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Segment Reporting | 12 Months Ended
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Dec. 31, 2018
Segment Reporting |
Segment Reporting | 16. Segment Reporting The Company has identified reportable segments as those consolidated subsidiaries that represent 10% or more of its net sales, 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 net sales 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. On August 3, 2018, the Company completed the sale of the U.K. Limited segment. See Note 4 “Discontinued Operation” for further information. The Company has restated all historical periods presented within these financial statements and has not included U.K. Limited as a reportable segment. During the first quarter of 2018, the Company reorganized its United States business operations and realigned its United States reporting segments to correspond with the manner with which the Company’s chief operating decision maker evaluates operating performance and makes decisions as to the allocation of resources. As a result of this realignment, the Company’s CPI on Demand business operations have been moved from the U.S. Prepaid Debit segment into the U.S. Debit and Credit reporting segment, consistent with the other related personalization operations. Segment information for previous periods has been restated to conform with this realignment and current period presentation. The restatement of the segment information for the year ended December 31, 2017 was not material. As of December 31, 2018, the Company’s reportable segments were as follows:
| · |  | U.S. Debit and Credit,
| · |  | U.S. Prepaid Debit, and
| · |  | Other.
The U.S. Debit and Credit segment primarily produces Financial Payment Cards and provides integrated card services to card-issuing banks in the United States. Products manufactured by this segment primarily include EMV and non-EMV Financial Payment Cards, including contact, contactless, and dual interface cards, and CPI Metals TM, a premium product capability. This segment also sells instant card issuance systems, and Private Label Credit Cards that are not issued on the networks of the Payment Cards Brands (including general purpose reloadable, gift, payroll and employee benefit, government disbursement, incentive, and transit cards). The Company provides CPI On-Demand services, where we produce images, personalized payment cards, and related collateral on a one-by-one, on demand basis for our customers. This segment also provides a variety of integrated card services, including card personalization and fulfillment services and instant issuance services. The U.S. Debit and Credit segment operations are each certified by multiple global Payment Card Brands and, where required by our customers, certified to be in compliance with the standards of the PCI Security Standards Council. The U.S. Prepaid Debit segment primarily provides integrated card services to Prepaid Debit Card providers in the United States, including tamper-evident security packaging. This segment also produces Financial Payment Cards issued on the networks of the Payment Card Brands that are included in the tamper-evident security packages. The U.S. Prepaid Debit segment operation is certified by multiple global Payment Card Brands, and is certified to be in compliance with the standards of the PCI Security Standards Council. The Other category includes the Company’s corporate headquarters and a less significant operating segment that derives its net sales from the production of Financial Payment Cards and retail gift cards in Canada. Performance Measures of Reportable Segments Net sales and EBITDA from continuing operations of the Company’s reportable segments for the years ended December 31, 2018 and 2017 were as follows:
|  | Net Sales |  | EBITDA
|  | December 31, |  | December 31,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
U.S. Debit and Credit |  | $ | 178,597 |  | $ | 162,216 |  | $ | 34,213 |  | $ | 11,618
U.S. Prepaid Debit |  |  | 69,199 |  |  | 57,005 |  |  | 23,782 |  |  | 18,847
Other |  |  | 9,891 |  |  | 11,049 |  |  | (35,297) |  |  | (32,314)
Intersegment eliminations(a) |  |  | (1,873) |  |  | (6,526) |  |  | — |  |  | —
Total: |  | $ | 255,814 |  | $ | 223,744 |  | $ | 22,698 |  | $ | (1,849)
| (a) |  | Amounts include the elimination of sales between segments for consolidation.
The following table provides a reconciliation of total segment EBITDA from continuing operations to “Net (loss) income from continuing operations” for the years ended December 31, 2018 and 2017:
|  | December 31,
|  | 2018 |  | 2017
Total segment EBITDA from continuing operations |  | $ | 22,698 |  | $ | (1,849)
Interest, net |  |  | (23,431) |  |  | (20,850)
Income tax benefit |  |  | 4,339 |  |  | 16,536
Depreciation and amortization |  |  | (18,405) |  |  | (16,922)
Net loss from continuing operations |  | $ | (14,799) |  | $ | (23,085)
Balance Sheet Data of Reportable Segments Total assets of the Company’s reportable segments as of December 31, 2018 and 2017 were as follows:
|  | December 31, |
|  | 2018 |  | 2017 |
U.S. Debit and Credit |  | $ | 169,567 |  | $ | 174,717 |
U.S. Prepaid Debit |  |  | 25,117 |  |  | 22,810 |
Other |  |  | 12,520 |  |  | 15,827 |
Total assets - reportable segments |  | $ | 207,204 |  | $ | 213,354 |
Assets of discontinued operation |  |  | — |  |  | 20,651 |
Total assets: |  | $ | 207,204 |  | $ | 234,005 |
Net Sales to Geographic Location, Property, Equipment and Leasehold Improvements and Long-Lived assets by Geographic Segments Subsequent to the sale of the Company’s U.K. Limited segment and reclassification to discontinued operations, the Company’s Net Sales, Property, Equipment and Leasehold Improvements, and Long-Lived assets relating to geographic locations outside of the United States is insignificant. Net Sales by Product and Services Net sales from products and services sold by the Company for the years ended December 31, 2018 and 2017 were as follows:
|  | December 31,
|  | 2018 |  | 2017 |
Product net sales(a) |  | $ | 125,069 |  | $ | 104,459 |
Services net sales(b) |  |  | 130,745 |  |  | 119,285 |
Total net sales: |  | $ | 255,814 |  | $ | 223,744 |
| (a) |  | Product net sales include the design and production of Financial Payment Cards, in contact EMV, dual-interface EMV, contactless and magnetic stripe formats. The Company also generates product revenue from the sale of Card@Once® instant issuance systems, Private Label Credit Cards, and retail gift cards. It is impracticable to split the products described into dollar amounts in the table above.
| (b) |  | Services net sales include revenue from the personalization and fulfillment of Financial Payment Cards, the provision of tamper-evident security packaging, providing fulfillment services to Prepaid Debit Card program managers, CPI on Demand 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). It is impracticable to split the services described into dollar amounts in the table above.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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