CPI Card (PMTS) 10-Q 9 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 23, 2018
Document and Entity Information
Entity Registrant Name	CPI Card Group Inc.
Entity Central Index Key	1,641,614
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,134,714
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 20,196	$ 23,205
Accounts receivable, net	42,277	37,537
Inventories	8,603	16,237
Prepaid expenses and other current assets	4,261	3,960
Income taxes receivable	8,926	8,435
Total current assets	84,263	89,374
Plant, equipment and leasehold improvements, net	50,244	49,300
Intangible assets, net	40,303	41,472
Goodwill	53,859	53,611
Other assets	234	248
Total assets	228,903	234,005
Current liabilities:
Accounts payable	15,344	16,545
Accrued expenses	14,972	13,820
Income taxes payable	678
Deferred revenue and customer deposits	403	4,177
Total current liabilities	31,397	34,542
Long-term debt	304,355	303,869
Deferred income taxes	11,209	12,286
Other long-term liabilities	5,361	2,882
Total liabilities	352,322	353,579
Commitments and contingencies (Note 12)
Stockholders' deficit:
Common Stock; $0.001 par value—100,000,000 shares authorized; 11,134,714 shares issued and outstanding at March 31, 2018 and December 31, 2017	11	11
Capital deficiency	(112,740)	(113,081)
Accumulated loss	(5,861)	(1,366)
Accumulated other comprehensive loss	(4,829)	(5,138)
Total stockholders' deficit	(123,419)	(119,574)
Total liabilities and stockholders' deficit	$ 228,903	$ 234,005

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 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)	11,134,714	11,134,714
Common shares, outstanding shares (in shares)	11,134,714	11,134,714

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net sales:
Total net sales	$ 59,070	$ 56,008
Cost of sales:
Depreciation and amortization	3,630	2,784
Total cost of sales	44,628	39,913
Gross Profit	14,442	16,095
Operating expenses:
Selling, general and administrative (exclusive of depreciation and amortization shown below)	16,815	16,155
Depreciation and amortization	1,595	1,749
Total operating expenses	18,410	17,904
Loss from operations	(3,968)	(1,809)
Other expense, net
Interest, net	(5,519)	(5,062)
Foreign currency gain	207	73
Other income, net	4	1
Total other expense, net	(5,308)	(4,988)
Loss before income taxes	(9,276)	(6,797)
Income tax benefit	1,985	2,291
Net loss	$ (7,291)	$ (4,506)
Basic and diluted loss per share:
(Loss) earnings per share (in dollars per share)	$ (0.65)	$ (0.40)
Basic (in shares)	11,134,714	11,084,875
Diluted (in shares)	11,134,714	11,084,875
Dividends declared per common share		$ 0.225
Comprehensive loss
Net loss	$ (7,291)	$ (4,506)
Currency translation adjustment	309	201
Total comprehensive loss	(6,982)	(4,305)
Products
Net sales:
Total net sales	27,560	29,764
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	19,082	19,688
Services
Net sales:
Total net sales	31,510	26,244
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	$ 21,916	$ 17,441

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities
Net loss	$ (7,291)	$ (4,506)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	5,225	4,533
Stock-based compensation expense	395	546
Amortization of debt issuance costs and debt discount	486	484
Deferred income tax	(1,622)	(351)
Other, net	(195)	(39)
Changes in operating assets and liabilities:
Accounts receivable	2,074	(2,375)
Inventories	681	(4,551)
Prepaid expenses and other assets	(282)	(485)
Income taxes	194	(2,005)
Accounts payable	(1,423)	1,751
Accrued expenses	421	(1,794)
Deferred revenue and customer deposits	(142)	3,424
Other liabilities	(306)	357
Cash used in operating activities	(1,785)	(5,011)
Investing activities
Acquisitions of plant, equipment and leasehold improvements	(1,161)	(3,283)
Cash used in investing activities	(1,161)	(3,283)
Financing activities
Payments on capital lease obligations	(129)
Dividends paid on common stock		(2,527)
Taxes withheld and paid on stock-based compensation awards		(336)
Cash used in financing activities	(129)	(2,863)
Effect of exchange rates on cash	66	108
Net decrease in cash and cash equivalents	(3,009)	(11,049)
Cash and cash equivalents, beginning of period	23,205	36,955
Cash and cash equivalents, end of period	20,196	25,906
Supplemental disclosures of cash flow information
Cash paid during the period for: Interest	4,760	4,488
Cash paid during the period for: Income taxes, net (refunds) payments	(88)	65
Capital lease obligations incurred for certain machinery and equipment leases	3,734
Accounts payable for acquisitions of plant, equipment and leasehold improvements	$ 400	$ 536

Business Overview and Summary o

Business Overview and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 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 Europe and 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 $800 for the three months ended March 31, 2018, and recorded a severance charge of $329 for this same time period. 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. 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, 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 will be recognized as goods are produced rather than upon shipment or delivery of goods. In addition to accelerating the timing of recording revenue, the Company has recorded decreases in deferred revenue, work in process and finished goods inventories, and an increase to accounts receivable. 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, Balance Sheet 2017 Adjustments 2018 Assets: Accounts receivable, net $ 37,537 $ 6,708 $ 44,245 Inventories 16,237 (7,003) 9,234 Liabilities: Deferred revenue and customer deposits 4,177 (3,659) 518 Deferred income taxes 12,286 540 12,826 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 March 31, Adoption of Balance Sheet 2018 Adjustments ASU 2014-09 Assets: Accounts receivable, net $ 42,277 $ (7,039) $ 35,238 Inventories 8,603 5,861 14,464 Liabilities: Deferred revenue and customer deposits 403 725 1,128 Deferred income taxes 11,209 (540) 10,669 Stockholders' deficit: Accumulated loss (5,861) (1,363) (7,224) Three Months Ended March 31, 2018 Balances As Reported Without March 31, Adoption of Statement of Operations and Comprehensive Income (Loss) 2018 Adjustments ASU 2014-09 Net sales: Products $ 27,560 $ (725) $ 26,835 Services 31,510 223 31,733 Cost of sales: Products (exclusive of depreciation and amortization) 19,082 (841) 18,241 Services (exclusive of depreciation and amortization) 21,916 179 22,095 Gross profit 14,442 160 14,602 Income tax benefit (expense) 1,985 (34) 1,951 Net (loss) income (7,291) 126 (7,165) 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 standard is required to be adopted using a modified retrospective approach. 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

Revenue	3 Months Ended
	Mar. 31, 2018
Revenue
Revenue	2. Revenue The Company disaggregates its revenue by major source as follows: Three Months Ended March 31, 2018 Products Services Total U.S. Debit and Credit $ 23,720 $ 13,428 $ 37,148 U.S. Prepaid Debit - 15,512 15,512 U.K. Limited 2,816 1,397 4,213 Other 1,375 1,324 2,699 Intersegment eliminations (351) (151) (502) Total $ 27,560 $ 31,510 $ 59,070 For periods after January 1, 2018, the Company accounts for its revenue as follows: Products Revenue Product 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 our 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.

Accounts Receivable

Accounts Receivable	3 Months Ended
	Mar. 31, 2018
Accounts Receivable
Accounts Receivable	3. Accounts Receivable Accounts receivable consisted of the following: March 31, 2018 December 31, 2017 Trade accounts receivable $ 35,291 $ 37,590 Unbilled accounts receivable 7,039 — 42,330 37,590 Less allowance for doubtful accounts (53) (53) $ 42,277 $ 37,537

Inventories

Inventories	3 Months Ended
	Mar. 31, 2018
Inventories
Inventories	4 . Inventories Inventories are summarized below: March 31, 2018 December 31, 2017 Raw materials $ 6,282 $ 6,498 Work-in-process — 6,557 Finished goods 2,321 3,182 $ 8,603 $ 16,237

Plant, Equipment and Leasehold

Plant, Equipment and Leasehold Improvements	3 Months Ended
	Mar. 31, 2018
Plant, Equipment and Leasehold Improvements
Plant, Equipment and Leasehold Improvements	5. Plant, Equipment and Leasehold Improvements Plant, equipment and leasehold improvements consisted of the following: March 31, 2018 December 31, 2017 Buildings $ 2,363 $ 2,318 Machinery and equipment 63,640 62,318 Machinery and equipment under capital leases 3,734 — Furniture, fixtures and computer equipment 7,626 7,585 Leasehold improvements 19,782 19,754 Construction in progress 1,393 1,980 98,538 93,955 Less accumulated depreciation (48,294) (44,655) $ 50,244 $ 49,300 Depreciation of plant, equipment and leasehold improvements, including depreciation of assets under capital leases, was $4,004 and $3,310 for the three months ended March 31, 2018 and 2017, respectively.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	3 Months Ended
	Mar. 31, 2018
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets	6. Goodwill and Other Intangible Assets The Company’s goodwill by reportable segment at March 31, 2018 and December 31, 2017 was as follows: March 31, 2018 December 31, 2017 U.S. Debit and Credit $ 47,150 $ 47,150 U.K. Limited 6,709 6,461 $ 53,859 $ 53,611 The change in goodwill from December 31, 2017 to March 31, 2018 was a result of foreign currency translation adjustments. 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 March 31, 2018 were related to foreign currency translation adjustments. Intangible amortization expense was $1,221 and $1,223 for the three months ended March 31, 2018 and 2017, respectively. At March 31, 2018 and December 31, 2017, intangible assets, excluding goodwill, were comprised of the following: March 31, 2018 December 31, 2017 Average Life Accumulated Net Book Accumulated Net Book (Years) Cost Amortization Value Cost Amortization Value Customer relationships 12 to 20 $ 59,026 $ (25,329) $ 33,697 $ 58,895 $ (24,373) $ 34,522 Technology and software 7 to 10 7,101 (3,327) 3,774 7,101 (3,095) 4,006 Trademarks 7.5 to 10 3,330 (584) 2,746 3,330 (487) 2,843 Non-compete agreements 5 to 8 491 (405) 86 491 (390) 101 Intangible assets subject to amortization $ 69,948 $ (29,645) $ 40,303 $ 69,817 $ (28,345) $ 41,472 The estimated future aggregate amortization expense for the identified amortizable intangibles noted above as of March 31, 2018 was as follows: 2018 (remaining 9 months) $ 3,666 2019 4,868 2020 4,828 2021 4,585 2022 4,100 Thereafter 18,256 $ 40,303

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2018
Fair Value of Financial Instruments
Fair Value of Financial Instruments	7. 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 March 31, 2018 March 31, March 31, (Using Fair Value Hierarchy) 2018 2018 Level 1 Level 2 Level 3 Liabilities: First Lien Term Loan $ 312,500 $ 217,188 $ — $ 217,188 $ — 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 8, “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.

Long-Term Debt and Credit Facil

Long-Term Debt and Credit Facility	3 Months Ended
	Mar. 31, 2018
Long-Term Debt and Credit Facility
Long-Term Debt and Credit Facility	8. Long-Term Debt and Credit Facility At March 31, 2018 and December 31, 2017, long-term debt and credit facilities consisted of the following: Interest March 31, December 31, Rate (1) 2018 2017 First Lien Term Loan (1) 6.36 % $ 312,500 $ 312,500 Unamortized discount (2,954) (3,122) Unamortized deferred financing costs (5,191) (5,509) Long-term debt $ 304,355 $ 303,869 (1 ) Interest rate at March 31, 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 March 31, 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 March 31, 2018, the Company did not expect to have a required excess cash flow payment related to 2018. At March 31, 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 March 31, 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 March 31, 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

Income Taxes	3 Months Ended
	Mar. 31, 2018
Income Taxes
Income Taxes	9. Income Taxes During the three months ended March 31, 2018, the Company recognized an income tax benefit of $1,985 on a pre-tax loss of $9,276, representing an effective income tax rate of 21.4%, compared to an income tax benefit of $2,291 on a pre-tax loss of $6,797, representing an effective tax rate of 33.7% during the three months ended March 31, 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 in 2018 primarily due to the impact of state income taxes. 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 reclassified this item from “Other long-term liabilities” to “Income taxes payable” in its Condensed Consolidated Balance Sheet as of March 31, 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, 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 for the quarter ended March 31, 2018. 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. All other accounting as required by the Tax Act has been completed.

Stockholders' Deficit

Stockholders' Deficit	3 Months Ended
	Mar. 31, 2018
Stockholders’ Deficit
Stockholders’ Deficit	10. Stockholders’ Deficit During the three months ended March 31, 2017, the Company paid dividends of $2,527, representing $0.225 per share. During August 2017, the Company discontinued its quarterly dividend of $0.225 per share.

Loss per Share

Loss per Share	3 Months Ended
	Mar. 31, 2018
Loss per Share
Loss per Share	11. 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 March 31, 2018 2017 Numerator: Net loss $ (7,291) $ (4,506) Denominator: Basic-weighted-average common shares outstanding 11,134,714 11,084,875 Diluted-weighted-average common shares outstanding 11,134,714 11,084,875 Loss per share: Basic $ (0.65) $ (0.40) Diluted $ (0.65) $ (0.40) The Company reported a net loss for the three-month periods ended March 31, 2018 and 2017. Accordingly, the potentially dilutive effect of 952,706 and 465,174 stock options and 48,509 and 37,352 restricted stock units were excluded from the computation of diluted earnings per share as of March 31, 2018 and 2017, respectively, as their inclusion would be anti-dilutive.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies.
Commitments and Contingencies	12. Commitments and Contingencies Commitments The Company incurred rent expense under non-cancellable operating leases of $934 and $953 for the three months ended March 31, 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 March 31, 2018: March 31, 2018 Machinery and equipment $ 3,561 Less current portion of capital lease obligations (699) Total long-term capital lease obligations $ 2,862 In its Condensed Consolidated Balance Sheet at March 31, 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. The Company believes these claims are without merit and is defending the Class Action vigorously. Given the current stage of the matter, the range of any potential loss is not probable or estimable and no liability has been recorded as of March 31, 2018 or 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 March 31, 2018 or December 31, 2017. Gemalto S.A. v. CPI Card Group Inc. (2 cases) First case. This suit was initially filed by Gemalto S.A. (“Gemalto”) against the Company in the United States District Court for the Western District of Texas in October 2015. The complaint alleged that the Company infringed a now-expired Gemalto patent by incorporating into the Company’s products microchips that allegedly practice the EMV standard. The Company successfully moved to transfer the lawsuit to the District of Colorado, answered the complaint and filed counterclaims that the asserted patent was invalid and unenforceable, and that Gemalto’s lawsuit was a “sham” intended to interfere with the Company’s IPO and business relationships. During 2016, the Company filed an Inter Partes Review ("IPR") petition with the United States Patent & Trademark Office’s Patent Trial & Appeal Board (“PTAB”) seeking re-examination of Gemalto’s asserted patent, and the United States District Court for the District of Colorado granted the Company’s motion to stay the litigation pending the PTAB’s consideration of the Company’s challenge to the patentability of asserted claims. Second case. On May 3, 2016, Gemalto filed a second patent infringement action against CPI in the United States District Court for the District of Colorado. The complaint alleged that the Company infringed a Gemalto patent on networked smartcard printing by way of the Company’s Card Once offering. During 2017, the Company filed an IPR petition with the PTAB seeking re-examination of Gemalto’s asserted patent. On September 28, 2017, the Company reached a settlement with Gemalto to resolve both lawsuits. Under the terms of the settlement, the Company made a one-time payment of $750 in the fourth quarter of 2017. The settlement resulted in the dismissal of both lawsuits with prejudice, and included a mutual covenant not to sue for a period of 18 months. 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

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2018
Stock-Based Compensation
Stock-Based Compensation	13. 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 March 31, 2018, there were 167,506 shares available for grant under the Omnibus Plan. During the three months ended March 31, 2018, the Company granted awards of non-qualified stock options for 31,480 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 $ Granted 31,480 Forfeited (22,684) Outstanding as of March 31, 2018 946,106 $ 8.98 Options vested and exercisable as March 31, 2018 112,225 8.20 Options vested and expected to vest as March 31, 2018 946,106 8.98 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 31,480 1.80 Forfeited (22,684) 5.19 Vested (51,818) 4.61 Non-vested as of March 31, 2018 833,881 $ 3.93 Unvested options as of March 31, 2018 will vest as follows: 2018 255,669 2019 309,357 2020 256,880 2021 11,975 Total unvested options as of March 31, 2018 833,881 The fair value of the stock option awards granted during the three months ended March 31, 2018 was determined at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended March 31, 2018 Expected term in years (1) 6.0 Volatility (2) 49.0 % Risk-free interest rate (3) 2.3 % 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 quarter of 2018, the Company considered the volatility of its 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: Three Months Ended March 31, 2018 2017 Weighted-average grant-date fair value of options granted $ 1.80 $ 4.68 The following table summarizes the changes in the number of outstanding restricted stock units for the three month-period ended March 31, 2018: Weighted- Average Grant-Date Units Fair Value Outstanding as of December 31, 2017 49,677 $ 16.20 Forfeited (1,168) 22.53 Outstanding as of March 31, 2018 48,509 $ 16.05 There were no awards of restricted stock units during the first quarter of 2018. 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 issue to the award recipients. The following table summarizes the changes in the number of outstanding cash performance units for the three-month period ended March 31, 2018: Units Outstanding as of December 31, 2017 822,915 Granted — Vested (263,664) Forfeited (31,923) Outstanding as of March 31, 2018 527,328 There were no awards of cash performance units during the three months ended March 31, 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 quarter 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 March 31, 2018, the Company recognized a liability of $68 in “Accrued expenses” and $45 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 March 31, 2018 and 2017 was $395 and $689, respectively. As of March 31, 2018, the total unrecognized compensation expense related to unvested options, restricted stock units and cash performance unit awards under the Omnibus Plan was $1,720, which the Company expects to recognize over an estimated weighted-average period of 1.6 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 March 31, 2018. During the three months ended March 31, 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 5.16 years at March 31, 2018. Compensation expense and unrecorded compensation expense related to options previously granted under the Option Plan, for the three months ended March 31, 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 weighted-average grant-date fair value of $47.40. There are no outstanding unvested restricted shares of common stock as of March 31, 2018. There was no compensation expense recorded for these awards during the three months ended March 31, 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 during the three months ended March 31, 2017.

Segment Reporting

Segment Reporting	3 Months Ended
	Mar. 31, 2018
Segment Reporting
Segment Reporting	14. 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 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 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 first quarter 2017 segment information was not material. As of March 31, 2018, the Company’s reportable segments were as follows:  U.S. Debit and Credit,  U.S. Prepaid Debit,  U.K. Limited 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 months ended March 31, 2018 and 2017 were as follows: Revenue Three Months Ended March 31, 2018 2017 U.S. Debit and Credit $ 37,148 $ 39,751 U.S. Prepaid Debit 15,512 9,497 U.K. Limited 4,213 5,587 Other 2,699 2,503 Intersegment eliminations (502) (1,330) Total $ 59,070 $ 56,008 EBITDA Three Months Ended March 31, 2018 2017 U.S. Debit and Credit $ 5,719 $ 7,402 U.S. Prepaid Debit 4,819 2,013 U.K. Limited (1,102) 325 Other (7,968) (6,942) Total $ 1,468 $ 2,798 The following table provides a reconciliation of total segment EBITDA to net (loss) income for the three months ended March 31, 2018 and 2017: Three Months Ended March 31, 2018 2017 Total segment EBITDA from continuing operations $ 1,468 $ 2,798 Interest, net (5,519) (5,062) Income tax benefit 1,985 2,291 Depreciation and amortization (5,225) (4,533) Net (loss) $ (7,291) $ (4,506) Balance Sheet Data of Reportable Segments Total assets of the Company’s reportable segments at March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 U.S. Debit and Credit $ 160,708 $ 164,397 U.S. Prepaid Debit 30,960 33,130 U.K. Limited 23,286 22,640 Other 13,949 13,838 Total assets $ 228,903 $ 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 months ended March 31, 2018 and 2017 were as follows: Three Months Ended March 31, 2018 2017 U.S. $ 1,582 $ 2,275 Canada 2 72 Total North America 1,584 2,347 U.K. 3,311 961 Total plant, equipment and leasehold improvement additions $ 4,895 $ 3,308 Net Sales to Geographic Locations Net sales to geographic locations for the three months ended March 31, 2018 and 2017 were as follows: Three Months Ended March 31, 2018 2017 U.S. $ 52,791 $ 47,811 Other (a) 6,279 8,197 Total net sales $ 59,070 $ 56,008 (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 March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 U.S. $ 127,396 $ 130,767 Canada 814 911 Total North America 128,210 131,678 U.K. 16,196 12,705 Total long-lived assets $ 144,406 $ 144,383 Net Sales by Product and Services Net sales from products and services sold by the Company for the three months ended March 31, 2018 and 2017 were as follows: Three Months Ended March 31, 2018 2017 Product net sales (a) $ 27,560 $ 29,764 Services net sales (b) 31,510 26,244 Total net sales $ 59,070 $ 56,008 (a) Product 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 Product 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 the United Kingdom) 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 Summary20

Business Overview and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2018
Business Overview and Summary of Significant Accounting Policies
Basis of Presentation	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. 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	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, revenue recognized for period-end work in process and stock-based compensation expense. Actual results could differ from those estimates.
Machinery and Equipment Financing	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 will be recognized as goods are produced rather than upon shipment or delivery of goods. In addition to accelerating the timing of recording revenue, the Company has recorded decreases in deferred revenue, work in process and finished goods inventories, and an increase to accounts receivable. 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, Balance Sheet 2017 Adjustments 2018 Assets: Accounts receivable, net $ 37,537 $ 6,708 $ 44,245 Inventories 16,237 (7,003) 9,234 Liabilities: Deferred revenue and customer deposits 4,177 (3,659) 518 Deferred income taxes 12,286 540 12,826 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 March 31, Adoption of Balance Sheet 2018 Adjustments ASU 2014-09 Assets: Accounts receivable, net $ 42,277 $ (7,039) $ 35,238 Inventories 8,603 5,861 14,464 Liabilities: Deferred revenue and customer deposits 403 725 1,128 Deferred income taxes 11,209 (540) 10,669 Stockholders' deficit: Accumulated loss (5,861) (1,363) (7,224) Three Months Ended March 31, 2018 Balances As Reported Without March 31, Adoption of Statement of Operations and Comprehensive Income (Loss) 2018 Adjustments ASU 2014-09 Net sales: Products $ 27,560 $ (725) $ 26,835 Services 31,510 223 31,733 Cost of sales: Products (exclusive of depreciation and amortization) 19,082 (841) 18,241 Services (exclusive of depreciation and amortization) 21,916 179 22,095 Gross profit 14,442 160 14,602 Income tax benefit (expense) 1,985 (34) 1,951 Net (loss) income (7,291) 126 (7,165) 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 standard is required to be adopted using a modified retrospective approach. 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 Summary21

Business Overview and Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 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, Balance Sheet 2017 Adjustments 2018 Assets: Accounts receivable, net $ 37,537 $ 6,708 $ 44,245 Inventories 16,237 (7,003) 9,234 Liabilities: Deferred revenue and customer deposits 4,177 (3,659) 518 Deferred income taxes 12,286 540 12,826 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 March 31, Adoption of Balance Sheet 2018 Adjustments ASU 2014-09 Assets: Accounts receivable, net $ 42,277 $ (7,039) $ 35,238 Inventories 8,603 5,861 14,464 Liabilities: Deferred revenue and customer deposits 403 725 1,128 Deferred income taxes 11,209 (540) 10,669 Stockholders' deficit: Accumulated loss (5,861) (1,363) (7,224) Three Months Ended March 31, 2018 Balances As Reported Without March 31, Adoption of Statement of Operations and Comprehensive Income (Loss) 2018 Adjustments ASU 2014-09 Net sales: Products $ 27,560 $ (725) $ 26,835 Services 31,510 223 31,733 Cost of sales: Products (exclusive of depreciation and amortization) 19,082 (841) 18,241 Services (exclusive of depreciation and amortization) 21,916 179 22,095 Gross profit 14,442 160 14,602 Income tax benefit (expense) 1,985 (34) 1,951 Net (loss) income (7,291) 126 (7,165)

Revenue (Tables)

Revenue (Tables)	3 Months Ended
	Mar. 31, 2018
Revenue
Schedule of disaggregation of revenue by major source	Three Months Ended March 31, 2018 Products Services Total U.S. Debit and Credit $ 23,720 $ 13,428 $ 37,148 U.S. Prepaid Debit - 15,512 15,512 U.K. Limited 2,816 1,397 4,213 Other 1,375 1,324 2,699 Intersegment eliminations (351) (151) (502) Total $ 27,560 $ 31,510 $ 59,070

Accounts Receivable (Tables)

Accounts Receivable (Tables)	3 Months Ended
	Mar. 31, 2018
Accounts Receivable
Schedule of accounts receivable	March 31, 2018 December 31, 2017 Trade accounts receivable $ 35,291 $ 37,590 Unbilled accounts receivable 7,039 — 42,330 37,590 Less allowance for doubtful accounts (53) (53) $ 42,277 $ 37,537

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Mar. 31, 2018
Inventories
Schedule of inventories	March 31, 2018 December 31, 2017 Raw materials $ 6,282 $ 6,498 Work-in-process — 6,557 Finished goods 2,321 3,182 $ 8,603 $ 16,237

Plant, Equipment and Leasehol25

Plant, Equipment and Leasehold Improvements (Tables)	3 Months Ended
	Mar. 31, 2018
Plant, Equipment and Leasehold Improvements
Schedule of plant, equipment and leasehold improvements	March 31, 2018 December 31, 2017 Buildings $ 2,363 $ 2,318 Machinery and equipment 63,640 62,318 Machinery and equipment under capital leases 3,734 — Furniture, fixtures and computer equipment 7,626 7,585 Leasehold improvements 19,782 19,754 Construction in progress 1,393 1,980 98,538 93,955 Less accumulated depreciation (48,294) (44,655) $ 50,244 $ 49,300

Goodwill and Other Intangible26

Goodwill and Other Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2018
Goodwill and Other Intangible Assets
Schedule of goodwill by reportable segment	March 31, 2018 December 31, 2017 U.S. Debit and Credit $ 47,150 $ 47,150 U.K. Limited 6,709 6,461 $ 53,859 $ 53,611
Schedule of intangible assets excluding goodwill	March 31, 2018 December 31, 2017 Average Life Accumulated Net Book Accumulated Net Book (Years) Cost Amortization Value Cost Amortization Value Customer relationships 12 to 20 $ 59,026 $ (25,329) $ 33,697 $ 58,895 $ (24,373) $ 34,522 Technology and software 7 to 10 7,101 (3,327) 3,774 7,101 (3,095) 4,006 Trademarks 7.5 to 10 3,330 (584) 2,746 3,330 (487) 2,843 Non-compete agreements 5 to 8 491 (405) 86 491 (390) 101 Intangible assets subject to amortization $ 69,948 $ (29,645) $ 40,303 $ 69,817 $ (28,345) $ 41,472
Schedule of future aggregate amortization expense for identified amortizable intangibles	2018 (remaining 9 months) $ 3,666 2019 4,868 2020 4,828 2021 4,585 2022 4,100 Thereafter 18,256 $ 40,303

Fair Value of Financial Instr27

Fair Value of Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 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 March 31, 2018 March 31, March 31, (Using Fair Value Hierarchy) 2018 2018 Level 1 Level 2 Level 3 Liabilities: First Lien Term Loan $ 312,500 $ 217,188 $ — $ 217,188 $ — 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 Fac28

Long-Term Debt and Credit Facility (Tables)	3 Months Ended
	Mar. 31, 2018
Long-Term Debt and Credit Facility
Schedule of long-term debt	Interest March 31, December 31, Rate (1) 2018 2017 First Lien Term Loan (1) 6.36 % $ 312,500 $ 312,500 Unamortized discount (2,954) (3,122) Unamortized deferred financing costs (5,191) (5,509) Long-term debt $ 304,355 $ 303,869 (1 ) Interest rate at March 31, 2018. Interest rate at December 31, 2017 was 5.96%.

Loss per Share (Tables)

Loss per Share (Tables)	3 Months Ended
	Mar. 31, 2018
Loss per Share
Computation of basic and diluted (loss) EPS	Three Months Ended March 31, 2018 2017 Numerator: Net loss $ (7,291) $ (4,506) Denominator: Basic-weighted-average common shares outstanding 11,134,714 11,084,875 Diluted-weighted-average common shares outstanding 11,134,714 11,084,875 Loss per share: Basic $ (0.65) $ (0.40) Diluted $ (0.65) $ (0.40)

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies.
Schedule of equipment under capital leases	March 31, 2018 Machinery and equipment $ 3,561 Less current portion of capital lease obligations (699) Total long-term capital lease obligations $ 2,862

Stock Based Compensation (Table

Stock Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2018
Summary of changes in number of outstanding cash performance units	Units Outstanding as of December 31, 2017 822,915 Granted — Vested (263,664) Forfeited (31,923) Outstanding as of March 31, 2018 527,328
Summary of changes in outstanding restricted stock units	Weighted- Average Grant-Date Units Fair Value Outstanding as of December 31, 2017 49,677 $ 16.20 Forfeited (1,168) 22.53 Outstanding as of March 31, 2018 48,509 $ 16.05
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 $ Granted 31,480 Forfeited (22,684) Outstanding as of March 31, 2018 946,106 $ 8.98 Options vested and exercisable as March 31, 2018 112,225 8.20 Options vested and expected to vest as March 31, 2018 946,106 8.98
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 31,480 1.80 Forfeited (22,684) 5.19 Vested (51,818) 4.61 Non-vested as of March 31, 2018 833,881 $ 3.93
Schedule of vesting for unvested options	2018 255,669 2019 309,357 2020 256,880 2021 11,975 Total unvested options as of March 31, 2018 833,881
Schedule of valuation assumptions	Three Months Ended March 31, 2018 Expected term in years (1) 6.0 Volatility (2) 49.0 % Risk-free interest rate (3) 2.3 % 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 quarter of 2018, the Company considered the volatility of its 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	Three Months Ended March 31, 2018 2017 Weighted-average grant-date fair value of options granted $ 1.80 $ 4.68

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	Mar. 31, 2018
Segment Reporting
Schedule of revenue and EBITDA of the company's reportable segments	Revenue Three Months Ended March 31, 2018 2017 U.S. Debit and Credit $ 37,148 $ 39,751 U.S. Prepaid Debit 15,512 9,497 U.K. Limited 4,213 5,587 Other 2,699 2,503 Intersegment eliminations (502) (1,330) Total $ 59,070 $ 56,008 EBITDA Three Months Ended March 31, 2018 2017 U.S. Debit and Credit $ 5,719 $ 7,402 U.S. Prepaid Debit 4,819 2,013 U.K. Limited (1,102) 325 Other (7,968) (6,942) Total $ 1,468 $ 2,798
Schedule of reconciliation of total segment EBITDA to income before taxes	Three Months Ended March 31, 2018 2017 Total segment EBITDA from continuing operations $ 1,468 $ 2,798 Interest, net (5,519) (5,062) Income tax benefit 1,985 2,291 Depreciation and amortization (5,225) (4,533) Net (loss) $ (7,291) $ (4,506)
Schedule of total assets of the company's reportable segments	March 31, 2018 December 31, 2017 U.S. Debit and Credit $ 160,708 $ 164,397 U.S. Prepaid Debit 30,960 33,130 U.K. Limited 23,286 22,640 Other 13,949 13,838 Total assets $ 228,903 $ 234,005
Schedule of plant, equipment and leasehold improvement additions of geographic locations	Three Months Ended March 31, 2018 2017 U.S. $ 1,582 $ 2,275 Canada 2 72 Total North America 1,584 2,347 U.K. 3,311 961 Total plant, equipment and leasehold improvement additions $ 4,895 $ 3,308
Schedule of net sales of company's geographic locations	Three Months Ended March 31, 2018 2017 U.S. $ 52,791 $ 47,811 Other (a) 6,279 8,197 Total net sales $ 59,070 $ 56,008 (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	March 31, 2018 December 31, 2017 U.S. $ 127,396 $ 130,767 Canada 814 911 Total North America 128,210 131,678 U.K. 16,196 12,705 Total long-lived assets $ 144,406 $ 144,383
Schedule of net sales from product and services sold by the company	Three Months Ended March 31, 2018 2017 Product net sales (a) $ 27,560 $ 29,764 Services net sales (b) 31,510 26,244 Total net sales $ 59,070 $ 56,008 (a) Product 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 Product 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 the United Kingdom) 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 Summary33

Business Overview and Summary of Significant Accounting Policies - Business Overview and Basis of Presentation (Details) $ in Thousands	Dec. 20, 2017	Feb. 28, 2018item	Mar. 31, 2018USD ($)item
Business Overview and Summary of Significant Accounting Policies
Minimum number of payment card brands which certify card services			1
Number of personalization operations consolidated		3
Number of facilities personalization operations were consolidated into		2
Accelerated depreciation | $			$ 800
Severance charge | $			$ 329
Reverse stock split	0.20

Business Overview and Summary34

Business Overview and Summary of Significant Accounting Policies - Adoption of New Accounting Standard (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Jan. 02, 2018	Dec. 31, 2017
Assets
Accounts receivable, net	$ 42,277		$ 44,245	$ 37,537
Inventories	8,603		9,234	16,237
Liabilities
Deferred revenue and customer deposits	403		518	4,177
Deferred income taxes	11,209		12,826	12,286
Stockholders' deficit:
Accumulated loss	(5,861)		1,458	$ (1,366)
Net sales:
Revenues	59,070	$ 56,008
Cost of sales:
Gross profit	14,442	16,095
Income tax benefit (expense)	1,985	2,291
Net income (loss)	(7,291)	(4,506)
Balance without adoption of ASU 2014-09 | ASU 2014-09, Revenue from Contracts with Customers
Assets
Accounts receivable, net	35,238
Inventories	14,464
Liabilities
Deferred revenue and customer deposits	1,128
Deferred income taxes	10,669
Stockholders' deficit:
Accumulated loss	(7,224)
Cost of sales:
Gross profit	14,602
Income tax benefit (expense)	1,951
Net income (loss)	(7,165)
Adjustment
Assets
Accounts receivable, net			6,708
Inventories			(7,003)
Liabilities
Deferred revenue and customer deposits			(3,659)
Deferred income taxes			540
Stockholders' deficit:
Accumulated loss			$ 2,824
Adjustment | ASU 2014-09, Revenue from Contracts with Customers
Assets
Accounts receivable, net	(7,039)
Inventories	5,861
Liabilities
Deferred revenue and customer deposits	725
Deferred income taxes	(540)
Stockholders' deficit:
Accumulated loss	(1,363)
Cost of sales:
Gross profit	160
Income tax benefit (expense)	(34)
Net income (loss)	126
Products
Net sales:
Revenues	27,560	29,764
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	19,082	19,688
Products | Balance without adoption of ASU 2014-09 | ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenues	26,835
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	18,241
Products | Adjustment | ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenues	(725)
Cost of sales:
Products (exclusive of depreciation and amortization shown below)	(841)
Services
Net sales:
Revenues	31,510	26,244
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	21,916	$ 17,441
Services | Balance without adoption of ASU 2014-09 | ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenues	31,733
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	22,095
Services | Adjustment | ASU 2014-09, Revenue from Contracts with Customers
Net sales:
Revenues	223
Cost of sales:
Services (exclusive of depreciation and amortization shown below)	$ 179

Revenue (Details)

Revenue (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)
Disaggregation of Revenue
Revenue	$ 59,070
Operating Segments | U.S. Debit and Credit
Disaggregation of Revenue
Revenue	37,148
Operating Segments | U.S. Prepaid Debit
Disaggregation of Revenue
Revenue	15,512
Operating Segments | U.K. Limited
Disaggregation of Revenue
Revenue	4,213
Operating Segments | Other
Disaggregation of Revenue
Revenue	2,699
Intersegment eliminations
Disaggregation of Revenue
Revenue	(502)
Products
Disaggregation of Revenue
Revenue	27,560
Products | Operating Segments | U.S. Debit and Credit
Disaggregation of Revenue
Revenue	23,720
Products | Operating Segments | U.K. Limited
Disaggregation of Revenue
Revenue	2,816
Products | Operating Segments | Other
Disaggregation of Revenue
Revenue	1,375
Products | Intersegment eliminations
Disaggregation of Revenue
Revenue	(351)
Services
Disaggregation of Revenue
Revenue	31,510
Services | Operating Segments | U.S. Debit and Credit
Disaggregation of Revenue
Revenue	13,428
Services | Operating Segments | U.S. Prepaid Debit
Disaggregation of Revenue
Revenue	15,512
Services | Operating Segments | U.K. Limited
Disaggregation of Revenue
Revenue	1,397
Services | Operating Segments | Other
Disaggregation of Revenue
Revenue	1,324
Services | Intersegment eliminations
Disaggregation of Revenue
Revenue	$ (151)

Accounts Receivable (Details)

Accounts Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 02, 2018	Dec. 31, 2017
Accounts Receivable
Trade accounts receivable	$ 35,291		$ 37,590
Unbilled accounts receivable	7,039
Accounts receivable, gross	42,330		37,590
Less allowance for doubtful accounts	(53)		(53)
Accounts receivable, net	$ 42,277	$ 44,245	$ 37,537

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 02, 2018	Dec. 31, 2017
Inventories
Raw materials	$ 6,282		$ 6,498
Work-in-process			6,557
Finished goods	2,321		3,182
Inventory	$ 8,603	$ 9,234	$ 16,237

Plant, Equipment and Leasehol38

Plant, Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	$ 98,538		$ 93,955
Less accumulated depreciation and amortization	(48,294)		(44,655)
Plant, equipment and leasehold improvements, net	50,244		49,300
Depreciation	4,004	$ 3,310
Buildings
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	2,363		2,318
Machinery and equipment
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	63,640		62,318
Machinery and equipment under capital leases
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	3,734
Furniture, fixtures and computer equipment
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	7,626		7,585
Leasehold improvements
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	19,782		19,754
Construction in progress
Plant, Equipment and Leasehold Improvements
Plant, equipment and leasehold improvements, gross	$ 1,393		$ 1,980

Goodwill and Other Intangible39

Goodwill and Other Intangible Assets - Goodwill by Reporting Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Goodwill	$ 53,859	$ 53,611
U.S. Debit and Credit
Goodwill	47,150	47,150
U.K. Limited
Goodwill	$ 6,709	$ 6,461

Goodwill and Other Intangible40

Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Intangible Assets [Line Items]
Intangible amortization expense	$ 1,221	$ 1,223
Intangible assets subject to amortization, Cost	69,948		$ 69,817
Intangible assets subject to amortization, Accumulated Amortization	(29,645)		(28,345)
Intangible assets subject to amortization, Net Book Value	40,303		41,472
Customer relationships
Intangible Assets [Line Items]
Intangible assets subject to amortization, Cost	59,026		58,895
Intangible assets subject to amortization, Accumulated Amortization	(25,329)		(24,373)
Intangible assets subject to amortization, Net Book Value	$ 33,697		$ 34,522
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
Intangible assets subject to amortization, Accumulated Amortization	(3,327)		(3,095)
Intangible assets subject to amortization, Net Book Value	$ 3,774		$ 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
Intangible assets subject to amortization, Accumulated Amortization	(584)		(487)
Intangible assets subject to amortization, Net Book Value	$ 2,746		$ 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
Intangible assets subject to amortization, Accumulated Amortization	(405)		(390)
Intangible assets subject to amortization, Net Book Value	$ 86		$ 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 Intangible41

Goodwill and Other Intangible Assets - Future Aggregate Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Estimated future aggregate amortization expense
2018 (remaining 9 months)	$ 3,666
2,019	4,868
2,020	4,828
2,021	4,585
2,022	4,100
Thereafter	18,256
Intangible assets subject to amortization, Net Book Value	$ 40,303	$ 41,472

Fair Value of Financial Instr42

Fair Value of Financial Instruments (Details) - First Lien Credit Facility - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Liabilities:
Carrying amount	$ 312,500	$ 312,500
Term Loan
Liabilities:
Carrying amount	312,500	312,500
Long-term debt	217,188	228,125
Level 2 | Term Loan
Liabilities:
Long-term debt	$ 217,188	$ 228,125

Long-Term Debt and Credit Fac43

Long-Term Debt and Credit Facility - Long-Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Unamortized discount	$ (2,954)	$ (3,122)
Unamortized deferred financing costs	(5,191)	(5,509)
Total long-term debt	$ 304,355	$ 303,869
First Lien Credit Facility
Debt Instrument [Line Items]
Interest rate (as a percent)	6.36%	5.96%
Long-term debt	$ 312,500	$ 312,500

Long-Term Debt and Credit Fac44

Long-Term Debt and Credit Facility - First Lien Credit Facility (Details) $ in Thousands	Aug. 17, 2015USD ($)	Mar. 31, 2018USD ($)letter	Dec. 31, 2017USD ($)
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
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)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Mar. 30, 2018
Income Taxes
Income tax benefit	$ 1,985	$ 2,291
(Loss) income before income taxes
Loss before income taxes	$ 9,276	$ 6,797
Effective income tax rate (as a percent)	21.40%	33.70%
Federal statutory rate (as a percent)	21.00%		35.00%
Tax benefit related to the net change in deferred tax liabilities			$ 7,057
Tax liability from final determination				$ 678
Liability on foreign unremitted earnings	$ 0

Stockholders' Deficit (Details)

Stockholders' Deficit (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	Aug. 31, 2017	Mar. 31, 2017
Dividends, Common Stock [Abstract]
Dividends paid on common stock		$ 2,527
Cash dividend paid per common share		$ 0.225
Amount of discontinued quarterly dividends	$ 0.225

Loss per Share (Details)

Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Numerator:
Net loss	$ (7,291)	$ (4,506)
Denominator:
Basic EPS—weighted average common shares outstanding (in shares)	11,134,714	11,084,875
Diluted EPS—weighted average common shares outstanding (in shares)	11,134,714	11,084,875
Loss per share:
Basic (in dollars per share)	$ (0.65)	$ (0.40)
Diluted (in dollars per share)	$ (0.65)	$ (0.40)
Stock Options
Outstanding stock based awards
Potential dilutive effect of share-based compensation excluded (in shares)	952,706	465,174
Restricted stock units
Outstanding stock based awards
Potential dilutive effect of share-based compensation excluded (in shares)	48,509	37,352

Commitments and Contingencies -

Commitments and Contingencies - Capital Lease (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Commitments and Contingencies.
Operating leases, rent expense	$ 934	$ 953
Machinery and equipment capital lease obligations	3,561
Less current portion of capital lease obligations	(699)
Total long-term capital lease obligations	$ 2,862

Commitments and Contingencies49

Commitments and Contingencies - Contingencies (Details)	Sep. 28, 2017item	Jun. 15, 2016plaintiff	Dec. 31, 2017USD ($)	Mar. 31, 2018USD ($)
Securities Litigation Case | Pending Litigation
Commitments and Contingencies
Number of purported shareholders that have filed lawsuits | plaintiff		2
Loss contingency accrual			$ 0	$ 0
Heckermann Montross Suit | Pending Litigation
Commitments and Contingencies
Loss contingency accrual			0	$ 0
Gemalto Suit | Settled Litigation
Commitments and Contingencies
The number of patents involved in lawsuit | item	2
One-time settlement payment amount			$ 750,000
Period of no lawsuits upon settlement agreement	18 months

Stock Based Compensation - Omni

Stock Based Compensation - Omnibus Incentive Plan (Details) $ / shares in Units, $ in Thousands	Dec. 20, 2017	Sep. 25, 2017shares	Mar. 31, 2018USD ($)$ / sharesshares	Mar. 31, 2017USD ($)$ / shares	Oct. 31, 2015shares
Stock-based compensation
Reverse stock split	0.20
Omnibus Plan
Valuation Assumptions:
Compensation expense | $			$ 395	$ 689
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			167,506
Stock options granted (in shares)			31,480
Stock option life (in years)			10 years
Number of shares
Balance at beginning of year (in shares)			937,310
Granted (in shares)			31,480
Forfeited (in shares)			(22,684)
Balance at end of year (in shares)			946,106
Options: Options vested and exercisable			112,225
Options: Options vested and expected to vest			946,106
Weighted-Average Exercise Price
Balance at beginning of year (in dollars per share) | $ / shares			$ 17.11
Granted (in dollars per share) | $ / shares			5.02
Forfeited (in dollars per share) | $ / shares			18.31
Balance at end of year (in dollars per share) | $ / shares			16.68
Weighted-Average Exercise Price: Options vested and exercisable | $ / shares			35.67
Weighted-Average Exercise Price: Options vested and expected to vest | $ / shares			$ 16.68
Weighted- Average Remaining Contractual Term (in Years)
Balance (in years)			8 years 11 months 23 days
Weighted-Average Remaining Contractual Term (in Years): Options vested and exercisable			8 years 2 months 12 days
Weighted-Average Remaining Contractual Term (in Years): Options vested and expected to vest			8 years 11 months 23 days
Number of unvested options scheduled to vest
Non-Vested Options as of beginning of period			876,903
Granted (in shares)			31,480
Forfeited (in shares)			(22,684)
Vested (in shares)			(51,818)
Non-Vested Options as of end of period			833,881
Weighted-Average Grant Date Fair Value
Non-Vested, beginning balance | $ / shares			$ 4.08
Granted: Weighted-Average Grant Date Fair Value | $ / shares			1.80	$ 4.68
Forfeited: Weighted-Average Grant Date Fair Value | $ / shares			5.19
Vested: Weighted-Average Grant Date Fair Value | $ / shares			4.61
Non-Vested, ending balance | $ / shares			$ 3.93
Valuation Assumptions:
Expected term in years			6 years
Volatility (as a percent)			49.00%
Risk-free interest rate			2.30%
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			255,669
2019 | Omnibus Plan | Stock Options
Number of unvested options scheduled to vest
Non-Vested Options as of end of period			309,357
2020 | Omnibus Plan | Stock Options
Number of unvested options scheduled to vest
Non-Vested Options as of end of period			256,880
2021 | Omnibus Plan | Stock Options
Number of unvested options scheduled to vest
Non-Vested Options as of end of period			11,975

Stock Based Compensation - Rest

Stock Based Compensation - Restricted Stock Units (Details) - Omnibus Plan - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Weighted Average Grant Date Fair Value
Compensation expense	$ 395	$ 689
Restricted stock units
Number of Restricted Stock Units
Units outstanding at the beginning of the period (in shares)	49,677
Granted (in shares)	0
Forfeited (in shares)	(1,168)
Units outstanding at the end of the period (in shares)	48,509
Weighted Average Grant Date Fair Value
Units outstanding at the beginning of the period (in dollars per shares)	$ 16.20
Forfeited (in dollars per share)	22.53
Units outstanding at the end of the period (in dollars per shares)	$ 16.05
Unrecognized compensation expense	$ 1,720
Period over which compensation expense expected to recognize	1 year 7 months 6 days

Stock Based Compensation - Cash

Stock Based Compensation - Cash Performance Units (Details) - Cash Performance $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)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)	(263,664)
Forfeited (in shares)	(31,923)
Units outstanding at the end of the period (in shares)	527,328
Accrued expenses
Stock-based compensation
Cash performance liability | $	$ 68
Other Long Term Liabilities
Stock-based compensation
Cash performance liability | $	$ 45

Stock Based Compensation - Opti

Stock Based Compensation - Option Plan (Details) - Stock Options - Option Plan	3 Months Ended
	Mar. 31, 2018$ / sharesshares
Stock-based compensation
Stock option life (in years)	10 years
Number of shares
Balance at end of year (in shares) | shares	6,600
Weighted-Average Exercise Price
Exercisable at end of year (in dollars per share) | $ / shares	$ 0.002
Weighted- Average Remaining Contractual Term (in Years)
Balance (in years)	5 years 1 month 28 days

Stock Based Compensation - Re54

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

Segment Reporting - Revenue and

Segment Reporting - Revenue and EBITDA from Continuing Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment Reporting
Revenues	$ 59,070	$ 56,008
EBITDA	1,468	2,798
U.S. Debit and Credit
Segment Reporting
EBITDA	5,719	7,402
U.S. Prepaid Debit
Segment Reporting
EBITDA	4,819	2,013
U.K. Limited
Segment Reporting
EBITDA	(1,102)	325
Other
Segment Reporting
EBITDA	(7,968)	(6,942)
Operating Segments | U.S. Debit and Credit
Segment Reporting
Revenues	37,148	39,751
Operating Segments | U.S. Prepaid Debit
Segment Reporting
Revenues	15,512	9,497
Operating Segments | U.K. Limited
Segment Reporting
Revenues	4,213	5,587
Operating Segments | Other
Segment Reporting
Revenues	2,699	2,503
Intersegment eliminations
Segment Reporting
Revenues	$ (502)	$ (1,330)

Segment Reporting - Reconciliat

Segment Reporting - Reconciliation of EBITDA from Continuing Operations to "Net (Loss) Income from Continuing Operations" (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Reconciliation of total segment EBITDA to income before taxes
Total segment EBITDA from continuing operations	$ 1,468	$ 2,798
Interest, net	(5,519)	(5,062)
Income tax benefit (expense)	1,985	2,291
Depreciation and amortization	(5,225)	(4,533)
Net loss	$ (7,291)	$ (4,506)

Segment Reporting - Balance She

Segment Reporting - Balance Sheet Data (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Segment Reporting
Total assets	$ 228,903	$ 234,005
Operating Segments | U.S. Debit and Credit
Segment Reporting
Total assets	160,708	164,397
Operating Segments | U.S. Prepaid Debit
Segment Reporting
Total assets	30,960	33,130
Operating Segments | U.K. Limited
Segment Reporting
Total assets	23,286	22,640
Operating Segments | Other
Segment Reporting
Total assets	$ 13,949	$ 13,838

Segment Reporting - Geographic

Segment Reporting - Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Segment Reporting
Total plant, equipment and leasehold improvement additions	$ 4,895	$ 3,308
Revenues	59,070	56,008
Total long-lived assets	144,406		$ 144,383
Total North America
Segment Reporting
Total plant, equipment and leasehold improvement additions	1,584	2,347
Total long-lived assets	128,210		131,678
U.S.
Segment Reporting
Total plant, equipment and leasehold improvement additions	1,582	2,275
Revenues	52,791	47,811
Total long-lived assets	127,396		130,767
Canada
Segment Reporting
Total plant, equipment and leasehold improvement additions	2	72
Total long-lived assets	814		911
U.K.
Segment Reporting
Total plant, equipment and leasehold improvement additions	3,311	961
Total long-lived assets	16,196		$ 12,705
Other
Segment Reporting
Revenues	$ 6,279	$ 8,197

Segment Reporting - Net Sales b

Segment Reporting - Net Sales by Product and Services (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment Reporting
Total net sales	$ 59,070	$ 56,008
Products
Segment Reporting
Total net sales	27,560	29,764
Services
Segment Reporting
Total net sales	$ 31,510	$ 26,244