		213,354
Assets of discontinued operation		8,016		20,651
Total assets	$	215,599	$	234,005

Schedule of plant, equipment and leasehold improvement additions of geographic locations


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

U.S.	$	2,191	$	2,775	$	3,773	$	5,050
Canada		44		51		46		123
Total plant, equipment and leasehold improvement additions	$	2,235	$	2,826	$	3,819	$	5,173

Schedule of net sales of company's geographic locations


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

U.S.	$	58,643	$	52,339	$	111,726	$	100,150
Other (a)		2,811		2,497		4,585		5,107
Total net sales	$	61,454	$	54,836	$	116,311	$	105,257

(a) Amounts in Other include sales to various countries that individually are not material.

Schedule of Long lived assets of the company's geographic segments


	June 30, 2018		December 31, 2017

U.S.	$	124,402	$	130,768
Canada		551		911
Total long-lived assets	$	124,953	$	131,679

Schedule of net sales from product and services sold by the company


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

Products net sales (a)	$	31,494	$	26,640	$	56,238	$	52,866
Services net sales (b)		29,960		28,196		60,073		52,391
Total net sales	$	61,454	$	54,836	$	116,311	$	105,257

(a) “Products” net sales include the design and production of Financial Payment Cards in contact-EMV®, Dual-Interface EMV®, contactless and magnetic stripe card formats. The Company also generates “Products” revenue from the sale of Card@Once® instant issuance systems, private label credit cards and retail gift cards.

(b) “Services” net sales include revenue from the personalization and fulfillment of Financial Payment Cards, providing tamper-evident security packaging and fulfillment services to Prepaid Debit Card program managers and software as a service personalization of instant issuance debit cards. The Company also generates “Services” revenue from personalizing retail gift cards (primarily in Canada) and from click-fees generated from the Company’s patented card design software, known as MYCA, which provides customers and cardholders the ability to design cards on the internet and customize cards with individualized digital images.

Business Overview and Summary of Significant Accounting Policies - Business Overview and Basis of Presentation (Details) $ in Thousands		1 Months Ended	3 Months Ended	6 Months Ended
	Dec. 20, 2017	Feb. 28, 2018 item	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($) item
Business Overview and Summary of Significant Accounting Policies
Minimum number of payment card brands which certify card services \| item				1
Number of personalization operations consolidated \| item		3
Number of facilities personalization operations were consolidated into \| item		2
Accelerated depreciation \| $			$ 1,332	$ 2,132
Severance charge \| $			223	$ 552
Termination charge \| $			$ 432
Reverse stock split	0.20

Business Overview and Summary of Significant Accounting Policies - Adoption of New Accounting Standard (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 02, 2018	Dec. 31, 2017
Assets
Accounts receivable, net	$ 43,601		$ 43,601		$ 38,522	$ 32,531
Inventories	10,455		10,455		7,870	13,799
Assets of discontinued operation	8,016		8,016		20,294	20,651
Liabilities
Deferred revenue and customer deposits	509		509		279	3,342
Liabilities of discontinued operation	7,807		7,807		5,134	5,669
Deferred income taxes	7,925		7,925		12,647	12,168
Stockholders' deficit:
Accumulated (loss) earnings	(22,571)		(22,571)		1,458	$ (1,366)
Net sales:
Revenue	61,454	$ 54,836	116,311	$ 105,257
Cost of sales:
Gross profit	19,875	16,666	34,302	31,314
Income tax benefit (expense)	2,593	1,014	4,578	3,371
Net loss from continuing operations	(802)	(3,273)	(6,480)	(7,870)
Net (loss) income from a discontinued operation, net of taxes (Note 3)	(15,907)	1,112	(17,521)	1,202
Balance without adoption of ASU 2014-09 \| ASU 2014-09, Revenue from Contracts with Customers
Assets
Accounts receivable, net	36,486		36,486
Inventories	15,672		15,672
Assets of discontinued operation	8,245		8,245
Liabilities
Deferred revenue and customer deposits	509		509
Liabilities of discontinued operation	8,197		8,197
Deferred income taxes	7,446		7,446
Stockholders' deficit:
Accumulated (loss) earnings	(24,151)		(24,151)
Cost of sales:
Gross profit	19,692		34,267
Income tax benefit (expense)	2,631		4,585
Net loss from continuing operations	(947)		(6,508)
Net (loss) income from a discontinued operation, net of taxes (Note 3)	(15,935)		(17,540)
Adjustment \| ASU 2014-09, Revenue from Contracts with Customers
Assets
Accounts receivable, net	7,115		7,115		5,991
Inventories	(5,217)		(5,217)		(5,929)
Assets of discontinued operation	(229)		(229)		(357)
Liabilities
Deferred revenue and customer deposits					(3,063)
Liabilities of discontinued operation	(390)		(390)		(535)
Deferred income taxes	479		479		479
Stockholders' deficit:
Accumulated (loss) earnings	1,580		1,580		$ 2,824
Cost of sales:
Gross profit	(183)		(35)
Income tax benefit (expense)	38		7
Net loss from continuing operations	(145)		(28)
Net (loss) income from a discontinued operation, net of taxes (Note 3)	(28)		(19)
Products
Net sales:
Revenue	31,494	26,640	56,238	52,866
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	18,962	17,943	35,280	35,106
Products \| Balance without adoption of ASU 2014-09 \| ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenue	31,652		55,582
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	18,963		34,362
Products \| Adjustment \| ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenue	158		(656)
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	1		(918)
Services
Net sales:
Revenue	29,960	28,196	60,073	52,391
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	19,116	$ 17,533	39,780	$ 33,444
Services \| Balance without adoption of ASU 2014-09 \| ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenue	29,372		59,708
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	18,868		39,712
Services \| Adjustment \| ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenue	(588)		(365)
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	$ (248)		$ (68)

Revenue (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
Revenue (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2018
Disaggregation of Revenue
Revenue	$ 61,454	$ 116,311
Operating Segments \| U.S. Debit and Credit
Disaggregation of Revenue
Revenue	43,843	80,991
Operating Segments \| U.S. Prepaid Debit
Disaggregation of Revenue
Revenue	15,427	30,938
Operating Segments \| Other
Disaggregation of Revenue
Revenue	2,980	5,679
Intersegment eliminations
Disaggregation of Revenue
Revenue	(796)	(1,297)
Products
Disaggregation of Revenue
Revenue	31,494	56,238
Products \| Operating Segments \| U.S. Debit and Credit
Disaggregation of Revenue
Revenue	30,444	54,164
Products \| Operating Segments \| Other
Disaggregation of Revenue
Revenue	1,625	3,000
Products \| Intersegment eliminations
Disaggregation of Revenue
Revenue	(575)	(926)
Services
Disaggregation of Revenue
Revenue	29,960	60,073
Services \| Operating Segments \| U.S. Debit and Credit
Disaggregation of Revenue
Revenue	13,399	26,827
Services \| Operating Segments \| U.S. Prepaid Debit
Disaggregation of Revenue
Revenue	15,427	30,938
Services \| Operating Segments \| Other
Disaggregation of Revenue
Revenue	1,355	2,679
Services \| Intersegment eliminations
Disaggregation of Revenue
Revenue	$ (221)	$ (371)

Discontinued Operation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Discontinued Operation (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 02, 2018	Dec. 31, 2017
Assets
Total assets of discontinued operation	$ 8,016		$ 8,016		$ 20,294	$ 20,651
Liabilities
Total liabilities of discontinued operation	7,807		7,807		$ 5,134	5,669
Major line items constituting the (loss) income of the discontinued operation
Net (loss) income from discontinued operation	(15,907)	$ 1,112	(17,521)	$ 1,202
U.K. Limited \| Sold
Discontinued Operation and Disposition
Impairment of goodwill	6,366
Impairment of intangible assets	1,249
Assets
Accounts receivable	5,244		5,244			5,006
Inventories	1,626		1,626			2,438
Other assets	506		506			506
Plant, equipment and leasehold improvements	7,884		7,884			4,864
Intangible assets						1,379
Goodwill						6,458
Loss recognized on discontinued operation classification	(7,244)		(7,244)
Total assets of discontinued operation	8,016		8,016			20,651
Liabilities
Accounts payable	3,754		3,754			3,307
Other current liabilities	1,499		1,499			1,866
Other long-term liabilities	2,554		2,554			496
Total liabilities of discontinued operation	7,807		7,807			$ 5,669
Major line items constituting the (loss) income of the discontinued operation
Total net sales	4,587	11,010	8,799	16,597
Total cost of sales	4,300	8,391	8,498	12,530
Selling general and administrative	1,446	1,373	3,066	2,716
Impairment	7,615		7,615
Other expense (income), net	21	(31)	29	(85)
Pretax (loss) income from discontinued operation	(8,795)	1,277	(10,409)	1,436
Pre-tax loss on discontinued operation classification	(7,244)		(7,244)
Total pretax (loss) income on discontinued operation	(16,039)	1,277	(17,653)	1,436
Income tax benefit (expense)	132	(165)	132	(234)
Net (loss) income from discontinued operation	$ (15,907)	$ 1,112	$ (17,521)	$ 1,202

Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jan. 02, 2018	Dec. 31, 2017
Accounts Receivable
Trade accounts receivable	$ 37,049		$ 32,579
Unbilled accounts receivable	6,699
Accounts receivable, gross	43,748		32,579
Less allowance for doubtful accounts	(147)		(48)
Accounts receivable, net	$ 43,601	$ 38,522	$ 32,531

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jan. 02, 2018	Dec. 31, 2017
Inventories
Raw materials	$ 7,974		$ 5,718
Work-in-process			5,107
Finished goods	2,481		2,974
Inventory	$ 10,455	$ 7,870	$ 13,799

Plant, Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	$ 79,979		$ 79,979		$ 85,996
Less accumulated depreciation and amortization	(39,941)		(39,941)		(41,560)
Plant, equipment and leasehold improvements, net	40,038		40,038		44,436
Depreciation	3,802	$ 3,163	7,548	$ 6,327
Machinery and equipment
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	54,722		54,722		58,595
Machinery and equipment under capital leases
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	821		821
Furniture, fixtures and computer equipment
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	3,960		3,960		6,288
Leasehold improvements
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	18,158		18,158		19,601
Construction in progress
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	$ 2,318		$ 2,318		$ 1,512

Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Intangible Assets [Line Items]
Intangible amortization expense	$ 1,164	$ 1,172	$ 2,328	$ 2,343
Intangible assets subject to amortization, Cost	66,376		66,376		$ 66,376
Intangible assets subject to amortization, Accumulated Amortization	(28,611)		(28,611)		(26,283)
Intangible assets subject to amortization, Net Book Value	37,765		37,765		40,093
Customer relationships
Intangible Assets [Line Items]
Intangible assets subject to amortization, Cost	55,454		55,454		55,454
Intangible assets subject to amortization, Accumulated Amortization	(23,949)		(23,949)		(22,311)
Intangible assets subject to amortization, Net Book Value	31,505		$ 31,505		$ 33,143
Customer relationships \| Minimum
Intangible Assets [Line Items]
Average Life (Years)			12 years		12 years
Customer relationships \| Maximum
Intangible Assets [Line Items]
Average Life (Years)			20 years		20 years
Technology and software
Intangible Assets [Line Items]
Intangible assets subject to amortization, Cost	7,101		$ 7,101		$ 7,101
Intangible assets subject to amortization, Accumulated Amortization	(3,560)		(3,560)		(3,095)
Intangible assets subject to amortization, Net Book Value	3,541		$ 3,541		$ 4,006
Technology and software \| Minimum
Intangible Assets [Line Items]
Average Life (Years)			7 years		7 years
Technology and software \| Maximum
Intangible Assets [Line Items]
Average Life (Years)			10 years		10 years
Trademarks
Intangible Assets [Line Items]
Intangible assets subject to amortization, Cost	3,330		$ 3,330		$ 3,330
Intangible assets subject to amortization, Accumulated Amortization	(682)		(682)		(487)
Intangible assets subject to amortization, Net Book Value	2,648		$ 2,648		$ 2,843
Trademarks \| Minimum
Intangible Assets [Line Items]
Average Life (Years)			7 years 6 months		7 years 6 months
Trademarks \| Maximum
Intangible Assets [Line Items]
Average Life (Years)			10 years		10 years
Non-compete agreements
Intangible Assets [Line Items]
Intangible assets subject to amortization, Cost	491		$ 491		$ 491
Intangible assets subject to amortization, Accumulated Amortization	(420)		(420)		(390)
Intangible assets subject to amortization, Net Book Value	$ 71		$ 71		$ 101
Non-compete agreements \| Minimum
Intangible Assets [Line Items]
Average Life (Years)			5 years		5 years
Non-compete agreements \| Maximum
Intangible Assets [Line Items]
Average Life (Years)			8 years		8 years

Goodwill and Other Intangible Assets - Future Aggregate Amortization Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Estimated future aggregate amortization expense
2018 (remaining 6 months)	$ 2,343
2019	4,620
2020	4,595
2021	4,352
2022	3,867
Thereafter	17,988
Intangible assets subject to amortization, Net Book Value	$ 37,765	$ 40,093

Fair Value of Financial Instruments (Details) - First Lien Credit Facility - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Liabilities:
Carrying amount	$ 312,500	$ 312,500
Term Loan
Liabilities:
Carrying amount	312,500	312,500
Long-term debt	196,875	228,125
Level 2 \| Term Loan
Liabilities:
Long-term debt	$ 196,875	$ 228,125

Long-Term Debt and Credit Facility - Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Long-term Debt
Unamortized discount	$ (2,786)	$ (3,122)
Unamortized deferred financing costs	(4,873)	(5,509)
Total long-term debt	$ 304,841	$ 303,869
First Lien Credit Facility
Long-term Debt
Interest rate (as a percent)	6.36%	5.96%
Long-term debt	$ 312,500	$ 312,500

Long-Term Debt and Credit Facility - First Lien Credit Facility (Details) $ in Thousands		6 Months Ended	12 Months Ended
	Aug. 17, 2015 USD ($)	Jun. 30, 2018 USD ($) letter	Dec. 31, 2017 USD ($)
Long-term Debt
Fee on outstanding letters of credit (as a percent)		4.50%	4.50%
Fronting fee for letters of credit (as a percent)		0.125%	0.125%
Number of outstanding letters of credit \| letter		1
Letters of credit outstanding		$ 50
Accrued expenses
Long-term Debt
Accrued interest		$ 4,526	$ 4,296
First Lien Credit Facility
Long-term Debt
Maximum net leverage ratio	7.00
Eurodollar rate \| First Lien Credit Facility
Long-term Debt
Applicable margin over reference rate (as a percent)		4.50%
Eurodollar rate \| First Lien Credit Facility \| Minimum
Long-term Debt
Interest rate (as a percent)		1.00%
Base rate \| First Lien Credit Facility
Long-term Debt
Applicable margin over reference rate (as a percent)		3.50%
Term Loan \| First Lien Credit Facility
Long-term Debt
Maximum borrowing capacity	$ 435,000
Revolving Credit Facility
Long-term Debt
Amount outstanding		$ 0
Remaining borrowing capacity		$ 19,950
Revolving Credit Facility \| Minimum
Long-term Debt
Unused commitment fee (as a percent)		0.375%	0.375%
Revolving Credit Facility \| Maximum
Long-term Debt
Unused commitment fee (as a percent)		0.50%	0.50%
Revolving Credit Facility \| First Lien Credit Facility
Long-term Debt
Maximum borrowing capacity	$ 40,000
Amount drawn to trigger net leverage requirement (as a percent)		50.00%

Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
Income Taxes (Details) - USD ($)	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Mar. 30, 2018
Income Taxes
Income tax benefit	$ 2,593,000	$ 1,014,000	$ 4,578,000	$ 3,371,000
Loss before income taxes
Loss before income taxes	$ 3,395,000	$ 4,287,000	$ 11,058,000	$ 11,241,000
Effective income tax rate (as a percent)	76.40%	23.70%	41.40%	30.00%
Federal statutory rate (as a percent)			21.00%		35.00%
Tax benefit related to the net change in deferred tax liabilities					$ 7,057,000
Tax liability from final determination						$ 678,000
Liability on foreign unremitted earnings	$ 0		$ 0

Stockholders' Deficit (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Aug. 31, 2017	Jun. 30, 2017	Jun. 30, 2017
Dividends, Common Stock [Abstract]
Dividends paid on common stock		$ 2,499	$ 5,026
Cash dividend paid per common share		$ 0.225	$ 0.45
Amount of discontinued quarterly dividends	$ 0.225

Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net loss from continuing operations	$ (802)	$ (3,273)	$ (6,480)	$ (7,870)
Net (loss) income from a discontinued operation, net of taxes (Note 3)	(15,907)	1,112	(17,521)	1,202
Net loss	$ (16,709)	$ (2,161)	$ (24,001)	$ (6,668)
Denominator:
Basic and diluted weighted-average shares outstanding (in shares)	11,143,230	11,122,436	11,138,972	11,103,655
Basic and diluted loss per share:
Continuing operations (in dollars per share)	$ (0.07)	$ (0.30)	$ (0.58)	$ (0.71)
Discontinued operation (in dollars per share)	(1.43)	0.10	(1.57)	0.11
Net loss (in dollars per share)	$ (1.50)	$ (0.20)	$ (2.15)	$ (0.60)
Stock Options
Outstanding stock based awards
Potential dilutive effect of share-based compensation excluded (in shares)	957,840		417,418
Restricted stock units
Outstanding stock based awards
Potential dilutive effect of share-based compensation excluded (in shares)		98,535		54,610

Commitments and Contingencies - Capital Lease (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Commitments and Contingencies.
Operating leases, rent expense	$ 908	$ 880	$ 1,776	$ 1,770
Machinery and equipment capital lease obligations	748		748
Less current portion of capital lease obligations	(147)		(147)
Total long-term capital lease obligations	$ 601		$ 601

Commitments and Contingencies - Contingencies (Details) - Pending Litigation	Jun. 15, 2016 plaintiff	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Securities Litigation Case
Commitments and Contingencies
Number of purported shareholders that have filed lawsuits \| plaintiff	2
Loss contingency accrual			$ 0
Heckermann Montross Suit
Commitments and Contingencies
Loss contingency accrual		$ 0	$ 0

Stock Based Compensation - Omnibus Incentive Plan (Details) $ / shares in Units, $ in Thousands			3 Months Ended		6 Months Ended
	Dec. 20, 2017	Sep. 25, 2017 shares	Jun. 30, 2018 USD ($) $ / shares shares	Jun. 30, 2017 USD ($) $ / shares	Jun. 30, 2018 USD ($) $ / shares shares	Jun. 30, 2017 USD ($)	Oct. 31, 2015 shares
Stock-based compensation
Reverse stock split	0.20
Omnibus Plan
Valuation Assumptions:
Compensation expense \| $			$ 389	$ 546	$ 784	$ 860
Omnibus Plan \| Stock Options
Stock-based compensation
Number of shares authorized		1,200,000					800,000
Number of additional shares authorized		400,000
Number of shares available for grant			87,346		87,346
Stock options granted (in shares)					52,755
Stock option life (in years)					10 years
Number of shares
Balance at beginning of year (in shares)					937,310
Granted (in shares)					52,755
Forfeited (in shares)					(38,825)
Balance at end of year (in shares)			951,240		951,240
Options: Options vested and exercisable			116,897		116,897
Options: Options vested and expected to vest			951,240		951,240
Weighted-Average Exercise Price
Balance at beginning of year (in dollars per share) \| $ / shares					$ 17.11
Granted (in dollars per share) \| $ / shares					4.16
Forfeited (in dollars per share) \| $ / shares					19.72
Balance at end of year (in dollars per share) \| $ / shares			$ 16.28		16.28
Weighted-Average Exercise Price: Options vested and exercisable \| $ / shares			34.53		34.53
Weighted-Average Exercise Price: Options vested and expected to vest \| $ / shares			$ 16.28		$ 16.28
Weighted- Average Remaining Contractual Term (in Years)
Balance (in years)					8 years 9 months
Weighted-Average Remaining Contractual Term (in Years): Options vested and exercisable					7 years 10 months 24 days
Weighted-Average Remaining Contractual Term (in Years): Options vested and expected to vest					8 years 9 months
Number of unvested options scheduled to vest
Non-Vested Options as of beginning of period					876,903
Granted (in shares)					52,755
Forfeited (in shares)					(26,616)
Vested (in shares)					(68,699)
Non-Vested Options as of end of period			834,343		834,343
Weighted-Average Grant Date Fair Value
Non-Vested, beginning balance \| $ / shares					$ 4.08
Granted: Weighted-Average Grant Date Fair Value \| $ / shares			$ 1.65	$ 4.31	1.65
Forfeited: Weighted-Average Grant Date Fair Value \| $ / shares					4.75
Vested: Weighted-Average Grant Date Fair Value \| $ / shares					4.60
Non-Vested, ending balance \| $ / shares			$ 3.86		$ 3.86
Valuation Assumptions:
Expected term in years					6 years
Volatility (as a percent)					48.80%
Risk-free interest rate					2.50%
Period of initial public offering of common stock used for volatility rate					10 years
Awards vesting beginning the first anniversary of the grant date \| Stock Options
Stock-based compensation
Vesting period					3 years
2018 \| Omnibus Plan \| Stock Options
Number of unvested options scheduled to vest
Non-Vested Options as of end of period			238,126		238,126
2019 \| Omnibus Plan \| Stock Options
Number of unvested options scheduled to vest
Non-Vested Options as of end of period			315,036		315,036
2020 \| Omnibus Plan \| Stock Options
Number of unvested options scheduled to vest
Non-Vested Options as of end of period			262,538		262,538
2021 \| Omnibus Plan \| Stock Options
Number of unvested options scheduled to vest
Non-Vested Options as of end of period			18,643		18,643

Stock Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Restricted stock units
Weighted Average Grant Date Fair Value
Period over which compensation expense expected to recognize			1 year 4 months 24 days
Omnibus Plan
Weighted Average Grant Date Fair Value
Compensation expense	$ 389	$ 546	$ 784	$ 860
Omnibus Plan \| Restricted stock units
Number of Restricted Stock Units
Units outstanding at the beginning of the period (in shares)			49,677
Granted (in shares)			75,188
Vested (in shares)			(25,000)
Forfeited (in shares)			(1,330)
Units outstanding at the end of the period (in shares)	98,535		98,535
Weighted Average Grant Date Fair Value
Units outstanding at the beginning of the period (in dollars per shares)			$ 16.20
Granted (in dollars per share)			2.66
Vested (in dollars per share)			10.00
Forfeited (in dollars per share)			22.44
Units outstanding at the end of the period (in dollars per shares)	$ 7.36		$ 7.36
Unrecognized compensation expense					$ 1,558
Period over which compensation expense expected to recognize			1 year 4 months 6 days
Unvested restricted stock (in units)	98,535		49,677		98,535
Omnibus Plan \| Restricted stock units \| 2019
Number of Restricted Stock Units
Units outstanding at the end of the period (in shares)	75,188		75,188
Weighted Average Grant Date Fair Value
Unvested restricted stock (in units)	75,188		75,188		75,188
Omnibus Plan \| Restricted stock units \| 2020
Number of Restricted Stock Units
Units outstanding at the end of the period (in shares)	23,347		23,347
Weighted Average Grant Date Fair Value
Unvested restricted stock (in units)	23,347		23,347		23,347

Stock Based Compensation - Cash Performance Units (Details) - Cash Performance $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($) shares
Stock-based compensation
Period over which compensation expense expected to recognize	3 years
Cash payments made \| $	$ 137
Number of Cash Performance Units
Units outstanding at the beginning of the period (in shares)	822,915
Granted (in shares)	0
Vested (in shares)	(260,093)
Forfeited (in shares)	(42,636)
Units outstanding at the end of the period (in shares)	520,186
Accrued expenses
Stock-based compensation
Cash performance liability \| $	$ 83
Other Long Term Liabilities
Stock-based compensation
Cash performance liability \| $	$ 55

Stock Based Compensation - Option Plan (Details) - Stock Options - Option Plan - $ / shares	6 Months Ended
	Jun. 30, 2018
Stock-based compensation
Stock option life (in years)	10 years
Number of shares
Balance at end of year (in shares)	6,600
Weighted-Average Exercise Price
Exercisable at end of year (in dollars per share)	$ 0.002
Weighted- Average Remaining Contractual Term (in Years)
Balance (in years)	4 years 10 months 28 days

Stock Based Compensation - Restricted Shares (Details) - Restricted shares - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended			6 Months Ended
	Jun. 30, 2015	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2018	Jun. 30, 2017
Weighted Average Grant Date Fair Value
Compensation expense		$ 0	$ (228)	$ (143)	$ 0	$ (371)
Common Stock
Number of Restricted Stock Units
Granted (in shares)	38,332
Units outstanding at the end of the period (in shares)		0			0
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 47.40

Segment Reporting - Revenue and EBITDA from Continuing Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting
Revenue	$ 61,454	$ 54,836	$ 116,311	$ 105,257
EBITDA	7,157	5,213	9,910	7,657
U.S. Debit and Credit
Segment Reporting
EBITDA	9,933	7,943	15,651	15,346
U.S. Prepaid Debit
Segment Reporting
EBITDA	4,687	3,636	9,506	5,649
Other
Segment Reporting
EBITDA	(7,463)	(6,366)	(15,247)	(13,338)
Operating Segments \| U.S. Debit and Credit
Segment Reporting
Revenue	43,843	42,369	80,991	82,120
Operating Segments \| U.S. Prepaid Debit
Segment Reporting
Revenue	15,427	12,258	30,938	21,757
Operating Segments \| Other
Segment Reporting
Revenue	2,980	3,226	5,679	5,729
Intersegment eliminations
Segment Reporting
Revenue	$ (796)	$ (3,017)	$ (1,297)	$ (4,349)

Segment Reporting - Reconciliation of EBITDA from Continuing Operations to "Net (Loss) Income from Continuing Operations" (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of total segment EBITDA to income before taxes
Total segment EBITDA from continuing operations	$ 7,157	$ 5,213	$ 9,910	$ 7,657
Interest, net	(5,586)	(5,165)	(11,092)	(10,228)
Income tax benefit	2,593	1,014	4,578	3,371
Depreciation and amortization	(4,966)	(4,335)	(9,876)	(8,670)
Net (loss) income from a discontinued operation, net of taxes (Note 3)	(15,907)	1,112	(17,521)	1,202
Net loss	$ (16,709)	$ (2,161)	$ (24,001)	$ (6,668)

Segment Reporting - Balance Sheet Data (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jan. 02, 2018	Dec. 31, 2017
Segment Reporting
Assets of discontinued operation	$ 8,016	$ 20,294	$ 20,651
Total assets	215,599		234,005
Operating Segments
Segment Reporting
Total assets	207,583		213,354
Operating Segments \| U.S. Debit and Credit
Segment Reporting
Total assets	162,554		164,397
Operating Segments \| U.S. Prepaid Debit
Segment Reporting
Total assets	34,352		33,130
Operating Segments \| Other
Segment Reporting
Total assets	$ 10,677		$ 15,827

Segment Reporting - Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Segment Reporting
Total plant, equipment and leasehold improvement additions	$ 2,235	$ 2,826	$ 3,819	$ 5,173
Revenue	61,454	54,836	116,311	105,257
Total long-lived assets	124,953		124,953		$ 131,679
U.S.
Segment Reporting
Total plant, equipment and leasehold improvement additions	2,191	2,775	3,773	5,050
Revenue	58,643	52,339	111,726	100,150
Total long-lived assets	124,402		124,402		130,768
Canada
Segment Reporting
Total plant, equipment and leasehold improvement additions	44	51	46	123
Total long-lived assets	551		551		$ 911
Other
Segment Reporting
Revenue	$ 2,811	$ 2,497	$ 4,585	$ 5,107

Segment Reporting - Net Sales by Product and Services (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting
Total net sales	$ 61,454	$ 54,836	$ 116,311	$ 105,257
Products
Segment Reporting
Total net sales	31,494	26,640	56,238	52,866
Services
Segment Reporting
Total net sales	$ 29,960	$ 28,196	$ 60,073	$ 52,391

Three Months Ended June 30,

Weighted-average grant-date fair value of options granted