10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934
For the fiscal year ended December 31, 2011
or
¨	TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number 333-133253

HARLAND CLARKE HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

Delaware	84-1696500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10931 Laureate Drive, San Antonio, TX (Address of principal executive offices)	78249 (Zip code)

(210) 697-8888

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £ No R

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes R No £

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes R No £*

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes R     No £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  R

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £ Accelerated file £ Non-accelerated filer R Smaller reporting company £

                     (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes £ No R

As of March 21, 2012, there were 100 shares of the registrant's common stock outstanding, with a par value of $0.01 per share. All outstanding shares are owned by a subsidiary of M & F Worldwide Corp.

* The registrant is not required to file this Annual Report on Form 10-K or other reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, but has filed all reports during the preceding 12 months that would have been required pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The filing is required, however, pursuant to the terms of the indenture governing Harland Clarke Holdings Corp.'s senior notes due 2015.

HARLAND CLARKE HOLDINGS CORP.

INDEX TO ANNUAL REPORT ON FORM 10-K

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	20
Item 4.	Mine Safety Disclosures	21
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	22
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosures about Market Risks	44
Item 8.	Financial Statements and Supplementary Data	45
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	45
Item 9A.	Controls and Procedures	45
Item 9B.	Other Information	46
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	47
Item 11.	Executive Compensation	49
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	63
Item 13.	Certain Relationships and Related Transactions, and Director Independence	63
Item 14.	Principal Accounting Fees and Services	64
PART IV
Item 15.	Exhibits and Financial Statement Schedules	65

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PART I

Item 1.  Business

Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its subsidiaries, the "Company") is a holding company that conducts its operations through its direct and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed, subject to various closing conditions, to merge with an indirect, wholly owned subsidiary of MacAndrews, and, following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011 (the "MacAndrews Acquisition").

The Company has organized its business and corporate structure along the following three business segments: Harland Clarke, Harland Financial Solutions and Scantron.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial services, retail and software providers. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards and other business and home office products to consumers and small businesses.

The Harland Financial Solutions segment provides technology products and services to financial services clients worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems.

On December 6, 2010, Harland Financial Solutions, Inc. ("HFS"), a wholly owned subsidiary of the Company, acquired all of the outstanding membership interests of Parsam Technologies, LLC and the equity of SRC Software Private Limited (collectively "Parsam"). Parsam's solutions allow financial institutions to provide services online, in branches and at call centers, from new account opening and funding to account-to-account money transfers, person-to-person payments, account and adviser-client relationship management, and bill presentment and payment. HFS has integrated Parsam's solutions into its existing solution offerings (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

The Scantron segment provides data management and decision support solutions and related services to educational, commercial, healthcare and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management, business operational data collection, patient information collection and tracking, and managed technical services. Scantron's solutions combine a variety of data collection, analysis, and management tools, including web-based solutions, software, scanning equipment, forms, and related field maintenance services.

On July 21, 2010, Scantron Corporation ("Scantron”), a wholly owned subsidiary of the Company, acquired 100% of the equity of Spectrum K12 School Solutions, Inc. ("Spectrum K12"). Spectrum K12 develops, markets and sells student achievement management, response to intervention and special education software solutions. Spectrum K12's software solutions complement Scantron's software solutions for education assessments, content and data management (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

On January 3, 2011, Scantron purchased all of the outstanding capital stock or membership interests of KUE Digital Inc., KUED Sub I LLC and KUED Sub II LLC (collectively "GlobalScholar"). GlobalScholar's instructional management platform supports all aspects of managing education at K-12 schools, including student information systems; performance-based scheduler; gradebook; learning management system; longitudinal data collection, analysis and reporting; teacher development and performance tracking; and online communication and tutoring portals. GlobalScholar's instructional management platform complements Scantron's testing and assessment, response to intervention, student achievement management and special education software solutions thereby expanding Scantron's web-based education solutions (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Company Overview

Harland Clarke

Harland Clarke provides checks and related products, direct marketing services and customized business and home office products to financial services, retail and software providers as well as consumers and small business. In 2011, Harland Clarke generated revenues of $1,134.9 million (70% of the Company's 2011 consolidated net revenues).

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Products and Services

Checks and Related Products

In addition to offering basic consumer and small business checks, Harland Clarke also offers checks customized with licensed designs and characters, such as cartoon characters, collegiate designs and photographs. Harland Clarke also offers a variety of financial documents in conjunction with consumer and small business financial software packages. Accessory products include leather checkbook covers, endorsement stamps, address labels, recording registers and other bill paying accessories. In addition, Harland Clarke also offers its clients a variety of fraud prevention solutions.

Harland Clarke offers various delivery options, including expedited and trackable delivery. Check users often prefer expedited delivery to both receive their order sooner and for the security and tracking features that these expedited methods provide. These delivery services represent an important component of the range of value-added service offerings.

Harland Clarke also offers a wide variety of standard financial forms and flexible formats to suit clients' needs, and the products are also compatible with image processing systems. Harland Clarke also provides treasury management supplies, such as integrated cash deposit products, customized deposit tickets and security bags.

Marketing Services

Harland Clarke also offers integrated, multi-channel marketing services that help clients measure, understand, manage and optimize their business-to-consumer and business-to-business relationships as well as their returns on marketing investments. These services include:

• marketing strategies such as acquisition, lead generation and nurturing, retention, activation, cross-selling and up-selling;

• data management and analytics;

• database design, development and hosting;

• print production and lettershop;

• teleservices; and

• online and digital marketing with advanced filtering to deliver targeted messages, social media and web analytics integration, and tools to manage complex enterprise and channel programs.

Customized Business and Home Office Products

In addition to a wide variety of checks and related products, Harland Clarke offers consumers and small businesses customized products including stationery, business cards, notepads, invitations, announcements, labels, rubber stamps and envelopes.

Sales and Marketing

Harland Clarke manages relationships with large and complex financial and commercial institutions through dedicated account management teams composed of relationship management, marketing, operations and service oriented skill sets. In addition, Harland Clarke has a national sales force targeting distinct financial institution segments ranging from major nationwide and large regional banks and securities firms to community banks and credit unions. Hosted websites, contact center services and mail order forms enable clients to offer convenient ordering options to their customers.

Harland Clarke also markets its products directly to consumers and small businesses through advertising inserts in newspapers, advertisements sent directly to residences, and online and digital advertising. Online shopping, contact center access and mail order forms enable consumers to order at their convenience.

Clients

The clients of Harland Clarke range from major national and large regional banks and securities firms to community banks, credit unions, brokerage houses, retailers and software companies. In addition, Harland Clarke clients include consumers and small businesses.

Harland Clarke's contracts with its institutional clients are generally sole-source contracts for the sale of its checks and related products to the clients' customers. The initial terms of the agreements generally range from three to five years and generally are terminable for cause, although some of its financial institution clients can terminate their contracts for convenience.

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Competition

Harland Clarke's primary competition comes from alternative payment methods such as debit cards, credit cards, ACH, and other electronic and online payment options. Harland Clarke also competes with large providers that offer a wide variety of products and services including Deluxe Corporation, Harte-Hanks, Inc., and R.R. Donnelley & Sons Company. There are also many other competitors that specialize in providing one or more of the products and services Harland Clarke offers to its clients. Harland Clarke competes on the basis of service, convenience, quality, product range and price.

Environmental Matters

Harland Clarke's current check printing operations use hazardous materials in the printing process and generate solid wastes, wastewater and air emissions. Consequently, its facilities are subject to existing and may be subject to proposed federal, state and local laws and regulations designed to protect human health and the environment. While enforcement of these laws may require the expenditure of material amounts for environmental compliance or cleanup, Harland Clarke believes that its facilities are currently in material compliance with all applicable laws and regulations.

Historic check printing operations at Harland Clarke's current and former facilities used hazardous materials and generated regulated wastes in greater quantities than Harland Clarke's current operations. In some instances Harland Clarke has sold these facilities and agreed to indemnify the buyer of the facility for potential environmental liabilities. Harland Clarke may also be subject to liability under environmental laws for environmental conditions at these current or former facilities or in connection with the disposal of waste generated at these facilities. Harland Clarke is not aware of any fact or circumstance that would require the expenditure of material amounts for environmental cleanup or indemnification in connection with its historic operations. However, if environmental contamination is discovered at any of these former facilities or at locations where wastes were disposed, Harland Clarke could be required to spend material amounts for environmental cleanup.

It is generally not possible to predict the ultimate total costs relating to any remediation that may be demanded at any environmental site due to, among other factors, uncertainty regarding the extent of prior pollution, the complexity of applicable environmental laws and regulations and their interpretations, uncertainty regarding future changes to such laws and regulations or their enforcement, the varying costs and effectiveness of alternative cleanup technologies and methods, and the questionable and varying degrees of responsibility and/or involvement by Harland Clarke.

Harland Financial Solutions

Harland Financial Solutions provides technology products and services to financial services clients worldwide including lending and mortgage applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems. In 2011, Harland Financial Solutions generated revenues of $285.8 million (18% of the Company's 2011 consolidated net revenues).

Products and Services

Harland Financial Solutions provides host processing systems on both an in-house and outsourced basis to financial institutions, including banks, credit unions and thrifts. Its products centralize customer information and facilitate high speed and reliable processing of transactions from every delivery channel. Harland Financial Solutions has integrated its compliance, branch automation, Internet banking, mobile banking, self-service and business intelligence products into its core processing solutions. Management believes that this integration capability differentiates Harland Financial Solutions from other providers. Harland Financial Solutions helps financial institutions increase the profitability of customer relationships through business intelligence and branch automation software. Harland Financial Solutions offers Internet banking, mobile banking and branch automation systems designed to enhance the customer experience through integrated teller, platform, call center and self-service tools from new account opening and funding to account-to-account money transfers, person-to-person payments, account and adviser-client relationship management, and bill presentment and payment.

Harland Financial Solutions also sells loan and deposit origination and compliance software to financial institutions. Harland Financial Solutions offers a complete product suite, ProSuite, including solutions for lending, account opening, sales management and loan underwriting. Harland Financial Solutions also offers a commercial lending risk management, underwriting and portfolio management product suite marketed as CreditQuest. Harland Financial Solutions provides mortgage loan origination, production and servicing solutions through its various products.

As a result of the Parsam acquisition in December 2010, Harland Financial Solutions has a software development and support operation consisting of approximately 50 information technology professionals located in Thiruvananthapuram, India.

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Backlog

Harland Financial Solutions' backlog was estimated to be $399.3 million and $366.1 million at December 31, 2011 and 2010, respectively. Backlog consists of contracted products, maintenance, outsourced services and professional services prior to delivery. The Company expects to deliver approximately 34.8% of the 2011 backlog during 2012. Due to the long-term nature of certain service contracts, primarily in the service bureau business, the remainder of the backlog will be delivered in 2013 and beyond.

Sales and Marketing

Harland Financial Solutions predominately sells its products and services directly to financial institutions through its own national sales organization supported by dedicated product management, marketing, and client support organizations.

Clients

Harland Financial Solutions is a leading supplier of financial software and services to financial institutions, including banks, credit unions and thrifts. Harland Financial Solutions contracts generally provide for a license with ongoing maintenance or a term-based service arrangement.

Competition

Providing technological solutions to financial institutions is highly competitive and fragmented. Harland Financial Solutions competes with several large and diversified financial technology providers, including, among others, Fidelity National Information Services, Inc., Fiserv, Inc., Jack Henry & Associates, Inc., Open Solutions Inc., Computer Services Inc. and many regional providers. Many multi-national and international providers of technological solutions to financial institutions also compete with products or services offered by Harland Financial Solutions both domestically and internationally, including Temenos Group AG, Misys plc, Infosys Technologies Limited, Tata Consultancy and Oracle Financial Services. There are also many other competitors that offer one or more specialized products or services that compete with products and services offered by Harland Financial Solutions. Management believes that competitive factors influencing buying decisions include product features and functionality, client support, price and vendor financial stability.

Scantron

Scantron provides data management and decision support solutions and related services to educational, commercial, healthcare and governmental entities worldwide. Scantron's solutions combine a variety of data collection, analysis and management tools, including web-based solutions, software, scanning equipment, forms, and related field maintenance services. In 2011, Scantron generated revenue of $201.2 million (12% of the Company's 2011 consolidated net revenues).

Products and Services

Education-Related Products

Scantron's sales to K-12 educational institutions have historically represented the largest portion of Scantron's revenues, although it also generates revenues from sales to higher education, healthcare, government and commercial institutions. In 2011, Scantron derived approximately 46% of its revenues from sales to K-12 educational institutions.

Scantron's Achievement Series is a set of web-based testing solutions that provide schools and other enterprises with a content-neutral platform for measuring achievement, with real-time reporting. Scantron also offers solutions for managing and centralizing the data generated by the testing process to measure progress against state and national standards. Scantron's Performance Series is an Internet-delivered, standards-based, computer adaptive assessment that provides valid and reliable diagnostic and placement assessment data. Each assessment is adapted for each student, is aligned to individual state standards, and links to instructional applications that can help educators design formative assessment-based instruction.

Scantron has integrated Achievement Series and Performance Series to provide an overall diagnostic, achievement testing, monitoring and data reporting solution. These solutions also allow the easy integration of disparate technologies and content. Scantron's Achievement Series and Performance Series solutions generate subscription revenues and the opportunity for the sale of associated products, including forms and scanner solutions, testing content, testing-based instruction applications and data management tools.

EXCEED® is a web-based solution acquired in 2010 in the Spectrum K12 acquisition that manages, administers and prescribes the personalized learning process and data required for all K-12 students. Information about each student is gathered from any assessments to conduct universal screening and ongoing progress monitoring. This instructional outcome data is integrated with other student data like attendance, discipline, and grades to give teachers, principals and school district administrators a centralized, 360 degree view of each student and the data to inform and individualize instruction for every

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student.

As a result of the GlobalScholar acquisition in January 2011, Scantron provides a comprehensive software platform through GlobalScholar's Pinnacle System, that supports standards-based student, classroom, and program grading and evaluation, enabling schools to identify deficiencies in student performance and comply with government-mandated standards. The Pinnacle System provides databases of attendance, grades, and student proficiencies that is available over the Internet and through other devices to students, parents, teachers and administrators. Additionally, users worldwide, through a series of websites, can obtain tutoring services and access directories of educational institutions; access lectures and full courses on many topics; obtain educational administrative support and assistance in developing interactive educational websites; and store curriculum, testing, and evaluation information. With the GlobalScholar acquisition, Scantron acquired operations located in Chennai, India consisting of approximately 300 employees. Approximately 200 of these employees are information technology professionals who provide software development and support services.

Scantron provides educational institutions with a patented forms and scanner solution for standardized and classroom-based testing needs. The Scantron forms and scanner solution has achieved widespread acceptance among educational institutions. Scantron generates forms and scanner solutions revenues by charging for the purchase or lease of scanners and the purchase of forms by the client. In addition, Scantron has a loan marketing program, under which a scanner is loaned to a client in exchange for a minimum annual forms purchase.

Scantron also offers custom form and scanner solutions, course evaluations and classroom testing software packages, and student response devices.

Commercial, Healthcare, and Government - Related Products

Scantron provides data management and decision support services for clients using web-based, telephone and paper-based methods for data collection, processing, analysis and reporting. These services include operational data capture, patient information tracking, and a wide variety of other data collection, analysis and management applications.

Scantron provides custom form and scanner solutions for a wide variety of data collection applications such as patient information collection, safety assessments and employee testing or information collection. Scantron offers scanners with both optical mark and full image capabilities. The scanners range in size and speed for various customer applications. Scantron also provides software that converts optical marks and images into digital data for delivery to third-party applications.

In addition, Scantron offers software packages for client-managed survey and operational data collection.

Field Maintenance Services

Scantron provides field maintenance services including installation, maintenance and repairs for computers and other third-party equipment as well as Scantron scanners.

Backlog

Scantron's backlog, which consists primarily of contracted products and services prior to delivery, was estimated to be $83.5 million and $60.4 million at December 31, 2011 and 2010, respectively. The Company expects to deliver approximately 66% of the 2011 backlog during 2012. Due to the long-term nature of certain service contracts, the remainder of the backlog will be delivered in 2013 and beyond.

Sales, Marketing and Product Support

Scantron sells its products and services directly through sales organizations segmented by industry vertical or product category. Scantron provides comprehensive product support to its clients directly with telephone and online support and provides on-site and depot support for scanner products.

Clients

Clients for Scantron's educational products range from K-12 institutions and districts to higher education institutions. Clients for Scantron's other data management products include commercial, healthcare and government organizations.

Competition

Scantron competes with many education software providers at the K-12 and higher education levels. Scantron also faces significant competition from a number of local and regional education competitors. Scantron faces competition with respect to its forms and scanners from large international and regional printers and manufacturers. The business landscape for commercial, healthcare and governmental data management is highly fragmented, and Scantron faces competition for its products and services from many large and small companies.

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The Company's Suppliers

The main supplies used in check and form printing are paper, print ink, binders, boxes, packaging and delivery services. For all critical supplies, Harland Clarke has at least two qualified suppliers or multiple qualified production sites in order to ensure that supplies are available as needed. Using alternative suppliers may, however, result in increased costs. Harland Clarke has not historically experienced any material shortages and management believes Harland Clarke has redundancy in its supplier network for each of its critical inputs.

Scantron purchases a majority of the paper for its business from a single supplier. It purchases scanner components from various equipment manufacturers and supply firms. Scantron historically has not experienced shortages of materials and believes it will continue to be able to obtain such materials or suitable substitutes in acceptable quantities and at acceptable prices.

The Company's Foreign Sales

The Company conducts business outside the United States in Canada, India, Ireland and Israel. Its foreign sales totaled $23.0 million in 2011, $20.6 million in 2010 and $18.1 million in 2009.

The Company's Employees

As of December 31, 2011, the Company had approximately 6,800 employees. No employees of the Company are represented by a labor union. The Company considers its employee relations to be good.

The Company's Intellectual Property

The Company relies on a combination of trademark, copyright and patent laws, trade secret protection and confidentiality and license agreements to protect its trademarks, copyrights, software, inventions, trade secrets, know-how and other intellectual property. The sale of products bearing trademarks or designs licensed from third parties accounts for a significant portion of the Company's revenue. Typically, such license agreements are effective for a two- to three-year period, provide for the retention of ownership of the tradename, know-how or other intellectual property by the licensor and require the payment of a royalty to the licensor. There can be no guarantee that such licenses will be renewed or will continue to be available on terms that would allow the Company to sell the licensed products profitably.

Governmental Regulation Related to the Company

The Company is subject to the federal financial modernization law known as the Gramm-Leach-Bliley Act and the regulations implementing its privacy and information security requirements, as well as other privacy and data security federal and state laws and regulations. The Company is also subject to additional privacy and information security requirements in many of its contracts with financial institution clients, which are often more restrictive than these laws and regulations. Collectively, these laws, regulations and agreements require the Company to develop and implement policies to protect the security and confidentiality of consumers' nonpublic personal information and to disclose these policies to consumers before a customer relationship is established and periodically thereafter.

These laws and regulations require some of the Company's businesses to provide a notice to consumers to allow them the opportunity to have their nonpublic personal information removed from the Company's files before the Company shares their information with certain third parties. These laws and regulations may limit the Company's ability to use its direct-to-consumer data in its businesses. Current laws and regulations allow the Company to transfer consumer information to process a consumer-initiated transaction, but also require the Company to protect the confidentiality of a consumer's records or to protect against actual or potential fraud, unauthorized transactions, claims or other liabilities. The Company is also allowed to transfer consumer information for required institutional risk control and for resolving customer disputes or inquiries. The Company may also contribute consumer information to a consumer-reporting agency under the Fair Credit Reporting Act. Some of the Company's financial institution clients request various contractual provisions in their agreements that are intended to comply with their obligations under the Gramm-Leach-Bliley Act and other laws and regulations.

Congress and many states have passed and are considering additional laws or regulations that, among other things, restrict the use, purchase, sale or sharing of nonpublic personal information about consumers and business customers. New laws and regulations may be adopted in the future with respect to the Internet, e-commerce or marketing practices generally relating to consumer privacy. Such laws or regulations may impede the growth of the Internet and/or use of other sales or marketing vehicles. For example, new privacy laws could decrease traffic to the Company's websites, decrease telemarketing opportunities and decrease the demand for its products and services. Additionally, the applicability to the Internet of existing laws governing property ownership, taxation and personal privacy is uncertain and may remain uncertain for a considerable

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length of time.

Non-Operating Contingent Claims, Indemnification and Insurance Matters

Honeywell Indemnification

Certain of the intermediate holding companies of the predecessor of the Company had issued guarantees on behalf of operating companies formerly owned by these intermediate holding companies, which operating companies are not part of the Company's current businesses. In the stock purchase agreement executed in connection with M & F Worldwide's acquisition of the Company in 2005, Honeywell International Inc. ("Honeywell") agreed to use its commercially reasonable efforts to assume, replace or terminate such guarantees and indemnify M & F Worldwide and its affiliates, including the Company and its subsidiaries, with respect to all liabilities arising under such guarantees. Honeywell has been fulfilling its obligation to indemnify M & F Worldwide and its affiliates with regard to the guarantees and certain tax matters. The Company believes it is remote that it will incur any material liability related to the guarantees and tax matters.

Other

A series of commercial borrowers in various states that allegedly obtained loans from financial institutions employing HFS'sLaserProsoftware have commenced individual or class actions against their financial institutions alleging that the loans were deceptive or usurious in that they failed to disclose properly the effect of the "365/360" method of calculating interest. In some cases, the financial institutions have made warranty claims against HFS related to these actions. Some of the actions commenced by the commercial borrowers have been dismissed, and many of the remainder, and the related warranty claims, are at early stages, so that the likely progress of those pending matters is not yet clear. The Company has not accepted any of the warranty claims. One of the financial institutions has commenced an arbitration against the Company relating to a commercial borrower claim against it under the terms of the Company's agreement with the financial institution, and another financial institution has filed a motion in the action brought by its commercial borrower seeking to assert a third-party claim against the Company. In the latter action, the Company has moved to stay the third-party claim pending arbitration. At the appropriate time, the Company intends to deny liability to both financial institutions, but the Company is not able at this early stage to assess whether it may have any liability to either institution or the amount of any such liability, but it believes it is remote that either claim will result in material liability. Due to the preliminary nature of the remaining matters, the Company believes it is remote that any of the remaining warranty claims will result in any material liability for the Company.

Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, environmental matters, employment matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations.

Availability of Reports

Copies of the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports filed or furnished pursuant to the Securities Exchange Act of 1934, are available without charge as soon as reasonably practicable after the Company files such materials with or furnishes such materials to the Securities and Exchange Commission upon request to the Chief Financial Officer, Harland Clarke Holdings Corp., 10931 Laureate Drive, San Antonio, TX 78249.

Item 1A.  Risk Factors

Risks Related to Our Substantial Indebtedness

We have substantial indebtedness, which may adversely affect our ability to operateour business and prevent us from fulfilling our obligations under our debtagreements.

As of December 31, 2011, we had indebtedness with a total principal amount of $2,198.1 million (including $3.5 million of capital lease obligations and other indebtedness), and $92.0 million of additional availability under our revolving credit facility (after giving effect to the issuance of $8.0 million of letters of credit). In addition, under certain circumstances, we are permitted to incur additional term loan and/or revolving credit facility indebtedness in an aggregate principal amount of up to $250.0 million, and the terms of our senior secured credit facilities and notes allow us to borrow substantial additional debt, including additional secured debt. Our substantial level of indebtedness could have important consequences. For example, it could:

• make it more difficult for us to satisfy our obligations with respect to our indebtedness;

• increase our vulnerability to general adverse economic and industry conditions;

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• require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes;

• limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate; and

• limit our ability to borrow additional funds.

Our ability to make payments on our indebtedness depends on our ability to generatesufficient cash in the future.

Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond our control.

We are required to make scheduled payments of principal on our senior secured term loan in the amount of $18.0 million per year in equal quarterly installments. In addition, our term loan facility requires that a portion of our excess cash flow be applied to prepay amounts borrowed under that facility. An excess cash flow payment of approximately $12.5 million will be paid in the first quarter of 2012 with respect to 2011 and will be applied against other mandatory payments due in 2012 under the terms of the facility. An excess cash flow payment of $3.5 million was paid in 2011 with respect to 2010 and was applied against other mandatory payments due in 2011 under the terms of the facility. No such excess cash flow payment was paid in 2010 with respect to 2009. We are required to repay our senior secured term loan in full in 2014 and are required to repay our senior notes in 2015. Our revolving credit facility will mature in 2013.

We may not be able to generate sufficient cash flow from operations and future borrowings may not be available to us under our senior secured credit facilities in an amount sufficient to enable us to repay our debt or to fund our other liquidity needs. If our future cash flow from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, obtain additional debt or equity capital or restructure or refinance all or a portion of our debt on or before maturity. We may not be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of our existing and future indebtedness, including the notes and our senior secured credit facilities, may limit our ability to pursue any of these alternatives.

Despite our current indebtedness levels, we may still be able to incur substantiallymore debt. Additional indebtedness could exacerbate the risks associated with oursubstantial leverage.

We may be able to incur substantial additional indebtedness in the future. The terms of our senior secured credit facilities and the indenture governing our senior notes do not fully prohibit us from doing so. In addition, as of December 31, 2011, there was $92.0 million of additional availability under our $100.0 million revolving credit facility (after giving effect to the issuance of $8.0 million of letters of credit). Under certain circumstances, we are permitted to incur additional term loan and/or revolving credit facility indebtedness under our senior secured credit facilities in an aggregate principal amount of up to $250.0 million. In addition, the terms of our senior secured credit facilities and senior notes allow us to borrow substantial additional debt, including additional secured debt. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.

Covenant restrictions under our indebtedness may limit our ability to operate ourbusiness.

The indenture governing the notes and the agreement governing our senior secured credit facilities contain, among other things, covenants that restrict our ability to finance future operations or capital needs or to engage in other business activities. The indenture restricts, among other things, our ability to:

• incur or guarantee additional indebtedness;

• make certain investments;

• make restricted payments;

• pay certain dividends or make other distributions;

• incur liens;

• enter into transactions with affiliates; and

• merge or consolidate or transfer and sell assets.

Our senior secured credit facilities contain customary affirmative and negative covenants including, among other things,

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restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, investments, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale-leaseback transactions.

In addition, our credit agreement requires us to maintain a maximum consolidated leverage ratio for the benefit of the lenders under our revolving credit facility only. These restrictions may limit our ability to operate our businesses and may prohibit or limit our ability to enhance our operations or take advantage of potential business opportunities as they arise.

Risks Related to Our Business

Weak economic conditions and further acceleration of check unit declines may continueto have an adverse effect on the Company's revenues and profitability and couldresult in additional impairment charges.

The Company has substantial intangible assets, including substantial goodwill. Goodwill and other intangible assets determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired. The Company also has substantial property, plant and equipment and amortizable intangible assets, such as customer relationships, which are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The impairment test processes are more fully described in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" included elsewhere in this Annual Report on Form 10-K.

The annual impairment evaluations for goodwill and indefinite-lived intangible assets involve significant estimates and assumptions made by management regarding specific business and operating factors as well as discount rates. Changes in estimates and assumptions, as well as the occurrence of various events or changes in circumstances could have a material impact on the fair value of goodwill or indefinite-lived intangible assets in future periods, which in turn may result in material asset impairments. Similar considerations apply to any impairment evaluation of our property, plant and equipment and amortizable intangible assets as well as our determinations as to whether interim impairment tests are necessary.

The Company periodically updates its long-range business plans and forecasts, which include financial projections that are incorporated in the annual impairment tests. Estimated revenue growth rates for all reporting units may be lower than past projections due to the various factors discussed in this report, including, but not limited to, the following:

• the continued adverse economic environment, which may negatively affect future revenue and margins as a result of lower demand and pricing pressure; and

• check unit declines are expected to continue, which may negatively affect future revenue for our Harland Clarke segment.

Depending on the nature of these factors and the expected relative magnitude and permanency of their effects, the Company's businesses may not be able to achieve previous levels of performance even when overall economic conditions improve. As a result of the 2011 step one annual impairment test for goodwill, the Company determined the estimated fair value of the Scantron reporting unit was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. This required the Company to perform the second step of the test and hypothetically allocate the estimated fair value to Scantron's assets and liabilities with the unallocated fair value representing the implied fair value of Scantron's goodwill. As a result of this analysis, a non-cash impairment charge of $102.2 million was recorded for the Scantron segment in the fourth quarter of 2011 based on the implied fair value of Scantron's goodwill being less than its carrying value. The Company also performed the 2011 annual impairment test for indefinite-lived tradenames and determined the estimated fair value of the Scantron tradename was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. As a result of this impairment and changes in Scantron's branding strategy, the useful life of the Scantron tradename was reassessed and determined to no longer be indefinite. The Company determined the economic life for the Scantron tradename is 15 years. A non-cash impairment charge of $4.2 million was recorded for the Scantron segment in the fourth quarter of 2011 based on the estimated fair value of the Scantron tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to a life of 15 years. The annual impairment tests for goodwill and indefinite-lived tradenames performed in the fourth quarter of 2010 did not result in impairments of goodwill and indefinite-lived tradenames.

Future impairment tests may result in a determination that there has been a material asset impairment. Any asset impairment would be reported as a non-cash operating loss, would have a negative effect on the Company's earnings and total assets, and could have a negative impact on the market prices of the Company's outstanding securities. Impairment charges in the future would not affect the Company's consolidated cash flows, current liquidity, capital resources and covenants under its existing credit facilities.

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Difficult conditions in the financial markets and a general economic downturn mayadversely affect the business and results of operations of the Company, and we cannotdetermine if these conditions will improve or worsen in the near future.

The economic conditions since late 2008 and the volatility in the financial markets during this period have contributed and may continue to contribute to high unemployment levels, decreased consumer spending, reduced credit availability and/or declining business and consumer confidence. During this period, a number of financial institutions have taken significant write-downs of asset values. These write-downs have caused many financial institutions to seek additional capital, to merge with other institutions and, in some cases, to fail. We cannot determine whether the difficult conditions in the economy in general and/or the financial markets will improve or worsen in the near future. Our businesses have been and may continue to be adversely affected by these difficult conditions. Harland Clarke may experience reduced revenues due to losses of customers in the event the financial institutions upon which it depends either merge with or are sold to other institutions, or fail, or in the event that consumer spending continues to decline, or checking account openings continue to decrease, resulting in further acceleration in the decline of check usage and the use of Harland Clarke's other products. Similarly, Harland Financial Solutions, which also depends on its financial institution customers, may be adversely affected due to losses of financial institution customers from mergers, consolidations or failures. Reductions in financial institution information technology budgets in response to market difficulties could continue to result in further delays or cancellations of Harland Financial Solutions client purchases, as well as potential pricing pressure on Harland Financial Solutions products. Economic slowdown and liquidity constraints may also cause state and local public and private education budgets to be further reduced, which could continue to result in reduced revenues at Scantron, as well as pricing pressure on Scantron products. In addition, further disruptions in the credit and other financial markets could, among other things, impair the financial condition of suppliers of the Company, thereby increasing the risk of supplier performance.

Account data breaches involving stored client data or misuse of such data couldadversely affect our reputation, revenues, profits and growth.

We, our clients, and other third parties store customer account information relating to our Harland Clarke segment's checks. In addition, a number of clients use our Harland Financial Solutions products and Scantron products to store and manage sensitive customer and student information. Scantron also provides services which involve the storage of non-public customer information. Any breach of the systems on which sensitive customer data and account information are stored or archived and any misuse by our own employees, by employees of data archiving services or by other unauthorized users of such data could lead to fraudulent activity involving our clients and our financial institution clients' customers' information and/or funds, damage the reputation of our brands and result in claims against us. If we are unsuccessful in defending any lawsuit involving such data security breaches or misuse, we may be forced to pay damages, which could materially and adversely affect our profitability and could have a material adverse impact on our transaction volumes, revenue and future growth prospects. In addition, such breaches could adversely affect our financial institution clients' perception as to our reliability, and could lead to the termination of client contracts.

Legislation and contracts relating to protection of personal data could limit or harmour future business.

We are subject to state and federal laws and regulations regarding the protection of consumer information commonly referred to as "non-public personal information." Examples include the federal financial modernization law known as the Gramm-Leach-Bliley Act and the regulations implementing its privacy and information security requirements, as well as other privacy and data security federal and state laws and regulations. We are also subject to additional requirements in many of our contracts with financial institution clients, which are often more restrictive than the regulations. These laws, regulations and agreements require us to develop and implement policies to protect non-public personal information and to disclose these policies to consumers before a customer relationship is established and periodically thereafter. The laws, regulations, and agreements limit our ability to use or disclose non-public personal information for other than the purposes originally intended.

Where not preempted by the provisions of the Gramm-Leach-Bliley Act, states may enact legislation or regulations that are more restrictive on our use of data. In addition, more restrictive legislation or regulations have been introduced in the past and could be introduced in the future in Congress and the states and could have a negative impact on our business, results of operations or prospects. Additionally, future contracts may impose even more stringent requirements on us which could increase our operating costs, as well as interfere with the cost savings we are trying to achieve.

We market certain products and services through various distribution media, including direct mail, telemarketing, online marketing, and other methods. These media are subject to increasing regulation, both at the federal and state levels, particularly in the area of consumer privacy. Our ability to solicit or sign up new customers may be affected.

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The financial services sector is also subject to various federal and state regulations and oversight. As a supplier of services to financial institutions, certain operations of our Harland Clarke and Harland Financial Solutions segments are examined by the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC"), among other agencies, to confirm our ability to maintain data security. These agencies regulate and audit services we provide and the manner in which we operate, and we are required to comply with a broad range of applicable laws and regulations. Adverse audit findings could impact our ability to continue to render services or require investment in corrective measures. Moreover, current laws and regulations may be amended in the future or interpreted by regulators in a manner which could negatively affect the operations of our Harland Clarke or Harland Financial Solutions segments or limit their future growth.

The use of our Scantron products and services to store and manage student and other educational data may be subject to The Family Education Rights and Privacy Act of 1974, commonly known as FERPA, which is a federal law that protects the privacy of student education records in connection with Scantron's web-based assessment services. Many states have enacted similar laws to protect the privacy of student data. The operation of websites by Scantron that are accessed by children under the age of 13 may be subject to the Children's Online Privacy Protection Act of 1998, commonly known as COPPA. The collection of patient data through Scantron's survey services is subject to the Health Insurance Portability and Accountability Act of 1996, commonly known as HIPAA, which protects the privacy of patient data. Scantron is also subject to the Gramm-Leach-Bliley Act.

New laws and regulations may be adopted in the future with respect to the Internet, e-commerce or marketing practices generally relating to consumer privacy. Such laws or regulations may impede the growth of the Internet and/or use of other sales or marketing vehicles. As an example, new privacy laws could decrease traffic to our websites, decrease telemarketing opportunities and decrease the demand for our products and services. Additionally, the applicability to the Internet of existing laws governing property ownership, taxation, libel and personal privacy is uncertain and may remain uncertain for a considerable length of time.

We may experience processing errors or software defects that could harm our businessand reputation.

We use sophisticated software and computing systems in our Harland Clarke, Harland Financial Solutions and Scantron segments. We may experience difficulties in installing or integrating our technologies on platforms used by our clients. Furthermore, certain financial institution clients of our Harland Clarke segment have integrated certain components of their systems with ours, permitting our operators to effect certain operations directly into our financial institution clients' customers' accounts. Errors or delays in the processing of check orders, software defects or other difficulties could result in:

• loss of clients;

• additional development costs;

• diversion of technical and other resources;

• negative publicity; or

• exposure to liability claims.

We may not successfully implement any or all components of our business strategies orrealize all of our continued cost savings, which could reduce our future revenues andprofitability.

Our business strategies include a goal to cross-sell between business segments, capitalize on complementary offerings across the client base of our Harland Clarke segment, cross-sell software products into our combined client base, continue focusing on software-enabled testing and assessment products while expanding the offering of survey services to financial institutions, and continue to reduce costs and generate strong cash flow.

We may not be able to implement fully any or all components of our business strategies or realize, in whole or in part or within the timeframes anticipated, the efficiency improvements or cost savings from these strategies. These strategies are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. Financial industry turmoil and the general economic slowdown may continue to affect adversely our ability to implement our business strategies. Additionally, our business strategies may change from time to time. As a result, we may not be able to achieve our anticipated results of operations.

We may be unable to protect our rights in intellectual property, and third-partyinfringement or misappropriation may materially adversely affect our profitability.

We rely on a combination of measures to protect our intellectual property, among them, contract provisions, registering trademarks and copyrights, patenting inventions, implementing procedures that afford trade secret status and protection to our proprietary information, such as entering into third-party non-disclosure and intellectual property assignment agreements, and

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maintaining our intellectual property by entering into licenses that grant only limited rights to third parties. We may be required to spend significant resources to protect, monitor and police our trade secrets, proprietary know-how trademarks and other intellectual property rights. Despite our efforts to protect our intellectual property, third parties or licensees may infringe or misappropriate our intellectual property. The confidentiality agreements that are designed to protect our trade secrets and proprietary know-how could be breached, or our trade secrets and proprietary know-how might otherwise become known by others. We may not have adequate remedies for infringement or misappropriation of our intellectual property rights or for breach of our confidentiality agreements. The loss of intellectual property protection or the inability to enforce our intellectual property rights could harm our business and ability to compete.

We may be unable to maintain our licenses to use third-party intellectual property onfavorable terms.

A significant portion of our revenues are derived from the sale of products by our Harland Clarke segment bearing third-party trademarks or designs pursuant to royalty-bearing licenses. Typically, these licenses are for a term of between two and three years, and some licenses may be terminated at the licensor's option upon a change of control. There can be no guarantee that such licenses will be renewed or will continue to be available to us on terms that would allow us to continue to sell the licensed products profitably.

Third parties may claim we infringe on their intellectual property rights.

Third parties have and may assert intellectual property infringement claims against us in the future. In particular, there has been a substantial increase in the issuance of patents for Internet-related systems and business methods, which may have broad implications for participants in technology and service sectors. Claims for infringement of these patents are increasingly becoming a subject of litigation. Because patent application information may not always be readily available, there is also a risk that we could adopt a technology without knowledge of a pending patent application, which technology would infringe a third-party patent once that patent is issued. Responding to these infringement claims may require us to incur significant fees and costs and expend resources, to enter into royalty-bearing license agreements, to stop selling or to redesign affected products, services and technologies, to pay damages, and/or to satisfy indemnification commitments under agreements with our licensees. In the event that our trademarks are successfully challenged by third parties, we could be forced to rebrand our products, which could result in the loss of brand recognition. Litigation relating to infringement claims could also result in substantial costs to us and a diversion of management resources. Adverse determinations in any litigation or proceeding could also subject us to significant liabilities and could prevent us from using some of our products, services or technologies.

We are dependent upon third-party providers for significant information technologyneeds, and an interruption of services from these providers could materially andadversely affect our operations.

We have entered into agreements with third-party providers for the licensing of certain software and the provision of information technology services, including software development and support services, and personal computer, telecommunications, network server and help desk services. In the event that one or more of these providers is not able to provide adequate information technology services or terminates a license or service, we would be adversely affected. Although we believe that information technology services and substantially equivalent software and services are available from numerous sources, a failure to perform or a termination by one or more of our service providers could cause a disruption in our business while we obtain an alternative source of supply and we may not be able to find such an alternative source on commercially reasonable terms, or at all.

We depend upon the talents and contributions of a limited number of individuals, manyof whom would be difficult to replace, and the loss or interruption of theirservices could materially and adversely affect our business, financial condition andresults of operations.

Our business is driven in part by the personal relationships of our senior management teams. Despite executing employment agreements with certain members of our senior management teams, these individuals may discontinue service with us and we may not be able to find individuals to replace them at the same cost, or at all. We have not obtained "key person" insurance for any member of our senior management teams. The loss or interruption of the services of these executives could have a material adverse effect on our business, financial condition and results of operations.

We face uncertainty with respect to future acquisitions, and unsuitable orunsuccessful acquisitions could materially and adversely affect our business,prospects, results of operations and financial condition.

We have acquired complementary businesses in the past, and we may pursue acquisitions of complementary businesses in the future. We cannot predict whether suitable acquisition candidates can be acquired on acceptable terms or whether future acquisitions, even if completed, will be successful. Future acquisitions by us could result in the incurrence of contingent liabilities, debt or amortization expenses relating to intangible assets which could materially adversely affect our business, results of operations and financial condition. Moreover, the success of any past or future acquisition will depend upon our

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ability to integrate effectively the acquired businesses.

We also cannot predict whether any acquired products, technology or business will contribute to our revenues or earnings to any material extent or whether cost savings and synergies we expect at the time of an acquisition can be realized once the acquisition has been completed. Furthermore, if we incur additional indebtedness to finance an acquisition, we cannot predict whether the acquired business will be able to generate sufficient cash flow to service that additional indebtedness.

Unsuitable or unsuccessful acquisitions could therefore have a material and adverse effect on our business, prospects, financial condition and results of operations.

Our business is exposed to changes in interest rates.

We are exposed to changes in interest rates on our variable-rate debt. A hypothetical increase of 1 percentage point in the variable component of interest rates applicable to floating rate debt outstanding as of December 31, 2011 would have resulted in an increase to interest expense of approximately $8.6 million per year including the effect of interest rate swaps outstanding at December 31, 2011. Adverse interest rate changes could have a material adverse effect on our business, results of operations and financial condition.

We are dependent on the success of our research and development efforts and the failure todevelop new and improved products could adversely affect our business.

We have in the past made, and intend to continue in the future to make, investments in research and development in order to enable us to identify and develop new products. The development process for new products can be lengthy. Despite investments in this area, our research and development may not result in the discovery or successful development of new products. The success of our new product offerings will depend on several factors, including our ability to:

• accurately anticipate and properly identify our customers' needs and industry trends;

• price our products competitively;

• innovate, develop and commercialize new products and applications in a timely manner;

• obtain necessary regulatory approvals;

• differentiate our products from competitors' products; and

• use our research and development budget efficiently.

The continuous introduction of new products is important to our growth. Our financial condition could deteriorate if we cannot timely and cost effectively develop and commercialize new products.

We may be subject to sales and other taxes, which could have adverse effects on ourbusiness.

In accordance with current federal, state and local tax laws, and the constitutional limitations thereon, we currently collect sales, use or other similar taxes in state and local jurisdictions where we have a physical presence. One or more state or local jurisdictions may seek to impose sales tax collection obligations on us and other out-of-state companies which engage in remote or online commerce. Several states in the United States have taken various initiatives to prompt retailers to collect local and state sales taxes on purchases made over the Internet. Furthermore, tax law and the interpretation of constitutional limitations thereon is subject to change. In addition, any new operations of these businesses in states where they do not currently have a physical presence could subject shipments of goods into such states by these businesses to sales tax under current or future laws. If one or more state or local jurisdictions successfully asserts that we must collect sales or other taxes beyond our current practices, it could have a material, adverse effect on our business.

We may be subject to environmental risks, and liabilities for environmentalcompliance or cleanup could have a material, adverse effect on our profitability.

Our operations are subject to existing and may be subject to proposed federal, state and local laws and regulations pertaining to pollution and protection of human health and the environment, the violation of which can result in substantial costs and liabilities, including material civil and criminal fines and penalties. Such requirements include those pertaining to air emissions; wastewater discharges; occupational safety and health; the generation, handling, treatment, remediation, use, storage, transport, release, and exposure to hazardous substances and wastes. Under certain of these laws and regulations, such as the federal Superfund statute, the obligation to investigate and remediate contamination at a facility may be imposed on current and former owners or operators or on persons who may have sent waste to that facility for disposal. In addition, environmental laws and regulations, and interpretation or enforcement thereof, are constantly evolving and any such changes could affect the Company's business, financial condition or results of operations. Enforcement of these laws and regulations

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may require the expenditure of material amounts for environmental compliance or cleanup.

The operations of our Harland Clarke segment use hazardous materials in the printing process and generate wastewater and air emissions. Some of our historic check and form printing operations at current and former facilities used hazardous materials in greater quantities. In some instances, we have sold these facilities and agreed to indemnify the buyer of the facility for certain environmental liabilities. We may also be subject to liability under environmental laws and regulations for environmental conditions at our current or former facilities or in connection with the disposal of waste generated at these facilities. Although we are not aware of any fact or circumstance that would require the expenditure of material amounts for environmental compliance or cleanup, if environmental liabilities are discovered at our current or former facilities or at locations where our wastes were disposed, we could be required to spend material amounts for environmental compliance or cleanup.

It is generally not possible to predict the ultimate total costs relating to any remediation that may be demanded at any environmental site due to, among other factors, uncertainty regarding the extent of prior pollution, the complexity of applicable environmental laws and regulations and their interpretations, uncertainty regarding future changes to such laws and regulations or their enforcement, the varying costs and effectiveness of alternative cleanup technologies and methods, and the questionable and varying degrees of responsibility and/or involvement by us.

MacAndrews, our indirect parent company, and its sole stockholder havesignificant influence over us.

Mr. Ronald O. Perelman, through MacAndrews, beneficially owned, as of December 31, 2011, all of the outstanding common stock of M & F Worldwide, which beneficially owns 100% of our stock. In addition, a majority of our directors is affiliated with MacAndrews. As a result, MacAndrews and its sole stockholder possess significant influence over our business decisions.

Risks Related to our Harland Clarke Segment

The paper check industry overall is a mature industry and check usage is declining.Our business will be harmed if check usage declines faster than expected.

Check and related products and services, including delivery services, account for most of our revenues. The check industry overall is a mature industry. The number of checks written in the United States has declined in recent years, and we believe that it will continue to decline due to the increasing use of alternative payment methods, including credit cards, debit cards, smart cards, automated teller machines, direct deposit, wire transfers, electronic, home banking applications, Internet based payment services and other bill paying services. The actual rate and extent to which alternative payment methods will achieve consumer acceptance and replace checks, whether as a result of legislative developments, personal preference or otherwise, cannot be predicted with certainty and could decline at a more rapid rate. Changes in technology or the widespread adoption of current technologies may also make alternative payment methods more popular. An increase in the use of any of these alternative payment methods could have a material adverse effect on the demand for checks and a material adverse effect on our business, results of operations and prospects. In recent years, Harland Clarke has experienced check unit declines at a higher rate than in the past, as evidenced by recent period-over-period declines in Harland Clarke revenue. Harland Clarke believes these higher rates of decline are attributable at least in part to changing business strategies of certain of our financial institution clients and an increase in the use of alternative non-cash payments in addition to other factors. Harland Clarke is unable to determine the extent to which other factors such as economic and financial market difficulties, the depth and length of the economic recession, higher unemployment, decreased openings of checking accounts and decreased consumer spending have also contributed to the higher rates of decline. During 2011, this trend of higher check unit declines improved slightly from that experienced in recent years, however Harland Clarke is unable to determine at this time if this improvement to the trend will continue. Harland Clarke expects that check unit volume will continue to decline, resulting in a corresponding decrease in check revenues and depending on the nature and relative magnitude of the causes for the decreases, such decreases may not be mitigated as and when overall economic conditions improve. Harland Clarke is focused on growing its non-check related products and services, including marketing services, and optimizing its existing catalog of offerings to better serve its clients, as well as managing its costs, overhead and facilities to reflect the decline in check unit volumes. Harland Clarke does not believe that revenues from non-check related products and services will fully offset revenue declines from declining check unit volumes. In the future, Harland Clarke may not be able to mitigate the revenue declines from declining check unit volumes through cost management, which could negatively affect Harland Clarke's margins.

Consolidation among financial institutions may adversely affect our relationshipswith our clients and our ability to sell our products and may therefore result inlower revenues and profitability.

Mergers, acquisitions and personnel changes at financial institutions, as well as failures or liquidations of such financial institutions, may adversely affect our business, financial condition and results of operations. For the year ended December 31,

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2011, financial institutions accounted for approximately 82% of revenues for our Harland Clarke segment. In recent years, the number of financial institutions has declined due to consolidation. Consolidation among financial institutions could cause us to lose current and potential clients as such clients are, for example, acquired by financial institutions with pre-existing relationships with other providers. The increase in general negotiating strength possessed by such consolidated entities also presents a risk that new and/or renewed contracts with these institutions may not be secured on terms as favorable as those historically negotiated with these clients. Consolidation among or failure of financial institutions could therefore decrease our revenues and profitability.

We are dependent on a few large clients, and adverse changes in our relationshipswith these highly concentrated clients may adversely affect our revenues andprofitability.

The majority of sales from our Harland Clarke segment has been, and very likely will continue to be, concentrated among a small group of clients. For the year ended December 31, 2011, the top 20 clients of our Harland Clarke segment represented approximately 43% of its revenues, with sales to Bank of America and Wells Fargo representing a significant portion of revenues. A number of contracts with Harland Clarke segment clients may be terminated by the client for convenience upon written notice or "for cause." A significant decrease or interruption in business from any of our Harland Clarke segment significant clients, or the termination of our contracts with any of our most significant clients could have a material adverse effect on our revenues and profitability.

Our financial results can also be adversely affected by the business practices and actions of our large clients in a number of ways, including timing, size and mix of product orders and supply chain management. Several contracts with our significant clients expire over the next several years. We may not be able to renew them on terms favorable to us, or at all. The loss of one or more of these clients or a shift in the demand by, distribution methods of, pricing to, or terms of sale to, one or more of these clients could materially adversely affect us. The write-off of any significant receivable due from delays in payment or return of products by any of our significant clients could also adversely impact our revenues and profitability.

We face intense competition and pricing pressures in certain areas of our business,which could result in lower revenues, higher costs and lower profitability.

The check printing industry is intensely competitive. In addition to competition from alternative payment methods, we also face considerable competition from other check printers and other similar providers of printed products. The principal factors on which we compete are service, convenience, quality, product range and price. We may not be able to compete effectively against current and future competitors, which could result in lower revenues, higher costs and lower profitability.

Interruptions or adverse changes in our vendor or supplier relationships or deliveryservices could have a material adverse effect on our business.

We have strong relationships with many of the country's largest paper mills and ink suppliers. These relationships afford us certain purchasing advantages, including stable supply and favorable pricing arrangements. Our supplier arrangements are by purchase order and terminable at will at the option of either party. While we have been able to obtain sufficient paper supplies during recent paper shortages and otherwise, in part through purchases from foreign suppliers, we are subject to the risk that we will be unable to purchase sufficient quantities of paper to meet our production requirements during times of tight supply. An interruption in our relationship with service providers for our digital printers could compromise our ability to fulfill pending orders for checks and related products. In addition, disruptions in the credit and other financial markets could, among other things, impair the financial condition of suppliers of the Company, thereby increasing the risk of supplier performance. Any interruption in supplies or service from these or other vendors or suppliers or delivery services could result in a disruption to our business if we are unable to readily find alternative service providers at comparable rates.

Increased production and delivery costs, such as fluctuations in paper costs, couldmaterially adversely affect our profitability.

Increases in production costs such as paper and labor could adversely affect our profitability, our business, our financial condition and results of operations. For example, the principal raw material used by our Harland Clarke segment is paper. Rising inflation may cause our material and delivery costs to rise. Any significant increase in paper prices as a result of a short supply or otherwise would adversely affect our costs. In addition, disruptions in parcel deliveries or increases in delivery rates, which are often tied to fuel prices, could also increase our costs. Our contracts with clients in our Harland Clarke segment may contain certain restrictions on our ability to pass on to clients increased production costs or price increases. In addition, competitive pressures in the check industry may have the effect of inhibiting our ability to reflect these increased costs in the prices of our products and services.

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Softness in direct mail response rates could have an adverse impact on our operatingresults.

The direct-to-consumer business of our Harland Clarke segment has experienced declines in response and retention rates related to direct mail promotional materials. We believe that these declines are attributable to a number of factors, including the decline in check usage, the overall increase in direct mail solicitations received by our target customers, and the multi-box promotional strategies employed by us and our competitors. To offset these factors, we may have to modify and/or increase our marketing efforts, which could result in increased expense.

The profitability of the direct-to-consumer business of our Harland Clarke segment depends in large part on our ability to secure adequate advertising media placements at acceptable rates, as well as the consumer response rates generated by such advertising. Suitable advertising media may not be available at a reasonable cost, or available at all. Furthermore, the advertising we utilize may not be effective. Competitive pricing pressure may inhibit our ability to reflect any of these increased costs in the prices of our products. We may not be able to sustain our current levels of profitability as a result.

Risks Related to our Harland Financial Solutions and Scantron Segments

Our Scantron segment provides products and services to educational institutions that are subject to educational budget allotments, which are under pressure and could affect customer willingness to invest in our products.

Our Scantron business is subject to federal and state educational budget allotments. In the current economic and political landscapes, these budget allotments may come under pressure and could be reduced, thus affecting customer willingness to invest in our products.

If we fail to continually improve our Harland Financial Solutions and Scantronproducts, effectively manage our product offerings and introduce new products andservice offerings, our business may suffer.

Harland Financial Solutions' and Scantron's businesses are affected by technological change, evolving industry standards, changes in client requirements and frequent new product introductions and enhancements. The businesses of providing technological solutions to financial institutions, educational organizations and other enterprises have been and continue to be intensely competitive, requiring us to continually improve our existing products and create new products while at the same time controlling our costs. Such improvements have required and will continue to require substantial cash investments and allocations of personnel and other resources. We face intense competition from a number of multi-national, international, national, regional and local providers of software and services, some of whom may have greater financial and other resources than we have, greater familiarity with our prospective clients than we do, or the ability to offer more attractive products and services than we do. Our future success will depend in part upon our ability to:

• continue to enhance and expand existing Harland Financial Solutions and Scantron products and services;

• make Harland Financial Solutions and Scantron products compatible with future and existing operating systems and applications that achieve popularity within the business application marketplace, including current and future versions of Windows, Unix and IBM iSeries;

• engage in new business initiatives; and

• develop and introduce new products and new services that satisfy increasingly sophisticated client requirements, keep pace with technological and regulatory developments, provide client value and are attractive to customers.

We may not successfully anticipate and develop product enhancements or new products and services to adequately address changing technologies and client requirements. Any such products, solutions or services may not be successful or may not generate expected revenues or cash flow, and the business and results of operations of our Harland Financial Solutions and Scantron businesses may be materially and adversely affected as a result.

The revenues, cash flows and results of operations of our Harland Financial Solutionssegment may be reduced if we need to lower prices or offer other favorable terms onour products and services to meet competitive pressures in the software industry.

Providing technological solutions to financial institutions has been and continues to be intensely competitive. Some of our competitors have advantages over Harland Financial Solutions due to their significant worldwide presence, longer operating and product development history, larger installed client base, and substantially greater financial, technical and marketing resources. In response to competition, Harland Financial Solutions has been required in the past, and may be required in the future, to furnish additional discounts to clients, otherwise modify pricing practices or offer more favorable payment terms or more favorable contractual implementation terms. These developments have and may increasingly negatively affect the revenues, cash flows and results of operations of the Harland Financial Solutions business.

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Consolidation among financial institutions may adversely affect our relationshipswith Harland Financial Solutions clients and our ability to sell our products and maytherefore result in lower revenues and profitability.

Mergers, acquisitions and personnel changes at financial institutions, as well as failures or liquidations of such financial institutions, may adversely affect our Harland Financial Solutions business, financial condition and results of operations. For the year ended December 31, 2011, financial institutions accounted for substantially all of our Harland Financial Solutions segment revenues. In recent years, the number of financial institutions has declined due to consolidation. Consolidation among financial institutions could cause us to lose current and potential clients as such clients are, for example, acquired by financial institutions with pre-existing relationships with other providers. The increase in general negotiating strength possessed by such consolidated entities also presents a risk that new and/or renewed contracts with these institutions may not be secured on terms as favorable as those historically negotiated with these clients. Consolidation among or failure of financial institutions could therefore decrease our revenues and profitability.

Downturns in general economic and industry conditions, enhanced regulatory burdensand reductions in information technology budgets could cause decreases in demand forour software and related services which could negatively affect our revenues, cashflows and results of operations.

Our revenues, cash flows and results of operations depend on the overall demand for our products, software and related services. Economic downturns in one or more of the countries in which we do business and enhanced regulatory burdens, including through increased fees and assessments charged to financial institutions by the FDIC and National Credit Union Administration ("NCUA") or due to recently enacted federal legislation for additional taxes on certain financial institutions, could result in reductions in the information technology budgets for some portion of our clients and potentially longer lead-times for acquiring Harland Financial Solutions products and services. Such reductions and longer lead times could result in delays or cancellations of client purchases and could have a material adverse effect on our business, financial position, results of operations and cash flows. Recent financial industry turmoil and the general economic slowdown may adversely affect our financial institution clients' ability or willingness to commit financial resources to our products, and spending decisions by these clients may continue to be delayed. Prolonged economic slowdowns may result in clients requiring us to renegotiate existing contracts on less advantageous terms than those currently in place or default on payments due on existing contracts.

As our software offerings increase in number, scope and complexity, our need toprevent any undetected errors and to correct any identified errors may increase ourcosts, slow the introduction of new products and we may become subject to warranty orproduct liability claims which could be costly to resolve and result in negativepublicity.

Although our Harland Financial Solutions and Scantron businesses test each of their new products and product enhancement releases and evaluate and test the products obtained through acquisition before introducing them to customers, significant errors may be found in existing or future releases of our software products, and vulnerability to cyber attacks may arise, with the possible result that significant resources and expenditures may be required in order to correct such errors or otherwise satisfy client demands. In addition, defects in our products or difficulty integrating our products with our clients' systems could result in delayed or lost revenues, warranty or other claims against us by clients or third parties, adverse client reaction and negative publicity about us or our products and services or reduced acceptance of our products and services in the marketplace, any of which could have a material adverse effect on our business, financial position, results of operations and cash flows.

Errors, defects or other performance problems of our products could result in harm ordamage to our clients and expose us to liability, which may adversely affect ourbusiness and operating results.

Because our clients may use our products for mission critical applications, errors, defects or other performance problems may cause financial or other damages to our clients and result in claims for substantial damages against us, regardless of our responsibility for such errors, defects or other performance problems. For example, Harland Financial Solutions has been named in lawsuits challenging certain provisions in Harland Financial Solutions' lending products.

The terms of our contracts with our clients are generally designed to limit our liability for errors, defects or other performance problems and damages relating to such errors, defects or other performance problems, but these provisions may not be enforced by a court or otherwise effectively protect us from legal claims. Our liability insurance may not be adequate to cover all of the costs resulting from these legal claims. Our current liability insurance coverage may not continue to be available on acceptable terms and insurers may deny coverage as to any future claim. The successful assertion against us of one or more large claims that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or coinsurance requirements, could have a material adverse effect on our business, financial position, results of operations and cash flows. Furthermore, even if we succeed in the litigation, we are likely to incur additional costs and our management's attention might be diverted from our normal operations.

17

Failure to hire and retain a sufficient number of qualified information technologyprofessionals could have a material adverse effect on our business, results ofoperations and financial condition.

Our business of delivering professional information technology services is labor intensive, and, accordingly, our success depends upon our ability to attract, develop, motivate, retain and effectively utilize highly skilled information technology professionals. We believe that there is a growing shortage of, and significant competition for, information technology professionals in the United States who possess the technical skills and experience necessary to deliver our services, and that such information technology professionals are likely to remain a limited resource for the foreseeable future. We also plan to manage and grow software development operations internationally related to Harland Financial Solutions and Scantron. We believe that, as a result of these factors, we operate within an industry that experiences a significant rate of annual turnover of information technology personnel. Our business plans are based on hiring and training a significant number of additional information technology professionals each year to meet anticipated turnover and increased staffing needs. Our ability to maintain and renew existing engagements and to obtain new business depends, in large part, on our ability to hire and retain qualified information technology professionals. We may not be able to recruit and train a sufficient number of qualified information technology professionals, and we may not be successful in retaining current or future employees. Increased hiring by technology companies and increasing worldwide competition for skilled technology professionals may lead to a shortage in the availability of qualified personnel in the markets in which we operate and hire. Failure to hire and train or retain qualified information technology professionals in sufficient numbers could have a material adverse effect on our business, results of operations and financial condition.

We may not receive significant revenues from our current research and developmentefforts.

Developing and localizing software is expensive, and the investment in product development may involve a long payback cycle. Our future plans include significant investments in software research and development and related product opportunities. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position, but future revenues from these investments are not fully predictable. Therefore, we may not realize any benefits from our research and development efforts in a timely fashion or at all.

Our Harland Financial Solutions segment provides services to clients that are subjectto government regulations that could constrain its operations.

The financial services sector is subject to various federal and state regulations and oversight. As a supplier of services to financial institutions, certain Harland Financial Solutions operations are examined by the OCC, the FDIC and the NCUA, among other agencies. These agencies regulate services we provide and the manner in which we operate, and we are required to comply with a broad range of applicable laws and regulations. Current laws and regulations may be amended in the future or interpreted by regulators in a manner which could negatively affect our current Harland Financial Solutions' operations or limit its future growth.

We may not be able to successfully develop new products and services for our Scantronsegment, and those products and services may not receive widespread acceptance. As aresult, the business, prospects, results of operations and financial condition ofScantron could be materially and adversely affected.

The data collection and educational testing industry has also changed significantly during recent years due to technological advances and regulatory changes, and we must successfully develop new products and solutions in our Scantron segment to respond to those changes. Scantron must continue to keep pace with changes in testing and data collection technology and the needs of its clients. The development of new testing methods and technologies depends on the timing and costs of the development effort, product performance, functionality, customer acceptance, adoption rates and competition, all of which could have a negative effect on our business. If we are not able to adopt new electronic data collection solutions at a rate that keeps pace with other technological advances, the business, business prospects, results of operations and financial condition of Scantron could be materially and adversely affected.

Budget deficits may reduce funding available for Scantron products and services andhave a negative effect on our revenue.

Our Scantron segment derives a significant portion of its revenues from public schools and colleges, which are heavily dependent on local, state and federal governments for financial support. Government budget deficits, including deficits arising from the current economic slowdown, may have a negative effect on the availability of funding for Scantron products. Budget deficits experienced by schools or colleges may also cause those institutions to react negatively to future price increases for Scantron products. If budget deficits significantly reduce funding available for Scantron products and services, our revenue could be adversely affected.

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If we are not able to obtain paper and other supplies at acceptable quantities andprices, our revenue could be adversely affected.

Our Scantron segment purchases a majority of its paper from one supplier. Scantron purchases scanner components from equipment manufacturers, supply firms and others. Scantron may not be able to purchase those supplies in adequate quantities or at acceptable prices. Rising inflation will also cause Scantron's material and delivery costs to rise. If Scantron is forced to obtain paper and other supplies at higher prices or lower quantities, our profitability could be adversely affected.

Item 1B.  Unresolved Staff Comments

None.

Item 2.  Properties

Harland Clarke is headquartered in San Antonio, Texas, Harland Financial Solutions is headquartered in Lake Mary, Florida, and Scantron is headquartered in Eagan, Minnesota. The principal properties for each segment are as follows:

Harland Clarke

Location	Use	Approximate Floor Space (Square Feet)	Leased/Owned Status
Atlanta, GA	Administration, Information Technology, Sales and Marketing	96,400	Owned
Atlanta, GA(a)	Closed	36,000	Owned
Atlanta, GA(a)	Closed	54,000	Owned
Atlanta, GA(a)	Closed	132,300	Owned
Atlanta, GA	Tech Center	14,294	Leased
Atlanta, GA	Operations Support	9,665	Leased
Boulder City, NV	Administration and Production	4,000	Leased
Braintree, MA	Marketing Services and Support	3,476	Leased
Charlotte, NC	Administration	4,906	Leased
Colorado Springs, CO	Services	22,665	Leased
Glen Burnie, MD	Marketing Services and Production	120,000	Leased
Grapevine, TX	Printing	83,282	Leased
Gurabo, Puerto Rico	Printing	22,446	Leased
High Point, NC	Printing	135,000	Leased
Jeffersonville, IN	Printing	141,332	Leased
Lisle, IL	Marketing Services	7,050	Leased
Louisville, KY	Printing	50,000	Leased
Milton, WA	Printing	87,640	Leased
Nashville, TN	Administration	8,124	Leased
New Braunfels, TX	Administration, Printing and Contact Center	98,030	Owned
Phoenix, AZ	Printing	64,000	Leased
Salt Lake City, UT	Printing, Distribution and Contact Center	129,100	Owned
San Antonio, TX	Printing	166,000	Leased
San Antonio, TX	Contact Center	68,000	Leased
San Antonio, TX	Contact Center	42,262	Leased
San Antonio, TX	Corporate Headquarters	90,000	Leased
San Antonio, TX	Administration	1,936	Leased
San Antonio, TX	Warehouse	16,166	Leased
San Antonio, TX	Warehouse	18,675	Leased

___________

^(a)  Held for sale.

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Harland Financial Solutions

Location	Use	Approximate Floor Space (Square Feet)	Leased/Owned Status
Atlanta, GA	Development and Support	7,098	Leased
Birmingham, AL	Development and Support	4,400	Leased
Bothell, WA	Development and Support	16,286	Leased
Carmel, IN	Development and Support	4,821	Leased
Cincinnati, OH	Service Bureau, Data Center	63,901	Leased
Clive, IA	Service Bureau, Data Center	36,466	Leased
Cotuit, MA	Development and Support	3,200	Leased
Englewood, CO	Development and Support, Data Center	28,838	Leased
Fargo, ND	Development and Support	18,371	Leased
Grand Rapids, MI	Development and Support	5,703	Leased
Lake Mary, FL	Corporate Headquarters, Development and Support	80,390	Leased
Memphis, TN	Development and Support	7,981	Leased
Miamisburg, OH	Development and Support	15,286	Leased
Orlando, FL	Processing	14,856	Leased
Pleasanton, CA	Development and Support	30,232	Leased
Portland, OR	Administration, Development and Support	58,685	Leased
Tel Aviv, Israel	Development and Support	7,911	Leased
Thiruvananthapuram, India	Development and Support	21,500	Leased

Scantron

Location	Use	Approximate Floor Space (Square Feet)	Leased/Owned Status
Atlanta, GA	Administration, Development and Support	12,780	Leased
Bellevue, WA	Administration	16,000	Leased
Chennai, India	Development and Support	38,060	Leased
Columbia, PA	Printing	121,370	Owned
Eagan, MN	Corporate Headquarters, Development and Support	109,500	Owned
Loveland, CO	Development and Support	12,895	Leased
Lawrence, KS	Administration	21,000	Leased
McLean, VA	Administration, Development and Support	4,336	Leased
Olivet, MI	Development and Support	1,856	Leased
Omaha, NE	Field Services, Administration and Support	50,000	Owned
Santa Ana, CA	Development and Support	26,057	Leased
San Diego, CA	Development and Support	21,333	Leased
Towson, MD	Administration, Development and Support	9,193	Leased

Item 3. Legal Proceedings

A series of commercial borrowers in various states that allegedly obtained loans from financial institutions employing HFS'sLaserProsoftware have commenced individual or class actions against their financial institutions alleging that the loans were deceptive or usurious in that they failed to disclose properly the effect of the "365/360" method of calculating interest. In some cases, the financial institutions have made warranty claims against HFS related to these actions. Some of the actions commenced by the commercial borrowers have been dismissed, and many of the remainder, and the related warranty claims, are at early stages, so that the likely progress of those pending matters is not yet clear. The Company has not accepted any of the warranty claims. One of the financial institutions has commenced an arbitration against the Company relating to a commercial borrower claim against it under the terms of the Company's agreement with the financial institution, and another financial institution has filed a motion in the action brought by its commercial borrower seeking to assert a third-party claim against the Company. In the latter action, the Company has moved to stay the third-party claim pending arbitration. At the

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appropriate time, the Company intends to deny liability to both financial institutions, but the Company is not able at this early stage to assess whether it may have any liability to either institution or the amount of any such liability, but it believes it is remote that either claim will result in material liability. Due to the preliminary nature of the remaining matters, the Company believes it is remote that any of the remaining warranty claims will result in any material liability for the Company.

Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, environmental matters, employment matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations.

Item 4.  Mine Safety Disclosures

Not applicable.

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Part II

Item 5.  Market for Registrant's Common Equity, Related StockholderMatters and Issuer Purchases of Equity Securities

We are an indirect, wholly owned subsidiary of M & F Worldwide. As such, our common stock is not listed on any stock exchange or traded in any over-the-counter market and is held by only one holder.

Item 6.  Selected Financial Data

The table below reflects historical financial data, which are derived from the audited consolidated financial statements for the periods January 1 to December 21, 2011 and December 22 to December 31, 2011 and each of the years ended December 31, 2010, 2009, 2008 and 2007.

The Company is an indirect, wholly owned subsidiary of M & F Worldwide, which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews. On September 12, 2011, M & F Worldwide agreed, subject to various closing conditions, to merge with an indirect wholly owned subsidiary of MacAndrews, and, following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011. As a result of the MacAndrews Acquisition, under Generally Accepted Accounting Principles, the Company is required to present the operating results for the year ended December 31, 2011 separately for the predecessor and successor periods. The period prior to the Merger Transaction (January 1 to December 21, 2011) is presented below as ''Predecessor." The period subsequent to the Merger Transaction (December 22 to December 31, 2011) is presented below as ''Successor.''

As a result of the Company applying the acquisition method of accounting for the MacAndrews Acquisition, the Successor period financial statements reflect a new basis of accounting, while the Predecessor financial statements were prepared using the Company's historical basis of accounting. As a result, the Predecessor and Successor financial statements are not comparable. There have been no changes in the business operations of the Company due to the MacAndrews Acquisition. See Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion of the MacAndrews Acquisition.

The selected financial data are not necessarily indicative of results of future operations, and should be read in conjunction with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

	Successor			Predecessor
	December 22 to December 31,			January 1 to December 21,			Years Ended December 31,
(In millions)	2011 (a)			2011 (a)			2010 (b)			2009 (c)			2008 (d)			2007 (e)
Statement of Operations Data:
Net revenues	$	35.0		$	1,586.0		$	1,671.2		$	1,712.3		$	1,794.6		$	1,369.9
Cost of revenues	27.3			931.2			958.5			997.7			1,066.9			833.8
Gross profit	7.7			654.8			712.7			714.6			727.7			536.1
Selling, general and administrative expenses	10.9			393.3			389.7			387.4			445.9			333.2
Revaluation of contingent consideration	—			(24.3		)	0.3			—			—			—
Asset impairment charges	—			111.6			3.7			44.4			2.4			3.1
Restructuring costs	—			12.6			22.3			32.5			14.6			5.6
Operating (loss) income	(3.2		)	161.6			296.7			250.3			264.8			194.2
(Loss) gain on early extinguishment of debt	(0.1		)	—			—			65.0			—			(54.6		)
Interest expense, net	(6.5		)	(104.4		)	(114.8		)	(135.9		)	(184.2		)	(159.9		)
Other income (expense), net	—			13.2			0.1			0.1			(0.4		)	(0.5		)
(Loss) income before income taxes	(9.8		)	70.4			182.0			179.5			80.2			(20.8		)
(Benefit) provision for income taxes	(3.8		)	41.2			67.8			67.4			33.0			(5.4		)
Net (loss) income	$	(6.0	)	$	29.2		$	114.2		$	112.1		$	47.2		$	(15.4	)

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	December 31,
(In millions)	2011 (a)		2010 (b)		2009 (c)		2008 (d)		2007 (e)
Balance Sheet Data:
Total assets	$	3,135.9	$	3,336.1	$	3,252.0	$	3,391.8	$	3,447.6
Long-term debt, including current portion and short-term borrowings(f)	1,785.4		2,219.7		2,238.8		2,390.6		2,409.9
Stockholder's equity	216.2		338.8		246.0		166.3		190.5

____________

(a) Includes the financial position and results of operations of GlobalScholar from the date of its acquisition on January 3, 2011. Includes new basis of accounting in the Successor period related to acquisition accounting required by the MacAndrews Acquisition. See to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

(b) Includes the financial position and results of operations of Spectrum K12 from the date of its acquisition on July 21, 2010 and the financial position and results of operations of Parsam from the date of its acquisition on December 6, 2010. See to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

(c) Includes the financial position and results of operations of Protocol Integrated Marketing Services from the date of its acquisition on December 4, 2009 and the financial position of SubscriberMail from the date of its acquisition on December 31, 2009. See to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

(d) Includes the financial position and results of operations of Data Management I LLC from the date of its acquisition on February 22, 2008 and the financial position of Transaction Holdings from the date of its acquisition on December 31, 2008.

(e) Includes the financial position and results of operations of John H. Harland Company from the date of its acquisition on May 1, 2007.

(f) Includes capital leases of $3.5 million, $4.6 million, $5.7 million, $2.6 million and $3.4 million for fiscal years 2011, 2010, 2009, 2008 and 2007, respectively.

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Item 7.  Management's Discussion and Analysis of Financial Condition andResults of Operations

The following discussion should be read in conjunction with Item 6. "SelectedFinancial Data" and the Harland Clarke Holdings consolidated financial statements andnotes thereto included elsewhere in this Annual Report on Form 10-K.

Overview of Business

Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its subsidiaries, the "Company") is a holding company that conducts its operations through its direct and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed, subject to various closing conditions, to merge with an indirect, wholly owned subsidiary of MacAndrews, and, following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011 (the "MacAndrews Acquisition").

As a result of the Company applying the acquisition method of accounting for the MacAndrews Acquisition, the Successor period financial statements reflect a new basis of accounting, while the Predecessor financial statements were prepared using the Company's historical basis of accounting. As a result, the Predecessor and Successor financial statements are not comparable. There have been no changes in the business operations of the Company due to the MacAndrews Acquisition. See Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion of the MacAndrews Acquisition.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial services, retail and software providers. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards and other business and home office products to consumers and small businesses.

The Harland Financial Solutions segment provides technology products and services to financial services clients worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems.

The Scantron segment provides data management and decision support solutions and related services to educational, commercial, healthcare and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management, business operational data collection, patient information collection and tracking, and managed technical services. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment, forms, and related field maintenance services.

The GlobalScholar Acquisition

On January 3, 2011, Scantron Corporation ("Scantron"), a wholly owned subsidiary of the Company, purchased all of the outstanding capital stock or membership interests of KUE Digital Inc., KUED Sub I LLC and KUED Sub II LLC (collectively "GlobalScholar"). GlobalScholar's instructional management platform supports all aspects of managing education at K-12 schools, including student information systems; performance-based scheduler; gradebook; learning management system; longitudinal data collection, analysis and reporting; teacher development and performance tracking; and online communication and tutoring portals. GlobalScholar's instructional management platform complements Scantron's testing and assessment, response to intervention, student achievement management and special education software solutions thereby expanding Scantron's web-based education solutions. The acquisition-date purchase price was $134.9 million in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $18.5 million, which resulted in total estimated consideration of $153.4 million as of the acquisition date. Contingent consideration would be payable in 2012 upon achievement of certain revenue targets of GlobalScholar during calendar year 2011 (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). The Company financed the acquisition and related fees and expenses with cash on hand.

The Parsam Acquisition

On December 6, 2010, Harland Financial Solutions, Inc. ("HFS"), a wholly owned subsidiary of the Company, acquired all of the outstanding membership interests of Parsam Technologies, LLC and the equity of SRC Software Private Limited (collectively "Parsam"). Parsam's solutions allow financial institutions to provide services online, in branches and at call centers, from new account opening and funding to account-to-account money transfers, person-to-person payments, account

24

and adviser-client relationship management and bill presentment and payment. HFS has integrated Parsam's solutions into its existing solution offerings. The acquisition-date purchase price was $32.8 million in cash, net of cash acquired, and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $1.2 million, which resulted in total estimated consideration of $34.0 million as of the acquisition date. Contingent consideration would be payable upon achievement of certain revenue targets of Parsam during calendar years 2011 and 2012 with a maximum contingent consideration of $25.0 million if the revenue targets are met (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). The Company financed the acquisition and related fees and expenses with cash on hand.

The Spectrum K12 Acquisition

On July 21, 2010, Scantron acquired Spectrum K12 School Solutions, Inc. ("Spectrum K12"). Spectrum K12 develops, markets and sells student achievement management, response to intervention and special education software solutions. Spectrum K12's software solutions complement Scantron's software solutions for education assessments, content and data management. The acquisition-date purchase price was $28.6 million in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $4.0 million, which resulted in total estimated consideration of $32.7 million as of the acquisition date. Contingent consideration would be payable upon achievement of certain revenue targets of Spectrum K12 during the twelve-month periods ending June 30, 2011 and 2012 with a maximum aggregate contingent consideration of $20.0 million if the revenue targets are met (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). The Company financed the acquisition and related fees and expenses with cash on hand.

The SubscriberMail and Protocol IMS Acquisitions

During December 2009, Harland Clarke Corp., a wholly owned subsidiary of the Company, acquired in separate transactions SubscriberMail and Protocol Integrated Marketing Services ("Protocol IMS"), a division of Protocol Global Solutions. SubscriberMail is a leading email marketing service provider that offers patented tools to develop and deliver professional email communications. Protocol IMS focuses on direct marketing services with solutions that include business to business strategic services, business to consumer strategic services, database marketing and analytics, outbound business to business teleservices, production and fulfillment. The acquisition-date aggregate consideration of $13.1 million for these transactions includes contingent consideration of $1.8 million for SubscriberMail upon the achievement of certain revenue targets in 2010 and 2011, with a maximum aggregate contingent consideration of $2.0 million if the revenue targets are met (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). The Protocol IMS and SubscriberMail acquisitions are collectively referred to as the "2009 Acquisitions."

Economic and Other Factors Affecting the Businesses of the Company

Harland Clarke

While total non-cash payments - including checks, credit cards, debit cards and other electronic forms of payment - are growing, the number of checks written has declined and is expected to continue to decline. Harland Clarke believes the number of checks printed is driven by the number of checks written, the number of new checking accounts opened and reorders reflecting changes in consumers' personal situations, such as name or address changes. In recent years, Harland Clarke has experienced check unit declines at a higher rate than in the past, as evidenced by recent period-over-period declines in Harland Clarke revenue which are discussed in more detail elsewhere in this report. Harland Clarke believes these higher rates of decline are attributable at least in part to changing business strategies of certain of our financial institution clients and an increase in the use of alternative non-cash payments in addition to other factors. Harland Clarke is unable to determine the extent to which other factors such as economic and financial market difficulties, the depth and length of the economic downturn, higher unemployment, decreased openings of checking accounts and decreased consumer spending have also contributed to the higher rates of decline. During 2011, this trend of higher check unit declines improved slightly from that experienced in recent years, however Harland Clarke is unable to determine at this time if this improvement to the trend will continue. Harland Clarke still expects that check unit volume will continue to decline, resulting in a corresponding decrease in check revenues and depending on the nature and relative magnitude of the causes for the decreases, such decreases may not be mitigated as and when overall economic conditions improve. Harland Clarke is focused on growing its non-check related products and services, including marketing services, and optimizing its existing catalog of offerings to better serve its clients, as well as managing its costs, overhead and facilities to reflect the decline in check unit volumes. Harland Clarke does not believe that revenues from non-check related products and services will fully offset revenue declines from declining check unit volumes. In the future, Harland Clarke may not be able to mitigate the revenue declines from declining check unit volumes through cost management, which could negatively affect Harland Clarke's margins.

Harland Clarke's primary competition comes from alternative payment methods such as debit cards, credit cards, ACH, and

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other electronic and online payment options. Harland Clarke also competes with large providers that offer a wide variety of products and services including Deluxe Corporation, Harte-Hanks, Inc., and R.R. Donnelley & Sons Company. There are also many other competitors that specialize in providing one or more of the products and services Harland Clarke offers to its clients. Harland Clarke competes on the basis of service, convenience, quality, product range and price.

The Harland Clarke segment's operating results are also affected by consumer confidence and employment. Consumer confidence directly correlates with consumer spending, while employment also affects revenues through the number of new checking accounts being opened. The Harland Clarke segment's operating results may be negatively affected by slow or negative growth of, or downturns in, the United States economy. Business confidence affects a portion of the Harland Clarke segment. In addition, if Harland Clarke's financial institution customers fail or merge with other financial institutions, Harland Clarke may lose any or all revenue from such financial institutions and/or experience further pricing pressure, which would negatively affect Harland Clarke's operating results.

Harland Financial Solutions

Harland Financial Solutions' operating results are affected by the overall demand for our products, software and related services, which is based upon the technology budgets of our clients and prospects. Economic downturns in one or more of the countries in which we do business and enhanced regulatory burdens, including through increased fees and assessments charged to financial institutions by the Federal Deposit Insurance Corporation and National Credit Union Association or due to recently enacted federal legislation for additional taxes on certain financial institutions, could result in reductions in the information technology budgets for some portion of our clients and potentially longer lead-times for acquiring Harland Financial Solutions products and services. In addition, if Harland Financial Solutions' financial institution customers fail or merge with other financial institutions, Harland Financial Solutions may lose any or all revenue from such financial institutions and/or experience further pricing pressure, which would negatively affect Harland Financial Solutions' operating results.

Harland Financial Solutions' business is affected by technological change, evolving industry standards, regulatory changes in client requirements and frequent new product introductions and enhancements. The business of providing technological solutions to financial institutions and other enterprises requires that we continually improve our existing products and create new products while at the same time controlling our costs to remain price competitive.

Providing technological solutions to financial institutions is highly competitive and fragmented. Harland Financial Solutions competes with several large and diversified financial technology providers, including, among others, Fidelity National Information Services, Inc., Fiserv, Inc., Jack Henry & Associates, Inc., Open Solutions Inc., Computer Services Inc. and many regional providers. Many multi-national and international providers of technological solutions to financial institutions also compete with Harland Financial Solutions both domestically and internationally, including Temenos Group AG, Misys plc, Infosys Technologies Limited, Tata Consultancy and Oracle Financial Services. There are also many other competitors that offer one or more specialized products or services that compete with products and services offered by Harland Financial Solutions. Management believes that competitive factors influencing buying decisions include product features and functionality, client support, price and vendor financial stability.

Scantron

While the number of tests given annually in K-12 and higher education continues to grow, the demand for optical mark reader paper-based testing has declined and is expected to continue to decline. Changes in educational funding can affect the rate at which schools adopt new technology thus slowing the decline for paper-based testing but also slowing the demand for Scantron's on-line testing products. Educational funding changes may also reduce the rate of consumption of Scantron's forms and purchase of additional hardware to process these forms. Scantron's education-based customers may turn to lower cost solutions for paper-based forms and hardware in furtherance of addressing their budget needs. A weak economy in the United States may negatively affect education budgets and spending, which would have an adverse effect on Scantron's operating results. Data collection is also experiencing a conversion to non-paper based methods of collection. Scantron believes this trend will also continue as the availability of these alternative technologies becomes more widespread. While Scantron's non-paper data collection business could benefit from this trend, Scantron's paper-based data collection business could be negatively affected by this trend. Changes in the overall economy can affect the demand for data collection to the extent that Scantron's customers adjust their research or testing expenditures.

Scantron enters into contracts with customers that provide for multiple products and services or "elements," such as software, implementation, configuration, training and maintenance (referred to as "multiple-element contracts"). In order to recognize revenue for each element of the contract separately as earned, the relevant accounting guidance requires that the Company have "vendor-specific objective evidence", or "VSOE", of fair value of each element. VSOE of fair value of each element is typically based on the price charged when sold separately. The Company does not yet have sufficient history with GlobalScholar and Spectrum K12 sales to establish VSOE for elements within their contracts. As a result, for such contracts,

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the entire contract is bundled as a single unit for accounting purposes with revenue being recognized ratably over the initial term of the contract commencing with the delivery of the software or the completion of implementation services if such services are essential to the functionality of the software. This methodology results in substantial deferral of revenue into future periods, while the related costs, with the exception of direct implementation costs, are expensed as incurred rather than deferred. In addition, revenue from contracts that are subject to substantive customer acceptance provisions is deferred until the acceptance provisions have been met. As a result of these factors that cause deferral of significant revenue into future periods for amounts that are billed and collected, the Company expects to record operating losses for the acquired GlobalScholar and Spectrum K12 operations in 2012.

Critical Accounting Policies and Estimates

The Company reviews its accounting policies on a regular basis. The Company makes estimates and judgments as part of its financial reporting that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to accounts receivable, investments, intangible assets, other postretirement benefits, income taxes, contingencies and litigation, as well as other assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that it believes reasonable under the circumstances. These estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Results may differ from these estimates due to actual outcomes being different from the assumed outcomes. The Company believes the following critical accounting policies affect its more significant judgments and estimates.

Revenue Recognition - The Company considers its revenue recognition policy as critical to its reported results of operations primarily in its Harland Financial Solutions and Scantron segments. Revenue recognition requires judgment, including amongst other things, whether a software arrangement includes multiple elements, whether any elements are essential to the functionality of any other elements, and whether VSOE of fair value exists for those elements. Customers receive certain elements of the Company's products and services over time.

Changes to the elements in a software arrangement or in the Company's ability to identify VSOE for those elements could materially affect the amount of earned and unearned revenue reflected in the financial statements.

For software license agreements that do not require significant modification or customization of the software, the Company recognizes software license revenue when persuasive evidence of an arrangement exists, delivery of the product has occurred, the license fee is fixed and determinable and collection is probable. The Company's software license agreements include multiple products and services or "elements." None of these elements are deemed to be essential to the functionality of the other elements. Accounting guidance for such multiple-deliverable arrangements prior to January 1, 2011 generally requires revenue earned on software arrangements involving multiple elements to be allocated among the elements based upon the relative fair value of each element as determined through VSOE (the price of a bundled element when sold separately). In the event that the Company determined that VSOE does not exist for one or more of the delivered elements of a software arrangement, but does exist for all of the undelivered elements, revenue is recognized using the residual method. Under the residual method, a residual amount of the total arrangement fee is recognized as revenue for the delivered elements after the established fair value of all undelivered elements has been deducted. In the event the Company determined that VSOE is not achieved for any of the elements of a software arrangement, the entire arrangement is bundled as a single unit and revenue is recognized ratably over the initial term of the arrangement commencing upon the delivery of the software or the completion of implementation services if such services are essential to the functionality of the software.

New accounting guidance for multiple-deliverable arrangements that was adopted by the Company on January 1, 2011 requires entities to allocate revenue in an arrangement within the scope of the guidance using estimated selling prices based on a selling price hierarchy. The new guidance also eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. Application of this new guidance did not have a material effect on the Company's financial statements.

Implementation services are generally for installation, training, implementation and configuration. These services are generally not considered essential to the functionality of the related software. VSOE of fair value is established by pricing used when these services are sold separately. Generally, revenue is recognized when services are completed. On implementations for outsourced data processing services, revenue is deferred and recognized over the life of the outsourcing arrangement. Revenue from arrangements that are subject to substantive customer acceptance provisions is deferred until the acceptance conditions have been met.

Maintenance fees are deferred and recognized ratably over the maintenance period, which is usually twelve months. VSOE of fair value is determined based on contract renewal rates.

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Outsourced data processing services and other transaction processing services are recognized in the month the transactions are processed or the services are rendered.

The Company recognizes product and service revenue when persuasive evidence of a non-cancelable arrangement exists, products have been shipped and/or services have been rendered, the price is fixed or determinable, collectability is reasonably assured, legal title and economic risk is transferred to the customer and an economic exchange has taken place. Revenues are recorded net of any applicable discounts, contract acquisition payments amortization, accrued incentives and allowances for sales returns. Deferred revenues generally represent amounts billed to the customer in excess of amounts earned. As a result of the accounting required in connection with the MacAndrews Acquisition, deferred revenues at December 31, 2011 represent the fair value of the cost to complete contractual obligations for which funds have already been received. Deferred revenues at December 31, 2010 represent amounts billed to the customer in excess of amounts earned.

Revenues for direct response marketing services are recognized from the Company's fixed price direct mail and marketing contracts based on the proportional performance method for specific projects.

Income Taxes - The Company estimates its actual current tax liability together with temporary differences resulting from differing treatment of items, such as net operating losses and depreciation, for tax and accounting purposes. These temporary differences result in deferred tax assets and liabilities. The Company must assess the likelihood that it will recover deferred tax assets from future taxable income and, to the extent it believes that recovery is not likely, establish a valuation allowance. To the extent the Company establishes a valuation allowance or increases this allowance in a period, it must include and expense the allowance within the tax provision in the consolidated statement of operations. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets.

As part of the process of preparing its consolidated financial statements, the Company is required to calculate the amount of income tax in each of the jurisdictions in which it operates. On a regular basis the amount of taxable income is reviewed by various federal, state and foreign taxing authorities. As such, the Company routinely provides reserves for unrecognized tax benefits for items that it believes could be challenged by these taxing authorities.

Long-Lived Assets - The Company assesses the impairment of property, plant and equipment and amortizable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Some factors the Company considers important that could trigger an impairment review include the following:

• Significant underperformance relative to expected historical or projected future operating results;

• Significant changes in the manner of use of these assets or the strategy for the Company's overall business; and

• Significant negative industry or economic trends.

When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, it measures the impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with current market expectations. Significant assumptions requiring judgment are required to determine future cash flows, including but not limited to the estimated remaining useful life of the asset, future revenue streams and future expenditures to maintain the existing service potential of the asset. The Company re-evaluates the useful life of these assets at least annually to determine if events and circumstances continue to support their recorded useful lives. Assets held for sale are carried at the lower of carrying amount or fair value, less estimated costs to sell such assets.

Goodwill and Acquired Intangible Assets - Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets acquired. Acquired intangibles are recorded at fair value as of the date acquired. Goodwill and other intangibles determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired, such as a significant adverse change in the business climate.

The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of the Company's reporting units. In 2010, the Company reduced the number of reporting units from four to three as a result of the integration of two former reporting units into a single reporting unit. The Company's reporting units are now the same as its reportable segments.

The Company utilizes both the income and market approaches to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit's estimated cost of equity and debt ("cost of capital") derived using, both known and estimated, customary

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market metrics. The Company performs sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies; evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies; and applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. The Company weights the results of the income and market approaches equally, except where guideline companies are not similar enough to provide a reasonable value using the market approach. When that occurs, the market approach is weighted less than the income approach.

If the estimated fair value of a reporting unit is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of the Company's "implied fair value" requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to the corresponding carrying value.

The Company measures impairment of its indefinite-lived tradename based on the relief-from-royalty-method. Under the relief-from-royalty method of the income approach, the value of an intangible asset is determined by quantifying the cost savings a company obtains by owning, as opposed to licensing, the intangible asset. Assumptions about royalty rates are based on the rates at which similar tradenames are licensed in the marketplace. The Company also re-evaluates the useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life.

The annual impairment evaluations for goodwill and the indefinite-lived intangible asset involve significant estimates made by management. The discounted cash flow analyses require various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Changes in estimates could have a material impact in the carrying amount of goodwill and the indefinite-lived intangible asset in future periods.

Intangible assets that are deemed to have a finite life are amortized over their estimated useful life generally using accelerated methods that are based on expected cash flows. They are also evaluated for impairment as discussed above in "Long-Lived Assets."

Contingent Consideration Arrangements - The Company has entered into contingent consideration arrangements in conjunction with recent acquisitions. These arrangements are in the form of earn-out agreements with payments based on the achievement of certain revenue targets over specified time periods after the date of the acquisition. The fair value of these contingent consideration arrangements is recorded as a liability on the date of the acquisition, except for arrangements that are considered to be employee compensation for services rendered. In those cases, the fair value is recorded as a liability and compensation expense ratably over the requisite service period. The fair value of these arrangements is subject to remeasurement as of each balance sheet date.

The fair value of each arrangement is estimated utilizing a discounted cash flow analysis. The analysis considers, among other things, estimates of future revenues which involve significant estimates by management. Changes in estimates of revenues could have a material effect on the fair value of liabilities for contingent consideration arrangements with any changes in fair value being recognized in net income.

Contingencies and Indemnification Agreements - The Company records the estimated effects of various conditions, situations or circumstances involving uncertain outcomes. These events are "contingencies," and the accounting for such events follows accounting guidance for contingencies.

The accrual of a contingency involves considerable judgment by management. The Company uses internal expertise and consults with outside experts, as necessary, to help estimate the probability that the Company has incurred a loss and the amount (or range) of the loss. When evaluating the need for an accrual or a change in an existing accrual, the Company considers whether it is reasonably probable to estimate an outcome for the contingency based on its experience, any experience of others facing similar contingencies of which the Company is aware and the particulars of the circumstances creating the contingency. See Item 3. Legal Proceedings; and Note 16 - Commitments and Contingencies to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Postretirement Benefits - The Company sponsors unfunded defined benefit postretirement plans that cover certain former salaried and non-salaried employees. One postretirement benefit plan provides healthcare benefits and the other provides life insurance benefits. The Company consults with outside actuaries who use several statistical and other factors that attempt to estimate future events to calculate the expense and liability related to the plans. These factors include assumptions about the discount rate within certain guidelines. In addition, the Company's actuarial consultants also use subjective factors such as

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withdrawal and mortality rates and the expected healthcare cost trend rate to estimate these factors.

The actuarial assumptions used by the Company may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, higher or lower healthcare inflation rates or longer or shorter life spans of participants, among other things. Differences from these assumptions may result in a significant difference with the amount of postretirement benefits expense and liability that the Company recorded.

Derivative Financial Instruments - The Company uses derivative financial instruments to manage interest rate risk related to a portion of its long-term debt. The Company recognizes all derivatives at fair value as either assets or liabilities on the consolidated balance sheets and changes in the fair values of such instruments are recognized in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, the Company recognizes the changes in fair value of these instruments in other comprehensive income (loss) until the underlying debt instrument being hedged is settled or the Company determines that the specific hedge accounting criteria are no longer met.

On the date the interest rate derivative contract is entered into, the Company designates the derivative as either a fair value hedge or a cash flow hedge. The Company formally documents the relationship between hedging instruments and the hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. The Company links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. The Company links all hedges that are designated as cash flow hedges to forecasted transactions or to liabilities on the balance sheet. The Company also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. If an existing derivative were to become not highly effective as a hedge, the Company would discontinue hedge accounting prospectively. The Company assesses the effectiveness of the hedge based on total changes in the hedge's cash flows at each payment date as compared to the change in the expected future cash flows on the long-term debt.

Accounting Guidance

See Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K regarding the impact of recently adopted and recently issued accounting guidance on the Company's financial condition and results of operations.

Off-Balance Sheet Arrangements

It has not been the Company's practice to enter into off-balance sheet arrangements. In the normal course of business the Company periodically enters into agreements that incorporate general indemnification language. These indemnifications encompass such items as intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third-party claim. There has historically been no material losses related to such indemnifications, and the Company does not expect any material adverse claims in the future.

The Company is not engaged in any transactions, arrangements or other relationships with any unconsolidated entity or other third party that is reasonably likely to have a material effect on its consolidated results of operations, financial position or liquidity. In addition, the Company has not established any special purpose entity.

Asset Impairments

Changes in estimates and assumptions used in the Company's financial projections resulting from the factors discussed above for any of the Company's business segments could have a material impact on the fair value of goodwill, indefinite-lived intangible assets or other long-lived assets in future periods, which may result in material asset impairments, as more fully described in Item 1A, "Risk Factors - Weak economic conditions and further acceleration of check unit declines may continue to have an adverse effect on the Company's revenues and profitability and could result in additional impairment charges."

Restructuring

The Company has taken restructuring actions in the past in an effort to achieve manufacturing and contact center efficiencies and other cost savings. Past restructuring actions have related to both acquisitions and ongoing cost reduction initiatives and have included manufacturing plant closures, contact center closures and workforce rationalization. The Company anticipates future restructuring actions, where appropriate, to realize process efficiencies, to continue to align our cost structure with business needs and remain competitive in the marketplace. The Company expects to incur severance and severance-related costs, facilities closures costs and other costs such as inventory write-offs, training, hiring and travel in connection with future restructuring actions.

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Presentation of Financial Information

As a result of the change in ownership from the MacAndrews Acquisition, under Generally Accepted Accounting Principles ("GAAP"), the Company is required to present the operating results for the year ended December 31, 2011 separately for the predecessor and successor periods. The period prior to the MacAndrews Acquisition (January 1 to December 21, 2011) is presented below as ''Predecessor." The period subsequent to the MacAndrews Acquisition (December 22 to December 31, 2011) is presented below as ''Successor.'' In the following discussion, the combined results of operations from the Predecessor and Successor periods for the year ended December 31, 2011 are compared to the Predecessor results of operations for the year ended December 31, 2010. Although such presentation is not in accordance with GAAP, management believes this is the most informative way to present and discuss the Company's results of operations.

In addition, as a result of the MacAndrews Acquisition, the acquisition consideration has been allocated and pushed down to the Company. The effects of the acquisition accounting fair valuations are reflected in the Successor period for 2011. Those effects include but are not limited to increases in the carrying values of property, plant and equipment, intangible assets, and inventories and decreases in the carrying values of long-term debt and deferred revenues. The Successor period, December 22 to December 31, 2011, and future successor periods will include significantly higher interest expense, depreciation and amortization expense and lower revenues which will reduce net income significantly. However, since these effects are non-cash in nature, the Company's cash flow will not be adversely affected.

Consolidated Operating Results

The Company has organized its business along three reportable segments together with a corporate group for certain support services. The Company's operations are aligned on the basis of products, services and industry. Management measures and evaluates the reportable segments based on operating income.

In the tables below, dollars are in millions.

2011 Compared to 2010

The operating results for 2011 and 2010, as reflected in the accompanying consolidated statements of operations and described below, include the acquired GlobalScholar, Parsam, and Spectrum K12 businesses from the respective dates of acquisition (see Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Net Revenues:

	Successor		Predecessor			Combined			Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011			Year ended December 31, 2011			Year ended December 31, 2010
Consolidated Net Revenues:
Harland Clarke segment	$	24.3	$	1,110.6		$	1,134.9		$	1,191.2
Harland Financial Solutions segment	6.3		279.5			285.8			282.7
Scantron segment	4.4		196.8			201.2			203.7
Eliminations	—		(0.9		)	(0.9		)	(6.4		)
Total	$	35.0	$	1,586.0		$	1,621.0		$	1,671.2

Net revenues decreased by $50.2 million, or 3.0%, to $1,621.0 million in 2011 from $1,671.2 million in 2010.

Net revenues for the Harland Clarke segment decreased by $56.3 million, or 4.7%, to $1,134.9 million in 2011 from $1,191.2 million in 2010. The decrease was primarily due to volume declines, net of client additions and losses, in check and related products that reduced net revenues by $49.6 million, as well as a $10.9 million decrease resulting from a decline in sales of a solution to assist financial institutions with the implementation of new federal regulations in 2010. The decline in revenue was partially offset by an increase in revenues per unit that increased net revenues by $4.2 million. Net revenues in 2011 included revenue for a one-time payment of $6.5 million resulting from the loss of a client, a net increase of $1.7 million as compared to 2010. Net revenues included charges for non-cash fair value adjustments to deferred revenues and client incentives of $1.5 million related to the MacAndrews Acquisition.

Net revenues for the Harland Financial Solutions segment increased by $3.1 million, or 1.1%, to $285.8 million in 2011 from $282.7 million in 2010. The increase was primarily due to incremental revenues of $5.9 million from the Parsam acquisition completed in December 2010, as well as a $3.0 million increase in software revenues from perpetual license agreements, a $2.3 million increase in early termination fees and a $1.7 million increase in services revenues from new clients. The increases were partially offset by a non-cash change in the recognition of revenue for certain product lines due to

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undelivered elements within multiple-element contracts for those product lines, which reduced net revenues by $4.4 million. In addition, there was a $3.1 million decrease in maintenance revenues driven by industry trends to hosted versus in-house solutions and customers converting from enterprise to term agreements. Net revenues in 2011 included charges for non-cash fair value acquisition accounting adjustments to deferred revenue of $1.0 million related to the Parsam acquisition and $2.0 million related to the MacAndrews Acquisition.

Net revenues for the Scantron segment decreased by $2.5 million, or 1.2%, to $201.2 million in 2011 from $203.7 million in 2010. The decrease was primarily due to a decline in the sales of a survey solution to assist financial institutions with the implementation of new federal regulations in 2010 that reduced net revenues by $5.6 million, volume declines in sales of forms that decreased net revenues by $4.5 million, declines in survey services of $2.5 million and a reduction in sales of a web-based solution that reduced net revenues by $2.0 million. These decreases were partially offset by the acquisitions of GlobalScholar and Spectrum K12, which contributed incremental net revenues of $10.2 million and an increase in field services installations, which contributed $2.7 million in net revenues. Net revenues in 2011 included charges for non-cash fair value acquisition accounting adjustments to deferred revenue of $8.8 million related to the GlobalScholar and Spectrum K12 acquisitions and $0.5 million related to the MacAndrews Acquisition. In addition, as further discussed in "Economic and Other Factors Affecting the Businesses of the Company," GlobalScholar and Spectrum K12 have not established VSOE of fair value for their multiple-element contracts and also have contracts with substantive customer acceptance provisions, resulting in a substantial deferral of revenues into future periods. Deferred revenue related to GlobalScholar and Spectrum K12 increased by $28.9 million during 2011.

Elimination of net revenues decreased to $0.9 million in 2011 from $6.4 million in 2010 primarily due to intersegment sales from the Scantron segment to the Harland Clarke segment in 2010. These intersegment sales were related to solutions that assisted financial institutions with the implementation of changes to federal regulations during 2010.

Cost of Revenues:

	Successor		Predecessor			Combined			Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011			Year ended December 31, 2011			Year ended December 31, 2010
Consolidated Cost of Revenues:
Harland Clarke segment	$	20.6	$	680.6		$	701.2		$	730.9
Harland Financial Solutions segment	3.3		115.5			118.8			121.7
Scantron segment	3.4		136.0			139.4			112.3
Eliminations	—		(0.9		)	(0.9		)	(6.4		)
Total	$	27.3	$	931.2		$	958.5		$	958.5

Cost of revenues were unchanged in 2011 compared to 2010.

Cost of revenues for the Harland Clarke segment decreased by $29.7 million, or 4.1%, to $701.2 million in 2011 from $730.9 million in 2010. The decrease in cost of revenues was primarily due to decreases in depreciation and amortization expense of $11.6 million, labor cost reductions of $9.3 million primarily resulting from restructuring activities, lower delivery, materials and other variable overhead expenses of $9.2 million resulting from lower volumes and a decrease in other overheads of $4.4 million. Cost of revenues in 2011 also included an increase of $1.8 million for depreciation and amortization and a charge of $3.3 million for non-cash fair value adjustments to inventory, which will not recur, related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Harland Clarke segment was 61.8% in 2011 as compared to 61.4% in 2010.

Cost of revenues for the Harland Financial Solutions segment decreased by $2.9 million, or 2.4%, to $118.8 million in 2011 from $121.7 million in 2010. The decrease in cost of revenues was primarily due to decreases in depreciation and amortization expense of $2.5 million, telecom expense of $1.7 million, occupancy costs of $1.2 million, and labor costs of $1.3 million. The decrease in telecom was a result of renegotiated communications contracts, the decrease in occupancy expense was related to restructuring and consolidation of facilities and the decrease in labor expense was a result of restructuring activities and lower benefits expense. The decrease in cost of revenues was partially offset by costs of $1.9 million associated with the Parsam acquisition completed in December 2010. Cost of revenues in 2011 also included an increase of $0.3 million for depreciation and amortization related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 41.6% in 2011 as compared to 43.0% in 2010.

Cost of revenues for the Scantron segment increased by $27.1 million, or 24.1%, to $139.4 million in 2011 from $112.3 million in 2010. The increase was primarily due to costs of $28.9 million associated with the businesses acquired in the Spectrum K12 and GlobalScholar acquisitions including $17.1 million in amortization expense in 2011 resulting from

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intangible assets recorded in connection with these acquisitions. These costs were partially offset by a decrease of $1.2 million in other amortization expense. Cost of revenues in 2011 also included a decrease of $0.7 million for depreciation and amortization and a charge of $0.3 million for non-cash fair value adjustments to inventory, which will not recur, related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Scantron segment was 69.3% in 2011 as compared to 55.1% in 2010. The increase in cost of revenues as a percentage of revenues were primarily due to the amortization expense and other costs associated with the acquisitions, non-cash acquisition accounting adjustments that reduced revenue by $8.8 million and the deferral of revenue for certain amounts billed and collected as further described above in the Net Revenues section.

Elimination of cost of revenues decreased to $0.9 million in 2011 from $6.4 million in 2010 primarily due to intersegment sales from the Scantron segment to the Harland Clarke segment in 2010. These intersegment sales were related to solutions that assisted financial institutions with the implementation of changes to federal regulations during 2010.

Selling, General and Administrative Expenses:

	Successor		Predecessor		Combined		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011		Year ended December 31, 2011		Year ended December 31, 2010
Consolidated Selling, General and Administrative Expenses:
Harland Clarke segment	$	4.3	$	180.0	$	184.3	$	206.3
Harland Financial Solutions segment	3.9		109.5		113.4		109.6
Scantron segment	2.4		89.0		91.4		58.6
Corporate	0.3		14.8		15.1		15.2
Total	$	10.9	$	393.3	$	404.2	$	389.7

Selling, general and administrative expenses increased by $14.5 million, or 3.7%, to $404.2 million in 2011 from $389.7 million in 2010.

Selling, general and administrative expenses for the Harland Clarke segment decreased by $22.0 million, or 10.7%, to $184.3 million in 2011 from $206.3 million in 2010. The decrease was primarily due to labor cost reductions of $10.6 million mostly resulting from restructuring activities, lower travel costs of $4.1 million, a decline in other general overhead expenses of $3.3 million, lower professional fees of $2.1 million and a decline in facility expenses of $1.4 million. Selling, general and administrative expenses in 2011 also included a benefit of $0.3 million for non-cash fair value adjustments to pre-paid advertising related to the MacAndrews Acquisition. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment was 16.2% in 2011 as compared to 17.3% in 2010. The decrease in selling, general and administrative expenses as a percentage of revenues was primarily a result of restructuring and other cost reduction activities.

Selling, general and administrative expenses for the Harland Financial Solutions segment increased by $3.8 million, or 3.5%, to $113.4 million in 2011 from $109.6 million in 2010. The increase was primarily due to costs of $3.1 million associated with the business acquired in the Parsam acquisition completed in December 2010 and expanded selling efforts, which increased travel expenses by $1.3 million. Partially offsetting these increases was a decrease in professional fees of $1.1 million and a decrease in compensation expense of $1.1 million related to an incentive agreement for an acquisition in 2007. Selling, general and administrative expenses in 2011 also included an expense of $0.7 million for non-cash fair value adjustments related to the MacAndrews Acquisition. Selling, general and administrative expenses as a percentage of revenues for the Harland Financial Solutions segment was 39.7% in 2011 as compared to 38.8% in 2010.

Selling, general and administrative expenses for the Scantron segment increased $32.8 million, or 56.0%, to $91.4 million in 2011 from $58.6 million in 2010. The increase was primarily due to costs of $30.8 million associated with the businesses acquired in the Spectrum K12 and GlobalScholar acquisitions. Selling, general and administrative expenses as a percentage of revenues for the Scantron segment was 45.4% in 2011 as compared to 28.8% in 2010. The increase in selling, general and administrative expenses as a percentage of revenues was primarily due to costs associated with the acquisitions, non-cash acquisition accounting adjustments that reduced revenue by $9.3 million and the deferral of revenue for certain amounts billed and collected, as further described above in the Net Revenues section and increased product development expenses.

Corporate selling, general and administrative expenses decreased $0.1 million, or 0.7%, to $15.1 million in 2011 from $15.2 million in 2010 primarily due to decreases in general overhead costs.

Revaluation of Contingent Consideration

Operating expenses decreased by $24.3 million in 2011 due to decreases in the fair value of accrued contingent

33

consideration related to the GlobalScholar, Spectrum K12, Parsam and SubscriberMail acquisitions, which resulted from 2011 actual and 2012 projected revenues below the threshold amounts that would trigger a payment. Operating expenses increased by $0.3 million in 2010 due to an increase in the fair value of accrued contingent consideration related to the Spectrum K12 acquisition, which resulted from accruals for the incentive compensation component of the arrangement.

Asset Impairment Charges

During 2011, the Company recorded non-cash impairment charges of $111.0 million for the Scantron segment and $0.6 million for the Harland Clarke segment. The impairment charges for the Scantron segment were primarily related to the annual impairment tests for Scantron's goodwill and indefinite-lived tradename. The impairment charges for the Harland Clarke segment primarily related to assets that were determined to have limited future use. During 2010, the Company recorded non-cash impairment charges of $3.7 million for the Harland Clarke segment primarily related to the abandonment of a development project, an adjustment to the carrying value of certain held for sale facilities to reflect an updated estimate for the fair values less costs to sell and restructuring related impairments of property, plant and equipment.

See Notes 5, 6, 7 and 13 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these asset impairment charges.

Restructuring Costs

The Company has adopted plans to strengthen operating margins and leverage incremental synergies within the printing plants, contact centers and selling, general and administrative areas by relying on the Company's shared services capabilities and reorganizing certain operations and sales and support functions.

During 2011, the Company recorded restructuring costs of $7.7 million for the Harland Clarke segment and Corporate, $0.4 million for the Harland Financial Solutions segment and $4.5 million for the Scantron segment related to these plans. During 2010, the Company recorded restructuring costs of $12.3 million for the Harland Clarke segment and Corporate, $2.8 million for the Harland Financial Solutions segment and $7.2 million for the Scantron segment related to these plans (see Note 15 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Interest Income

Interest income was $0.4 million in 2011 as compared to $0.7 million in 2010. The decrease in interest income was primarily due to decreased interest on notes receivable from a related party (see Note 17 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Interest Expense

	Successor			Predecessor			Combined			Predecessor
	December 22 to December 31, 2011			January 1 to December 21, 2011			Year ended December 31, 2011			Year ended December 31, 2010
Interest Expense	$	(6.5	)	$	(104.8	)	$	(111.3	)	$	(115.5	)

Interest expense was $111.3 million in 2011 as compared to $115.5 million in 2010. The decrease in interest expense was primarily due to lower effective interest rates as well as a decrease in total debt outstanding, partially offset by acquisition accounting related fair value adjustments of $2.1 (see Note 11 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

(Loss) Gain on Early Extinguishment of Debt

During 2011, the Company extinguished debt with a total principal amount of $2.5 million with a carrying value of $1.6 million, after acquisition accounting related fair value adjustments, by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7 million, resulting in a loss of $0.1 million. The Company did not purchase any 2015 Senior Notes during the 2010 period (see Note 11 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Other Income, Net

Other income, net was $13.2 million in 2011 as compared to $0.1 million in 2010. The income in 2011 was due to gains on the sale of marketable securities. The income in 2010 was due to non-recurring miscellaneous income.

Provision for Income Taxes

The Company's effective tax rate was 61.7% in 2011 and 37.3% in 2010. The increase in the effective tax rate for 2011 was primarily due to the impairment of non-deductible goodwill partially offset by $22.8 million of reductions of contingent

34

consideration in 2011 related to acquisitions that are not subject to income taxes.

2010 Compared to 2009

The operating results for 2010 and 2009, as reflected in the accompanying consolidated statements of operations and described below, include the acquired Parsam, Spectrum K12, SubscriberMail and Protocol IMS businesses from the respective dates of acquisition (see Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Net Revenues:

	Year Ended December 31,
	2010			2009
Consolidated Net Revenues:
Harland Clarke segment	$	1,191.2		$	1,226.0
Harland Financial Solutions segment	282.7			278.9
Scantron segment	203.7			208.0
Eliminations	(6.4		)	(0.6		)
Total	$	1,671.2		$	1,712.3

Net revenues decreased by $41.1 million, or 2.4%, to $1,671.2 million in 2010 from $1,712.3 million in 2009.

Net revenues for the Harland Clarke segment decreased by $34.8 million, or 2.8%, to $1,191.2 million in 2010 from $1,226.0 million in 2009. The decrease was primarily due to volume declines in check and related products, the loss of a client and a decrease in revenues per unit, partially offset by a $27.0 million increase in revenues from the businesses acquired in the 2009 Acquisitions, the addition of new clients, and a one-time payment received as a result of the loss of a client. Revenues from new client additions more than offset lost revenues from client losses. Net revenues in the 2010 period included charges of $0.6 million for non-cash fair value acquisition accounting adjustments to deferred revenue related to the SubscriberMail acquisition.

Net revenues for the Harland Financial Solutions segment increased by $3.8 million, or 1.4%, to $282.7 million in 2010 from $278.9 million in 2009. Increases in term license, maintenance, outsourced host processing revenues and early termination fees as well as revenues from the Parsam acquisition were partially offset by decreases in other license revenues and hardware sales.

Net revenues for the Scantron segment decreased by $4.3 million, or 2.1%, to $203.7 million in 2010 from $208.0 million in 2009. The decrease was primarily due to declines in forms, hardware and service maintenance revenues, partially offset by increases in revenues from web-based products and services for the education market, sales of a solution that assists financial institutions with the implementation of changes to federal regulations during 2010 regarding overdraft services provided to financial institution customers and revenues from the Spectrum K12 acquisition. Net revenues in the 2010 period included charges of $2.1 million for non-cash fair value acquisition accounting adjustments to deferred revenue primarily related to the Spectrum K12 acquisition.

Elimination of net revenues increased to $6.4 million in the 2010 period from $0.6 million in the 2009 period primarily due to intersegment sales from the Scantron segment to the Harland Clarke segment. These intersegment sales are related to solutions that assist financial institutions with the implementation of changes to federal regulations during 2010.

Cost of Revenues:

	Year Ended December 31,
	2010			2009
Consolidated Cost of Revenues:
Harland Clarke segment	$	730.9		$	764.3
Harland Financial Solutions segment	121.7			119.6
Scantron segment	112.3			114.4
Eliminations	(6.4		)	(0.6		)
Total	$	958.5		$	997.7

35

Cost of revenues decreased by $39.2 million, or 3.9%, to $958.5 million in 2010 from $997.7 million in 2009.

Cost of revenues for the Harland Clarke segment decreased by $33.4 million, or 4.4%, to $730.9 million in 2010 from $764.3 million in 2009. The decrease in cost of revenues was primarily due to labor cost reductions and decreases in depreciation and occupancy expenses, primarily resulting from restructuring activities. Additionally, lower volumes resulted in lower delivery, materials, and other variable overhead expenses. Decreases in cost of revenues were partially offset by increases resulting from the businesses acquired in the 2009 Acquisitions and by a $4.6 million increase in amortization expense resulting from the reclassification of the Harland Clarke tradename from an indefinite-lived to a definite-lived intangible asset in the fourth quarter of 2009. Cost of revenues as a percentage of revenues for the Harland Clarke segment was 61.4% in 2010 as compared to 62.3% in 2009.

Cost of revenues for the Harland Financial Solutions segment increased by $2.1 million, or 1.8%, to $121.7 million in 2010 from $119.6 million in 2009. The increase in cost of revenues was primarily due to a $1.7 million increase in amortization expense resulting from the reclassification of the Harland Clarke tradename from an indefinite-lived to a definite-lived intangible asset in the fourth quarter of 2009. Additional increases due to labor and related expenses and costs associated with the business acquired in the Parsam acquisition were offset by lower hardware and third-party license costs. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 43.0% in 2010 as compared to 42.9% in 2009.

Cost of revenues for the Scantron segment decreased by $2.1 million, or 1.8%, to $112.3 million in 2010 from $114.4 million in 2009. The decrease was primarily due to volume declines and labor cost reductions resulting from restructuring activities, partially offset by costs associated with the business acquired in the Spectrum K12 acquisition and an increase in delivery costs related to the Company's solution that assists financial institutions with the implementation of changes to federal regulations during 2010. Cost of revenues as a percentage of revenues for the Scantron segment was 55.1% in 2010 as compared to 55.0% in 2009.

Elimination of cost of revenues increased to $6.4 million in the 2010 period from $0.6 million in the 2009 period primarily due to intersegment costs from the Scantron segment to the Harland Clarke segment. These intersegment costs are related to solutions that assist financial institutions with the implementation of changes to federal regulations during 2010.

Selling, General and Administrative Expenses:

	Year Ended December 31,
	2010		2009
Consolidated Selling, General and Administrative Expenses:
Harland Clarke segment	$	206.3	$	206.6
Harland Financial Solutions segment	109.6		112.1
Scantron segment	58.6		55.9
Corporate	15.2		12.8
Total	$	389.7	$	387.4

Selling, general and administrative expenses increased by $2.3 million, or 0.6%, to $389.7 million in 2010 from $387.4 million in 2009.

Selling, general and administrative expenses for the Harland Clarke segment decreased by $0.3 million, or 0.1%, to $206.3 million in 2010 from $206.6 million in 2009. The decrease was primarily due to labor cost reductions resulting from restructuring activities and reductions in advertising and selling expenses, substantially offset by costs of the businesses acquired in the 2009 Acquisitions, investments in growth initiatives and an increase in travel expenses. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment was 17.3% in 2010 as compared to 16.9% in 2009.

Selling, general and administrative expenses for the Harland Financial Solutions segment decreased by $2.5 million, or 2.2%, to $109.6 million in 2010 from $112.1 million in 2009. The decrease was primarily due to labor cost reductions resulting from restructuring activities, a reduction in compensation expense related to an incentive agreement, and decreases in general overhead expenses and depreciation, partially offset by an increase in selling expenses, an increase in occupancy costs and costs associated with the business acquired in the Parsam acquisition. Selling, general and administrative expenses in the 2010 and 2009 periods included charges of $1.1 million and $3.5 million, respectively, for compensation expense related to an incentive agreement for an acquisition in 2007. Selling, general and administrative expenses as a percentage of revenues for the Harland Financial Solutions segment was 38.8% in 2010 as compared to 40.2% in 2009.

Selling, general and administrative expenses for the Scantron segment increased $2.7 million, or 4.8%, to $58.6 million in

36

2010 from $55.9 million in 2009. The increase was primarily due to costs associated with the business acquired in the Spectrum K12 acquisition and increases in management, sales and product development personnel in connection with investments in growth initiatives, partially offset by cost reductions resulting from restructuring activities and a decrease in integration expenses. Selling, general and administrative expenses as a percentage of revenues for the Scantron segment was 28.8% in 2010 as compared to 26.9% in 2009.

Corporate selling, general and administrative expenses increased $2.4 million, or 18.8%, to $15.2 million in 2010 from $12.8 million in 2009, primarily due to $2.2 million in transaction expenses related to merger and acquisition activities and increases in general overhead costs.

Revaluation of Contingent Consideration

Operating expenses increased by $0.3 million in 2010 due to an increase in the fair value of accrued contingent consideration related to the Spectrum K12 acquisition, which resulted from accruals for the incentive compensation component of the arrangement.

Asset Impairment Charges

During 2010, the Company recorded non-cash impairment charges of $3.7 million for the Harland Clarke segment primarily related to the abandonment of a development project, an adjustment to the carrying value of certain held for sale facilities to reflect an updated estimate for the fair values less costs to sell and restructuring related impairments of property, plant and equipment. During 2009, the Company recorded non-cash asset impairment charges of $33.6 million for the Harland Clarke segment, $10.6 million for the Harland Financial Solutions segment and $0.2 million for the Scantron segment, of which $44.2 million related to an impairment of the Harland Clarke tradename. This impairment resulted from the 2009 annual impairment test for indefinite-lived tradenames and the Company's decision to reclassify the Harland Clarke tradename to a definite life.

See Notes 5,6, 7 and 13 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these asset impairment charges.

Restructuring Costs

The Company adopted plans during 2008, 2009 and 2010 to strengthen operating margins and leverage incremental synergies within the printing plants, contact centers and selling, general and administrative areas by relying on the Company's shared services capabilities and reorganizing certain operations and sales and support functions.

During 2010, the Company recorded restructuring costs of $12.3 million for the Harland Clarke segment and Corporate, $2.8 million for the Harland Financial Solutions segment and $7.2 million for the Scantron segment related to these plans. During 2009, the Company recorded restructuring costs of $25.7 million for the Harland Clarke segment and Corporate, $3.8 million for the Harland Financial Solutions segment and $3.0 million for the Scantron segment related to these plans (see Note 15 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Interest Income

Interest income was $0.7 million in 2010 as compared to $1.0 million in 2009. The decrease in interest income was primarily due to decreased interest on notes receivable from a related party (see Note 17 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Interest Expense

Interest expense was $115.5 million in 2010 as compared to $136.9 million in 2009. The decrease in interest expense was primarily due to lower effective interest rates as well as a decrease in total debt outstanding.

(Loss) Gain on Early Extinguishment of Debt

During 2009, the Company extinguished debt with a total principal amount of $136.9 million by purchasing 2015 Senior Notes in individually negotiated transactions for an aggregate purchase price of $67.6 million, resulting in a gain of $65.0 million after the write-off of $4.3 million of unamortized deferred financing fees related to the extinguished debt. The Company did not purchase any 2015 Senior Notes during the 2010 period (see Note 11 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Other Income, Net

Other income, net was $0.1 million in 2010 and 2009 primarily due to non-recurring miscellaneous income.

37

Provision for Income Taxes

The Company's effective tax rate was 37.3% in 2010 and 37.5% in 2009. The decrease was primarily due to an increased benefit from the domestic production activities deduction, partially offset by a charge in 2010 for the change in federal tax law relating to the deductibility of retiree prescription drug subsidies and the release of a reserve for uncertain tax positions in 2010 that was less than a similar release in 2009.

Related Party Transactions

Notes Receivable

On December 27, 2011, the Company entered into a revolving credit agreement with its indirect parent, MacAndrews, whereby MacAndrews could borrow an amount not exceeding $30.0 million. The facility is unsecured, bears interest at LIBOR plus 2% and matures in December 2013. The facility was drawn in full by MacAndrews on December 27, 2011 and remained outstanding at December 31, 2011.

In 2008, Harland Clarke Holdings acquired the senior secured credit facility and outstanding note of Delphax Technologies, Inc. ("Delphax"), the supplier of Imaggia printing machines and related supplies and service for the Harland Clarke segment. The senior secured credit facility and note were paid in full and cancelled on November 9, 2011. The senior secured credit facility was comprised of a revolving credit facility of up to $14.0 million, subject to borrowing limitations set forth therein that originally matured in September 2011. Contemporaneous with its acquisition of the senior secured credit facility and the note, Harland Clarke Holdings also acquired 250,000 shares of Delphax common stock from the previous holder of the Delphax note. In May 2011, the note was restated to set the interest rate to 8.0%, effective October 1, 2010, and to require the repayment of $1.0 million of principal in 2011 and the senior secured credit facility was extended to mature in September 2012.

During 2011, the Company received $4.0 million in payments on the note, fully repaying the principal balance of the note. During 2010, the Company received $3.0 million in payments on the note, bringing the principal balance of the note and the senior secured credit facility to $4.0 million and $0.0 million, respectively, at December 31, 2010. Interest income of $0.2 million, $0.4 million and $0.8 million was recorded during 2011, 2010 and 2009, respectively.

Other

The Company expensed $2.7 million annually during 2011, 2010 and 2009 for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses and accrued expenses.

In 2011 and 2010, the Company paid cash dividends of $61.3 million and $31.2 million, respectively, to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements.

As discussed in Note 8 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K, the Company made net payments to and had net receivables with M & F Worldwide related to a tax sharing agreement. The Company also had a net payable to MacAndrews related to a tax sharing agreement.

The Company participates in MacAndrews directors and officers insurance program, which covers the Company as well as MacAndrews and its other affiliates. MacAndrews indirectly beneficially owned, as of December 31, 2011, all of the outstanding common stock of M & F Worldwide, the Company's indirect parent. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews for its allocable portion of the premiums for such coverage, which the Company believes is more favorable than the premiums the Company could secure were it to secure its own coverage. At December 31, 2011 and 2010, the Company recorded prepaid expenses of $0.0 million and $0.1 million, respectively, relating to the directors and officers insurance program in the accompanying consolidated balance sheets. The Company paid $0.1 million, $0.0 million and $0.1 million to MacAndrews in 2011, 2010 and 2009, respectively, under the insurance program.

Liquidity and Capital Resources

Cash Flow Analysis

The following table summarizes our historical cash flows:

38

	Successor			Predecessor			Combined			Predecessor
(In millions)	December 22 to December 31, 2011			January 1 to December 21, 2011			Year ended December 31, 2011			Year ended December 31, 2010
Cash Provided By (Used In):
Operating activities	$	20.0		$	220.0		$	240.0		$	273.0
Investing activities	(88.0		)	(182.3		)	(270.3		)	(73.9		)
Financing activities	(20.7		)	(64.0		)	(84.7		)	(51.5		)

The Company's net cash provided by operating activities for the year ended December 31, 2011 was $240.0 million as compared to $273.0 million during the year ended December 31, 2010. The decrease in net cash provided by operating activities of $33.0 million was due to a decrease in cash flow from operations and changes in working capital. The decrease in cash flow from operations was primarily due to a decrease in net income after excluding asset impairments, a gain from the revaluation of contingent consideration arrangements and a gain on the sale of marketable securities. The changes in working capital were primarily due to payments under long-term incentive compensation plans of $17.5 million at the end of the plans' three-year cycle and increases in payments for other annual incentive compensation plans of $4.0 million, partially offset by a $10.8 million increase in deferred revenues during 2011 compared to 2010.

The Company's net cash used in investing activities was $270.3 million for year ended December 31, 2011 as compared to $73.9 million for the year ended December 31, 2010. The increase in cash used in investing activities during 2011 compared to 2010 was due to increased payments for acquisitions of $73.9 million, higher capital expenditures of $20.0 million and an $11.3 million decrease in proceeds from the sale of marketable securities. The Company also purchased marketable securities for $56.5 million and funded a related party note receivable in the amount of $30.0 million in 2011.

The Company's net cash used in financing activities was $84.7 million for the year ended December 31, 2011 as compared to $51.5 million for the year ended December 31, 2010. The increase in net cash used in financing activities was primarily due to $30.1 million increase in dividends paid to parent in 2011 compared to 2010.

The Company's Consolidated Contractual Obligations

The Company has certain cash obligations and other commercial commitments which will affect its short-term liquidity. At December 31, 2011, such obligations and commitments, which do not include options for renewal, were as follows:

	Payments Due by Period
(In millions)	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Revolving credit facilities(1)(7)	$	—	$	—	$	—	$	—	$	—
Senior secured term loans(2)(7)	1,719.0		18.0		1,701.0		—		—
Senior notes(3)(7)	475.6		—		—		475.6		—
Interest on long-term debt(4)(7)	258.4		95.6		148.6		14.2		—
Capital lease obligations and other indebtedness	4.2		1.6		2.4		0.2		—
Operating lease obligations	92.7		25.9		38.1		17.0		11.7
Raw material purchase obligations	26.2		25.9		0.3		—		—
Other long-term liabilities	15.6		0.1		8.2		1.6		5.7
Client incentive payments(5)	76.7		33.9		33.0		9.8		—
Other purchase obligations(6)	31.2		11.9		19.2		0.1		—
Postretirement benefits payments	6.3		0.6		1.2		1.3		3.2
Contingent consideration arrangements(8)	0.5		—		0.5		—		—
Total	$	2,706.4	$	213.5	$	1,952.5	$	519.8	$	20.6

___________

⁽¹⁾  Consists of our $100.0 million revolving credit facility, which will mature on June 28, 2013. See to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

⁽²⁾  $1,800.0 million senior secured term loan will mature on June 30, 2014 and the Company is required to make payments of principal in the amount of $18.0 million per year in equal quarterly installments. See to the accompanying consoli

39

dated financial statements included elsewhere in this Annual Report on Form 10-K.

⁽³⁾  The senior notes will mature in 2015 and include $271.3 million of fixed rate notes and $204.3 million of floating rate notes. See to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

⁽⁴⁾  Interest on long-term debt assumes that all floating rates of interest remain the same as those in effect at December 31, 2011 and includes the effect of the Company's interest rate derivative arrangements on future cash payments for the remaining period of those derivatives. The payments noted above also assume that the level of borrowing under the revolving credit facility remains at zero, as it was on December 31, 2011, and all mandatory payments are made.

⁽⁵⁾  Represents unpaid amounts under existing client contracts.

⁽⁶⁾  Purchase obligations include amounts due under contracts with third-party service providers. Such contracts are primarily for information technology services including license rights for mainframe software usage, voice and network data services and telecommunication services. We routinely issue purchase orders to numerous vendors for the purchase of inventory and other supplies. These purchase orders are generally cancelable with reasonable notice to the vendor. As such, these purchase orders are not included in the purchase obligations presented in the table above.

⁽⁷⁾  The credit facilities and senior notes include early repayment provisions if certain events occur, including excess cash flow payments with respect to the senior secured credit facilities. See to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Payments in the table above assume that only mandatory principal payments will be made and that there will be no prepayments.

⁽⁸⁾  Represents the recorded liabilities for contingent consideration arrangements as of December 31, 2011. See Notes  and to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

At December 31, 2011, the Company had a net deferred tax liability of $703.3 million. See Note 8 to the accompanying consolidated financial statements included elsewhere in this annual Report on Forma 10-K. Deferred tax liabilities are temporary differences between tax and financial statement basis of assets and do not directly relate to income taxes to be paid in the future. At December 31, 2011, the Company had unrecognized tax benefits of $10.9 million for which the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority. Thus, these liabilities have not been included in the contractual obligations table.

The Company's Credit Agreement

On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into senior secured credit facilities, which provided for a revolving credit facility of $100.0 million maturing on June 28, 2013 and a $1,800.0 million term loan maturing on June 30, 2014. Portions of the Company's revolving credit facility are available for the issuance of letters of credit and swing line loans.

All obligations under the credit facilities are guaranteed by the Company's direct parent and by each of the Company's direct and indirect present domestic subsidiaries and future wholly-owned domestic subsidiaries. The credit facilities are secured by a perfected first priority security interest in substantially all of the Company and the guarantors' assets, other than voting stock in excess of 65.0% of the outstanding voting stock of each direct foreign subsidiary and certain other excluded property.

The term loan facility has an aggregate principal amount of $1,800.0 million which was drawn in full on May 1, 2007. The term loan facility is required to be repaid in quarterly installments of $4.5 million until maturity. The term loan facility requires that a portion of the Company's excess cash flow (as defined in the senior secured credit facilities) be applied to prepay amounts borrowed thereunder, beginning in 2009 with respect to 2008. An excess cash flow payment of approximately $12.5 million will be paid in the first quarter of 2012 with respect to 2011 and will be applied against other mandatory payments due in 2012 under the terms of the facility. An excess cash flow payment of $3.5 million was paid in 2011 with respect to 2010 and applied against other mandatory payments due in 2011 under the terms of the facility. No such excess cash flow payment was paid in 2010 with respect to 2009 and no such excess cash flow payment was paid in 2009 with respect to 2008. The balance of the term loan facility is due in full in 2014.

Loans under the credit facilities bear, at the Company's option, interest at:

• a rate per annum equal to the higher of (a) the prime rate of Credit Suisse and (b) the Federal Funds rate plus 0.50%, in each case plus an applicable margin of 1.50% per annum for revolving loans and for term loans; or

• a rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin of 2.50% per annum for revolving loans and for term loans.

The credit facilities have a commitment fee of 0.50% for the unused portion of the revolver and a weighted average

40

commitment fee of 2.52% for issued letters of credit. Interest rate margins and commitment fees under the revolver are subject to reduction in increments based upon the Company achieving certain consolidated leverage ratios.

The credit facilities contain representations and warranties customary for a senior secured credit facility. They also contain affirmative and negative covenants customary for a senior secured credit facility, including, among other things, restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale leaseback transactions. The credit facilities also require the Company to maintain a certain maximum consolidated leverage ratio for the benefit of the lenders under the revolver only.

As of December 31, 2011, $1,719.0 million principal amount was outstanding under the term loan facility. As of December 31, 2011, no amounts were drawn under the Company's $100.0 million revolving credit facility, and the Company had $92.0 million available for borrowing (giving effect to the issuance of $8.0 million of letters of credit).

During 2009 and 2010, the Company entered into interest derivative transactions in the form of three-year interest rate swaps with notional amounts totaling $855.0 million currently outstanding, which swap the underlying variable rate for fixed rates ranging from 1.264% to 2.353%. Those derivatives are being accounted for as cash flow hedges. The purpose of the transactions is to limit the Company's risk on a portion of its variable rate term loan.

The Company's Senior Notes

On May 1, 2007, the Company issued $305.0 million aggregate principal amount of Senior Floating Rate Notes due 2015 (the "Floating Rate Notes") and $310.0 million aggregate principal amount of 9.50% Senior Fixed Rate Notes due 2015 (the "Fixed Rate Notes" and, together with the Floating Rate Notes, the "2015 Senior Notes"). The 2015 Senior Notes mature on May 15, 2015. The Fixed Rate Notes bear interest at a rate per annum of 9.50%. The Floating Rate Notes bear interest at a rate per annum equal to the Applicable LIBOR Rate (as defined in the indenture governing the 2015 Senior Notes (the "Indenture")), subject to a floor of 1.25%, plus 4.75%. The Senior Notes are unsecured and are therefore effectively subordinated to all of the Company's senior secured indebtedness, including outstanding borrowings under the senior secured credit facilities. The Indenture contains customary restrictive covenants, including, among other things, restrictions on the Company's ability to incur additional debt, pay dividends and make distributions, make certain investments, repurchase stock, incur liens, enter into transactions with affiliates, enter into sale and lease back transactions, merge or consolidate and transfer or sell assets. The Company must offer to repurchase all of the 2015 Senior Notes upon the occurrence of a "change of control," as defined in the Indenture, at a purchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. The Company must also offer to repurchase the 2015 Senior Notes with the proceeds from certain sales of assets, if it does not apply those proceeds within a specified time period after the sale, at a purchase price equal to 100% of their aggregate principal amount, plus accrued and unpaid interest.

The Senior Notes are guaranteed fully and unconditionally, jointly and severally by each of the Company's existing subsidiaries other than unrestricted and certain immaterial subsidiaries, all of which are wholly owned by the Company.

During 2011, the Company extinguished debt with a total principal amount of $2.5 million by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7 million. During 2009, the Company extinguished debt with a total principal amount of $136.9 million by purchasing 2015 Senior Notes in individually negotiated transactions for an aggregate purchase price of $67.6 million. The Company did not purchase any 2015 Senior Notes during 2010.

Impact of Inflation

The Company presents its results of operations and financial condition based upon historical cost. While it is difficult to measure accurately the impact of inflation due to the imprecise nature of the estimates required, the Company believes that, for the three most recent fiscal years, the effects of inflation, if any, on its results of operations and financial condition have been minor.

Liquidity Assessment

The Company believes that its cash and cash equivalents, borrowings available under its credit agreements (as further discussed in Note 11 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K) and anticipated cash flow from operating activities will be sufficient to meet the Company's expected operating needs, investment and capital spending requirements and debt service requirements for the foreseeable future.

In addition to normal operating cash, working capital requirements and service of indebtedness, the Company also requires cash to fund capital expenditures, make contract acquisition payments to financial institution clients and enable cost reductions through restructuring projects as follows:

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• Capital Expenditures.  The Company's capital expenditures are primarily related to infrastructure investments, internally developed software, cost reduction programs, marketing initiatives and other projects that support future revenue growth. During the years ended December 31, 2011, 2010 and 2009, the Company incurred $58.6 million, $38.6 million and $42.2 million of capital expenditures and $0.3 million, $0.1 million and $0.3 million of capitalized interest, respectively. The Company's capital expenditures are estimated to be in the range of $50.0 million to $60.0 million for the year ending December 31, 2012.

• Contract Acquisition Payments.  During the years ended December 31, 2011, 2010 and 2009, the Company made $43.3 million, $39.6 million and $39.5 million of contract acquisition payments to its clients, respectively.

• Restructuring/Cost Reductions.  Restructuring accruals have been established for anticipated severance payments, costs related to facilities closures and other expenses related to the planned restructuring or consolidation of some of the Company's historical operations as well as related to certain acquisitions. During the years ended December 31, 2011, 2010 and 2009, the Company made $12.3 million, $14.4 million and $33.6 million of payments for restructuring, respectively.

The Company may also, from time to time, seek to use its cash to make acquisitions or investments, and also to retire or purchase its outstanding debt in open market purchases, in privately negotiated transactions, or otherwise. Such retirement or purchase of debt may be funded from the operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material. During 2011, the Company extinguished debt with a total principal amount of $2.5 million by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7 million. During 2009, the Company extinguished debt with a total principal amount of $136.9 million by purchasing 2015 Senior Notes in individually negotiated transactions for an aggregate purchase price of $67.6 million. The Company did not purchase any 2015 Senior Notes during 2010. The Company also used cash on hand to fund the aggregate $61.2 million, net of cash acquired, expended for both the Spectrum K12 and Parsam acquisitions in 2010 and the $134.9 million, net of cash acquired, expended for the GlobalScholar acquisition on January 3, 2011.

CashFlow Risks

The Company's ability to meet its debt service obligations and reduce its total debt will depend upon its ability to generate cash in the future which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond the Company's control. The Company may not be able to generate sufficient cash flow from operations or borrow under its credit facility in an amount sufficient to repay its debt or to fund other liquidity needs. As of December 31, 2011, the Company had $92.0 million of availability under its revolving credit facility (after giving effect to the issuance of $8.0 million of letters of credit). The Company may also use its revolving credit facility to fund potential future acquisitions or investments. If future cash flow from operations and other capital resources is insufficient to pay the Company's obligations as they mature or to fund its liquidity needs, the Company may be forced to reduce or delay business activities and capital expenditures, sell assets, obtain additional debt or equity capital or restructure or refinance all or a portion of its debt on or before maturity. The Company may not be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of the Company's existing and future indebtedness may limit its ability to pursue any of these alternatives.

Honeywell Indemnification

Certain of the intermediate holding companies of the predecessor of the Company had issued guarantees on behalf of operating companies formerly owned by these intermediate holding companies, which operating companies are not part of the Company's current businesses. In the stock purchase agreement executed in connection with M & F Worldwide's acquisition of the Company in 2005, Honeywell International Inc. ("Honeywell") agreed to use its commercially reasonable efforts to assume, replace or terminate such guarantees and indemnify M & F Worldwide and its affiliates, including the Company and its subsidiaries, with respect to all liabilities arising under such guarantees. Honeywell has been fulfilling its obligation to indemnify M & F Worldwide and its affiliates with regard to the guarantees and certain tax matters. The Company believes it is remote that it will incur any material liability related to the guarantees and tax matters.

Other

A series of commercial borrowers in various states that allegedly obtained loans from financial institutions employing HFS'sLaserProsoftware have commenced individual or class actions against their financial institutions alleging that the loans were deceptive or usurious in that they failed to disclose properly the effect of the "365/360" method of calculating interest. In some cases, the financial institutions have made warranty claims against HFS related to these actions. Some of the actions commenced by the commercial borrowers have been dismissed, and many of the remainder, and the related

42

warranty claims, are at early stages, so that the likely progress of those pending matters is not yet clear. The Company has not accepted any of the warranty claims. One of the financial institutions has commenced an arbitration against the Company relating to a commercial borrower claim against it under the terms of the Company's agreement with the financial institution, and another financial institution has filed a motion in the action brought by its commercial borrower seeking to assert a third-party claim against the Company. In the latter action, the Company has moved to stay the third-party claim pending arbitration. At the appropriate time, the Company intends to deny liability to both financial institutions, but the Company is not able at this early stage to assess whether it may have any liability to either institution or the amount of any such liability, but it believes it is remote that either claim will result in material liability. Due to the preliminary nature of the remaining matters, the Company believes it is remote that any of the remaining warranty claims will result in any material liability for the Company.

Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, environmental matters, employment matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations.

Forward-Looking Statements

This Annual Report on Form 10-K for the year ended December 31, 2011, as well as certain of the Company's other public documents and statements and oral statements, contains forward-looking statements that reflect management's current assumptions and estimates of future performance and economic conditions. When used in this Annual Report on Form 10-K, the words "believes," "anticipates," "plans," "expects," "intends," "estimates" or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this Annual Report on Form 10-K. Although the Company believes that its plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, such plans, intentions or expectations may not be achieved. Such forward-looking statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those projected, stated or implied by the forward-looking statements. In addition, the Company encourages investors to read the summary of the Company's critical accounting policies and estimates included in this Annual Report on Form 10-K under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates."

In addition to factors described in the Company's SEC filings and others, the following factors could cause the Company's actual results to differ materially from those expressed in any forward-looking statements made by the Company:

• our substantial indebtedness;

• further adverse changes in or worsening of general economic and industry conditions, including the depth and length of the economic downturn and higher unemployment, which could result in more rapid declines in product sales of and/or pricing pressure on the Harland Clarke and Scantron segments, and reductions in information technology budgets which could result in adverse impacts on the Harland Financial Solutions segment;

• weak economic conditions and declines in the financial performance of our business that may result in material impairment charges, which could have a negative effect on the Company's earnings, total assets and market prices of the Company's outstanding securities;

• our ability to generate sufficient cash in the future that affects our ability to make payments on our indebtedness;

• our ability to incur substantially more debt that could exacerbate the risks associated with our substantial leverage;

• covenant restrictions under our indebtedness that may limit our ability to operate our businesses and react to market changes;

• increases in interest rates;

• the maturity of the paper check industry, including a faster than anticipated decline in check usage due to increasing use of alternative payment methods, decreased consumer spending and other factors and our ability to grow non-check related product lines;

• consolidation among financial institutions;

• adverse changes or failures or consolidation of the large financial institution clients on which we depend, resulting in

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decreased revenues and/or pricing pressure;

• intense competition in all areas of our businesses;

• our ability to successfully integrate and manage recent acquisitions as well as future acquisitions;

• our ability to implement any or all components of our business strategy;

• interruptions or adverse changes in our vendor or supplier relationships;

• increased production and delivery costs;

• fluctuations in the costs of raw materials and other supplies;

• our ability to attract, hire and retain qualified personnel;

• technological improvements that may reduce any advantage over other providers in our respective industries;

• our ability to protect customer or consumer data against data security breaches;

• changes in legislation relating to consumer privacy protection that could increase our costs or limit our future business opportunities;

• contracts with our clients relating to consumer privacy protection that could restrict our business;

• our ability to protect our intellectual property rights;

• our reliance on third-party providers for certain significant information technology needs;

• software defects or cyber attacks that could harm our businesses and reputation;

• sales and other taxes that could have adverse effects on our businesses;

• environmental risks;

• the ability of our Harland Financial Solutions segment to achieve organic growth;

• regulations governing the Harland Financial Solutions segment;

• our ability to develop new products for our Scantron segment and to grow Scantron's web-based education business;

• our ability to achieve VSOE of fair value for multiple-element arrangements for software businesses we have acquired or will acquire, which could affect the timing of recognition of revenue;

• changes in contingent consideration estimates related to acquisition earn-out arrangements;

• future warranty or product liability claims which could be costly to resolve and result in negative publicity;

• government and school clients' budget deficits, which could have an adverse impact on our Scantron segment;

• softness in direct mail response rates;

• lower than expected cash flow from operations;

• unfavorable foreign currency fluctuations;

• the loss of one of our significant customers;

• work stoppages and other labor disturbances; and

• unanticipated internal control deficiencies or weaknesses.

The Company encourages investors to read carefully the risk factors in the section entitled "Risk Factors" for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risks

The Company has exposure to market risk from changes in interest rates and foreign currency exchange rates, which could affect its business, results of operations and financial condition. The Company manages its exposure to these market risks through its regular operating and financing activities.

At December 31, 2011, the Company had $1,719.0 million principal amount of term loans outstanding under its credit agreement, $8.0 million principal amount of letters of credit outstanding under its revolving credit facility, $204.3

44

million principal amount of floating rate senior notes and $271.3 million principal amount of 9.50% fixed rate senior notes. All of these outstanding loans bear interest at variable rates, with the exception of the $271.3 million principal amount of fixed rate senior notes. Accordingly, the Company is subject to risk due to changes in interest rates. The Company believes that a hypothetical increase of 1 percentage point in the variable component of interest rates applicable to its principal amount of floating rate debt outstanding as of December 31, 2011 would have resulted in an increase in its annual interest expense of approximately $8.6 million, including the effect of the interest rate derivative transactions discussed below.

In order to manage its exposure to fluctuations in interest rates on a portion of the outstanding variable rate debt, the Company entered into interest rate derivative transactions in 2009 and 2010 in the form of swaps with notional amounts totaling $855.0 million currently outstanding as further described in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. These derivatives currently swap the underlying variable rates for fixed rates ranging from 1.264% to 2.353%.

As of December 31, 2011, the Company's net foreign currency market exposures were $20.0 million. This is the value of the equity of the investments in the foreign subsidiaries in Canada, India, Ireland and Israel. Since the exposures are not material, the Company does not generally hedge against foreign currency fluctuations.

A 10% appreciation in foreign currency exchange rates from the prevailing market rates would result in a $2.0 million increase in the related assets or liabilities. Conversely, a 10% depreciation in these currencies from the prevailing market rates would result in a $2.0 million decrease in the related assets or liabilities.

Item 8.  Financial Statements and Supplementary Data

See the financial statements and supplementary data listed in the accompanying Index to Consolidated Financial Statements and Financial Statement Schedules on page F-1 herein. Information required by other schedules called for under Regulation S-X is either not applicable or is included in the consolidated financial statements or notes thereto included elsewhere in this Annual Report on Form 10-K.

Item 9.  Changes in and Disagreements with Accountants on Accounting andFinancial Disclosure

None.

Item 9A.  Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13(a)-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of December 31, 2011. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2011.

There were no material changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2011 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Management's Report on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company's internal control over financial reporting includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate

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because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework.

Based on its assessment, management believes that, as of December 31, 2011, the Company's internal control over financial reporting was effective.

Item 9B.  Other Information

Not applicable.

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PART III

Item 10.  Directors, Executive Officers and Corporate Governance

Organizational Structure

Harland Clarke Holdings is organized along the following three business segments: Harland Clarke, Harland Financial Solutions and Scantron.

The following table sets forth information regarding our directors and executive officers as of March 21, 2012:

Name	Age	Position
Charles T. Dawson	63	President and Chief Executive Officer, Harland Clarke Holdings; Director
Peter A. Fera, Jr.	43	Executive Vice President and Chief Financial Officer, Harland Clarke Holdings and Harland Clarke
James D. Singleton	52	President and Chief Executive Officer, Harland Clarke
Raju M. Shivdasani	61	President and Chief Executive Officer, Harland Financial Solutions
John A. Lawler	52	President, Scantron
Paul G. Savas	49	Director
Barry F. Schwartz	62	Director

Charles T. Dawson was appointed President and Chief Executive Officer of Harland Clarke Holdings on September 27, 2007. Mr. Dawson was elected as a Director of Harland Clarke Holdings and appointed Chief Executive Officer of Harland Clarke on May 1, 2007. Mr. Dawson's experience with the operations of the Company led the Board of Directors to conclude that he should be a member of the Board of Directors. Mr. Dawson has over 30 years of experience in the security printing industry. Mr. Dawson also served as President of Harland Clarke from May 2007 to August 2009 and before that as President of Clarke American Corp. ("Clarke American") from April 2005 to May 2007. Previous roles at Clarke American included Executive Vice President/General Manager of Partnership Development from February 2003 to April 2005 and Senior Vice President/General Manager of the National Account/Securities/Business Development divisions from July 2000 to February 2003. Mr. Dawson was the Chief Executive Officer for Rocky Mountain Bank Note Company before joining Clarke American in 1992. Mr. Dawson was a director of M & F Worldwide until the consummation of the MacAndrews Acquisition.

Peter A. Fera, Jr. was appointed Executive Vice President and Chief Financial Officer of Harland Clarke Holdings on September 27, 2007. Mr. Fera was appointed Executive Vice President and Chief Financial Officer of Harland Clarke on May 1, 2007 and also served as Senior Vice President and Chief Financial Officer of Clarke American from April 2005 to April 2007. Previously, Mr. Fera was employed by Honeywell International, Inc. ("Honeywell") for seven years and held a variety of leadership positions in finance and marketing. Most recently he served as Chief Financial Officer for the Aircraft Landing Systems business of Honeywell from October 2003 to April 2005. At Honeywell, he also served as Director of Finance - Business Analysis and Planning from February 2002 to October 2003 and Global Marketing Manager from October 2000 to February 2002. Earlier in his career he held operational and engineering roles at General Electric Co.

James D. Singleton was appointed President and Chief Executive Officer of Harland Clarke on March 12, 2012. Mr. Singleton was appointed President of Harland Clarke on August 14, 2009 and previously served as Chief Operating Officer of Harland Clarke from October 5, 2008 to August 13, 2009 and Executive Vice President of Harland Clarke from May 2007 until October 2008 with responsibility for Sales, Marketing, and Customer Service and Sales Contact Centers. Mr. Singleton previously held other roles at Clarke American including Senior Vice President Partnership Development from January 2006 to May 2007, as well as a variety of positions in Sales and Marketing. Previous roles at Indalex Aluminum Solutions Inc. from November 2000 to January 2006 included Vice President and General Manager, Specialty Products, Business Unit President South, and Senior Vice President Sales Marketing and International.

Raju M. Shivdasani was appointed Chief Executive Officer of Harland Financial Solutions on March 12, 2012. Mr. Shivdasani was appointed President of Harland Financial Solutions on August 31, 2009. Mr. Shivdasani previously served as President of Enterprise Solutions for Harland Financial Solutions since August 2001. Prior to joining Harland Financial Solutions, Mr. Shivdasani was with Phoenix International, Inc. where he served as President and Chief Operating Officer from 1998 to 2001, and as Senior Vice President and President of the International Division from July 1996 to January 1998. Mr. Shivdasani was previously employed as the Group Executive Vice President for Fiserv, Inc. and with Citicorp Information Resources as President of CBS Worldwide. He also served on the IBM AS/400 Strategic Advisory Board from 1992 to 1994.

John A. Lawler was appointed President, Scantron Commercial Business Group on February 14, 2011, and President, GlobalScholar on September 1, 2011. Mr. Lawler has 24 years experience transforming and growing businesses in information

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services, education, and technology markets. Previously, Mr. Lawler served as CEO of Triumph Learning, a New York-based educational publisher from 2009 to 2010 and was Chief Executive Officer of Arrow Advisory, a New Jersey-based advisory and turnaround firm from 2007 to 2008. Mr. Lawler was Global Leader of Customer Transformation at Dun & Bradstreet in 2006. Mr. Lawler served in various executive roles at LexisNexis from 2001 to 2005, including President and Chief Executive Officer of Martindale-Hubbell and Managing Director of Emerging Markets. Previously, Mr. Lawler led Global Product Development, Global Account Management and various Sales, Marketing, and General Management leadership positions in Asia/Pacific, Europe, and North America at Dun & Bradstreet.

Paul G. Savas has been one of our directors since May 1, 2007 and served as Harland Clarke Holdings' Executive Vice President and Chief Financial Officer from May 1, 2007 to September 27, 2007. Mr. Savas was appointed to the Board of Directors because of his extensive business and operations experience with the Company, M & F Worldwide and MacAndrews. He has been Executive Vice President and Chief Financial Officer of MacAndrews & Forbes Holdings Inc. and various affiliates since May 2007, and previously served as Executive Vice President - Finance from April 2006 until May 2007 and was Senior Vice President - Finance of MacAndrews & Forbes Holdings Inc. and various affiliates from 2002 until April 2006. Mr. Savas joined MacAndrews & Forbes Holdings Inc. in 1994 as Director of Corporate Finance and was appointed Vice President - Finance in 1998. Mr. Savas is also a director of SIGA Technologies Inc., which is required to file reports under the Securities Exchange Act of 1934.

Barry F. Schwartz has been one of our directors since the Clarke American acquisition by M & F Worldwide in 2005, has acted as Chairman of our Board since September 2007, and served as Harland Clarke Holdings' President and Chief Executive Officer from May 1, 2007 to September 27, 2007. Mr. Schwartz was appointed to the Board of Directors because of his extensive business and operations experience with the Company, M & F Worldwide and MacAndrews. Mr. Schwartz has been Executive Vice Chairman and Chief Administrative Officer of MacAndrews & Forbes Holdings Inc. and various affiliates since October 2007 and previously served as Executive Vice President and General Counsel of MacAndrews & Forbes Holdings Inc. and various affiliates since 1993 and was Senior Vice President of MacAndrews & Forbes Holdings Inc. and various affiliates from 1989 to 1993. Mr. Schwartz is also a Director of the following organizations which are required to file reports under the Securities Exchange Act of 1934: Scientific Games Corporation, Revlon Consumer Products Corporation and Revlon Inc.

Code of Ethics

Harland Clarke Holdings does not have a separate code of ethics but is subject to the code of ethics of its parent, M & F Worldwide. All of our employees, including our principal executive officer, principal financial officer and principal accounting officer, are subject to the M & F Worldwide Code of Business Conduct. The Code is available to employees at www.myHC2.com.

Board of Directors

Harland Clarke Holdings is an indirect, wholly owned subsidiary of M & F Worldwide. Our board of directors is currently composed of three individuals, Charles T. Dawson, Paul G. Savas and Barry F. Schwartz. We believe this structure effectively combines the involvement of our parent, M & F Worldwide (for which Messrs. Savas and Schwartz serve as executives), and our Chief Executive Officer in the oversight of the Company's operations.

The Board is responsible for risk oversight. The Board's role in the Company's risk oversight process includes receiving periodic reports from members of senior management on areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic and reputational risks. The Company does not have a separate risk committee or chief risk officer as risk functions are performed throughout the organization and reviewed by the Board and senior management of the Company and M & F Worldwide, providing what we believe to be an appropriate level of accountability, as well as separation of duties.

Board Committees

Prior to the MacAndrews Acquisition, we did not have standing audit, nominating or compensation committees because we were a wholly owned subsidiary of M & F Worldwide, which had an audit, nominating and compensation committee. After the MacAndrews Acquisition, M & F Worldwide no longer has an audit, nominating or compensation committee and our Board of Directors serves these functions for the Company subject to consultation with senior management of M & F Worldwide. We do not have a formal policy on diversity in identifying board nominees. The exact number of members of our board is determined from time to time by a resolution of a majority of our full Board of Directors.

Compensation Committee Interlocks and Insider Participation

Prior to the MacAndrews Acquisition, there were no interlocking relationships between any member of M & F Worldwide's Compensation Committee and any of our executive officers that would require disclosure under the rules of the

48

United States Securities and Exchange Commission. Prior to the MacAndrews Acquisition, no member of M & F Worldwide's Compensation Committee was a current or former officer or employee of the Company.

Compensation Risk Assessment

The Company conducted a risk assessment of the various compensation policies and practices at the Harland Clarke Holdings level and across its three business segments. The Company evaluated whether any of its compensation programs, policies, and practices are reasonably likely to have a material adverse effect on the Company.

The following summarizes the Company's evaluation of our compensation programs, policies, and practices with respect to the assessment of risk:

• The programs provide an appropriate mix of fixed and variable compensation.

• Variable pay is an appropriate mix of both short-term and long-term compensation.

• Program features which limit the payout of variable compensation provide an additional balance between risk and reward. For example, all 2010 variable compensation plans are capped and certain plans commencing in 2011 have a clawback provision.

• Base pay is limited by the terms of the relevant employment agreements for executives or compensation policy for employees who do not have an employment agreement.

• Long-term incentives are subject to multi-year vesting which ties value to long-term performance.

• All executive variable compensation programs are based on the achievement of pre-established targets set by management and reviewed with the CEO and management. Adjustments to performance measures are made to align achievement of targets with significant changes to the business, including adjustments for acquisitions and dispositions.

• Harland Clarke Holdings currently does not provide single-trigger "change of control" compensation to its executives or employees.

• Severance pay is defined by Company policy or applicable employment agreement with severance packages offering a maximum of two years of salary continuation for only certain of our named executive officers ("NEOs") and significantly lesser amounts for other employees.

• Severance amounts for all employees, including those severance amounts made available to NEOs and other executives under an employment agreement, are in line with market standards.

• Compensation policies in general are reviewed periodically to compare against market standards.

Based on this evaluation and the currently known facts and circumstances, the Company concluded that its compensation programs, policies, and practices are not reasonably likely to have a material adverse effect on the Company.

Item 11.  Executive Compensation

Compensation Discussion & Analysis

Named Executive Officers

This Compensation Discussion & Analysis ("CD&A") describes the compensation programs applicable for our named executive officers and the basis for decisions regarding their compensation for 2011. Our NEOs for 2011 are:

• Mr. Charles T. Dawson, President and CEO of the Company;

• Mr. Peter A. Fera, Jr., CFO of the Company;

• Mr. James D. Singleton, President and CEO of Harland Clarke;

• Mr. Raju M. Shivdasani, President and CEO of Harland Financial Solutions; and

• Mr. John A. Lawler, President of Scantron.

Compensation Decision Makers

Our Compensation Committee

Prior to the MacAndrews Acquisition, the Compensation Committee of the Board of Directors of M & F Worldwide served as our compensation committee (the “Prior Compensation Committee”). After the MacAndrews Acquisition, our Board of

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Directors, in consultation with the management of M & F Worldwide, is responsible for functions performed by the Prior Compensation Committee.

Role of Executive Officers in the Compensation Process

Mr. Dawson recommends business performance targets and objectives to management of M & F Worldwide in his role as CEO. He further evaluates the performances of and recommends compensation for the executive officers reporting to him, which includes all NEOs other than himself for 2011. Targets are set consistent with annual budgets of the Company.

Compensation Consultants

In 2010, the Prior Compensation Committee engaged Compensation Advisory Partners, LLC to advise on the structure of a long-term incentive plan covering the period 2011-2013 ("2011-2013 LTIP") as well as other changes to senior executives' compensation.

Market Data

The Company subscribes to various compensation surveys to provide general market data for executive positions. Further, in determining the structure of the 2011-2013 LTIP as well as other changes to senior executives' total compensation in 2011, the Prior Compensation Committee reviewed data for peer groups and companies with revenues within a comparable range of the Company's revenue, provided by the Prior Compensation Committee's compensation consultant, Compensation Advisory Partners, LLC.

Compensation Philosophy

The objectives of the Company's compensation programs are to enable the Company to attract, retain, and motivate key talent and to reward achievement of short-term and long-term strategic business objectives and financial goals.

The material principles underlying the Company's executive compensation policies and decisions include recognizing that quality talent is attracted and retained with quality pay packages and that our executives recognize through their pay structure that their personal success with the Company is subject to and conditioned on the success of the Company's business segments. We set pay in a way we think best drives our executives to promote the growth of our three principal business segments, Harland Clarke, Harland Financial Solutions and Scantron.

We use cash compensation, not equity compensation. We, along with management of M & F Worldwide, have determined that our cash-based compensation programs are an appropriate means by which to link compensation with performance measures. In addition, we prefer cash-based compensation programs because of their greater simplicity in design and its ability to be understood by our executives and other employees.

Compensation can increase or decrease materially in the event of a change in scope of position responsibilities, in light of individual and/or Company performance, and in response to business need. We generally do not take one element of pay into account when setting another pay element for the same executive, but we have designed target total compensation opportunities to be competitive. We do calculate bonus as a percentage of base pay as we explain below. We view base plus bonus as an executive's core pay, and we deliberately set the mix of base and bonus based on the responsibility the executive has for our financial performance.

Overview of Compensation Components

Our executive compensation program includes the following elements:

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Pay Element	What the Pay Element Rewards	Purpose of the Pay Element
Base Salary	• Recognized leadership skills	• Provides base level of monthly income not subject to performance risk
	• Experience and expertise in the position	• Makes overall pay package more competitive
	• Demonstrated prior achievement of Company and personal goals
Annual Executive Bonus Plan	• Executive's contributions towards our achievement of annual performance targets	• Focuses executive on achievement of annual goals most important to the Company and investors
	• Recognizes executive's direct responsibility for our annual performance targets	• Exposes executive to risk of not receiving pay or receiving diminished pay if Company underperforms
	• Gives executive direct motivation to help Company achieve annual performance targets with significant upside for achieving exceptional results
Long-Term Incentive Compensation Plans	• Achievement of sustained growth	• Keeps executive focused on long- term growth of the Company
	• Achievement of cumulative performance targets over a three-year period	• Keeps executive personally invested in the implementation of the Company's long-term growth plan
Executive Employment Contract	• Continued service with the Company	• Keeps executive focused on job and performance
401(k) and Nonqualified Deferred Compensation Plan	• Long-term service with the Company	• Provides retention incentive • Makes overall pay package more competitive • Helps executive prepare for retirement
Additional Benefits and Perquisites	• Continued service with the Company	• Makes overall pay package more competitive
	• Payments in-kind may foster added Company loyalty in a way added cash pay does not
Termination Benefits	• Continued service in circumstances under which executive's job is at risk	• Keeps executive focused on job and performance in best interest of Company even if executive works himself or herself out of a job

Elements of Compensation

Base Salary

Mr. Dawson determines an NEO's recommended base pay by evaluating the NEO's individual leadership competencies, achievement of personal goals in support of the Company objectives and position-critical skills. Management of M & F Worldwide conducts this evaluation together with Mr. Dawson, and, where appropriate, discusses it with the NEO. Mr. Dawson's base salary is determined by his employment agreement.

We feel that a substantial portion of an executive's core pay (base and bonus) should be subject to risk to the extent that the executive is partially responsible for below-target financial performance. The analysis of how much direct responsibility our executives have for our performance targets determines how much of the executive's core pay should be at risk.

Annual Executive Bonus Plan

The amount of bonus paid to our NEOs is tied directly to the Company's performance and the NEO's individual performance. The Company wants our annual bonus program to properly reward our NEOs for their individual performances and contributions to the Company. Each NEO's bonus targets were set based on the performance of the principal business segment for which the NEO is responsible. These Adjusted EBITDA for Compensation Purposes targets vary for each of our business segments, reflecting the appropriate adjustments we make to financial performance. We discuss these Adjusted EBITDA for Compensation Purposes targets in more detail in "Adjusted EBITDA for Compensation Purposes Targets" below.

We base the bonus plan on achievement of the annual Adjusted EBITDA for Compensation Purposes target for each business segment. As illustrated in the chart below, the amount of bonus opportunity is tied to a percentage of salary increasing incrementally as performance against goal increases incrementally, up to a maximum amount. If at least 90% of target is not achieved, then no bonus will be paid. The differences in percentages listed in the "Bonus as a Percentage of Base Salary"

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column are due to differences in each NEO's responsibility and the size of the NEO's relevant business segment. The bonuses generally were designed to be compliant with the performance-based exception of Section 162(m) of the Internal Revenue Code (the "Code"), if applicable. Section 162(m) is not currently applicable to us because we are not a public company and M & F Worldwide is no longer a public company since the MacAndrews Acquisition. Each NEO, with the exception of Mr. Lawler, earned a bonus from the Company during 2009, 2010 and 2011. Bonuses are generally paid by March 15th of the year following the year for which the bonuses are earned.

The chart below sets forth the base salary, bonus potential and actual bonus paid for 2010 and 2011 for each of our NEOs.

NEO	Base Salary for 2011		Target %	Bonus as a % of Base Salary	Actual 2010 Bonus Paid in 2011		Actual 2011 Bonus Paid in 2012
Charles T. Dawson	$	1,050,000	90-145.1+	90-175	$	1,250,000	$	1,128,750
Peter A. Fera, Jr.	$	468,000	90-145.1+	90-150	$	450,000	$	444,600
James D. Singleton	$	520,000	90-145.1+	90-150	$	500,000	$	520,000
Raju M. Shivdasani	$	450,000	90-145.1+	90-150	$	318,750	$	450,000
John A. Lawler	$	400,000	90-145.1+	90-150	$	—	$	334,912

Long-Term Incentive Compensation

We believe in linking compensation to Company and individual performance. We tie long-term incentive compensation to our overall financial goals and, where appropriate, to the goals of individual business units. A NEO's compensation varies with our financial and operating performance so that they are rewarded when performance meets or exceeds objectives and receive lower compensation when performance objectives are not met. We apply objective measures of performance in setting pay levels. The Company has a strong history of achieving performance at and above target levels, and management of M & F Worldwide has determined that linking NEOs' compensation to certain individual and collective performance objectives can help our Company to achieve its targets.

The Company maintained a three-year cash-based plan tied to multiyear Company and business segment performance for the performance period from 2008 to 2010. Payments under this plan were paid to the eligible executives, to include the NEOs, excluding Mr. Lawler, on March 11, 2011. A similarly designed long-term incentive plan covering the period from 2011 to 2013 was approved by the Prior Compensation Committee on December 10, 2010. Each of these long-term incentive plans are described below, followed by additional detail on the determinations of performance measures and targets established pursuant to these plans.

The 2008-2010 M & F Worldwide Long-Term Incentive Compensation Plan("2008-2010 LTIP")

The 2008-2010 LTIP was a three-year cash-based plan tied to multiyear Company and business segment performance. It became effective on January 1, 2008 and covered fiscal years 2008 through 2010. All payouts to the executives were made on March 11, 2011. All of the NEOs participated in the 2008-2010 LTIP in 2010, 2009 and 2008, excluding Mr. Lawler. The payout amount to our current NEOs for the 2008-2010 LTIP at the end of the three-year cycle was $7.8 million.

The 2011-2013 M & F Worldwide Long-Term Incentive Compensation Plan

On December 10, 2010, the Prior Compensation Committee approved the 2011-2013 LTIP. The 2011-2013 LTIP is a three-year cash-based plan tied to Company and business segment performance. The 2011-2013 LTIP became effective January 1, 2011 and covers fiscal years 2011 through 2013.

The Company has granted awards to certain executives of the Company and its subsidiaries, including each of the NEOs. All payouts to the executives participating will be made, assuming the cumulative performance thresholds are met, at the end of the three-year cycle. While the Company expects the performance targets under the 2011-2013 LTIP to be met, the Company is not certain it will achieve or exceed the performance targets.

The awards will provide for a cash payment at the end of the three-year period ending December 31, 2013 and the executives will be entitled to payments in the amounts set forth in the table below assuming targets are achieved at the end of such three-year period. The performance measures used under the 2011-2013 LTIP include Adjusted EBITDA and a "non-check revenue" performance measure (as discussed in more detail in "Performance Measures and Performance Targets" below). Each award granted under the 2011-2013 LTIP will be based 75% on cumulative Adjusted EBITDA for Compensation Purposes targets and 25% on cumulative non-check revenue targets. If less than 90% of the target is achieved, then no payment will be made. If between 90% and 100% of the targets are achieved, then the amount of the award in the table below will be adjusted based on linear interpolation between 50% up to 100%, and if between 100% and 110% of the targets are achieved, then the

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amount of the award in the table below will be adjusted based on linear interpolation between 100% up to a maximum of 150%. For Mr. Dawson and Mr. Fera, the awards and related payments will be based solely on Company results and for Messrs. Singleton, Shivdasani and Lawler, 50% will be based on Company results and 50% will be based on the results of their respective business segment. The target payout amount to our NEOs at the end of the three-year cycle, assuming 100% of the target is achieved, is approximately $9.9 million in the aggregate. The target payout for all participants at the end of the three-year cycle, assuming 100% of the target is achieved, is approximately $12.3 million in the aggregate.

The 2011-2013 LTIP contains clawback provisions, which provide that if a participant is determined to have violated a noncompete, nonsolicit, nondisclosure covenant or other agreement or engaged in activity that was in conflict with or was adverse to the interests of the Company or its affiliates (including fraud) or conduct contributing to any financial restatement or financial irregularities, the participant's award may be cancelled. In addition, the participant may be required to repay any profits or benefit realized by the participant. To the extent required by applicable law (including without limitation Section 302 of the Sarbanes-Oxley Act of 2002 and Section 954 of the Dodd Frank Act), awards shall be subject to clawback, forfeiture or similar requirement.

2011-2013 LTIP Aggregate Target Amounts

Executive	Aggregate Target Amount (at end of 2013)
Mr. Dawson	$	4,050,000
Mr. Fera	$	1,350,000
Mr. Singleton	$	1,800,000
Mr. Shivdasani	$	1,500,000
Mr. Lawler	$	1,151,782

Performance Measures and Performance Targets

Adjusted EBITDA for Compensation Purposes Targets

The Prior Compensation Committee believed and management of M & F Worldwide believes that Adjusted EBITDA for Compensation Purposes targets is an appropriate performance measure on which to base long-term incentive compensation payments. Adjusted EBITDA for Compensation Purposes is a non-GAAP measure representing EBITDA (net income before interest expense-net, income taxes, depreciation and amortization) adjusted to reflect the impact of those items the Company does not consider indicative of its ongoing performance such as restructuring costs, certain non-operational items, group management fees, acquisition-related expenses, certain stand-alone costs, and other adjustments relevant to each segment. The Adjusted EBITDA for Compensation Purposes targets are similar to measures of covenant compliance under the Company's debt agreements, and securities analysts often use similar measures to evaluate the performance of the Company.

The Company's long-term incentive compensation plans have Adjusted EBITDA for Compensation Purposes targets based on both consolidated and segment performance; whereas the annual bonus is based solely on the relevant segment Adjusted EBITDA for Compensation Purposes targets. The consolidated Adjusted EBITDA for Compensation Purposes targets for the 2011-2013 period are not being disclosed as they represent confidential financial information that we do not disclose to the public, and we believe that disclosure of this information would cause us competitive harm because our direct competitors would know our historic financial budgets with respect to each of our business segments. In our industry segments, such information would give our competition a particular advantage over us because we are engaged in highly competitive industries which are very sensitive to pricing decisions, customer wins and losses, and customer perception. We would be at a significant disadvantage with respect to our customers if our competitors were able to compare themselves to us or draw inferences, particularly with respect to our pricing and profit margins, from our budgets and targets. We believe that these performance goals are difficult to achieve for the following reasons, among others: (i) the industries in which we are involved are mature industries which makes growth more challenging; and (ii) we are subject to both volatile customer wins and losses and customer bidding processes.

Non-Check Revenue Performance Measures Commencing in 2011

Commencing in 2011, the Prior Compensation Committee implemented a new performance measure for a portion of the Company's long-term compensation programs. Non-Check Revenue is the performance measure that encourages the development of additional revenue sources other than checks and check-related products, which are currently the Company's largest source of revenue, which have been in decline in recent years and are expected to continue declining. This measure is intended to encourage diversification of the Company's sources of revenue.

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Post-Employment Compensation

Payments to be made to executives in connection with termination without cause are in the form of severance and the temporary continuation of other benefits that are set forth in an individual's employment agreement. We want our executives to make business decisions that put the Company's interests before their own. We encourage them to feel comfortable making difficult decisions for the Company which might not otherwise be in their own long-term best interests by offering severance which would generally replace the income they would have received for the one and a half to two years following their termination of employment if we terminate them without cause.

We do not offer change in control protection, and we do not provide tax gross-ups if our NEOs are subject to the so-called "golden parachute excise tax," a special tax imposed under section 4999 of the Code on unusually large payments (in comparison to historic compensation) made in connection with a change in control.

In the event of termination with cause, post-employment compensation is forfeited.

Other Benefits and Perquisites

Other benefits and perquisites are a minor part of executive compensation offered in order to provide a competitive total compensation and benefits package. Our NEOs participate in benefit plans available to all employees and on the same terms as similarly situated employees, such as group medical insurance and participation in and matching through the Company-sponsored 401(k) plan. Our NEOs may also participate in our non-elective, nonqualified deferred compensation plan known as the "Benefit Equalization Plan," or "BEP," which is a supplemental benefit program for employees whose Company contributions to the 401(k) plan are limited due to IRS annual qualified plan compensation limits. In addition, our NEOs receive benefits available to other officers such as a monthly car allowance, life insurance, annual physicals and a cell phone. Certain of our NEOs are provided private country club membership. Mr. Dawson is the only NEO that is provided with a leased company car rather than a car allowance. Mr. Singleton is permitted to travel first class, and Mr. Dawson is permitted to travel first class or by chartered aircraft.

Report of the Board of Directors

We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have determined to include the Compensation Discussion and Analysis in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

Submitted by: Charles T. Dawson Paul G. Savas Barry F. Schwartz, Chairman

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SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2011

Name and Principal Position	Year	Salary(i)		Non-Equity Incentive Plan Compensation(ii)		Nonqualified Deferred Compensation Earnings(iii)		All Other Compensation(iv)		Total
Charles T. Dawson President & Chief Executive Officer	2011	$	1,049,039	$	1,128,750	$	—	$	394,039	$	2,571,828
	2010	$	1,000,000	$	5,307,693	$	909	$	202,196	$	6,510,798
	2009	$	1,038,462	$	1,250,000	$	—	$	166,914	$	2,455,376
Peter A. Fera, Jr. Executive Vice President & Chief Financial Officer	2011	$	467,653	$	444,600	$	—	$	105,728	$	1,017,981
	2010	$	450,000	$	1,521,741	$	200	$	57,594	$	2,029,535
	2009	$	467,308	$	450,000	$	—	$	54,674	$	971,982
James D. Singleton President and Chief Executive Officer of Harland Clarke	2011	$	519,615	$	520,000	$	—	$	136,528	$	1,176,143
	2010	$	500,000	$	1,896,509	$	220	$	74,202	$	2,470,931
	2009	$	519,231	$	500,000	$	—	$	65,333	$	1,084,564
Raju M. Shivdasani President and Chief Executive Officer of Harland Financial Solutions	2011	$	449,518	$	480,075	$	—	$	120,036	$	1,049,629
	2010	$	424,231	$	1,623,902	$	63	$	48,864	$	2,097,060
	2009	$	389,423	$	255,075	$	—	$	40,200	$	684,698
John A. Lawler President of Scantron	2011	$	346,154	$	365,681	$	—	$	39,723	$	751,558

____________

(i) Fiscal Year 2009 contained 27 pay periods instead of the standard 26, therefore actual pay is correspondingly more than the annual rate for all NEOs. 2010 actual pay includes several days of the 2009 pay rate, resulting in the difference between the actual and current annual salary rate for Mr. Shivdasani.

(ii) The compensation in this column for 2011 consists of:

• amounts earned during 2011 and paid in 2012 under the Annual Executive Bonus Plan as follows: Mr. Dawson $1,128,750, Mr. Fera $444,600, Mr. Singleton $520,000, Mr. Shivdasani $450,000 and Mr. Lawler $334,912;

• Mr. Shivdasani received $30,075 under the legacy John H. Harland 2007 Long-Term Cash Incentive Plan in 2011; and

• Mr. Lawler's amount includes $30,769 in additional pay effective September 1, 2011 for the added responsibility of assuming the management of GlobalScholar which is the pro rata portion of $100,000 in additional incentive compensation, which is supplemental to his annual salary.

(iii) Represents the above-market interest, if any, credited under our Benefits Equalization Plan (the "BEP"). We determined the above-market interest credited by determining the difference between the interest on BEP accounts calculated using the actual rate used in the plan, and 120% of the applicable federal long-term rate, with quarterly compounding for January of the applicable year, as prescribed under section 1274(d) of the Internal Revenue Code. Interest rates credited to the BEP accounts were 4.5%, 5.0% and 3.5% for 2011, 2010 and 2009, respectively.

(iv) All Other Compensation:

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All Other Compensation

Name	Year	Car Allowance(i)		Country Club Fees (ii)		Term Life, Executive AD&D and Executive Disability Insurance Premiums (iii)		Employer Contributions to 401(k) Plan and Supplemental Excess Benefit Plan (iv)		Tax Gross-Up (v)		Other Compensation (vi)		Total
Charles T. Dawson	2011	$	36,498	$	5,765	$	2,075	$	254,269	$	45,461	$	49,971	$	394,039
Peter A. Fera, Jr.	2011	$	5,940	$	4,723	$	571	$	78,176	$	5,948	$	10,370	$	105,728
James D. Singleton	2011	$	12,000	$	5,340	$	571	$	96,645	$	9,327	$	12,645	$	136,528
Raju M. Shivdasani	2011	$	12,000	$	—	$	4,945	$	81,734	$	9,536	$	11,821	$	120,036
John A. Lawler	2011	$	10,000	$	5,000	$	453	$	14,154	$	3,669	$	6,447	$	39,723

____________

(i) Comprised of (i) car allowance in the case of Messrs. Fera, Singleton, Shivdasani, and Lawler and (ii) the aggregate incremental cost to the Company of the leased vehicle in the case of Mr. Dawson, which is calculated as the total cost of the lease payments on the car, the insurance relating to the car, gasoline used in the car, and cleaning and maintenance of the car. Messrs. Fera, Singleton, Shivdasani, and Lawler are eligible to receive a pre-set amount per month as a car allowance.

(ii) The Company reimburses each executive's monthly country club dues.

(iii) Amount includes (i) executive life premiums, (ii) executive AD&D premiums for all NEOs and (iii) executive disability premiums for Mr. Shivdasani.

(iv) Consists of (1) employer contributions to the 401(k) plan of $9,800 for each NEO and (ii) employer contributions to a supplemental non-qualified excess benefit plan, the BEP (described below and in the Nonqualified Deferred Compensation Table), in the following amounts: Mr. Dawson $244,469, Mr. Fera $68,376, Mr. Singleton $86,845, Mr. Shivdasani $71,934 and Mr. Lawler $4,354.

(v) Consists of (i) the tax gross-up on the personal use of a company vehicle by Mr. Dawson of $19,189, (ii) the tax gross-up on executive disability premiums for Mr. Shivdasani of $2,756, (iii) the tax gross-up for the spousal travel and entertainment for Mr. Dawson of $14,866, Mr. Fera of $5,948, Mr. Singleton of $9,327, Mr. Shivdasani of $6,780 and Mr. Lawler of $3,669 and (iv) the tax gross-up for Mr. Dawson on home security of $11,406.

(vi) Consists of (i) spousal travel and entertainment for Mr. Dawson of $28,272, Mr. Fera of $10,370, Mr. Singleton of $12,645, Mr. Shivdasani of $11,821 and Mr. Lawler of $6,447 and (ii) home security for Mr. Dawson of $21,699.

The elements of NEO compensation are based upon the applicable employment contract, each NEO's long-term incentive plan agreements, Company policy regarding employee benefit plan participation (401(k) benefits, welfare and group insurance benefits), car allowance, cell phone use, or application of past practice. Specifically, the salaries are set under the terms of the respective employment contracts. During 2011, each of our NEOs had an employment contract in effect. The material terms of these employment contracts during 2011 are detailed in the section titled Employment Contracts below. Effective January 1, 2011, each NEO, except for Mr Lawler whose employment contract was effective February 14, 2011, entered into an amended and restated Employment Contract which is also detailed below under Employment Contracts. Bonus plans for each of our NEO's are outlined within their respective employment contract and long-term incentive plan agreements. Participation in the 401(k) and our nonqualified deferred compensation plan, the BEP, is pursuant to the plan documents. All other compensation is provided pursuant to written Company policy or practice according to their respective positions

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GRANTS OF PLAN BASED AWARDS FOR FISCAL YEAR 2011

Name	Award Type(i),(ii)	Threshold		Target		Maximum (iii)
Charles T. Dawson	Annual Bonus	$	945,000	$	1,312,500	$	1,837,500
	Segment 2011-2013 LTIP	$	—	$	—	$	—
	Consolidated 2011-2013 LTIP	$	2,025,000	$	4,050,000	$	6,075,000
Peter A. Fera, Jr.	Annual Bonus	$	421,200	$	468,000	$	702,000
	Segment 2011-2013 LTIP	$	—	$	—	$	—
	Consolidated 2011-2013 LTIP	$	675,000	$	1,350,000	$	2,025,000
James D. Singleton	Annual Bonus	$	468,000	$	520,000	$	780,000
	Segment 2011-2013 LTIP	$	450,000	$	900,000	$	1,350,000
	Consolidated 2011-2013 LTIP	$	450,000	$	900,000	$	1,350,000
Raju M. Shivdasani	Annual Bonus	$	405,000	$	450,000	$	675,000
	Segment 2011-2013 LTIP	$	375,000	$	750,000	$	1,125,000
	Consolidated 2011-2013 LTIP	$	375,000	$	750,000	$	1,125,000
John A. Lawler	Annual Bonus	$	316,603	$	351,781	$	527,672
	Segment 2011-2013 LTIP	$	287,946	$	575,891	$	863,837
	Consolidated 2011-2013 LTIP	$	287,946	$	575,891	$	863,837

____________

(i) The amounts listed in this column under the heading Annual Bonus represent the threshold, target and maximum amount which may be payable to each NEO pursuant to the annual executive bonus plan, as described in more detail above under "Elements of Compensation - The Annual Executive Bonus Plan."

(ii) The amounts listed under the heading 2011-2013 LTIP represent the threshold and target amount which might be payable in 2014 to each NEO at the end of the three year performance period (2011-2013) pursuant to the 2011-2013 LTIP, as described in more detail above under "Elements of Compensation - The 2011 M & F Worldwide Long Term Incentive Compensation Plan (the "2011-2013 LTIP"). The first row labeled 2011-2013 LTIP represents the amount of the 2011-2013 LTIP attributable to the performance of each NEO's individual business segment at the end of the three year performance period and the second row represents the amount attributable to consolidated Company results at the end of the three year performance period.

(iii) The 2011-2013 LTIP, which was designed to meet the requirements of Section 162(m) of the Code was approved by the shareholders of M & F Worldwide in 2011 for an aggregate maximum of $16.5 million. Under the terms of the 2011-2013 LTIP, the maximum payout to any participant is $10 million. Section 162(m) is not applicable to us because we are not a public company and M & F Worldwide has not been a public company since the MacAndrews Acquisition.

Employment Contracts

Mr. Dawson

Prior Employment Agreement

On February 13, 2008, Harland Clarke Holdings entered into an employment agreement with Mr. Dawson, effective as of January 1, 2008, which superseded his prior employment agreement with Harland Clarke Holdings dated as of May 29, 2007. The term of this employment agreement, whereby Mr. Dawson was employed as President and Chief Executive Officer of Harland Clarke Holdings and Chief Executive Officer of the Harland Clarke Business (as defined in the employment agreement), was to continue until December 31, 2013, pursuant to an extension amendment dated February 2, 2010. The current term is subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Under this employment agreement, Mr. Dawson's annual base salary was $1,000,000, and he was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Clarke Business Adjusted EBITDA for Compensation Purposes target. Mr. Dawson's annual bonus was established at 125% of his base salary if 100% of target was attained and increased ratably up to a maximum of 175% of his base salary if 145.1% of the target was attained. Pursuant to his employment agreement, Mr. Dawson participated in the 2008-2010 LTIP, for which he received a portion of the 2008-2010 LTIP bonus pool attributed to the Harland Clarke business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company. In September 2007, Mr. Dawson became President and Chief Executive Officer of Harland Clarke Holdings. As a

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result of his increased responsibilities, he was granted an additional portion of the 2008-2010 LTIP bonus pool that was based solely on consolidated performance. Mr. Dawson also received other standard officer benefits.

Amended and Restated Employment Agreement

On January 1, 2011, M & F Worldwide and Harland Clarke Holdings entered into an amended and restated employment agreement with Mr. Dawson which superseded, effective January 1, 2011, the previous employment agreement dated February 13, 2008. Pursuant to this agreement, Mr. Dawson will continue to serve as the President and Chief Executive Officer of the Company and the Chief Executive Officer of the Harland Clarke Business (as defined in the employment agreement) until December 31, 2013, subject to earlier termination as described therein. Under his employment agreement, Mr. Dawson's annual base salary is $1,050,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of the Company. His target annual bonus is 125% of base salary and increases ratably up to a maximum of 175% of his base salary if 145.1% of the targets are attained. Mr. Dawson will also participate in the Company's 2011-2013 LTIP. Mr. Dawson will continue to receive other standard officer benefits.

Mr. Fera

Prior Employment Agreement

On February 13, 2008, Harland Clarke Holdings entered into an employment agreement with Mr. Fera, effective as of January 1, 2008, which superseded his prior employment agreement with Harland Clarke Holdings dated May 2, 2007. This employment agreement, whereby Mr. Fera was employed as Chief Financial Officer of Harland Clarke Holdings and Executive Vice President and Chief Financial Officer of the Harland Clarke Business, was to continue until December 31, 2013, pursuant to an extension amendment dated February 2, 2010. The term was subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Under this employment agreement, Mr. Fera's annual base salary was $450,000 and he was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Clarke Business Adjusted EBITDA for Compensation Purposes target. Mr. Fera's annual bonus was 100% of his base salary if 100% of target is attained and increased ratably up to a maximum of 150% of his base salary if 145.1% of the target was attained. Pursuant to this agreement, Mr. Fera participated in the 2008-2010 LTIP, for which he received a portion of the 2008-2010 LTIP bonus pool attributable to the Harland Clarke Business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company, and he also received other standard officer benefits.

Amended and Restated Employment Agreement

On January 1, 2011, Harland Clarke Holdings entered into an amended and restated employment agreement with Mr. Fera which superseded, effective January 1, 2011, the previous employment agreement dated February 13, 2008. Pursuant to this agreement, Mr. Fera will continue to serve as the Executive Vice President and the Chief Financial Officer of the Company until December 31, 2013, subject to earlier termination as described therein. Under his employment agreement Mr. Fera's annual base salary is $468,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of the Company. His target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of his base salary if 145.1% of the targets are attained. Mr. Fera will also participate in the Company's 2011-2013 LTIP. Mr. Fera will continue to receive other standard officer benefits.

Mr. Singleton

Prior Employment Agreement

On February 7, 2008, Harland Clarke Holdings entered into an employment agreement with Mr. Singleton, effective as of January 1, 2008, which superseded his prior employment agreement with Harland Clarke Holdings dated May 2, 2007. This employment agreement, whereby Mr. Singleton was employed as Chief Operating Officer and President of Harland Clarke was to continue until December 31, 2013, pursuant to an extension amendment dated February 2, 2010. The current term was subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Under this employment agreement, Mr. Singleton's annual base salary was $500,000 and he was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Clarke Business Adjusted EBITDA for Compensation Purposes target. Mr. Singleton's annual bonus was 100% of his base salary if 100% of target was attained and increased ratably up to a maximum of 150% of his base salary if 145.1% of the target was attained. Pursuant to this agreement, Mr. Singleton participated in the 2008-2010 LTIP, for which he received a portion of the 2008-2010 LTIP bonus pool attributable to the Harland Clarke Business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company, and he also received other standard officer benefits.

Amended and Restated Employment Agreement

On January 1, 2011, Harland Clarke Holdings entered into an amended and restated employment agreement with

58

Mr. Singleton which superseded, effective January 1, 2011, the previous employment agreement dated February 7, 2008. Pursuant to this agreement, Mr. Singleton will continue to serve as the President and Chief Operating Officer of the Harland Clarke Business (as defined in the employment agreement) until December 31, 2013, subject to earlier termination as described therein. Mr. Singleton's title has been changed to President and Chief Executive Officer of Harland Clarke effective March 12, 2012. Under his employment agreement Mr. Singleton's annual base salary is $520,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of the Harland Clarke Business. His target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of his base salary if 145.1% of the targets are attained. Mr. Singleton will also participate in the Company's 2011-2013 LTIP. Mr. Singleton will continue to receive other standard officer benefits.

Mr. Shivdasani

Prior Employment Agreement

Effective August 31, 2009, Harland Financial Solutions and Harland Clarke Holdings amended the employment agreement with Mr. Shivdasani to provide that Mr. Shivdasani was employed as President of Harland Financial Solutions until December 31, 2010, subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Mr. Shivdasani's annual base salary was $375,000 in 2009 and increased to $425,000 effective January 1, 2010 in light of his increased responsibilities as President of Harland Financial Solutions. He was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Financial Solutions Adjusted EBITDA for Compensation Purposes target. Mr. Shivdasani's bonus for 2009 was 60% of his base salary if 100% of target was attained and increased ratably up to a maximum of 80% of his base salary if 125.1% of the target was attained. Mr. Shivdasani's annual bonus target for 2010 increased to 75% of his base salary if 100% of target was attained and increased ratably up to a maximum of 112.5% of his base salary if 145.1% of target was obtained, in light of his increased responsibilities as President of Harland Financial Solutions. Mr. Shivdasani also received a portion of the 2008-2010 LTIP attributable to the Harland Financial Solutions business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company, and he also received other standard officer benefits.

Amended and Restated Employment Agreement

On January 1, 2011, Harland Clarke Holdings and Harland Financial Solutions, Inc. entered into an amended and restated employment agreement with Mr. Shivdasani which superseded, effective January 1, 2011, the previous employment agreement dated August 31, 2009. Pursuant to this agreement, Mr. Shivdasani will continue to serve as the President of Harland Financial Solutions until December 31, 2013, subject to earlier termination as described therein. Mr. Shivdasani's title has been changed to President and Chief Executive Officer of Harland Financial Solutions effective March 12, 2012. Under his employment agreement his annual base salary is $450,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of HFS. His target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of his base salary if 145.1% of the targets are attained. Mr. Shivdasani will also participate in the Company's 2011-2013 LTIP. Mr. Shivdasani will continue to receive other standard officer benefits.

Mr. Lawler

Employment Agreement

On January 20, 2011, Harland Clarke Holdings and Scantron entered into an employment agreement with Mr. Lawler, effective as of February 14, 2011. Pursuant to this employment agreement, Mr. Lawler will serve as President of Scantron Commercial Business Group to continue until December 31, 2013, subject to earlier termination as described therein. Under his employment agreement his annual base salary is $400,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of the Adjusted EBITDA for Compensation Purposes of Scantron. His target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of his base salary if 145.1% of the targets are attained. Mr. Lawler will also participate in the Company's 2011-2013 LTIP. Mr. Lawler will continue to receive other standard officer benefits.

59

NONQUALIFIED DEFERRED COMPENSATION TABLE FOR FISCAL YEAR 2011

Name	Executive Contributions in Last FY		Registrant Contributions in Last FY (i)		Aggregate Earnings in Last FY		Aggregate Withdrawals/Distributions		Aggregate Balance at Last FYE (ii)
Charles T. Dawson	$	—	$	244,469	$	39,726	$	—	$	924,474
Peter A. Fera, Jr.	$	—	$	68,376	$	9,401	$	—	$	222,268
James D. Singleton	$	—	$	86,845	$	10,881	$	—	$	256,906
Raju M. Shivdasani	$	—	$	71,934	$	5,252	$	—	$	127,163
John A. Lawler	$	—	$	4,354	$	49	$	—	$	4,403

____________

(i) The amounts reported are included as part of "All Other Compensation" in the Summary Compensation Table.

(ii) Reflects the total balance of the executive's account as of December 31, 2011.

Material Features of the Deferred Compensation Plan

Our deferred compensation plan is a non-elective, nonqualified deferred compensation plan known as the BEP. It serves as a supplemental benefit program for employees whose Company contributions to the 401(k) plan are limited due to IRS annual qualified plan compensation limits. All employees whose eligible earnings are greater than the IRS qualified plan compensation limit are automatically eligible for this benefit.

Employees may not defer income into this plan. We do not match contributions under our tax-qualified 401(k) plan in respect of pay above the tax-qualified plan compensation limits. Instead, we credit a notional contribution in respect of pay above the tax-qualified plan limits to the employee's BEP account.

The BEP is an unfunded deferred compensation plan. Interest is compounded quarterly and credited to each participant's account based upon the 10-Year U.S. Treasury Bond yield as in effect on the first business day of the plan year rounded to the next higher one-half percent, plus one percent. For plan year 2011, the rate was 4.5%. This methodology of applying interest is based on the language outlined in the BEP. Interest rates are provided annually by a compensation consultant.

Distributions are allowed only at termination, retirement, death, or disability and are paid in a single lump sum on the first day of the seventh month following the occurrence of such a qualifying event.

Potential Payments Upon Termination or Change-in-Control

Each of our NEOs is entitled to certain payments and benefits in the event of termination of his employment. These payments and benefits are set forth in each of our NEO's respective employment agreements, described above. The terms of these arrangements were set through the course of arms-length negotiations with each of the NEOs.

Messrs. Dawson, Singleton, Shivdasani and Lawler will be entitled to continued payment of his base salary respectively for a period of two years after termination in the event he is terminated without cause or resigns for good reason.

Mr. Fera will be entitled to continued payment of his base salary for a period of 18 months after termination in the event he is terminated without cause or resigns for good reason.

In the case of termination without cause, or in the event of resignation for good reason, Messrs. Fera and Lawler would be entitled to receive: (i) a pro rata annual bonus for the year in which termination occurred, if it would have otherwise been payable but for the termination; (ii) any earned but unpaid annual bonus for the year prior to the year in which termination occurred; and (iii) a pro rata amount payable, if any, under the 2011-2013 LTIP in accordance with its terms; in each case, paid at the time and in the manner the bonus or long-term incentive plan amount, as applicable, is paid to other executives.

In the case of termination without cause or in the event of resignation for good reason, Messrs. Dawson, Singleton, and Shivdasani would be entitled to receive: (i) the annual bonus for the year in which termination occurred, if it would have otherwise been payable but for the termination; (ii) any earned but unpaid annual bonus for the year prior to the year in which termination occurred; and (iii) a pro rata amount payable, if any, under the 2011-2013 LTIP in accordance with its terms; in each case, paid at the time and in the manner the bonus or long-term incentive plan amount, as applicable, is paid to other executives.

In the case of death or disability, all NEOs would be entitled to receive: (i) the pro rata annual bonus for the year in which

60

death or disability occurred, if it would have otherwise been payable but for the death or disability; (ii) any earned but unpaid annual bonus for the year prior to the year in which death or disability occurred; and (iii) a pro rata amount payable, if any, under the 2011-2013 LTIP in accordance with its terms; in each case, paid at the time and in the manner the bonus or long-term incentive plan amount, as applicable, is paid to other executives.

In addition, in the case of termination of the employment of an NEO without cause, or if the executive resigns for good reason, the executive will also be entitled to receive continued participation in applicable welfare benefit plans for 12 months after termination with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the NEO as was effective on the date of termination.

If the employment of any of our NEOs is terminated for cause, further compensation is forfeited, except for accrued and unpaid base salary. In our NEO's employment agreements, "cause" is generally defined as neglect of duties, continued incompetence, unsatisfactory attendance, conviction of any felony, embezzlement, disloyalty, defalcation, usurpation of a Company opportunity, violation of rules, instructions, or requirements regarding conduct of employees, willful misconduct or breach of fiduciary obligation owed to the Company, breach of employment agreement, discriminatory or sexually harassing behavior, any act that has a material adverse effect upon the reputation or public confidence in the Company, material insubordination, or drug or alcohol use while working or representing the Company.

Pursuant to the terms of the employment agreements of each of our NEOs, "good reason" means, without the advance written consent of the executive: (i) a reduction in the executive's base salary; or (ii) a material and continuing reduction in the executive's responsibilities, in each case which the Company fails to cure within 30 days of receiving notice from the executive of such an event.

In order to receive any of the payments or benefits described above which are payable upon termination of employment, the NEO must execute an irrevocable release of claims in favor of the Company.

Each NEO is bound by a two-year non-competition covenant as well as a two-year non-solicitation covenant following termination of his employment. Breach of either the non-competition or the non-solicitation covenants will result in a cessation of salary continuation and premium rates under the group health benefits. If the executive's employment term is not renewed and the executive's employment is terminated after the end of the term, other than for cause or disability, the NEO will be subject to a minimum of a one-year non-competition covenant and a one-year non-solicitation covenant.

None of our NEOs will receive any additional payments or benefits beyond the severance terms described above in the event there is a change in control of the Company, or his employment is terminated following a change in control of the Company.

The following table sets forth payments which would hypothetically be made to our NEOs in the event each is terminated without cause, or he resigns for good reason as of December 31, 2011. This table excludes payments under the 2011-2013 LTIP as described under "Potential Payments upon Termination or Change-in-Control" above because, as indicated in the footnotes to the table, they are payable only at the termination of the 2011-2013 LTIP, and are not a continuing benefit.

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TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON

AS OF DECEMBER 31, 2011

Name and Principal Position	Separation Pay (i)		Vacation (ii)		Health/Welfare Plans (iii)		Executive Annual Bonus Plan (iv)		Outplacement Assistance (v)		Deferred Compensation Plan Balance (vi)		Total
Charles T. Dawson, President and CEO	$	2,100,000	$	11,077	$	5,621	$	1,312,500	$	30,000	$	924,474	$	4,383,672
Peter A. Fera, Jr., EVP & CFO	$	702,000	$	—	$	13,549	$	468,000	$	30,000	$	222,268	$	1,435,817
James D. Singleton, President & CEO of Harland Clarke	$	1,040,000	$	—	$	13,542	$	520,000	$	30,000	$	256,906	$	1,860,448
Raju M. Shivdasani, President & CEO of Harland Financial Solutions	$	900,000	$	—	$	9,413	$	450,000	$	30,000	$	127,163	$	1,516,576
John A. Lawler, President of Scantron	$	800,000	$	—	$	—	$	351,781	$	30,000	$	4,403	$	1,186,184

____________

(i) For each NEO, upon termination of the executive without cause or resignation for good reason (each as defined in each employment agreement), the executive is entitled to receive continued payment of base salary for the following periods: 24 months in the case of Messrs. Dawson, Singleton, Shivdasani and Lawler; and 18 months in the case of Mr. Fera.

(ii) Upon termination, the executive is entitled to his earned and unused vacation for the current year. Effective January 1, 2008, we established a policy pursuant to which up to 40 hours of vacation may be carried over from year to year. Mr. Dawson is also entitled to his balance of frozen vacation of $11,077.

(iii) For each NEO, except Mr. Lawler who does not participate in the plan, upon termination of the executive without cause, or resignation for good reason, the executive is entitled to continued participation in applicable welfare benefit plans for 12 months after the termination and continued contribution by the Company to the employer portion of the employee premiums of welfare benefit plans for 12 months after the termination. The employer portion reflects employer cost for 2011 based on the employee's enrollment in dental, medical and vision plans as of December 31, 2011.

(iv) For each NEO, upon termination of the executive without cause, due to death or disability, or in the event the NEO resigns for good reason, the executive is entitled to receive a pro rata annual bonus for the year in which the termination occurred if the executive would have been eligible to receive such bonus hereunder (including due to satisfaction of the company of performance milestones) had the executive been employed at the time such annual bonus is normally paid. The amounts provided in this column assume that the bonus is paid at a level at which 100% of the target is achieved.

(v) Upon termination, each executive is entitled to standard outplacement assistance for the key executive level up to $30,000 which would be paid to a mutually agreed provider of outplacement services for a 12-month outplacement program.

(vi) Upon termination, retirement, death or disability, the executive's total balance in the BEP is to be paid in a single lump sum on the first day of the seventh month following the occurrence of such an event. These amounts reflect the executive's account balance as of December 31, 2011.

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DIRECTORS' COMPENSATION TABLE FOR FISCAL YEAR 2011

Name

Fees Earned or Paid in Cash

Stock Awards

Option Awards

Non-Equity Incentive Plan Compensation

Pension Value and Nonqualified Deferred Compensation Earnings

All Other Compensation

Total

Barry F. Schwartz(i)

$

—

$

—

$

—

$

—

$

—

$

—

$

—

Paul G. Savas(i)

$

—

$

—

$

—

$

—

$

—

$

—

$

—

Charles T. Dawson(ii)

$

—

$

—

$

—

$

—

$

—

$

—

$

—

____________

(i) Messrs. Schwartz and Savas received no compensation directly or indirectly from the Company. They provided services to the Company under the terms of a Second Amended and Restated Management Services Agreement between M & F Worldwide and MacAndrews & Forbes LLC. Pursuant to the Second Amended and Restated Management Services Agreement, M & F Worldwide paid to MacAndrews & Forbes LLC, a wholly owned subsidiary of MacAndrews a fee of $2.5 million per calendar quarter, beginning May 1, 2007. The total amount paid to MacAndrews & Forbes LLC in 2011, 2010, and 2009 pursuant to the Second Amended and Restated Management Services Agreement was $10.0 million in each year.

(ii) Mr. Dawson did not receive any compensation for his service as a director in 2011, 2010 and 2009.

Item 12.  Security Ownership of Certain Beneficial Owners and Managementand Related Stockholder Matters

M & F Worldwide beneficially owns all the outstanding shares of our common stock. None of our executive officers or directors owns any of our common stock. M & F Worldwide is wholly owned by MacAndrews, which in turn is wholly owned by Mr. Ronald O. Perelman. M & F Worldwide, MacAndrews and Mr. Perelman all have a business address at 35 East 62nd Street, New York, NY 10065.

Item 13.  Certain Relationships and Related Transactions and DirectorIndependence

Related Person Transactions Policy

As a wholly owned subsidiary of M & F Worldwide, we are subject to M & F Worldwide's Code of Business Conduct and Ethics (the "Code"), which covers transactions and other activities by employees of M & F Worldwide and its subsidiaries (including our directors and officers) that give rise to conflicts of interest. The conflicts of interest policy in the Code limits or prohibits, among other things, transactions between the employee and M & F Worldwide and transactions by the employee with (and employment with or substantial investments in) an enterprise that is a present or potential supplier, customer or competitor, or that engages or may engage in any other business with M & F Worldwide. In addition, the policy also prohibits employees from appropriating for personal benefit business opportunities that should be first offered to M & F Worldwide. The Code also limits similar transactions by family members of employees. Any waivers of the Code must be approved by the Board of Directors of M & F Worldwide.

All of the transactions reported under Item 13 of this Annual Report on Form 10-K that occurred during our last completed fiscal year were not subject to the Code because they were not transactions involving conflicts of interest covered by the Code. All of the reported transactions were approved by our Board of Directors, and all such transactions entered into after the date of the Indenture governing our Senior Notes complied with the limitations on affiliate transactions contained in that Indenture.

Insurance

We participate in MacAndrews's directors' and officers' insurance program, which also covers other affiliates of MacAndrews. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. We bear an allocation of the premiums for such coverage, which we believe is more favorable than the premiums we could secure under stand alone coverage. The Company paid MacAndrews $0.1 million, $0.0 million and $0.1 million in 2011, 2010, and 2009, respectively, in respect of such insurance coverage.

Tax Sharing Agreement

The Company, M & F Worldwide and another subsidiary of M & F Worldwide entered into a tax sharing agreement in 2005 (the "2005 Tax Sharing Agreement") whereby M & F Worldwide files consolidated federal income tax returns on our and our affiliated subsidiaries' behalf, as well as on behalf of certain other subsidiaries of M & F Worldwide for periods prior to the MacAndrews Acquisition. Under the 2005 Tax Sharing Agreement, we made periodic payments to M & F Worldwide. These

63

payments are based on the applicable federal income tax liability that we and our affiliated subsidiaries would have had for each taxable period if we had not been included in our parent company's consolidated tax filing group. Similar provisions apply with respect to any foreign, state or local income or franchise tax returns filed by any consolidated, combined or unitary group containing the Company for each period that we or any of our subsidiaries are included in any such group for foreign, state or local tax purposes. Effective with the closing of the MacAndrews Acquisition, the 2005 Tax Sharing Agreement was amended and restated to incorporate MacAndrews as the common parent (the "2011 Tax Sharing Agreement"). For the periods beginning on or after December 22, 2011, MacAndrews will file consolidated federal income tax returns on the Company's behalf, as well as on the behalf of certain other subsidiaries of MacAndrews. The terms of the 2011 Tax Sharing Agreement are consistent with the terms of the 2005 Tax Sharing Agreement. During 2011, 2010, and 2009 the Company made payments totaling $70.3 million, $83.5 million and $79.4 million, respectively to M & F Worldwide pursuant to the terms of the tax sharing agreements.

To the extent that we have losses for tax purposes, the 2005 Tax Sharing Agreement and the 2011 Tax Sharing Agreement permit us to carry those losses back to periods beginning on or after December 15, 2005 and forward for so long as we are included in the affiliated group of which our parent is the common parent (in both cases, subject to federal, state and local rules on limitation and expiration of net operating losses) to reduce the amount of the payments we otherwise would be required to make to M & F Worldwide, under the 2005 Tax Sharing Agreement, or MacAndrews, under the 2011 Tax Sharing Agreement, in years in which it has current income for tax purposes. If the loss is carried back to the previous period, M & F Worldwide , under the 2005 Tax Sharing Agreement, and MacAndrews, under the 2011 Tax Sharing Agreement, shall pay us an amount equal to the decrease of the taxes we would have benefited as a result of the carry back.

Allocations

As a wholly owned subsidiary of M & F Worldwide, we receive certain financial, administrative and risk management oversight from M & F Worldwide. These fees are allocations of shared service costs from our parent and are included in selling, general and administrative expenses in the consolidated statements of operations. The Company recorded $2.7 million annually during the years ended December 31, 2011, 2010, and 2009 related to such fees.

Director Independence

Because we are not listed on any exchange, we are not subject to any listing standards for director independence. Under the listing standards of either the New York Stock Exchange or NASDAQ, however, none of our directors are independent because each of our directors is either one of our officers or an officer of M & F Worldwide.

Item 14.  Principal Accounting Fees and Services

The M & F Worldwide Audit Committee selected Ernst & Young LLP as the independent auditors for its subsidiaries, including Harland Clarke Holdings, for the years ended December 31, 2011, 2010, and 2009.

Audit Fees.  The aggregate fees and expenses that Ernst & Young LLP billed to us for professional services rendered for the audits of our financial statements and reviews of the financial statements included in our quarterly reports on Form 10-Q were $2.2 million, $2.2 million and $2.3 million for 2011, 2010, and 2009, respectively. Audit services include fees associated with the annual audit and reviews of our quarterly reports on Form 10-Q.

Audit-Related Fees.  The aggregate fees and expenses that Ernst & Young LLP billed to us for audit-related services rendered in 2011, 2010, and 2009 were $0.9 million, $1.0 million and $0.3 million, respectively. Audit-related services include SAS 70 and SSAE 16 reports on internal controls, due diligence, accounting consultations and acquisition-related consulting services.

Tax Fees.  The aggregate fees and expenses that Ernst & Young LLP billed us for assistance with property taxes and services performed for acquisition-related income tax matters were $0.0 million, $0.2 million and $0.1 million during 2011, 2010, and 2009, respectively.

All Other Fees.  No such fees were incurred by us in 2011, 2010, and 2009.

The Audit Committee of M & F Worldwide considered whether any audit-related and non-audit service that Ernst & Young LLP provided were compatible with maintaining the auditor's independence from management and Harland Clarke Holdings. Generally, the plan of audit services to be provided and an estimate of the cost for such audit service is approved in advance. Approval in advance for each calendar year of a plan of the expected services and a related budget, submitted by management, for audit-related services, tax services and other services that Harland Clarke Holdings expects the auditors to render during the year has also generally occurred. Any expenditure in excess of the approval limits for approved services, and any engagement of the auditors to render services in addition to those previously approved, requires advance approval by M & F Worldwide. M & F Worldwide's Audit Committee approved the audit plan, all of the fees disclosed above and the non-audit services that Harland Clarke Holdings expects Ernst & Young LLP to provide in 2011.

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PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a)  (1 and 2) Financial statements and financial statement schedule.

See Index to Consolidated Financial Statements and Financial Statement Schedules, which appears on page F-1 herein. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(3) Exhibits.

Exhibit Number	Description
2.1	Stock Purchase Agreement by and between M & F Worldwide Corp. and Honeywell International Inc., dated October 31, 2005 (incorporated by reference to Exhibit 2.1 of M & F Worldwide Corp.'s Current Report on Form 8-K dated October 31, 2005).
2.2	Membership Interest Purchase Agreement by and among M & F Worldwide Corp., NCS Pearson Inc. and Pearson Inc., dated as of February 13, 2008 (incorporated by reference to Exhibit 2.1 of M & F Worldwide Corp.'s Current Report on Form 8-K, dated February 14, 2008).
2.3	Agreement and Plan of Merger by and among John H. Harland Company, M & F Worldwide Corp. and H Acquisition Corp., dated as of December 19, 2006 (incorporated by reference to Exhibit 2.1 of M & F Worldwide Corp.'s Current Report on Form 8-K, dated December 20, 2006).
2.4	Securities Purchase Agreement, dated as of December 15, 2010, by and between Scantron Corporation and KUE Digital International LLC (incorporated by reference to Exhibit 2.1 of M & F Worldwide Corp.'s Current Report on Form 8-K, dated December 16, 2010).
2.5*	Stock Purchase Agreement, dated as of March 19, 2012, by and among Harland Clarke Holdings Corp., FLX Holdings LLC and Faneuil Holdco LLC.
3.1	Certificate of Incorporation of Harland Clarke Holdings Corp., as amended (incorporated by reference to Exhibit 3.1(i) of Harland Clarke Holdings Corp.'s Registration Statement on Form S-4, Commission File No. 333-133253).
3.2	By-laws of Harland Clarke Holdings Corp. (incorporated by reference to Exhibit 3.1(ii) of Harland Clarke Holdings Corp.'s Registration Statement on Form S-4, Commission File No. 333-133253).
4.1	Indenture dated as of May 1, 2007 among Harland Clarke Holdings Corp., the co-issuers and guarantors party thereto and Wells Fargo Bank, N.A., as trustee. (incorporated by reference to Exhibit 4.1 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.2	Registration Rights Agreement (relating to the initial notes) dated as of May 1, 2007 by and among Harland Clarke Holdings Corp., the Guarantors (listed therein), Credit Suisse Securities (USA) LLC, Bear, Stearns & Co., Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. (incorporated by reference to Exhibit 4.4 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.3	Credit Agreement, dated as of April 4, 2007 among Harland Clarke Holdings Corp., the Subsidiary Borrowers (listed therein), the Lenders (listed therein) and Credit Suisse, Cayman Islands Branch, as administrative agent. (incorporated by reference to Exhibit 4.5 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.4	First Amendment to Credit Agreement, dated as of May 4, 2007, by and among Harland Clarke Holdings Corp., the lender parties (listed therein) and Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.6 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.5	Guarantee and Collateral Agreement, dated as of May 1, 2007, by and among Harland Clarke Holdings Corp. and certain subsidiaries in favor of Credit Suisse, Cayman Islands Branch. (incorporated by reference to Exhibit 4.7 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.6	Assumption Agreement, dated as of May 1, 2007 by and among Harland Clarke Corp., Harland Checks and Services, Inc., Scantron Corporation, Harland Financial Solutions, Inc., HFS Core Systems, Inc., Centralia Holding Corp. and John H. Harland Company of Puerto Rico in favor of Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.8 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.7	Intellectual Property Security Agreement, dated as of May 1, 2007, by and among B(2)Direct, Inc., Checks in the Mail, Inc. and Clarke American Checks, Inc., the Grantors, in favor of Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.9 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).

65

Exhibit Number	Description
4.8	Intellectual Property Security Agreement, dated as of May 1, 2007, by and among Harland Clarke Corp., Harland Checks and Services, Inc., Scantron Corporation, Harland Financial Solutions, Inc. and HFS Core Systems, Inc., the Grantors, in favor of Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.10 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.9	Joinder Agreement, dated as of May 1, 2007, by and among B(2)Direct, Inc., Checks in the Mail, Inc., Clarke American Checks, Inc., New CS, Inc., New SCSFH, Inc., H Acquisition Corp., New SCH, Inc., New SFH, Inc. and Credit Suisse, Cayman Islands Branch. (incorporated by reference to Exhibit 4.11 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.10	Joinder Agreement, dated as of May 1, 2007, by and among Harland Clarke Corp., Harland Checks and Services, Inc., Scantron Corporation, Harland Financial Solutions, Inc., HFS Core Systems, Inc. and Credit Suisse, Cayman Islands Branch. (incorporated by reference to Exhibit 4.12 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.11	Deed to Secure Debt by Harland Clarke Corp. to Credit Suisse, Cayman Islands Branch (5096 Panola Industrial Blvd, Decatur, Georgia and 2933-2939 Miller Road, Decatur, Georgia). (incorporated by reference to Exhibit 4.14 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.12	Deed of Trust, Security Agreement, Assignment of Rents and Leases and Fixture Filing by Scantron Corporation in favor of First American Title Insurance Company, as trustee for the benefit of Credit Suisse, Cayman Islands Branch (2020 South 156 Circle, Omaha, Nebraska). (incorporated by reference to Exhibit 4.15 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.13	Deed of Trust, Security Agreement, Assignment of Rents and Leases and Fixture Filing by Checks In The Mail Inc. in favor of Peter Graf, Esq., as trustee for the benefit of Credit Suisse, Cayman Islands Branch (2435 Goodwin Lane, New Braunfels, Texas). (incorporated by reference to Exhibit 4.18 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
4.14	Deed of Trust, Security Agreement, Assignment of Rents and Leases and Fixture Filing by Harland Clarke Corp. in favor of First American Title Insurance Agency, LLC, as trustee for the benefit of Credit Suisse, Cayman Islands Branch (4867-4883 West Harold Gatty Road, Salt Lake City, Utah). (incorporated by reference to Exhibit 4.20 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).
10.1	Tax Sharing Agreement, dated as of December 15, 2005, by and among M & F Worldwide Corp., Harland Clarke Holdings Corp. and PCT International Holdings Inc. (incorporated by reference to Exhibit 10.15 of M & F Worldwide Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2005).
10.2+	M & F Worldwide Corp. 2008 Long Term Incentive Plan (incorporated by reference to Exhibit 10.15 to M & F Worldwide Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2007).
10.3+	Amendment No. 1 to the M & F Worldwide Corp. 2008 Long Term Incentive Plan, dated as of December 31, 2008 (incorporated by reference to Exhibit 10.2 to M & F Worldwide Corp.'s Current Report on Form 8-K filed on January 7, 2009).
10.4+	M & F Worldwide Corp. 2008 Long Term Incentive Plan - Award Agreement for Participating Executives (incorporated by reference to Exhibit 10.16 to M & F Worldwide Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2007).
10.5+	Employment Agreement, dated as of February 13, 2008, between Harland Clarke Holdings Corp. and Charles T. Dawson (incorporated by reference to Exhibit 10.1 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on February 15, 2008).
10.6+	Amendment, dated as of December 31, 2008, to the Employment Agreement, dated as of February 13, 2008, between Harland Clarke Holdings Corp. and Charles T. Dawson (incorporated by reference to Exhibit 10.2 to M & F Worldwide Corp.'s Current Report on Form 8-K filed on January 7, 2009).
10.7+	Employment Agreement dated February 13, 2008 between Harland Clarke Corp. and Peter A. Fera, Jr. (incorporated by reference to Exhibit 10.2 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on February 15, 2008).
10.8+	Amendment, dated as of December 31, 2008, to the Employment Agreement, dated as of February 13, 2008, between Harland Clarke Corp. and Peter A. Fera, Jr. (incorporated by reference to Exhibit 10.3 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on January 7, 2009).
10.9+	Employment Agreement, dated as of February 7, 2008, between Harland Clarke Holdings Corp. and Daniel Singleton (incorporated by reference to Exhibit 10.14 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008).

66

Exhibit Number	Description
10.10+	Employment Agreement, dated as of May 5, 2008, between Harland Clarke Holdings Corp., Harland Financial Solutions and Raju M. Shivdasani (incorporated by reference to Exhibit 10.15 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008).
10.11	Second Amended and Restated Management Services Agreement, dated as of June 30, 2007, by and between MacAndrews & Forbes Inc. and M & F Worldwide Corp. (incorporated by reference to Exhibit 10.1 to M & F Worldwide Corp.'s Current Report on Form 8-K dated June 25, 2007).
10.12+	Amendment, dated as of December 31, 2008, to the Employment Agreement, dated as of February 7, 2008, between Harland Clarke Holdings Corp. and Daniel Singleton (incorporated by reference to Exhibit 10.18 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008).
10.13+	Amendment, dated as of December 31, 2008, to the Employment Agreement, dated as of May 5, 2008, among Harland Clarke Holdings Corp., Harland Financial Solutions and Raju Shivdasani (incorporated by reference to Exhibit 10.19 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008).
10.14+	Amendment, dated as of February 2, 2010, to the Employment Agreement, dated as of February 13, 2008, between Harland Clarke Holdings Corp. and Charles T. Dawson (incorporated by reference to Exhibit 10.21 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009).
10.15+	Amendment, dated as of February 2, 2010, to the Employment Agreement, dated as of February 7, 2008, between Harland Clarke Holdings Corp. and Daniel Singleton (incorporated by reference to Exhibit 10.22 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009).
10.16+	Amendment, dated as of February 2, 2010, to the Employment Agreement, dated as of February 13, 2008, between Harland Clarke Holdings Corp. and Peter A. Fera, Jr. (incorporated by reference to Exhibit 10.23 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009).
10.17+	Amendment, dated as of February 22, 2010, to the Employment Agreement, dated as of May 5, 2008, among Harland Clarke Holdings Corp., Harland Financial Solutions and Raju Shivdasani (incorporated by reference to Exhibit 10.24 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009).
10.18+	Employment Agreement, dated as of January 1, 2011, by and among M & F Worldwide Corp., Harland Clarke Holdings Corp. and Charles Dawson (incorporated by reference to Exhibit 10.1 to M & F Worldwide Corp.'s Current Report on Form 8-K filed on January 6, 2011).
10.19+	Employment Agreement, dated as of January 1, 2011, between Harland Clarke Holdings Corp. and Peter Fera (incorporated by reference to Exhibit 10.2 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on January 6, 2011).
10.20+	Employment Agreement, dated as of January 1, 2011, between Harland Clarke Holdings Corp. and Daniel Singleton (incorporated by reference to Exhibit 10.3 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on January 6, 2011).
10.21+	Employment Agreement, dated as of January 1, 2011, by and among Harland Clarke Holdings Corp., Harland Financial Solutions, Inc. and Raju Shivdasani (incorporated by reference to Exhibit 10.4 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on January 6, 2011).
10.22+*	Employment Agreement, dated as of January 20, 2011, and effective as of February 14, 2011, by and among Harland Clarke Holdings Corp., Scantron Corporation and John A. Lawler.
10.23*	Amended and Restated Tax Sharing Agreement, dated as of December 21, 2011, by and among MacAndrews & Forbes Holdings Inc., M & F Worldwide Corp., Harland Clarke Holdings Corp. and PCT International Holdings Inc.
21.1*	Subsidiaries of Harland Clarke Holdings Corp.
31.1*	Certification of Charles T. Dawson, Chief Executive Officer, dated March 21, 2012.
31.2*	Certification of Peter A. Fera, Jr., Chief Financial Officer, dated March 21, 2012.
101.INS	XBRL Instance Document. (1)
101.SCH	XBRL Taxonomy Extension Schema.(1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase. (1)
101.DEF	XBRL Taxonomy Definition Linkbase. (1)
101.LAB	XBRL Taxonomy Extension Labels Linkbase. (1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.(1)

67

____________

*	Filed herewith.
+	Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto.
(1)	Furnished, not filed. Furnished with this Annual Report on Form 10-K are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2011 (Successor) and December 31, 2010 (Predecessor), (ii) the Consolidated Statements of Operations for the periods from December 22 to December 31, 2011 (Successor), January 1 to December 21, 2011 (Predecessor) and fiscal years ended December 31, 2010 and 2009 (Predecessor), (iii) Statement of Shareholder's Equity for the periods from December 22 to December 31, 2011 (Successor), January 1 to December 21, 2011 (Predecessor) and fiscal years ended December 31, 2010 and 2009 (Predecessor), (iv) the Consolidated Statements of Cash Flows for the periods from December 22 to December 31, 2011 (Successor), January 1 to December 21, 2011 (Predecessor) and fiscal years ended December 31, 2010 and 2009 (Predecessor), and (v) Notes to Consolidated Financial Statements.

68

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			HARLAND CLARKE HOLDINGS CORP.
Dated:	March 21, 2012	By:	/s/ Charles T. Dawson
			Charles T. Dawson President, Chief Executive Officer and Director (Principal Executive Officer)
Dated:	March 21, 2012	By:	/s/ Peter A. Fera, Jr.
			Peter A. Fera, Jr. Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated:	March 21, 2012	By:	/s/ J. Michael Riley
			J. Michael Riley Vice President and Controller (Principal Accounting Officer)

69

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Charles T. Dawson	President, Chief Executive Officer and Director	March 21, 2012
Charles T. Dawson
/s/ Paul G. Savas	Director	March 21, 2012
Paul G. Savas
/s/ Barry F. Schwartz	Director	March 21, 2012
Barry F. Schwartz

70

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULE

The following consolidated financial statements of Harland Clarke Holdings Corp. and Subsidiaries are included in Item 8:

	Pages
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2011 (Successor) and December 31, 2010 (Predecessor)	F-3
Consolidated Statements of Operations for the periods from December 22 to December 31, 2011 (Successor), January 1 to December 21, 2011 (Predecessor) and fiscal years ended December 31, 2010 and December 31, 2009 (Predecessor)	F-4
Consolidated Statements of Stockholder's Equity for the periods from December 22 to December 31, 2011 (Successor), January 1 to December 21, 2011 (Predecessor) and fiscal years ended December 31, 2010 and December 31, 2009 (Predecessor)	F-5
Consolidated Statements of Cash Flows for the periods from December 22 to December 31, 2011 (Successor), January 1 to December 21, 2011 (Predecessor) and fiscal years ended December 31, 2010 and December 31, 2009 (Predecessor)	F-6
Notes to Consolidated Financial Statements	F-7
Schedule II - Valuation and Qualifying Accounts and Reserves	F-39

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholder of

Harland Clarke Holdings Corp.

We have audited the accompanying consolidated balance sheets of Harland Clarke Holdings Corp. and subsidiaries as of December 31, 2011 (Successor) and 2010 (Predecessor), and the related consolidated statements of operations, stockholder's equity, and cash flows for the period from December 22 to December 31, 2011 (Successor), the period from January 1 to December 21, 2011 (Predecessor) and each of the years in the two-year period ended December 31, 2010 (Predecessor). Our audits also included the financial statement schedule II listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Harland Clarke Holdings Corp. and subsidiaries' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Harland Clarke Holdings Corp. and subsidiaries' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Harland Clarke Holdings Corp. and subsidiaries at December 31, 2011 (Successor) and 2010 (Predecessor) and the consolidated results of their operations and their cash flows for the period from December 22 to December 31, 2011 (Successor), the period from January 1 to December 21, 2011 (Predecessor), and each of the years in the two-year period ended December 31, 2010 (Predecessor), in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/  Ernst & Young LLP

San Antonio, Texas

March 21, 2012

F-2

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Balance Sheets

(in millions, except share data)

The acquisition method of accounting was used to revalue assets and liabilities assumed as a result of the MacAndrews Acquisition on December 21, 2011. Accordingly, the accompanying financial statements of the Successor and Predecessor are not comparable in all material respects since those financial statements report financial position, results of operations and cash flows on a different basis of accounting for the periods before and after the MacAndrews Acquisition. See Notes 1 and 3.

	Successor			Predecessor
	December 31, 2011			December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	96.5		$	211.5
Marketable securities	56.6			—
Accounts receivable (net of allowances of $1.8 and $2.8)	109.9			124.7
Inventories	43.2			31.6
Income taxes receivable	15.5			9.3
Deferred tax assets	24.5			19.9
Prepaid expenses and other current assets	44.9			56.0
Total current assets	391.1			453.0
Property, plant and equipment, net	205.3			143.4
Goodwill	824.8			1,526.8
Other intangible assets, net	1,657.6			1,097.4
Contract acquisition payments, net	—			27.2
Notes receivable - related party	30.0			4.0
Other assets	27.1			84.3
Total assets	$	3,135.9		$	3,336.1
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	37.7		$	36.0
Deferred revenues	88.4			128.9
Current maturities of long-term debt	19.1			19.4
Accrued liabilities:
Salaries, wages and employee benefits	52.6			73.1
Income and other taxes payable	12.8			13.4
Customer incentives	55.7			29.0
Payable to parent	—			0.7
Other current liabilities	32.9			27.5
Total current liabilities	299.2			328.0
Long-term debt	1,766.3			2,200.3
Deferred tax liabilities	727.8			389.5
Deferred revenues	20.4			12.7
Other liabilities	106.0			66.8
Commitments and contingencies
Stockholder's equity:
Common stock — 200 shares authorized; par value $0.01; 100 shares issued and outstanding at December 31, 2011 and 2010	—			—
Additional paid-in capital	222.3			157.0
(Accumulated deficit) retained earnings	(6.0		)	181.0
Accumulated other comprehensive (loss) income, net of taxes:
Foreign currency translation adjustments	—			(0.1		)
Unrecognized amounts included in postretirement obligations	(0.1		)	4.0
Derivative fair-value adjustments	(0.1		)	(10.9		)
Unrealized gains on investments, net	0.1			7.8
Total accumulated other comprehensive (loss) income, net of taxes	(0.1		)	0.8
Total stockholder's equity	216.2			338.8
Total liabilities and stockholder's equity	$	3,135.9		$	3,336.1

See Notes to Consolidated Financial Statements

F-3

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Statements of Operations

(in millions)

The acquisition method of accounting was used to revalue assets and liabilities assumed as a result of the MacAndrews Acquisition on December 21, 2011. Accordingly, the accompanying financial statements of the Successor and Predecessor are not comparable in all material respects since those financial statements report financial position, results of operations and cash flows on a different basis of accounting for the periods before and after the MacAndrews Acquisition. See Notes 1 and 3.

	Successor			Predecessor
	December 22 to December 31, 2011			January 1 to December 21, 2011			Years ended December 31,
							2010			2009
Product revenues, net	$	27.4		$	1,273.2		$	1,344.8		$	1,413.0
Service revenues, net	7.6			312.8			326.4			299.3
Total net revenues	35.0			1,586.0			1,671.2			1,712.3
Cost of products sold	22.1			772.0			787.3			845.6
Cost of services provided	5.2			159.2			171.2			152.1
Total cost of revenues	27.3			931.2			958.5			997.7
Gross profit	7.7			654.8			712.7			714.6
Selling, general and administrative expenses	10.9			393.3			389.7			387.4
Revaluation of contingent consideration	—			(24.3		)	0.3			—
Asset impairment charges	—			111.6			3.7			44.4
Restructuring costs	—			12.6			22.3			32.5
Operating (loss) income	(3.2		)	161.6			296.7			250.3
Interest income	—			0.4			0.7			1.0
Interest expense	(6.5		)	(104.8		)	(115.5		)	(136.9		)
(Loss) gain on early extinguishment of debt	(0.1		)	—			—			65.0
Other income, net	—			13.2			0.1			0.1
(Loss) income before income taxes	(9.8		)	70.4			182.0			179.5
(Benefit) provision for income taxes	(3.8		)	41.2			67.8			67.4
Net (loss) income	$	(6.0	)	$	29.2		$	114.2		$	112.1

See Notes to Consolidated Financial Statements

F-4

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Statements of Stockholder's Equity

(in millions, except share data)

The acquisition method of accounting was used to revalue assets and liabilities assumed as a result of the MacAndrews Acquisition on December 21, 2011. Accordingly, the accompanying financial statements of the Successor and Predecessor are not comparable in all material respects since those financial statements report financial position, results of operations and cash flows on a different basis of accounting for the periods before and after the MacAndrews Acquisition. See Notes 1 and 3.

	Shares of Common Stock	Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive (Loss) Income				Total
Predecessor
Balance, December 31, 2008	100	$	157.0		$	27.2			$	(17.9	)	$	166.3
Net income					112.1							112.1
Foreign currency translation adjustments, net of taxes of $0.0									0.7			0.7
Derivative fair-value adjustment, net of taxes of $5.2									8.2			8.2
Change in unrecognized amounts included in postretirement obligations, net of taxes of $0.7									(0.9		)	(0.9		)
Unrealized gains on investments, net of taxes of $0.6									0.9			0.9
Total comprehensive income												121.0
Dividend paid to parent					(41.3		)					(41.3		)
Balance, December 31, 2009	100	$	157.0		$	98.0			$	(9.0	)	$	246.0
Net income					114.2							114.2
Foreign currency translation adjustments, net of taxes of $0.0									(0.4		)	(0.4		)
Derivative fair-value adjustment, net of taxes of $1.3									(2.3		)	(2.3		)
Change in unrecognized amounts included in postretirement obligations, net of taxes of $3.6									5.6			5.6
Unrealized gains on investments, net of taxes of $4.4									6.9			6.9
Total comprehensive income												124.0
Dividend paid to parent					(31.2		)					(31.2		)
Balance, December 31, 2010	100	$	157.0		$	181.0			$	0.8		$	338.8
Net income					29.2							29.2
Foreign currency translation adjustments, net of taxes of $0.0									(0.9		)	(0.9		)
Derivative fair-value adjustment, net of taxes of $2.7									4.4			4.4
Change in unrecognized amounts included in postretirement obligations, net of taxes of $0.6									(1.1		)	(1.1		)
Unrealized gains on investments, net of taxes of $0.1									0.3			0.3
Reclassification of gains on investments included in net income, net of taxes of $5.1									(8.1		)	(8.1		)
Total comprehensive income												23.8
Dividends declared to parent					(61.3		)					(61.3		)
Balance as of December 21, 2011	100	$	157.0		$	148.9			$	(4.6	)	$	301.3
Successor
Change in ownership		(157.0		)	(148.9		)		4.6			(301.3		)
Allocation of equity consideration from MacAndrews Acquisition		222.3										222.3
Net loss					(6.0		)					(6.0		)
Derivative fair-value adjustment, net of taxes of $0.0									(0.1		)	(0.1		)
Change in unrecognized amounts included in postretirement obligations, net of taxes of $0.1									(0.1		)	(0.1		)
Unrealized gains on investments, net of taxes of $0.0									0.1			0.1
Total comprehensive loss												(6.1		)
Balance at December 31, 2011	100	$	222.3		$	(6.0	)		$	(0.1	)	$	216.2

See Notes to Consolidated Financial Statements

F-5

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(in millions)

The acquisition method of accounting was used to revalue assets and liabilities assumed as a result of the MacAndrews Acquisition on December 21, 2011. Accordingly, the accompanying financial statements of the Successor and Predecessor are not comparable in all material respects since those financial statements report financial position, results of operations and cash flows on a different basis of accounting for the periods before and after the MacAndrews Acquisition. See Notes 1 and 3.

	Successor			Predecessor
	December 22 to December 31, 2011			January 1 to December 21, 2011			Years ended December 31,
							2010			2009
Operating activities
Net (loss) income	$	(6.0	)	$	29.2		$	114.2		$	112.1
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	1.8			40.9			48.9			57.9
Amortization of intangible assets	4.1			117.5			109.0			104.2
Amortization of debt fair value adjustments and deferred financing fees	4.1			6.7			7.0			7.3
Revaluation of contingent consideration	—			(24.3		)	0.3			—
Loss (gain) on early extinguishment of debt	0.1			—			—			(65.0		)
Gain on sale of marketable securities	—			(13.2		)	(0.1		)	(0.1		)
Deferred income taxes	(6.2		)	(35.5		)	(31.9		)	(23.2		)
Asset impairments	—			111.6			3.7			44.4
Changes in operating assets and liabilities, net of effect of businesses acquired:
Accounts receivable	0.3			15.0			(1.1		)	11.8
Inventories	3.7			2.3			0.9			6.0
Prepaid expenses and other assets	(1.1		)	(12.0		)	(17.0		)	(19.3		)
Contract acquisition payments, net	—			(8.9		)	1.4			11.2
Accounts payable and accrued liabilities	5.7			(13.8		)	18.4			(54.4		)
Deferred revenues	12.0			11.8			13.0			11.1
Income and other taxes	2.3			(7.4		)	0.6			(3.5		)
Payable to parent	(0.8		)	0.1			0.7			(0.7		)
Other, net	—			—			5.0			5.5
Net cash provided by operating activities	20.0			220.0			273.0			205.3
Investing activities
Purchase of businesses, net of cash acquired	—			(134.9		)	(61.2		)	(11.4		)
Additional purchase price consideration for previous acquisition	—			(0.2		)	—			—
Purchase of marketable securities	(56.5		)	—			—			(24.6		)
Funding of related party note receivable	(30.0		)	—			—			—
Repayments of related party notes receivable	—			4.0			3.0			5.2
Proceeds from sale of property, plant and equipment	—			0.2			2.5			0.7
Proceeds from sale of marketable securities	—			13.4			24.7			—
Capital expenditures	—			(58.6		)	(38.6		)	(42.2		)
Capitalized interest	—			(0.3		)	(0.1		)	(0.3		)
Other, net	(1.5		)	(5.9		)	(4.2		)	(4.2		)
Net cash used in investing activities	(88.0		)	(182.3		)	(73.9		)	(76.8		)
Financing activities
Dividends to parent	(12.6		)	(48.7		)	(31.2		)	(41.3		)
Redemption of notes	(1.7		)	—			—			(67.6		)
Payments of contingent consideration arrangements	—			(0.3		)	(0.7		)	—
Payments for hedge financing activities	(1.9		)	—			—			—
Repayments of credit agreements and other borrowings	(4.5		)	(15.0		)	(19.6		)	(20.3		)
Net cash used in financing activities	(20.7		)	(64.0		)	(51.5		)	(129.2		)
Net (decrease) increase in cash and cash equivalents	(88.7		)	(26.3		)	147.6			(0.7		)
Cash and cash equivalents at beginning of period	185.2			211.5			63.9			64.6
Cash and cash equivalents at end of period	$	96.5		$	185.2		$	211.5		$	63.9
Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized	$	5.4		$	94.4		$	108.0		$	138.0
Income taxes, net of refunds	—			84.1			97.7			95.5

See Notes to Consolidated Financial Statements

F-6

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements

(dollars in millions)

1.  Description of the Business and Basis of Presentation

Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its subsidiaries, the "Company") is a holding company that conducts its operations through its direct and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed, subject to various closing conditions, to merge with an indirect wholly owned subsidiary of MacAndrews, and, following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011 (hereafter referred to as the "MacAndrews Acquisition").

As a result of the MacAndrews Acquisition, which resulted in a change in ownership of M & F Worldwide, the Company was required to use the acquisition method of accounting to revalue its assets and liabilities as of the date of the MacAndrews Acquisition. Such accounting results in a number of changes (see Note 3), including, but not limited to, increased depreciation and amortization, as well as increased non-cash interest expense that results from adjusting the Company's long-term debt to fair value as of the date of the MacAndrews Acquisition. Accordingly, the accompanying financial statements for the Predecessor and Successor periods are not comparable in all material respects and the Company is required to present separately its operating results for periods before and after the MacAndrews Acquisition. The periods prior to the MacAndrews Acquisition (the period January 1 to December 21, 2011 and the years ended December 31, 2010 and 2009) are presented in the accompanying consolidated financial statements as "Predecessor." The period subsequent to the MacAndrews Acquisition (December 22 to December 31, 2011) is presented in the accompanying consolidated financial statements as "Successor."

The Company has organized its business and corporate structure along the following three business segments: Harland Clarke, Harland Financial Solutions and Scantron.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial services, retail and software providers. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards and other business and home office products to consumers and small businesses.

The Harland Financial Solutions segment provides technology products and services to financial services clients worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems.

The Scantron segment provides data management and decision support solutions and related services to educational, commercial, healthcare and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management, business operational data collection, patient information collection and tracking, and managed technical services. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment, forms, and related field maintenance services.

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries after the elimination of all material intercompany accounts and transactions. The Company has consolidated the results of operations and accounts of businesses acquired from the date of acquisition.

The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries are guarantors and may also be co-issuers under the 2015 Senior Notes (as hereinafter defined) (see Note 11). Harland Clarke Holdings is a holding company and has no significant assets at December 31, 2011 and no operations. The guarantees and the obligations of the subsidiaries of the Company are full and unconditional and joint and several, and any subsidiaries of the Company other than the subsidiary guarantors and obligors are not significant.

See Note 3 for information regarding recent acquisitions.

2.  Summary of Significant Accounting Policies

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United

F-7

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes product and service revenue when persuasive evidence of a non-cancelable arrangement exists, products have been shipped and/or services have been rendered, the price is fixed or determinable, collectibility is reasonably assured, legal title and economic risk is transferred to the customer and an economic exchange has taken place. Revenues are recorded net of any applicable discounts, contract acquisition payments amortization, accrued incentives and allowances for sales returns. As a result of the accounting required in connection with the MacAndrews Acquisition, deferred revenues at December 31, 2011 represent the fair value of the cost to complete contractual obligations for which funds have already been received. Deferred revenues at December 31, 2010 represent amounts billed to the customer in excess of amounts earned.

Revenues for direct response marketing services are recognized from the Company's fixed price direct mail and marketing contracts based on the proportional performance method for specific projects.

For multiple-element software arrangements entered into prior to January 1, 2011, total revenue is allocated to each element based on the relative fair value method or the residual method when applicable. Under the relative fair value method, the total revenue is allocated among the elements based upon the relative fair value of each element as determined through vendor-specific objective evidence ("VSOE") (the price of a bundled element when sold separately). Under the residual method, the fair value of the undelivered software maintenance, training and other service elements, as determined based on VSOE, is deferred and the remaining (residual) arrangement is recognized as revenue at the time of delivery. Maintenance fees are deferred and recognized ratably over the maintenance period, which is usually twelve months. Training and other services revenue is recognized as the services are performed. In the event the Company determines that VSOE is not achieved for any of the elements of a software arrangement, the entire arrangement is bundled as a single unit and revenue is recognized ratably over the initial term of the arrangement commencing upon delivery of the software or the completion of implementation services if such services are essential to the functionality of the software.

New accounting guidance for multiple-deliverable arrangements that was adopted by the Company on January 1, 2011 requires entities to allocate revenue in an arrangement within the scope of the guidance using estimated selling prices based on a selling price hierarchy. The new guidance also eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. Application of this new guidance did not have a material effect on the Company's financial statements.

Revenue from licensing of software under usage-based contracts is recognized ratably over the term of the agreement or on an actual usage basis. Revenue from licensing of software under limited term license agreements is recognized ratably over the term of the agreement.

For software that is installed and integrated by the Company or customer, license revenue is recognized upon shipment if functionality has already been proven and there are no significant customization services. For software that is installed, integrated and customized by the Company, revenue is recognized either on a percentage-of-completion or completed contract basis. Percentage-of-completion recognizes both license and services revenue as the services are performed using an input method based on labor hours. Estimates of efforts to complete a project are used in the percentage-of-completion calculation. Due to the uncertainties inherent in these estimates, actual results could differ from those estimates. Completed contract basis is used either when reliable estimates of effort are not available, or if VSOE does not exist for one or more elements, or if there are substantive customer acceptance provisions. Under this methodology all revenue is deferred until all services are complete, or the acceptance conditions have been met.

Revenue from outsourced data processing services and other transaction processing services is recognized in the month the transactions are processed or the services are rendered.

The contractual terms of software sales do not provide for product returns or allowances. However, on occasion the Company may allow for returns or allowances primarily in the case of a new product release. Provisions for estimated returns and sales allowances are established by the Company concurrently with the recognition of revenue and are based on a variety of factors including actual return and sales allowance history and projected economic conditions.

Service revenues are comprised of revenues derived from software maintenance agreements, software implementation services, software as a service, field maintenance services, direct marketing services, certain contract center services, core processing service bureau deliverables, consulting services, training services, survey services and other services.

F-8

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Customer Incentives

The Company's Harland Clarke segment has contracts with certain clients that provide both fixed and volume-based rebates. These rebates are recorded as a reduction of revenues to which they apply and as accrued liabilities.

Shipping and Handling

Revenue received from shipping and handling fees is reflected in product revenues, net in the accompanying consolidated statements of operations. Costs related to shipping and handling are included in cost of products sold.

Cash and Cash Equivalents

The Company considers all cash on hand, money market funds and other highly liquid debt instruments with a maturity, when purchased, of three months or less to be cash and cash equivalents.

Investments

The Company has investments which consist of corporate equity securities and United States treasury securities which are classified as available-for-sale securities and are stated at fair value with unrealized gains and losses on such investments reflected net of tax, as other comprehensive income (loss). Realized gains and losses on investments are included in other income, net in the accompanying consolidated statements of operations. The cost of securities sold is based on the specific identification method. The United States treasury securities are classified as current and included in marketable securities in the accompanying consolidated balance sheets. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14.

If the market value of an investment declines below its cost, the Company evaluates whether the decline is temporary or other than temporary. The Company considers several factors in determining whether a decline is temporary including the length of time market value has been below cost, the magnitude of the decline, financial prospects of the issuer or business and the Company's intention to hold the security. If a decline in market value of an investment is determined to be other than temporary, a charge to earnings is recorded for the loss and a new cost basis in the investment is established.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable losses in its existing accounts receivable based on historical losses and current economic conditions. Account balances are charged against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance sheet credit exposure related to its customers.

Inventories

The Company states inventories at the lower of cost or market value. The Company determines cost by average costing or the first-in, first-out method.

Contract Acquisition Payments

Certain contracts with customers of the Company's Harland Clarke segment involve upfront payments to the customer. These payments are capitalized and amortized on a straight-line basis as a reduction of revenue over the life of the related contract. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance. These payments are generally refundable from the customer on a prorated basis if the contract is canceled prior to the contract termination date. When such a termination occurs, the amounts repaid are offset against any unamortized contract acquisition payment balance related to the terminating customer, with any resulting excess reported as an increase in revenue. The Company recorded revenue related to these contract terminations of $0.0 and $7.5 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $5.8 and $0.8 for fiscal years 2010 and 2009, respectively.

Advertising

Advertising costs, which are recorded predominately in selling, general and administrative expenses, consist mainly of marketing new and existing products, re-branding existing products and launching new initiatives throughout the Company.

Direct-response advertising is capitalized and amortized over its expected period of future benefit, while all other advertising costs are expensed as incurred. Direct-response advertising consists primarily of inserts that include order coupons

F-9

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

for products offered by a division of the Company's Harland Clarke segment, which are amortized for a period up to 18 months. These costs are amortized following their distribution, and are charged to match the advertising expense with the related revenue streams.

At December 31, 2011 and 2010, the Company had prepaid advertising costs of $0.1 and $4.5, respectively, which are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. The Company's advertising expense was $0.4 and $21.4 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $19.6 and $22.0 for fiscal years 2010 and 2009, respectively.

Property, Plant and Equipment

The Company states property, plant and equipment at cost. Maintenance and repairs are charged to expense as incurred. Additions, improvements and replacements that extend the asset life are capitalized. Depreciation is provided on a straight-line basis over the estimated useful lives of such assets. The Company amortizes leasehold improvements over the shorter of the useful life of the related asset or the lease term. Certain leases also contain tenant improvement allowances, which are recorded as a leasehold improvement and deferred rent and amortized over the lease term. The Company eliminates cost and accumulated depreciation applicable to assets retired or otherwise disposed of from the accounts and reflects any gain or loss on such disposition in operating results. As further discussed below, the Company capitalizes the qualifying costs incurred during the development stage on software to be sold, leased or otherwise marketed, internally developed software and software obtained for internal use and amortizes the costs over the estimated useful life of the software. The Company capitalizes interest on qualified long-term projects and depreciates it over the life of the related asset.

The useful lives for computing depreciation are as follows:

Machinery and equipment	3 - 15 years
Computer software and hardware	3 - 5 years
Leasehold improvements	1 - 20 years
Buildings and improvements	20 - 30 years
Furniture, fixtures and transportation equipment	5 - 8 years

Software and Other Development Costs

The Company expenses research and development expenditures as incurred, including expenditures related to the development of software products that do not qualify for capitalization. The amounts expensed totaled $0.1 and $29.2 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $21.9 and $15.4 for fiscal years 2010 and 2009, respectively, and were primarily costs incurred related to the development of software.

Software development costs incurred for sold, leased, or otherwise marketed software prior to the establishment of technological feasibility are expensed as incurred. Software development costs incurred after establishing the technological feasibility of the subject software product and before its availability for sale are capitalized and are included in other intangible assets, net on the accompanying consolidated balance sheets. Capitalized software development costs are amortized on a product-by-product basis using the estimated economic life of the product on a straight-line basis over three years with related amortization expense in cost of products sold on the accompanying consolidated statements of operations. Unamortized software development costs in excess of estimated net realizable value from a particular product are written down to their estimated net realizable value.

The Company capitalizes costs to develop or obtain computer software for internal use once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project and (3) interest costs incurred, when significant, while developing internal-use software. Capitalization of costs ceases when the project is substantially complete and ready for its intended use and is included in property, plant and equipment, net on the accompanying consolidated balance sheets.

Goodwill and Acquired Intangible Assets

Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets acquired. Acquired

F-10

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

intangibles are recorded at fair value as of the date acquired. Goodwill and other intangibles determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired, such as a significant adverse change in the business climate.

The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of the Company's reporting units. In 2010, the Company reduced the number of reporting units from four to three as a result of the integration of two former reporting units into a single reporting unit. The Company's reporting units are now the same as its reportable segments.

The Company utilizes both the income and market approaches to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit's estimated cost of equity and debt ("cost of capital") derived using, both known and estimated, customary market metrics. The Company performs sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies; evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies; and applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. The Company weights the results of the income and market approaches equally, except where guideline companies are not similar enough to provide a reasonable value using the market approach. When that occurs, the market approach is weighted less than the income approach.

If the estimated fair value of a reporting unit is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of the Company's "implied fair value" requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to the corresponding carrying value.

The Company's step one annual impairment test for 2011 indicated goodwill impairment for the Scantron reporting unit as the estimated fair value for the Scantron reporting unit was less than its carrying value. The Company performed the second step of the test to determine the "implied fair value" of goodwill for the Scantron reporting unit, resulting in a non-cash impairment charge of $102.2 (see Note 7). No goodwill impairment was indicated for the Company's other two reporting units as a result of the 2011 test. The results of the Company's annual test for 2010 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values.

The Company measures impairment of its indefinite-lived tradename based on the relief-from-royalty-method. Under the relief-from-royalty method of the income approach, the value of an intangible asset is determined by quantifying the cost savings a company obtains by owning, as opposed to licensing, the intangible asset. Assumptions about royalty rates are based on the rates at which similar tradenames are licensed in the marketplace. The Company also re-evaluates the useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life.

The Company's annual impairment test for its indefinite-lived tradename for 2011 determined the estimated fair value of the indefinite-lived tradename for the Scantron reporting unit was less than its carrying value. As a result, the useful life was reassessed and determined to no longer be indefinite. A non-cash impairment charge of $4.2 was recorded based on the estimated fair value of the tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to an estimated economic life of 15 years (see Note 7).

The annual impairment evaluations for goodwill and the indefinite-lived intangible asset involve significant estimates made by management. The discounted cash flow analyses require various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Changes in estimates could have a material effect on the carrying amount of goodwill and indefinite-lived intangible assets in future periods.

Intangible assets that are deemed to have a finite life are amortized over their estimated useful life generally using accelerated methods that are based on expected cash flows. They are also evaluated for impairment as discussed below in "Long-Lived Assets."

Costs to renew or extend the term of a recognized intangible asset are expensed as incurred and are not significant.

F-11

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Long-Lived Assets

When events or changes in circumstances indicate that the carrying amount of a long-lived asset other than goodwill and indefinite-lived intangible assets may not be recoverable, the Company assesses the recoverability of such asset based on estimates of future undiscounted cash flows compared to net book value. If the future undiscounted cash flow estimates are less than net book value, net book value would then be reduced to estimated fair value, which generally approximates discounted cash flows. The Company also evaluates the amortization periods of assets to determine whether events or circumstances warrant revised estimates of useful lives. Assets held for sale are carried at the lower of carrying amount or fair value, less estimated costs to sell such assets.

Income and Other Taxes

The Company computes income taxes under the liability method. Under the liability method, the Company generally determines deferred income taxes based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company records net deferred tax assets when it is more likely than not that it will realize the tax benefits.

As part of the process of preparing its consolidated financial statements, the Company is required to calculate the amount of income tax in each jurisdiction in which it operates. On a regular basis, the amount of taxable income is reviewed by various federal, state and foreign taxing authorities. As such, the Company routinely provides reserves for unrecognized tax benefits for items that it believes could be challenged by these taxing authorities.

The Company records any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer, which may include, but is not limited to, sales, use, value added, and excise taxes, on a net basis in the accompanying consolidated statements of operations.

Pensions and Other Postretirement Benefits

The Company has defined benefit postretirement plans and defined contribution 401(k) plans, which cover certain current and former employees of the Company who meet eligibility requirements.

The Company recognizes in its balance sheet the funded status of its defined benefit postretirement benefit plans, measured as the difference between the fair value of the plan assets and the benefit obligation and recognizes changes in the funded status of a defined benefit postretirement benefit plan within accumulated other comprehensive income (loss), net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost (see Note 10).

Translation of Foreign Currencies

The functional currency for each of the Company's foreign subsidiaries is its local currency. The Company translates all assets and liabilities denominated in foreign functional currencies into United States dollars at rates of exchange in effect at the balance sheet date and statement of operations items at the average rates of exchange prevailing during the period. The Company records translation gains and losses as a component of accumulated other comprehensive income (loss) in the stockholder's equity section of the Company's balance sheets. Gains and losses resulting from transactions in other than functional currencies are reflected in operating results, except for transactions of a long-term nature. The Company considers undistributed earnings of certain foreign subsidiaries to be permanently invested. As a result, no income taxes have been provided on these undistributed earnings or on the foreign currency translation adjustments recorded as a part of other comprehensive income (loss).

Self-Insurance

The Company is self-insured for certain workers' compensation and group medical costs. Provisions for losses expected under these programs are recorded based on the Company's estimates of the aggregate liabilities for the claims incurred. Payments for estimated claims beyond one year have been discounted. As of December 31, 2011 and 2010, the combined liabilities for self-insured workers' compensation and group medical were $7.7 and $9.4, respectively.

Derivative Financial Instruments

The Company uses derivative financial instruments to manage interest rate risk related to a portion of its long-term debt. The Company recognizes all derivatives at fair value as either assets or liabilities in the consolidated balance sheets and changes in the fair values of such instruments are recognized in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, the Company recognizes the changes in fair value of these instruments in other comprehensive income (loss) until the underlying debt instrument being hedged is settled or the Company determines that

F-12

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

the specific hedge accounting criteria are no longer met.

On the date the interest rate derivative contract is entered into, the Company designates the derivative as either a fair value hedge or a cash flow hedge. The Company formally documents the relationship between hedging instruments and the hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. The Company links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. The Company links all hedges that are designated as cash flow hedges to forecasted transactions or to liabilities on the balance sheet. The Company also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. If an existing derivative were to become not highly effective as a hedge, the Company would discontinue hedge accounting prospectively.

Deferred Financing Fees

Deferred financing fees are being amortized to interest expense using the effective interest method over the term of the respective financing agreements. Unamortized balances are reflected in other assets in the accompanying consolidated balance sheets and were $0.0 and $25.2 as of December 31, 2011 and 2010, respectively. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance.

Restructuring Charges

The Company has restructuring costs related primarily to facility consolidations and workforce rationalization. The costs primarily consist of employee termination benefits which are accrued when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. In addition to employee termination benefits, other restructuring costs include, but are not limited to, equipment moves, training and travel, which are expensed as incurred. Additional restructuring charges related to the Company's existing operations will be incurred as the Company completes its restructuring plans.

Fair Value Measurements

The Company measures fair value using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (see Note 13).

Reclassifications

Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2011 and the consolidated statement of operations for 2011. These reclassifications had no effect on previously reported net income.

Specifically, the net change in the fair value of contingent consideration arrangements is now presented as a separate line item in the consolidated statements of operations. Previously, such amounts had been classified in cost of services provided and selling, general and administrative expenses. In addition, non-current deferred revenues and notes receivable - related party are now presented as separate line items in the consolidated balance sheets. Previously, non-current deferred revenues were included in other liabilities and notes receivable - related party were included in other assets. These reclassifications are also now included in the consolidated statements of cash flows.

Recently Adopted Accounting Guidance

Effective January 1, 2011, the Company adopted new guidance for multiple-deliverable revenue arrangements and certain arrangements that include software elements. The guidance for multiple-deliverable revenue arrangements requires entities to allocate revenue in new arrangements within the scope of the guidance using estimated selling prices based on a selling price hierarchy. It also eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. Application of the new guidance did not have a material effect on the Company's financial statements.

The new guidance for certain arrangements that include software elements removes non-software components of tangible products and software components of tangible products that have software components essential to the functionality of the tangible product from the scope of software revenue recognition. The majority of the Company's software arrangements are not tangible products with software components. Application of the new guidance did not have a material effect on the Company's

F-13

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

financial statements.

New Accounting Guidance

In September 2011, the Financial Accounting Standards Board ("FASB") amended existing guidance related to the requirement for an annual goodwill impairment test. This amendment provides entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. The amended provisions are effective for reporting periods beginning on or after December 15, 2011. However, early adoption is permitted if an entity's financial statements for the most recent annual or interim period have not yet been issued. The Company will adopt the new guidance effective January 1, 2012. This amendment affects testing steps only, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

In June 2011, the FASB amended existing guidance related to the presentation of comprehensive income. The amendment requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two separate but consecutive statements. It eliminates the option to report other comprehensive income and its components as part of the statement of changes in shareholders' equity. The amended provisions are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, and full retrospective application is required. The Company will adopt the new guidance effective January 1, 2012. This amendment affects presentation and disclosure only, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

3. Acquisitions

MacAndrews Acquisition of M & F Worldwide

On September 12, 2011, M & F Worldwide, the indirect parent of the Company, agreed, subject to various closing conditions, to merge with an indirect, wholly owned subsidiary of MacAndrews, and, following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011. M & F Worldwide has allocated its new equity basis to its subsidiaries and $222.3 has been allocated to and pushed down to the Company. The transaction was accounted for as a business combination. As discussed in Note 1, the period after the MacAndrews Acquisition has been bifurcated in these financial statements and indicated by the heading "Successor."

The following table summarizes the estimated fair values of the Company's assets and liabilities assumed at the date of the MacAndrews Acquisition:

Cash			$	185.2
Accounts receivable			110.1
Property, plant and equipment			207.1
Goodwill			824.8
Other intangible assets:
Customer relationships	$	1,519.0
Tradenames	101.4
Technology	39.8
Total other intangible assets			1,660.2
Other assets			148.9
Total assets acquired			3,136.3
Deferred revenues			96.8
Long-term debt			1,787.4
Deferred tax liabilities			723.0
Other liabilities			306.8
Net assets acquired			$	222.3

The above purchase price allocation is preliminary due to the recent acquisition date and the continuing review of assets and liabilities assumed. Goodwill in the amount of approximately $178.7 and intangible assets in the amount of approximately

F-14

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

$142.7 are deductible for tax purposes. The goodwill arises because the total consideration for the acquisition allocated to the Company, which reflects its future earnings and cash flow potential, exceeds the fair value of net assets acquired. The goodwill resulting from the acquisition was assigned to the Company's segments as follows: $459.5 to Harland Clarke, $301.9 to Harland Financial Solutions and $63.4 to Scantron. Acquisition-related fees and expenses for the Company were not material.

As part of the application of fair value accounting for business combinations, inventory was increased by $17.5. The amount of the inventory fair value adjustment is being expensed as additional non-cash cost of products sold as the fair-valued inventory is sold (of which $3.6 was expensed during the period from December 22 to December 31, 2011).

Also as part of the application of fair value accounting for business combinations, long-term debt and deferred revenues were decreased by $417.8 and $68.1, respectively. These non-cash fair value adjustments result in higher interest expense and lower revenues being recognized over the related earnings period, both of which are non-cash adjustments (of which $4.1 was reflected as increased interest expense and $3.9 was reflected as reduced revenues during the period from December 22 to December 31, 2011).

Pro Forma Financial Information

The unaudited financial information in the table below summarizes the results of operations of the Company, on a pro forma basis, as though the acquisition had occurred as of the beginning of the earliest year presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if this transaction had taken place at the beginning of the earliest year presented, nor does it purport to represent results of operations for future periods.

	Unaudited Pro Forma
	Years ended December 31,
	2011			2010
Net revenues	$	1,594.2		$	1,641.3
Operating income	151.1			225.3
Net (loss)	(65.8		)	(16.5		)
Depreciation and amortization (excluding amortization of deferred financing fees)	156.4			194.6

In the pro forma information above, the results prior to the acquisition were adjusted to include the pro forma effect of: the adjustment of amortization of intangible assets and depreciation of fixed assets based on the acquisition accounting allocations; the adjustment of interest expense reflecting the amortization of fair value adjustments of Harland Clarke Holdings' outstanding long-term debt; the non-recurring fair value adjustments to contract acquisition payments and commitments, deferred revenues, inventory and other deferred expenses; and to reflect the impact of income taxes with respect to the pro forma adjustments, utilizing an estimated effective tax rate of 39%.

Acquisition of GlobalScholar

On January 3, 2011, Scantron Corporation ("Scantron"), a wholly owned subsidiary of the Company, purchased all of the outstanding capital stock or membership interests of KUE Digital Inc., KUED Sub I LLC and KUED Sub II LLC (collectively "GlobalScholar"). GlobalScholar's instructional management platform supports all aspects of managing education at K-12 schools, including student information systems; performance-based scheduler; gradebook; learning management system; longitudinal data collection, analysis and reporting; teacher development and performance tracking; and online communication and tutoring portals. GlobalScholar's instructional management platform complements Scantron's testing and assessment, response to intervention, student achievement management and special education software solutions thereby expanding Scantron's web-based education solutions. The acquisition-date purchase price was $134.9 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $18.5, as described below, which resulted in total estimate consideration of $153.4 as of the acquisition date. Contingent consideration would be payable in 2012 upon achievement of certain revenue targets of GlobalScholar during calendar year 2011, which targets were not met as discussed below. The transaction was accounted for as a business combination and GlobalScholar's results of operations have been included in the Company's operations since the date of its acquisition.

The allocation of purchase price resulted in identified intangible assets of $92.3 and goodwill of $93.1. During 2011, the Company recorded additional deferred tax assets of $2.9 in accordance with applicable accounting guidance with a corresponding decrease in goodwill. The goodwill arises because the total consideration for GlobalScholar, which reflects its

F-15

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

future earnings and cash flow potential, exceeded the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $5.6 is deductible for income tax purposes. The Company financed the GlobalScholar acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. The Company has recognized $1.6 of acquisition related costs through December 21, 2011 for this acquisition, of which $0.2 was expensed and included in selling, general and administrative expenses in the consolidated statements of operations for the period January 1 to December 21, 2011 with the remainder having been expensed and included in selling, general and administrative expenses in the fourth quarter of 2010.

The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $20.0, based on the achievement of certain revenue targets of GlobalScholar measured during the calendar year 2011. The acquisition-date fair value of the contingent consideration arrangement of $18.5 was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions included a projection of certain GlobalScholar revenues for the measurement period. The application of fair value accounting for the contingent consideration arrangement required recurring remeasurement for changes in key assumptions (see Note 13). As of December 31, 2011, the contingent consideration liability was $0.0 and no amount will be paid in 2012 because the revenue targets were not met.

The application of acquisition accounting decreased acquired deferred revenues by $14.9 to $11.6 due to a fair value adjustment. This non-cash fair value adjustment results in lower revenues being recognized over the related earnings period (of which $5.2 was reflected as a reduction of revenues for the period January 1 to December 21, 2011).

The fair value of financial assets acquired was not significant and all receivables are expected to be collected. The pro forma effects for the GlobalScholar acquisition on the consolidated results of operations were not material.

Acquisition of Parsam

On December 6, 2010, Harland Financial Solutions, Inc. ("HFS"), a wholly owned subsidiary of the Company, acquired all of the outstanding membership interests of Parsam Technologies, LLC and the equity of SRC Software Private Limited (collectively "Parsam"). Parsam's solutions allow financial institutions to provide services online, in branches and at call centers, from new account opening and funding to account-to-account money transfers, person-to-person payments, account and adviser-client relationship management, and bill presentment and payment. HFS has integrated Parsam's solutions into its existing solution offerings. The acquisition-date purchase price was $32.8 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $1.2, as described below, which resulted in total estimated consideration of $34.0 as of the acquisition date. Contingent consideration would be payable upon achievement of certain revenue targets of Parsam during calendar years 2011 and 2012. The transaction was accounted for as a business combination and Parsam's results of operations have been included in the Company's operations since the date of its acquisition.

The contingent consideration arrangement provides for cash payments of up to an aggregate maximum of $25.0, which may be payable upon the achievement of certain future revenue targets of Parsam measured during calendar years 2011 and 2012. The acquisition-date fair value of the contingent consideration arrangement was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions include a projection of certain Parsam revenues for the measurement periods. During the first quarter of 2011, the Company identified a $1.6 decrease in the initial estimate of acquisition-date fair value of contingent consideration with a corresponding $1.6 decrease in goodwill. The application of fair value accounting for the contingent consideration arrangement requires recurring remeasurement for changes in key assumptions (see Note 13). As of December 31, 2011, the contingent consideration liability was $0.6. The decrease in the estimate of contingent consideration fair value was due to a decrease in the projection of certain Parsam revenues for the measurement periods, partially offset by the passage of time which reduced the effect of discounting to present value.

The allocation of purchase price resulted in identified intangible assets of $7.8 and goodwill of $26.2. The goodwill arises because the total consideration for Parsam, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Harland Financial Solutions segment. Of the goodwill recognized, $23.1 is expected to be deductible for income tax purposes. The Company financed the Parsam acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. Acquisition-related fees and expenses were not material.

The application of acquisition accounting decreased acquired deferred revenues by $1.6 to $0.4 due to a fair value adjustment. This non-cash fair value adjustment results in lower revenues being recognized over the related earnings period (of which $1.0 was reflected as a reduction of revenues for the period January 1 to December 21, 2011). The reduction of revenues

F-16

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

resulting from this acquisition accounting fair value adjustment was negligible for the period December 7, 2010 to December 31, 2010.

The fair value of financial assets acquired was not significant and all receivables are expected to be collected. The pro forma effects for the Parsam acquisition on the consolidated results of operations were not material.

Acquisition of Spectrum K12

On July 21, 2010, Scantron acquired 100% of the equity of Spectrum K12 School Solutions, Inc. ("Spectrum K12"). Spectrum K12 develops, markets and sells student achievement management, response to intervention and special education software solutions. Spectrum K12's software solutions complement Scantron's software solutions for educational assessments, content and data management. The acquisition-date purchase price was $28.6 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $4.0, as described below, which resulted in total estimated consideration of $32.7 as of the acquisition date. The transaction was accounted for as a business combination and Spectrum K12's results of operations have been included in the Company's operations since the date of its acquisition.

The allocation of purchase price resulted in identified intangible assets of $6.6 and goodwill of $25.2. During 2011, the Company recorded additional deferred tax assets of $1.4 in accordance with current accounting guidance with a corresponding decrease in goodwill. The goodwill arises because the total consideration for Spectrum K12, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $1.5 is expected to be deductible for income tax purposes. The Company financed the Spectrum K12 acquisition and related fees and expenses with cash on hand. Acquisition-related fees and expenses were not material.

The contingent consideration arrangement provides for cash payments of up to an aggregate maximum of $20.0, which may be payable upon the achievement of certain future revenue targets of Spectrum K12 measured during the twelve-month periods ending June 30, 2011 and 2012. Certain of the contingent consideration payments may be payable under the terms of the acquisition to eligible employees who remain employed by Spectrum K12 during the twelve-month periods ending June 30, 2011 and 2012. These contingent consideration payments of up to an aggregate of $5.0 to eligible employees are considered incentive compensation and recorded as compensation expense as earned. The acquisition-date fair value of the contingent consideration arrangement of $4.9, of which $0.9 is considered to be incentive compensation, was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions include a projection of Spectrum K12 revenues for the measurement periods. The application of fair value accounting for the contingent consideration arrangement requires recurring remeasurement for changes in key assumptions (see Note 13). As of December 31, 2011, the fair value of the contingent consideration arrangement was $0.0. The reduction in fair value from the acquisition date was the result of a decline in projected revenues during the measurement periods.

The application of acquisition accounting decreased acquired deferred revenues by $10.5 to $5.0 due to a fair value adjustment. This non-cash fair value adjustment results in lower revenues being recognized over the related earnings period (of which $3.6 and $1.8 was reflected as a reduction of revenues for the period January 1 to December 21, 2011 and the year ended December 31, 2010, respectively).

The fair value of financial assets acquired was not significant and all receivables have been collected. The pro forma effects for the Spectrum K12 acquisition on the consolidated results of operations were not material.

Acquisition of Protocol IMS and SubscriberMail

During December 2009, Harland Clarke Corp., a wholly owned subsidiary of the Company, acquired in separate transactions 100% of the equity of SubscriberMail and certain assets and liabilities of Protocol IMS. The acquisition-date aggregate consideration of $13.1 for these transactions includes contingent consideration of $1.8 for SubscriberMail upon the achievement of certain revenue targets in 2010 and 2011, with a maximum aggregate contingent consideration of $2.0 if the targets are met. In 2010, $1.0 of contingent consideration was earned under this contingent consideration arrangement, of which $0.7 was paid in 2010 and the remainder was paid in 2011. As of December 31, 2011, the fair value of the contingent consideration arrangement was $0.0 and no future payments will be made. SubscriberMail is a leading email marketing service provider that offers patented tools to develop and deliver professional email communications. SubscriberMail results of operations have been included in the Company's operations since December 31, 2009, the date of its acquisition. Protocol IMS focuses on direct marketing services with solutions that include business to business strategic services, business to consumer strategic services, database marketing and analytics, outbound business to business teleservices, production and fulfillment.

F-17

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Protocol IMS results of operations have been included in the Company's operations since December 4, 2009, the date of its acquisition. The allocations of purchase price resulted in identified intangible assets of $4.2 and goodwill of $7.2, which are deductible for tax purposes.

The pro forma effects for the Protocol IMS and SubscriberMail acquisitions on the consolidated results of operations were not material.

4.  Inventories

Inventories consist of the following:

	Successor		Predecessor
	December 31, 2011		December 31, 2010
Finished goods	$	12.4	$	8.8
Work-in-process	17.9		8.7
Raw materials	12.9		14.1
	$	43.2	$	31.6

5.  Property, Plant and Equipment

Property, plant and equipment consist of the following:

	Successor			Predecessor
	December 31, 2011			December 31, 2010
Machinery and equipment	$	67.0		$	101.4
Computer software and hardware	54.3			153.0
Leasehold improvements	16.8			26.3
Buildings and improvements	29.0			33.3
Furniture, fixtures and transportation equipment	5.9			15.7
Land	8.3			9.1
Construction-in-progress	25.8			15.0
	207.1			353.8
Accumulated depreciation	(1.8		)	(210.4		)
	$	205.3		$	143.4

Depreciation expense was $1.8 and $40.9 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $48.9 and $57.9 for fiscal years 2010 and 2009, respectively, and includes the depreciation of the Company's capital leases. Capitalized lease equipment was $3.1 and $11.6 at December 31, 2011 and 2010, respectively, and the related accumulated depreciation was $0.0 and $7.7 at December 31, 2011 and 2010, respectively.

During the 2011 Predecessor period, non-cash impairment charges of $0.5 were recorded for the Harland Clarke segment related to assets that were determined to have limited future use. During 2010, non-cash impairment charges of $2.8 were recorded for the Harland Clarke segment primarily related to the abandonment of a development project and restructuring-related impairments of property, plant and equipment. These impairment charges are included in asset impairment charges in the accompanying consolidated statements of operations. Construction-in-progress mainly consists of investments in Harland Clarke's information technology infrastructure, contact centers, production bindery and delivery systems.

6. Assets Held For Sale

At December 31, 2011, assets held for sale consist of the following Harland Clarke segment facilities:

F-18

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Location	Former Use	Year Closed
Atlanta, GA	Operations Support	2008
Atlanta, GA	Printing	2008
Atlanta, GA	Information Technology	2010

During 2010, the Company closed its information technology facility in Atlanta, GA and relocated those operations into an existing facility. The other listed Atlanta facilities were closed as part of the Company's plan to exit duplicative facilities related to an acquisition. Subsequent to the classification of the Atlanta facilities as assets held for sale, there have been significant changes in the real estate market. Non-cash impairment charges of $0.1 and $0.9 were recorded in the Predecessor period in 2011 and in 2010, respectively, to adjust the carrying values of the print facility and information technology facility to reflect an updated estimate of the fair values less costs to sell. These impairment charges are included in asset impairment charges in the accompanying consolidated statements of operations. The Company has made appropriate changes to its marketing plan and believes these facilities will be sold within twelve months. In January 2010, the Company sold its Syracuse facility, which was closed in 2009, for its carrying value of $1.1. In June 2010, the Company sold its Greensboro facility, which was closed in 2009, for $1.3 and realized a gain of $0.3, which is included in restructuring costs in the accompanying consolidated statements of operations.

Assets held for sale are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets and consist of the following:

	Successor		Predecessor
	December 31, 2011		December 31, 2010
Land	$	1.0	$	1.5
Buildings and improvements	2.3		1.9
	$	3.3	$	3.4

7. Goodwill and Other Intangible Assets

The change in carrying amount of goodwill by business segment for the years ended December 31, 2011, 2010 and 2009 is as follows:

	Harland Clarke			Harland Financial Solutions			Scantron			Total
Predecessor
Balance at December 31, 2009	$	779.4		$	425.2		$	268.6		$	1,473.2
2010 acquisitions	—			27.5			26.6			$	54.1
Effect of exchange rate changes	—			(0.5		)	—			$	(0.5	)
Balance at December 31, 2010	779.4			452.2			295.2			$	1,526.8
2010 acquisitions	—			(1.4		)	(1.4		)	(2.8		)
2011 acquisition	—						90.2			90.2
Impairment	—			—			(102.2		)	(102.2		)
Effect of exchange rate changes	—			(0.2		)	—			(0.2		)
Balance at December 21, 2011	779.4			450.6			281.8			1,511.8
Successor
Change in ownership	(779.4		)	(450.6		)	(281.8		)	(1,511.8		)
MacAndrews Acquisition	459.5			301.9			63.4			824.8
Balance at December 31, 2011	$	459.5		$	301.9		$	63.4		$	824.8

Useful lives, gross carrying amounts and accumulated amortization for other intangible assets are as follows:

F-19

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

		Gross Carrying Amount				Accumulated Amortization
		Successor		Predecessor		Successor		Predecessor
	Useful Life (in years)	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Amortized intangible assets:
Customer relationships	3 - 20	$	1,519.0	$	1,242.5	$	3.6	$	349.5
Trademarks and tradenames	2 - 25	101.4		155.0		0.1		12.3
Software and other	2 - 20	41.3		93.8		0.4		43.1
		1,661.7		1,491.3		4.1		404.9
Indefinite-lived intangible assets:
Tradename		—		11.0		—		—
Total other intangible assets		$	1,661.7	$	1,502.3	$	4.1	$	404.9

Amortization expense was $4.1 and $117.5 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $109.0, and $104.2 for fiscal years 2010 and 2009, respectively.

The weighted average amortization period for all amortizable intangible assets recorded in connection with the MacAndrews Acquisition was 18.6 years. The weighted average amortization period for each major class of amortizable intangible assets recorded in connection with the MacAndrews Acquisition was as follows: customer relationships - 18.6 years, trademarks and tradenames - 23.5 years and software - 5.9 years.

Estimated aggregate amortization expense for intangible assets through December 31, 2016 is as follows:

Year ended December 31, 2012	$	133.8
Year ended December 31, 2013	121.4
Year ended December 31, 2014	113.5
Year ended December 31, 2015	107.0
Year ended December 31, 2016	99.3

As a result of the 2011 step one annual impairment test for goodwill, the Company determined the estimated fair value of the Scantron reporting unit was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. This required the Company to perform the second step of the test and hypothetically allocate the estimated fair value to Scantron's assets and liabilities with the unallocated fair value representing the implied fair value of Scantron's goodwill. As a result of this analysis, a non-cash impairment charge of $102.2 was recorded for the Scantron segment in the fourth quarter of 2011 based on the implied fair value of Scantron's goodwill being less than its carrying value. The Company also performed the 2011 annual impairment test for indefinite-lived tradenames and determined the estimated fair value of the Scantron tradename was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. As a result of this impairment and changes in Scantron's branding strategy, the useful life of the Scantron tradename was reassessed and determined to no longer be indefinite. The Company determined the estimated economic life for the Scantron tradename is 15 years. A non-cash impairment charge of $4.2 was recorded for the Scantron segment in the fourth quarter of 2011 based on the estimated fair value of the Scantron tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to an estimated economic life of 15 years. In addition to the impairment charges resulting from the annual impairment tests, the Company recorded non-cash impairment charges of $4.6 during 2011 for the Scantron segment related to software that was determined to have limited future use. All of these impairment charges were included in asset impairment charges in the accompanying Predecessor consolidated statements of operations. The 2011 impairment charges did not affect consolidated cash flows, current liquidity, capital resources or covenants under existing credit facilities.

As a result of the 2009 annual impairment test for indefinite-lived tradenames, the Company determined the estimated fair value of the Harland Clarke tradename was less than its carrying value due to declines in revenues from check unit volumes that were projected to decline at rates that are higher than recent years and also due to the continuing economic downturn. As a result of this impairment, the useful life of the Harland Clarke tradename was reassessed and determined to no longer be indefinite. Based on an analysis of future cash flows attributable to the Harland Clarke tradename, the Company determined the economic life for the Harland Clarke tradename is 25 years. A non-cash impairment charge of $44.2 ($33.4 for the Harland

F-20

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Clarke segment, $10.6 for the Harland Financial Solutions segment and $0.2 for the Scantron segment) was recorded in the fourth quarter of 2009 based on the estimated fair value of the Harland Clarke tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to a life of 25 years. This impairment charge was included in asset impairment charges in the accompanying consolidated statements of operations. The charge did not affect consolidated cash flows, current liquidity, capital resources or covenants under existing credit facilities. The remaining balance of $145.8 for the Harland Clarke tradename was reclassified from indefinite-lived tradenames to amortized tradenames. The Company began to amortize this intangible asset on an undiscounted cash flow basis in the fourth quarter of 2009 resulting in additional amortization expense of $1.3 in 2009, $8.0 in 2010 and $7.5 in 2011.

8.  Income Taxes

Information pertaining to the Company's (loss) income before income taxes and the applicable (benefit) provision for income taxes is as follows:

	Successor			Predecessor
	December 22 to December 31, 2011			January 1 to December 21, 2011			Years ended December 31,
							2010			2009
(Loss) income before income taxes:
Domestic	$	(9.8	)	$	69.1		$	185.6		$	184.0
Foreign	—			1.3			(3.6		)	(4.5		)
Total (loss) income before income taxes	$	(9.8	)	$	70.4		$	182.0		$	179.5
(Benefit) provision for income taxes:
Current:
Federal	$	2.1		$	61.2		$	83.8		$	76.0
State and local	0.3			14.6			15.8			14.5
Foreign	—			0.9			0.1			0.1
	2.4			76.7			99.7			90.6
Deferred:
Federal	(5.6		)	(29.8		)	(28.7		)	(20.8		)
State and local	(0.6		)	(5.6		)	(3.0		)	(3.2		)
Foreign	—			(0.1		)	(0.2		)	0.8
	(6.2		)	(35.5		)	(31.9		)	(23.2		)
Total (benefit) provision for income taxes	$	(3.8	)	$	41.2		$	67.8		$	67.4

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

F-21

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

	Successor			Predecessor
	December 31, 2011			December 31, 2010
Current:
Prepaid expenses	$	4.1		$	(3.1	)
Inventory	(4.4		)	—
Deferred revenues	(11.1		)	8.1
Net operating loss carryforwards	7.1			0.2
Accrued expenses and other liabilities	30.7			21.8
Net current deferred tax asset before valuation allowance	26.4			27.0
Valuation allowance	(1.9		)	(7.1		)
Net current deferred tax asset	24.5			19.9
Long-term:
Property, plant and equipment	(29.8		)	(5.7		)
Intangible assets	(591.4		)	(387.1		)
Net operating loss carryforwards	11.0			21.1
Deferred gain on debt repurchases	(25.4		)	(25.4		)
Debt fair value adjustments	(161.0		)	—
Deferred financing fees	7.1			—
Accrued rebates	33.8			—
Other	29.8			17.4
Net long-term deferred tax liability before valuation allowance	(725.9		)	(379.7		)
Valuation allowance	(1.9		)	(9.8		)
Net long-term deferred tax liability	(727.8		)	(389.5		)
Net deferred tax liabilities	$	(703.3	)	$	(369.6	)

At December 31, 2011, the Company had domestic federal net operating loss ("NOL") carryforwards of $45.9, which expire between 2021 and 2030. The federal NOL carryforwards relate to acquisitions and therefore are subject to annual limitations under Internal Revenue Code Section 382, which generally restricts the amount of a corporation's taxable income that can be offset by a taxpayer's NOL carryforwards in taxable years after a change in ownership has occurred.

The Company had domestic state net operating loss carryforwards totaling $1.2 (tax effected), with $0.6 expiring between 2012 and 2020 and the remainder expiring after 2020. In addition, the Company had foreign net operating loss carryforwards of $16.6 for Ireland, which have no expiration dates.

The Company has established a valuation allowance for certain federal, state and foreign net operating loss and tax credit carryforwards. Management believes that, based on a number of factors, the available objective evidence creates uncertainty regarding the utilization of these carryforwards. At December 31, 2011, there was a valuation allowance of $3.8 for such items. The valuation allowance for deferred tax assets decreased by $13.1 during 2011. The decrease in this allowance was primarily due to a decrease in the valuation allowance of approximately $12.5 established in connection with the finalization of the Spectrum K12 acquisition accounting and a release of a valuation allowance of $0.6 related to marketable securities.

The effective tax rate varies from the current statutory federal income tax rate as follows:

F-22

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011		Years ended December 31,
					2010		2009
Statutory rate	35.0	%	35.0	%	35.0	%	35.0	%
State and local taxes	5.1	%	6.0	%	4.1	%	3.4	%
Goodwill impairment	—	%	34.0	%	—	%	—	%
Contingent consideration	—	%	(11.4	)%	—	%	—	%
Domestic production activities deduction	—	%	(4.0	)%	(2.1	)%	(0.9	)%
Uncertain tax positions	—	%	(0.3	)%	(1.2	)%	(2.0	)%
Other	(1.3	)%	(0.7	)%	1.5	%	2.0	%
	38.8	%	58.6	%	37.3	%	37.5	%

The Company, M & F Worldwide and another subsidiary of M & F Worldwide entered into a tax sharing agreement in 2005 (the "2005 Tax Sharing Agreement") whereby M & F Worldwide files consolidated federal income tax returns on the Company's behalf, as well as on behalf of certain other subsidiaries of M & F Worldwide for periods prior to the MacAndrews Acquisition. Under the 2005 Tax Sharing Agreement, the Company made periodic payments to M & F Worldwide. These payments were based on the applicable federal income tax liability that the Company would have had for each taxable period if the Company had not been included in the M & F Worldwide consolidated group. Similar provisions apply with respect to any foreign, state or local income or franchise tax returns filed by any M & F Worldwide consolidated, combined or unitary group for each period that the Company is included in any such group for foreign, state or local tax purposes. Effective upon the closing of the MacAndrews Acquisition, the 2005 Tax Sharing Agreement was amended and restated to incorporate MacAndrews as the common parent (the "2011 Tax Sharing Agreement"). For the periods beginning on or after December 22, 2011, MacAndrews will file consolidated federal income tax returns on the Company's behalf, as well as on behalf of certain other subsidiaries of MacAndrews. The terms of the 2011 Tax Sharing Agreement are consistent with the terms of the 2005 Tax Sharing Agreement. The Company made net payments to M & F Worldwide of $0.0 and $70.3 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $83.5 and $79.4, for fiscal years 2010 and 2009, respectively, under the tax sharing agreements. At the end of 2011 and 2010, the Company had net receivables of $16.0 and $7.0, respectively, relating to the tax sharing agreements.

To the extent that the Company has losses for tax purposes, the 2005 Tax Sharing Agreement and the 2011 Tax Sharing Agreement permit the Company to carry those losses back to periods beginning on or after December 15, 2005, and forward for so long as the Company is included in the affiliated group of which MacAndrews is the common parent (in both cases, subject to federal, state and local rules on limitation and expiration of net operating losses) to reduce the amount of the payments the Company otherwise would be required to make to M & F Worldwide, under the 2005 Tax Sharing Agreement, or MacAndrews, under the 2011 Tax Sharing Agreement, in years in which it has current income for tax purposes. If the loss is carried back to the previous period, M & F Worldwide, under the 2005 Tax Sharing Agreement, and MacAndrews, under the 2011 Tax Sharing Agreement, shall pay the Company an amount equal to the decrease of the taxes the Company would have benefited as a result of the carry back.

In connection with the 2005 acquisition of Clarke American Corp., Honeywell International Inc. ("Honeywell") agreed to indemnify M & F Worldwide and its affiliates, including the Company, for certain income tax liabilities that arose prior to the acquisition of Clarke American and M & F Worldwide has agreed to reimburse to the Company an amount equal to 100% of any payment received (unless M & F Worldwide incurs any such liabilities directly).

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

F-23

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011			Years ended December 31,
						2010			2009
Balance at beginning of period	$	10.9	$	12.0		$	13.6		$	18.6
Additions based on tax positions related to the current year	—		—			—			—
Additions for tax positions for prior years	—		2.5			0.6			1.7
Reductions for tax positions for prior years	—		(3.6		)	(2.2		)	(6.7		)
Settlements	—		—			—			—
Balance at end of period	$	10.9	$	10.9		$	12.0		$	13.6

Of the amounts reflected in the table above at December 31, 2011 and 2010, there were $4.8 and $4.6 of tax benefits that, if recognized in 2011 and 2010, respectively, would have reduced the Company's annual effective tax rate. The Company had accrued interest and penalties of approximately $6.7 and $6.0 as of December 31, 2011 and 2010, respectively. The Company records both accrued interest and penalties related to income tax matters, which is not significant, in the provision for income taxes in the accompanying consolidated statements of operations. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. The statute of limitations for the Company's federal and state tax returns for the tax years 2008 through 2011 generally remain open. In addition, open tax years related to foreign jurisdictions remain subject to examination but are not considered material.

In 2011, the Internal Revenue Service completed its examination of Novar USA Inc., a predecessor of Harland Clarke Holdings, for the tax year 2005 without change. In 2009, the Internal Revenue Service completed examinations of Harland for the tax years 2005 through May 1, 2007 and for Harland's amended tax returns filed for claims of research and development credits relating to tax years 2002 through 2005. In connection with completion of the audits, Harland resolved its research and development credit claims with the Internal Revenue Service. This resulted in a $5.9 reduction of the accrual for the Company's uncertain tax positions, of which $3.4 (inclusive of interest) was recorded as a benefit in the tax provision for the year ended December 31, 2009.

9.  Retirement Plans

The Company, through its subsidiaries, sponsors certain defined contribution benefit plans whereby it generally matches employee contributions up to 4% of base wages. Contributions to the plans totaled $0.1 and $12.7 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $13.2 and $14.5 for fiscal years 2010 and 2009, respectively.

The Company has deferred compensation agreements with certain former officers. The present value of the cash benefits payable under these agreements was $6.9 and $6.6 at December 31, 2011 and 2010, respectively. Accretion expense recognized for these agreements was not significant.

10.  Other Postretirement Benefit Plans

The Company sponsors two unfunded postretirement defined benefit plans that cover certain former salaried and non-salaried employees. One plan provides healthcare benefits and the other provides life insurance benefits. The medical plan is contributory and contributions are adjusted annually based on actual claims experience. For retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000, the Company contributes a portion of the cost of the medical plan. For all other retirees, the Company's intent is that the retirees provide the majority of the actual cost of the medical plan. The life insurance plan is noncontributory for those employees that retired by December 31, 2002.

During 2010, the Company amended the medical plan for benefits to be provided after December 31, 2010 for retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000. As a result of these amendments, the Company remeasured its accumulated postretirement benefit obligation ("APBO") as of September 30, 2010. The remeasurement reflected a new discount rate of 5.0% and resulted in a $7.0 decrease in the APBO and the offsetting amount was recorded in other comprehensive income.

As of December 31, 2011 and 2010, the APBO was $11.4 and $10.1, respectively. The Company contributed to these plans $0.0 and $0.4 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $0.5

F-24

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

for fiscal year 2010. The Company expects to contribute $0.6 to these plans in 2012.

The following table presents the beginning and ending balances of the APBO, the changes in the APBO, and reconciles the plans' status to the accrued postretirement healthcare and life insurance liability reflected on the accompanying consolidated balance sheets as of December 31, 2011 and 2010:

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011			Year ended December 31, 2010
APBO at beginning of period	$	11.2	$	10.1		$	18.9
Changes in APBO:
Interest cost	—		0.5			0.9
Benefits paid	—		(0.8		)	(1.5		)
Retiree contributions	—		0.3			0.9
Health benefits subsidy	—		0.1			0.1
Actuarial (gain) loss	0.2		1.0			(0.6		)
Plan amendment	—		—			(8.6		)
APBO at end of period	$	11.4	$	11.2		$	10.1
Included in accrued salaries, wages and employee benefits	$	0.6	$	0.6		$	0.6
Included in other liabilities	10.8		10.6			9.5
APBO at end of period	$	11.4	$	11.2		$	10.1

The following table presents the changes in the fair value of plan assets and the funded status for the periods presented:

	Successor			Predecessor
	December 22 to December 31, 2011			January 1 to December 21, 2011			Year ended December 31, 2010
Fair value of plan assets at beginning of period	$	—		$	—		$	—
Employer contributions	—			0.4			0.5
Retiree contributions	—			0.3			0.9
Health benefits subsidy	—			0.1			0.1
Benefits paid	—			(0.8		)	(1.5		)
Fair value of plan assets at end of period	$	—		$	—		$	—
Funded status	$	(11.4	)	$	(11.2	)	$	(10.1	)

As of December 31, 2011 and 2010, amounts recognized in accumulated other comprehensive income (loss), which have not yet been recognized as a component of net postretirement benefit cost, consist of:

	Successor		Predecessor
	2011		2010
Unrecognized prior service credits	$	—	(8.5		)
Unrecognized actuarial net loss	0.2		1.9
	$	0.2	$	(6.6	)

Net periodic postretirement benefit costs for these plans were as follows:

F-25

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

	Successor		Predecessor
						Years ended December 31,
	December 22 to December 31, 2011		January 1 to December 21, 2011			2010			2009
Interest on accumulated postretirement benefit obligation	$	—	$	0.5		$	0.9		$	1.0
Amortization of prior service credits	—		(0.4		)	(0.1		)	—
Amortization of net actuarial loss	—		—			0.1			—
Net postretirement benefit cost	—		0.1			0.9			1.0
Other changes in benefit obligations recognized in other comprehensive income:
Unrecognized actuarial net loss (gain)	0.2		1.0			(0.6		)	1.6
Amortization of net actuarial loss	—		—			(0.1		)	—
Prior service credits	—		—			(8.6		)	—
Amortization of prior service credits	—		0.4			0.1			—
Total recognized in net periodic benefit cost and other comprehensive income	$	0.2	$	1.5		$	(8.3	)	$	2.6

The weighted average discount rates used to determine benefit obligations for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 and fiscal year 2010 were 4.15%, 4.30% and 5.25%, respectively. The weighted average discount rates used to determine the net periodic postretirement benefit cost for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 were 5.25% for each period and were 5.75% and 6.0% for fiscal years 2010 and 2009, respectively. The annual healthcare cost trend rates used for 2012 to determine benefit obligations at December 31, 2011 were assumed to be 8.0%. The estimated annual healthcare cost trend rates grade down gradually to 4.75% at 2018. Participant contributions are assumed to increase with healthcare cost trend rates.

The healthcare cost trend rate assumptions, which are net of participant contributions, could have a significant effect on amounts reported. A change in the assumed trend rate of 1 percentage point would have the following effects:

	1 Percentage Point Increase	1 Percentage Point Decrease
Effect on total interest cost for 2011	—	—
Effect on postretirement benefit obligation at December 31, 2011	0.3	(0.2	)

The following reflects the estimated future benefit payments, net of estimated participant contributions:

2012	$	0.6
2013	0.6
2014	0.6
2015	0.6
2016	0.6
2017-2021	3.2

There will not be any amortization of accumulated actuarial net loss in 2012.

F-26

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

11. Long-Term Debt

	Successor			Predecessor
	December 31, 2011			December 31, 2010
$1,900.0 Senior Secured Credit Facilities	$	1,719.0		$	1,737.0
Senior Floating Rate Notes due 2015	204.3			206.8
9.50% Senior Fixed Rate Notes due 2015	271.3			271.3
Capital lease obligations and other indebtedness	3.5			4.6
Unamortized acquisition accounting-related fair value discount	(412.7		)	—
	1,785.4			2,219.7
Less: current maturities	(19.1		)	(19.4		)
Long-term debt, net of current maturities	$	1,766.3		$	2,200.3

$1,900.0 Senior Secured Credit Facilities

On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into a credit agreement (the "Credit Agreement"). The Credit Agreement provides for a $1,800.0 senior secured term loan (the "Term Loan"), which was fully drawn at closing on May 1, 2007 and matures on June 30, 2014. The Company is required to repay the Term Loan in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount. In addition, the Credit Agreement requires that a portion of the Company's excess cash flow be applied to prepay amounts borrowed, as further described below. The Credit Agreement also provides for a $100.0 revolving credit facility (the "Revolver") that matures on June 28, 2013. The Revolver includes an up to $60.0 subfacility in the form of letters of credit and an up to $30.0 subfacility in the form of short-term swing line loans. The weighted average interest rate on the principal amount of borrowings outstanding under the Term Loan was 2.8% at December 31, 2011. As of December 31, 2011 there were no outstanding borrowings under the Revolver and there was $92.0 available for borrowing (giving effect to the issuance of $8.0 of letters of credit). As of December 31, 2010, there were no outstanding borrowings under the Revolver and there was $91.8 available for borrowing (giving effect to the issuance of $8.2 of letters of credit).

Under certain circumstances, the Company is permitted to incur additional term loan and/or revolving credit facility indebtedness in an aggregate principal amount of up to $250.0. In addition, the terms of the Credit Agreement and the 2015 Senior Notes (as defined below) allow the Company to incur substantial additional debt.

Loans under the Credit Agreement bear, at the Company's option, interest at:

• A rate per annum equal to the higher of (a) the prime rate of Credit Suisse and (b) the Federal Funds rate plus 0.50%, in each case plus an applicable margin of 1.50% per annum for revolving loans and for term loans; or

• A rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin of 2.50% per annum for revolving loans and for term loans.

The Credit Agreement has a commitment fee of 0.50% for the unused portion of the Revolver and a weighted average commitment fee of 2.52% for issued letters of credit. Interest rate margins and commitment fees under the Revolver are subject to reduction in increments based upon the Company achieving certain consolidated leverage ratios.

The Company and each of its existing and future domestic subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries, are guarantors and may also be co-borrowers under the Credit Agreement. In addition, the Company's direct parent, CA Acquisition Holdings, Inc., is a guarantor under the Credit Agreement. The senior secured credit facilities are secured by a perfected first priority security interest in substantially all of the Company's, each of the co-borrowers' and the guarantors' tangible and intangible assets and equity interests (other than voting stock in excess of 65.0% of the outstanding voting stock of each direct foreign subsidiary and certain other excluded property).

The Credit Agreement contains customary affirmative and negative covenants including, among other things, restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale-leaseback transactions. The Credit Agreement requires the Company to maintain a maximum consolidated leverage ratio for the benefit of lenders under the Revolver only. The Company has the right to prepay the Term Loan at any time without premium or penalty, subject to certain breakage costs,

F-27

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

and the Company may also reduce any unutilized portion of the Revolver at any time, in minimum principal amounts set forth in the Credit Agreement. The Company is required to prepay the Term Loan with 50% of excess cash flow (as defined in the Credit Agreement, with certain reductions set forth in the Credit Agreement, based on achievement and maintenance of leverage ratios) and 100% of the net proceeds of certain issuances, offerings or placements of debt obligations of the Company or any of its subsidiaries (other than permitted debt). Each such prepayment will be applied first to the next eight unpaid quarterly amortization installments on the term loans and second to the remaining amortization installments on the term loans on a pro rata basis. An excess cash flow payment of approximately $12.5 will be paid in the first quarter of 2012 with respect to 2011 and will be applied against other mandatory payments due in 2012 under the terms of the Credit Agreement. An excess cash flow payment of $3.5 was paid in March 2011 with respect to 2010 and under the terms of the Credit Agreement was applied against other mandatory payments due in 2011. No such excess cash flow payment was required to be paid in 2010 with respect to 2009.

The Credit Agreement also contains certain customary affirmative covenants and events of default. Such events of default include, but are not limited to: non-payment of amounts when due; violation of covenants; material inaccuracy of representations and warranties; cross default and cross acceleration with respect to other material debt; bankruptcy and other insolvency events; certain ERISA events; invalidity of guarantees or security documents; and material judgments. Some of these events of default allow for grace periods.

If a change of control (as defined in the Credit Agreement) occurs, the Company will be required to make an offer to prepay all outstanding term loans under the Credit Agreement at 101% of the outstanding principal amount thereof plus accrued and unpaid interest, and lenders holding a majority of the revolving credit commitments may elect to terminate the revolving credit commitments in full. The Company is also required to offer to prepay outstanding term loans at 100% of the principal amount to be prepaid, plus accrued and unpaid interest, with the proceeds of certain asset sales under certain circumstances.

Senior Notes due 2015

On May 1, 2007, the Company issued $305.0 aggregate principal amount of Senior Floating Rate Notes due 2015 (the "Floating Rate Notes") and $310.0 aggregate principal amount of 9.50% Senior Fixed Rate Notes due 2015 (the "Fixed Rate Notes" and, together with the Floating Rate Notes, the "2015 Senior Notes"). The 2015 Senior Notes mature on May 15, 2015. The Fixed Rate Notes bear interest at a rate per annum of 9.50%, payable on May 15 and November 15 of each year. The Floating Rate Notes bear interest at a rate per annum equal to the Applicable LIBOR Rate (as defined in the indenture governing the 2015 Senior Notes (the "Indenture")), subject to a floor of 1.25%, plus 4.75%, payable on February 15, May 15, August 15 and November 15 of each year. The interest rate on the Floating Rate Notes was 6.0% at December 31, 2011. The Senior Notes are unsecured and are therefore effectively subordinated to all of the Company's senior secured indebtedness, including outstanding borrowings under the Credit Agreement. The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries, are guarantors and may also be co-issuers under the 2015 Senior Notes.

The Indenture contains customary restrictive covenants, including, among other things, restrictions on the Company's ability to incur additional debt, pay dividends and make distributions, make certain investments, repurchase stock, incur liens, enter into transactions with affiliates, enter into sale and lease back transactions, merge or consolidate and transfer or sell assets. The Company must offer to repurchase all of the 2015 Senior Notes upon the occurrence of a "change of control," as defined in the Indenture, at a purchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. The Company must also offer to repurchase the 2015 Senior Notes with the proceeds from certain sales of assets, if it does not apply those proceeds within a specified time period after the sale, at a purchase price equal to 100% of their aggregate principal amount, plus accrued and unpaid interest.

(Loss) Gain on Early Extinguishment of Debt

During 2011, the Company extinguished debt with a total principal amount of $2.5 with a carrying value of $1.6, after acquisition accounting related fair value adjustments, by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7, resulting in a loss of $0.1. During 2009, the Company extinguished debt with a total principal amount of $136.9 by purchasing 2015 Senior Notes in individually negotiated transactions for an aggregate purchase price of $67.6, resulting in a gain of $65.0 after the write-off of $4.3 of unamortized deferred financing fees related to the extinguished debt. The Company did not purchase any 2015 Senior Notes during 2010.

Capital Lease Obligations and Other Indebtedness

The Company has outstanding capital lease obligations and other indebtedness with principal balances totaling $3.5 and

F-28

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

$4.6 at December 31, 2011 and December 31, 2010, respectively. These obligations have imputed interest rates ranging from 4.54% to 9.6% and have required payments of $1.1 in 2012, $1.2 in 2013, $1.0 in 2014, $0.1 in 2015 and $0.1 in 2016. During the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009, subsidiaries of the Company entered into capital leases and other indebtedness totaling $0.0, $0.4, $0.4 and $5.1, respectively, and, accordingly, such non-cash transaction amounts have been excluded from the consolidated statements of cash flows.

Annual Maturities

Annual maturities of long-term debt during the next five years are as follows:

2012	$	19.1
2013	19.2
2014	1,684.0
2015	475.7
2016	0.1

12. Derivative Financial Instruments

Interest Rate Hedges

The Company uses hedge transactions, which are accounted for as cash flow hedges, to limit the Company's risk on a portion of its variable-rate debt.

During February 2006, the Company entered into interest rate hedge transactions in the form of three-year interest rate swaps with a total notional amount of $150.0, which became effective on July 1, 2006. The hedges, which expired on June 30, 2009, swapped the underlying variable rate for a fixed rate of 4.992%.

During June 2007, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $255.0, which became effective on June 29, 2007. This hedge, which expired on June 30, 2010, swapped the underlying variable rate for a fixed rate of 5.362%.

During June 2009, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $350.0, which became effective on June 30, 2009. This hedge swaps the underlying variable rate for a fixed rate of 2.353%. During September 2009, the Company entered into an additional interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $250.0, which became effective on September 30, 2009. This hedge swaps the underlying variable rate for a fixed rate of 2.140%.

During June 2010, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $255.0, which became effective on June 30, 2010. This hedge swaps the underlying variable rate for a fixed rate of 1.264%.

The following presents the fair values of these derivative instruments and the classification in the consolidated balance sheets.

		December 31,
Derivatives Designated as Cash Flow Hedging Instruments:	Balance Sheet Classification	2011		2010
Interest rate swaps	Other current liabilities	$	6.1	$	—
	Other liabilities	2.9		17.8

Fair value of interest rate swaps is based on forward-looking interest rate curves as provided by the counterparty, adjusted for the Company's credit risk.

These derivative instruments had no ineffective portions during 2010 and 2009. Accordingly, no amounts were required to be reclassified from accumulated other comprehensive income to the consolidated statements of operations in 2010 and 2009 due to ineffectiveness. The following presents the effect of these derivative instruments (effective and ineffective portion) on other comprehensive income and amounts reclassified from accumulated other comprehensive income into interest expense.

F-29

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011		Years ended December 31,
					2010		2009
Interest Rate Swaps:
Loss recognized in other comprehensive income (effective portion)	$	0.1	$	5.8	$	23.3	$	18.3
Loss reclassified from other comprehensive income into interest expense (effective portion)	—		12.9		19.7		31.6
Loss recognized in interest expense (ineffective portion)	0.1		—		—		—

The Company expects to reclassify approximately $0.1 from accumulated other comprehensive income at December 31, 2011 into net income as additional interest expense during the twelve months ending December 31, 2012.

The following presents the balances and net changes in the accumulated other comprehensive income related to these derivative instruments, net of income taxes:

	Successor			Predecessor
Balances and Net Changes:	December 22 to December 31, 2011			January 1 to December 21, 2011			2010
Balance at beginning of period	$	6.5		$	10.9		$	8.6
Change in ownership	(6.5		)	—			—
Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0, $5.0 and $7.7	—			(7.9		)	(12.0		)
Net change in fair value of interest rate swaps (effective portion), net of taxes of $0.0, $2.3 and $9.0	0.1			3.5			14.3
Balance at end of period	$	0.1		$	6.5		$	10.9

13.  Fair Value Measurements

Nonrecurring Fair Value Measurements

The following table presents the Company's nonfinancial assets that were measured at fair value on a nonrecurring basis during 2011:

	Fair Value at November 1, 2011		(Level 1)	(Level 2)	(Level 3)		Impairment Charges
Goodwill - Scantron	$	281.9	—	—	$	281.9	$	102.2
Indefinite-lived tradename - Scantron	6.8		—	—	6.8		4.2

Goodwill and indefinite-lived tradename for the Scantron segment were measured for impairment during the fourth quarter of 2011 as part of the Company's annual measurements for impairment testing and resulted in non-cash impairment charges totaling $102.2 and $4.2, respectively. The impairments were primarily due to declines in projected revenues and margins and a higher discount rate for the Scantron segment.

The following table presents the Company's nonfinancial assets that were measured at fair value on a nonrecurring basis during 2009:

	Fair Value at November 1, 2009		(Level 1)	(Level 2)	(Level 3)		Impairment Charges
Indefinite-lived trademarks and tradenames	$	156.8	—	—	$	156.8	$	44.2

Indefinite-lived trademarks and tradenames were measured for impairment during the fourth quarter of 2009 as part of the

F-30

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Company's annual measurements for impairment testing and resulted in non-cash impairment charges totaling $44.2. The charges consisted of $33.4 related to the Harland Clarke segment, $10.6 related to the Harland Financial Solutions segment and $0.2 related to the Scantron segment. The impairments were primarily due to declines in revenues from check unit volumes that were projected to decline at rates that are higher than recent years and also due to the continuing economic downturn.

See Note 2 for more information on the fair value measurement process for goodwill and indefinite-lived trademarks and tradenames.

Recurring Fair Value Measurements

Fair values of financial instruments subject to recurring fair value measurements as of December 31, 2011 and 2010, are as follows:

	Balance at December 31, 2011		(Level 1)		(Level 2)		(Level 3)
United States treasury securities	$	56.6	$	56.6	$	—	$	—
Corporate equity securities	0.1		0.1		—		—
Liability for interest rate swaps	9.0		—		9.0		—
Liability for contingent consideration related to business combinations	0.5		—		—		0.5

	Balance at December 31, 2010		(Level 1)		(Level 2)		(Level 3)
Corporate equity securities	$	13.1	$	13.1	$	—	$	—
Liability for interest rate swaps	17.8		—		17.8		—
Liability for contingent consideration related to business combinations	8.2		—		—		8.2

Fair value of interest rate swaps is based on forward-looking interest rate curves as provided by the counterparty, adjusted for the Company's credit risk. Fair value of corporate equity securities and United States treasury securities are based on quoted market prices. Fair value of the liability for contingent consideration related to business combinations is estimated utilizing a discounted cash flow analysis. The analysis considers, among other things, estimates of future revenues and the timing of expected future contingent consideration payments. The liability for contingent consideration that is considered to be incentive compensation is recorded as compensation expense as earned.

The following table presents the Company's liability for contingent consideration related to business combinations measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	2011			2010
Balance at beginning of period	$	8.2		1.8
Businesses acquired	17.0			6.8
Net changes in fair value	(24.3		)	0.3
Payment on contingent consideration arrangement	(0.3		)	(0.7		)
Balance at end of period	$	0.6		$	8.2

Fair Value of Financial Instruments

Most of the Company's clients are in the financial services and educational industries. The Company performs ongoing credit evaluations of its clients and maintains allowances for potential credit losses. The Company does not generally require collateral. Actual losses and allowances have been within management's expectations.

The carrying amounts for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues as of the measurement date. The estimated fair value of long-term debt at December 31, 2011 and 2010, was approximately $1,794.8 and $2,009.2, respectively. The carrying value of long-term debt at December 31, 2011 and 2010, was $1,785.4 and $2,219.7, respectively. As described in Note 3, the carrying value of the Company's long-term debt was adjusted to fair value as of the date of the MacAndrews Acquisition.

F-31

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

14. Marketable Securities

The Company's marketable securities are classified as available-for-sale and are reported at their fair values, which are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Balance at December 31, 2011:
United States treasury securities	$	56.5	$	0.1	$	—		$	56.6
Corporate equity securities	0.1		—		—			0.1
Balance at December 31, 2010:
Corporate equity securities	$	0.3	$	12.9	$	(0.1	)	$	13.1

The Company purchased United States treasury securities, which mature in 2014, during the fourth quarter of 2011. During 2011, the Company sold certain corporate equity securities for $13.4 in cash and recognized a gain of $13.2, which is included in other income, net in the accompanying consolidated statements of operations. During 2010, the Company sold its investment in United States treasury securities, which were to mature in 2012, for $24.7 in cash and recognized a gain of $0.1, which is included in other income, net in the accompanying consolidated statements of operations.

15.  Restructuring

Harland Clarke and Corporate

The Company adopted plans during 2008, 2009, 2010 and 2011 to realize additional cost savings in the Harland Clarke segment and Corporate by further consolidating printing plants, contact centers and selling, general and administrative functions. The Company also recorded restructuring liabilities of $1.5 in connection with an acquisition in 2008. The restructuring liabilities were reduced by $1.1 and $0.2 in 2009 and 2010, respectively, of which, $0.6 is reflected as 2009 non-cash utilization in the table below.

The following table details the components of the Company's restructuring accruals under its plans related to the Harland Clarke segment and Corporate for 2011, 2010 and 2009:

	Beginning Balance		Expensed		Paid in Cash			Non-cash Utilization			Ending Balance
Year ended December 31, 2011:
Severance and severance-related	$	1.5	$	6.1	$	(3.1	)	$	—		$	4.5
Facilities closures and other costs	4.5		1.6		(3.0		)	(0.1		)	3.0
Total	$	6.0	$	7.7	$	(6.1	)	$	(0.1	)	$	7.5
Year ended December 31, 2010:
Severance and severance-related	$	2.5	$	5.1	$	(6.1	)	$	—		$	1.5
Facilities closures and other costs	2.5		7.2		(2.5		)	(2.7		)	4.5
Total	$	5.0	$	12.3	$	(8.6	)	$	(2.7	)	$	6.0
Year ended December 31, 2009:
Severance and severance-related	7.4		$	18.1	$	(23.0	)	$	—		$	2.5
Facilities closures and other costs	2.3		7.6		(2.8		)	(4.6		)	2.5
Total	$	9.7	$	25.7	$	(25.8	)	$	(4.6	)	$	5.0

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period.

The non-cash utilization of $0.1, $2.7 and $4.6 in 2011, 2010 and 2009, respectively, in the table above, includes adjustments to the carrying value of other property, plant and equipment. The Company expects to incur in future periods an additional $1.4 for costs related to these plans. Ongoing lease commitments related to these plans continue through 2017.

F-32

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Harland Financial Solutions

During 2009, the Company initiated a multi-year plan to reorganize certain operations and sales and support functions within the Harland Financial Solutions segment. The plan, which was completed in 2011, focused on moving from a product-centric organization to a functional organization in order to enhance customer support.

The following table details the Company's restructuring accruals related to the Harland Financial Solutions segment for 2011, 2010 and 2009:

	Beginning Balance		Expensed		Paid in Cash			Non-cash Utilization		Ending Balance
Year ended December 31, 2011:
Severance and severance-related	$	0.1	$	0.3	$	(0.4	)	$	—	$	—
Facilities and other costs	2.2		0.1		(0.8		)	—		1.5
Total	$	2.3	$	0.4	$	(1.2	)	$	—	$	1.5
Year ended December 31, 2010:
Severance and severance-related	$	1.0	$	0.7	$	(1.6	)	$	—	$	0.1
Facilities and other costs	0.1		2.1		(0.1		)	0.1		2.2
Total	$	1.1	$	2.8	$	(1.7	)	$	0.1	$	2.3
Year ended December 31, 2009:
Severance and severance-related	$	1.4	$	3.3	$	(3.7	)	$	—	$	1.0
Facilities and other costs	0.7		0.5		(1.1		)	—		0.1
Total	$	2.1	$	3.8	$	(4.8	)	$	—	$	1.1

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period.

Scantron

As a result of an acquisition, the Company adopted plans to restructure the Scantron segment in 2008. These plans focused on improving operating margins through consolidating manufacturing and printing operations and reducing duplicative selling, general and administrative expenses through workforce rationalization, consolidation of certain redundant outsourcing and the reduction of consulting and other professional services. The Company completed substantially all of the planned employee terminations and consolidation of printing and manufacturing operations related to the acquisition in 2009.

The Company also adopted plans during 2009, 2010 and 2011 to realize additional cost savings in the Scantron segment by further consolidation of operations and elimination of certain selling, general and administrative expenses.

The following table details the components of the Company's restructuring accruals related to the Scantron segment for 2011, 2010 and 2009:

F-33

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

	Beginning Balance		Expensed			Paid in Cash			Non-cash Utilization			Ending Balance
Year ended December 31, 2011:
Severance and severance-related	$	0.1	$	5.2		$	(3.3	)	$	—		$	2.0
Facilities and other costs	3.7		(0.7		)	(1.7		)	0.1			1.4
Total	$	3.8	$	4.5		$	(5.0	)	$	0.1		$	3.4
Year ended December 31, 2010:
Severance and severance-related	$	0.5	$	2.5		$	(2.9	)	$	—		$	0.1
Facilities and other costs	—		4.7			(1.2		)	0.2			3.7
Total	$	0.5	$	7.2		$	(4.1	)	$	0.2		$	3.8
Year ended December 31, 2009:
Severance and severance-related	$	1.0	$	2.7		$	(3.0	)	$	(0.2	)	$	0.5
Facilities and other costs	—		0.3			—			(0.3		)	—
Total	$	1.0	$	3.0		$	(3.0	)	$	(0.5	)	$	0.5

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period.

Ongoing lease commitments related to these plans continue to 2013.

Restructuring accruals for all of the segments' plans are reflected in other current liabilities and other liabilities in the accompanying consolidated balance sheets. The Company expects to pay the remaining severance, facilities and other costs related to the segments' restructuring plans through 2017.

16.  Commitments and Contingencies

Lease and Purchase Commitments

The Company leases property, equipment and vehicles under operating leases that expire at various dates through 2020. Certain leases contain renewal options for one- to five-year periods. Rental payments are typically fixed over the initial term of the lease and usually contain escalation factors for the renewal term. At December 31, 2011, future minimum lease payments under non-cancelable operating leases with terms of one year or more are as follows:

2012	$	25.9
2013	21.5
2014	16.6
2015	9.2
2016	7.8
Thereafter	11.7

Minimum annual rental payments in the above table have not been reduced by minimum sublease rentals of $2.2.

Total operating lease expense, excluding operating lease expense included in restructuring costs was $0.5 and $20.8 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $22.4 and $23.8 for fiscal years 2010 and 2009, respectively.

At December 31, 2011, the Company had obligations of $31.2 payable under contracts with third-party service providers primarily for information technology services and obligations to purchase approximately $26.2 of raw materials.

Honeywell Indemnification

Certain of the intermediate holding companies of the predecessor of the Company had issued guarantees on behalf of operating companies formerly owned by these intermediate holding companies, which operating companies are not part of the Company's current businesses. In the stock purchase agreement executed in connection with M & F Worldwide's acquisition of the Company in 2005, Honeywell agreed to use its commercially reasonable efforts to assume, replace or terminate such guarantees and indemnify M & F Worldwide and its affiliates, including the Company and its subsidiaries, with respect to all

F-34

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

liabilities arising under such guarantees.

Other

A series of commercial borrowers in various states that allegedly obtained loans from financial institutions employing HFS'sLaserProsoftware have commenced individual or class actions against their financial institutions alleging that the loans were deceptive or usurious in that they failed to disclose properly the effect of the "365/360" method of calculating interest. In some cases, the financial institutions have made warranty claims against HFS related to these actions. Some of the actions commenced by the commercial borrowers have been dismissed, and many of the remainder, and the related warranty claims, are at early stages, so that the likely progress of those pending matters is not yet clear. The Company has not accepted any of the warranty claims. One of the financial institutions has commenced an arbitration against the Company relating to a commercial borrower claim against it under the terms of the Company's agreement with the financial institution, and another financial institution has filed a motion in the action brought by its commercial borrower seeking to assert a third-party claim against the Company. In the latter action, the Company has moved to stay the third-party claim pending arbitration. At the appropriate time, the Company intends to deny liability to both financial institutions, but the Company is not able at this early stage to assess whether it may have any liability to either institution or the amount of any such liability, but it believes it is remote that either claim will result in material liability. Due to the preliminary nature of the remaining matters, the Company believes it is remote that any of the remaining warranty claims will result in any material liability for the Company.

Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, environmental matters, employment matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations.

17.  Transactions with Related Parties

The Company participates in MacAndrews directors and officers insurance program, which covers the Company as well as MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews for its allocable portion of the premiums for such coverage, which the Company believes is more favorable than the premiums the Company could secure were it to secure its own coverage. At December 31, 2011 and 2010, the Company recorded prepaid expenses of $0.0 and $0.1, respectively, relating to the directors and officers insurance program in the accompanying consolidated balance sheets. The Company paid $0.0 and $0.1 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $0.0 and $0.1 for the fiscal years 2010 and 2009, respectively, to MacAndrews under the insurance program.

Notes Receivable

On December 27, 2011, the Company entered into a revolving credit agreement with its indirect parent, MacAndrews, whereby MacAndrews could borrow an amount not exceeding $30.0. The facility is unsecured, bears interest at LIBOR plus 2% and matures in December 2013. The facility was drawn in full by MacAndrews on December 27, 2011 and remained outstanding at December 31, 2011.

In 2008, Harland Clarke Holdings acquired the senior secured credit facility and outstanding note of Delphax Technologies, Inc. ("Delphax"), the supplier of Imaggia printing machines and related supplies and service for the Harland Clarke segment. The senior secured credit facility and note were paid in full and canceled on November 9, 2011. The senior secured credit facility was comprised of a revolving credit facility of up to $14.0, subject to borrowing limitations set forth therein that originally matured in September 2011. Contemporaneous with its acquisition of the senior secured credit facility and the note, Harland Clarke Holdings also acquired 250,000 shares of Delphax common stock from the previous holder of the Delphax note. In May 2011, the note was restated to set the interest rate to 8.0%, effective October 1, 2010, and to require the repayment of $1.0 of principal in 2011 and the senior secured credit facility was extended to mature in September 2012.

During 2011, the Company received $4.0 in payments on the note, fully repaying the principal balance of the note. During 2010, the Company received $3.0 in payments on the note, bringing the principal balance of the note and the senior secured credit facility to $4.0 and $0.0, respectively, at December 31, 2010. Interest income of $0.0, $0.2, $0.4 and $0.8 was recorded during the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009, respectively.

F-35

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

Other

The Company expensed $0.0, $2.7, $2.7 and $2.7 during the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009, respectively, for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses.

In the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009 , the Company paid cash dividends of $12.6, $48.7, $31.2 and $41.3, respectively, to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements.

As discussed in Note 8, the Company made net payments to and had net receivables with M & F Worldwide related to the 2005 Tax Sharing Agreement. The Company also had a net payable to MacAndrews related to the 2011 Tax Sharing Agreement.

18.  Significant Customers

The Company's top 20 clients accounted for approximately 30% of the Company's consolidated net revenues during each of the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 and 32% for each of the fiscal years 2010 and 2009, with sales to Bank of America and Wells Fargo representing a significant portion of such revenues in the Harland Clarke segment.

19.  Business Segment Information

The Company has organized its business along three reportable segments together with a corporate group for certain support services. The Company's operations are aligned on the basis of products, services and industry. Management measures and evaluates the reportable segments based on operating income. The current segments and their principal activities consist of the following:

• Harland Clarke segment — Provides checks and related products, direct marketing services and customized business and home products to financial, retail and software providers, as well as consumers and small businesses. This segment operates primarily in the United States and Puerto Rico.

• Harland Financial Solutions segment — Provides technology products and services to financial services clients worldwide. This segment operates primarily in the United States, Israel, Ireland and India.

• Scantron segment — Provides data management and decision support solutions and related services to educational, commercial, healthcare and governmental entities worldwide. This segment operates primarily in the United States, Canada and India.

Selected summarized financial information for the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009 is as follows:

F-36

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

	Harland Clarke(1)			Harland Financial Solutions(2)			Scantron(3)			Corporate and Other(4)			Total
Successor
Product revenues, net:
December 22 to December 31, 2011	$	23.9		$	1.1		$	2.4		$	—		$	27.4
Service revenues, net:
December 22 to December 31, 2011	$	0.4		$	5.2		$	2.0		$	—		$	7.6
Intersegment revenues:
December 22 to December 31, 2011	$	—		$	—		$	—		$	—		$	—
Operating loss:
December 22 to December 31, 2011	$	(0.6	)	$	(0.9	)	$	(1.4	)	$	(0.3	)	$	(3.2	)
Depreciation and amortization (excluding amortization of deferred financing fees):
December 22 to December 31, 2011	$	4.3		$	1.0		$	0.6		$	—		$	5.9
Non-cash asset impairment charges:
December 22 to December 31, 2011	$	—		$	—		$	—		$	—		$	—
Capital expenditures (excluding capital leases):
December 22 to December 31, 2011	$	—		$	—		$	—		$	—		$	—
Predecessor
Product revenues, net:
January 1 to December 21, 2011	$	1,092.0		$	69.4		$	111.8		$	—		$	1,273.2
2010	1,156.6			72.0			116.2			—			1,344.8
2009	1,216.8			73.0			123.2			—			1,413.0
Service revenues, net:
January 1 to December 21, 2011	$	18.5		$	210.1		$	84.2		$	—		$	312.8
2010	34.3			210.7			81.4			—			326.4
2009	9.2			205.9			84.2			—			299.3
Intersegment revenues:
January 1 to December 21, 2011	$	0.1		$	—		$	0.8		$	(0.9	)	$	—
2010	0.3			—			6.1			(6.4		)	—
2009	—			—			0.6			(0.6		)	—
Operating income (loss):(5)
January 1 to December 21, 2011	$	242.5		$	54.8		$	(120.9	)	$	(14.8	)	$	161.6
2010	238.0			48.6			25.3			(15.2		)	296.7
2009	195.8			32.8			34.5			(12.8		)	250.3
Depreciation and amortization (excluding amortization of deferred financing fees):
January 1 to December 21, 2011	$	88.9		$	26.1		$	43.4		$	—		$	158.4
2010	103.2			28.5			26.2			—			157.9
2009	109.3			26.9			25.9			—			162.1
Non-cash asset impairment charges:
January 1 to December 21, 2011	$	0.6		$	—		$	111.0		$	—		$	111.6
2010	3.7			—			—			—			3.7
2009	33.6			10.6			0.2			—			44.4
Capital expenditures (excluding capital leases):
January 1 to December 21, 2011	$	38.4		$	7.0		$	13.2		$	—		$	58.6
2010	24.0			8.3			6.3			—			38.6
2009	28.3			6.5			7.4			—			42.2
Total assets:
December 31, 2011 - Successor	$	1,495.8		$	426.7		$	256.2		$	957.2		$	3,135.9
December 31, 2010 - Predecessor	$	987.8		$	342.0		$	311.6		$	1,694.7		$	3,336.1

____________

(1) Includes results of the acquired SubscriberMail business from the date of acquisition.

(2) Includes results of the acquired Parsam business from the date of acquisition.

(3) Includes results of the acquired Spectrum K12 and GlobalScholar businesses from their respective dates of acquisition.

(4) Total assets include goodwill of $824.8 and $1,526.8 as of December 31, 2011 and December 31, 2010, respectively, which is not assigned to the operating segments.

(5) Includes restructuring costs of $12.6, $22.3 and $32.5 for 2011, 2010 and 2009, respectively, (see Note 15) and non-cash impairment charges of $111.6, $3.7 and $44.4 for 2011, 2010 and 2009, respectively.

F-37

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

20.  Subsequent Event

Harland Clarke Holdings entered into a Stock Purchase Agreement, dated as of March 19, 2012, with FLX Holdings LLC and Faneuil Holdco LLC (together with FLX Holdings LLC, "Sellers"), pursuant to which Harland Clarke Holdings purchased (the "Purchase") from the Sellers 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil"), for $70.0 in cash. New Faneuil, through its wholly owned subsidiary Faneuil, Inc., engages in the business of call center operations, staffing and related activities, toll collection operations, toll road services and back office operations (including violations processing).

The issued and outstanding limited liability company interest of each Seller are 100% owned, directly or indirectly, by Mr. Ronald O. Perelman, who indirectly owns 100% of the issued and outstanding shares of capital stock of Harland Clarke Holdings. The Purchase was financed with available cash on hand at Harland Clarke Holdings.

F-38

Schedule II - Valuation and Qualifying Accounts and Reserves

(in millions)

The following is a summary of the valuation and qualifying accounts and reserves for the period from January 2009 to December 31, 2011.

	Beginning Balance		Effect of Acquisition Accounting			Amounts Reserved		Balance Written Off			Ending Balance
Allowance for Doubtful Accounts and Sales Returns and Allowance Reserves
December 22 to December 31, 2011	$	3.0	$	(1.2	)	$	0.2	$	(0.2	)	$	1.8
January 1 to December 21, 2011	$	2.8	$	—		$	1.7	$	(1.5	)	$	3.0
Year Ended December 31, 2010	$	3.0	$	—		$	4.0	$	(4.2	)	$	2.8
Year Ended December 31, 2009	$	2.8	$	—		$	7.6	$	(7.4	)	$	3.0

F-39

EX-2.5

Exhibit 2.5

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is dated as of March 19, 2012, by and among HARLAND CLARKE HOLDINGS CORP., a Delaware corporation ("Purchaser"), FLX HOLDINGS LLC, a Delaware limited liability company ("Seller One"), and FANEUIL HOLDCO LLC, a Delaware limited liability company ("Seller Two", and collectively with Seller One, the "Sellers", and each a "Seller").

RECITALS

WHEREAS, Seller One directly owns 100% of the issued and outstanding class A common shares (the "Class A Shares") of New Faneuil, Inc., a Delaware corporation (the "Company"), and Seller Two directly owns 100% of the issued and outstanding class B common shares (the "Class B Shares", and collectively with the Class A Shares, the "Shares") of the Company which together represent 100% of the issued and outstanding shares of capital stock of the Company; and

WHEREAS, Seller One desires to sell to Purchaser the Class A Shares and Seller Two desires to sell to Purchaser the Class B Shares, and Purchaser desires to purchase from Seller One the Class A Shares and desires to purchase from Seller Two the Class B Shares, in each case, free and clear of all liens (other than any liens imposed by applicable securities laws), subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, and intending to be legally bound, the Parties hereby agree as follows:

1.Purchase Price. The purchase price that the Purchaser shall pay in consideration for the Shares shall be $70,000,000 (the "Purchase Price").

2.Closing. The closing of the purchase and sale of the Shares (the "Closing") shall take place simultaneously with the execution and delivery of this Agreement.

3.Closing Deliverables. At the Closing, Sellers will deliver to Purchaser original certificates representing the Shares duly endorsed or accompanied by stock powers duly endorsed in blank and Purchaser will deliver to each Seller the portion of the Purchase Price to which such Seller is entitled in accordance with Section 4 hereof, in cash, by wire transfer or other immediately available funds to an account (or accounts) designated by such Seller.

4.Allocation of Payment. The portion of the Purchase Price payable to (a) Seller One shall be equal to the product of the Purchase Price and 94.44% and (b) Seller Two shall be equal to the product of the Purchase Price and 5.56%.

5.Representations of the Sellers.

a. Organization and Qualification. Each Seller is a limited liability company duly organized, validly existing and in good standing under the Laws of Delaware. The Company is a corporation duly organized, validly existing and in good standing under the Laws of Delaware.

b. Capital Stock; Title to Interests. The total number of authorized shares of each class of capital stock of the Company, and the total number of issued and outstanding shares of each class of capital stock of the Company, are set forth on Schedule A. The Shares are duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and issued in compliance with applicable law. Seller One owns all of the Class A Shares, beneficially and of record, free and clear of all liens (other than any liens imposed by applicable securities laws). Seller Two owns all of the Class B Shares, beneficially and of record, free and clear of all liens (other than any liens imposed by applicable securities laws). Upon delivery of the Shares to Purchaser at Closing, Purchaser will receive good and valid title to the Shares, free and clear of all liens (other than any liens imposed by applicable securities laws).

c. Authority. The execution and delivery by each Seller of this Agreement and the performance by such Seller of its obligations hereunder, have been duly and validly

authorized by all necessary limited liability company action with no other limited liability company action or other proceedings on the part of such Seller (or its member) being necessary. This Agreement has been duly and validly executed and delivered by each Seller and (assuming due authorization, execution and delivery by Purchaser) constitutes a valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally or by general equitable principles.

d. No Conflict. The execution, performance and delivery by each Seller of this Agreement does not, and the consummation of the transactions contemplated hereby will not: (i) conflict with or result in the breach of any of the provisions of the organizational documents of the Company or Sellers or (ii) violate in any material respect any provision of any law or government order applicable to the Company or Sellers or any of their respective assets or properties.

6.Representations of Purchaser.

a. Organization and Qualification. Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of Delaware.

b. Authority. The execution and delivery by Purchaser of this Agreement, and the performance by Purchaser of its obligations hereunder, have been duly and validly authorized with no other action or other proceedings on the part of Purchaser being necessary. Purchaser has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by Purchaser and (assuming due authorization, execution and delivery by Sellers) constitutes a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally or by general equitable principles.

c. No Conflict. The execution, performance and delivery by Purchaser of this Agreement does not, and the consummation by it of the purchase will not: (i) conflict with or result in the breach of any of the terms, conditions or provisions of the organizational documents of Purchaser or (ii) violate in any material respect any provision of any law or government order applicable to Purchaser or any of its assets or properties.

7.Headings and Section References. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. All section references contained in this Agreement are to sections of this Agreement, except where the context requires otherwise.

8.Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to conflicts of law principles.

9.Consent to Jurisdiction. All judicial proceedings brought against the parties arising out of or relating to this Agreement, or any obligations hereunder, shall be brought in any state or federal court of competent jurisdiction located in Wilmington, Delaware. By executing and delivering this Agreement, the parties irrevocably: (a) accept generally and unconditionally the exclusive jurisdiction and venue of these courts and (b) waive any objections which such party may now or hereafter have to the laying of venue of any of the aforesaid proceedings arising out of or in connection with this Agreement brought in the courts referred to in clause (a) above and hereby further irrevocably waive and agree not to plead or claim in any such court that such proceeding brought in any such court has been brought in an inconvenient forum.

10.Severability. Any term or provision of this Agreement which is determined by a court of competent jurisdiction to be invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction, and if any provision of this Agreement is determined to be so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable, in all cases so long as neither the economic nor legal substance of the transactions

contemplated hereby is affected in any manner materially adverse to any party. Upon any such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

11.Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. For purposes of this Agreement, facsimile signatures and signatures delivered electronically shall be deemed originals.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Purchase Agreement effective as of the day and year first above written.

FLX HOLDINGS LLC
By:	/s/ Paul G. Savas
Name:	Paul G. Savas
Title:	Executive Vice President &
	Chief Financial Officer
FANEUIL HOLDCO LLC
By:	/s/ Paul G. Savas
Name:	Paul G. Savas
Title:	Executive Vice President &
	Chief Financial Officer
HARLAND CLARKE HOLDINGS CORP.
By:	/s/ Peter A. Fera, Jr.
Name:	Peter A. Fera, Jr.
Title:	Executive Vice President &
	Chief Financial Officer

SCHEDULE A

The Company is authorized to issue 1,000 shares of common stock (950 shares of class A common stock and 50 shares of class B common stock). It has issued and outstanding 95 shares of class A common stock to Seller One and 5 shares of class B common stock to Seller Two.

EX-10.22

Exhibit 10.22

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of January 20, 2011, and effective as of February 14, 2011, among Harland Clarke Holdings Corp., a Delaware corporation (“Harland Clarke Holdings”), Scantron Corporation, a Delaware corporation (the “Company”), and John Lawler (the “Executive”).

WHEREAS the Company wishes to employ the Executive and the Executive wishes to accept such employment according to the terms set forth in this Agreement.

ACCORDINGLY, Harland Clarke Holdings, the Company and the Executive agree as follows:

1.    Employment, Duties and Acceptance.

1.1    Employment, Duties. The Company hereby employs the Executive for the Term (as defined in Section 2.1), to render exclusive and full-time services to the Company as the President of Scantron Commercial Business Group (the “Business Unit”) or in such other executive position as may be mutually agreed upon by the Company and the Executive, and to perform such other duties consistent with such position or as may be assigned to the Executive by the Chief Executive Officer of Harland Clarke Holdings (the “CEO”) or his designee or the Board of Directors of Harland Clarke Holdings (the “Board”). During the Term, the Executive shall report solely to the CEO (or his designee).

1.2    Acceptance. The Executive hereby accepts such employment and agrees to render the services described above. During the Term, the Executive agrees to serve the Company faithfully and to the best of the Executive's ability, to devote the Executive's entire business time, energy and skill to such employment, and to use the Executive's best efforts, skill and ability to promote the Company's interests. The Executive further agrees to accept election, and to serve during all or any part of the Term, as an officer or director of the Company and of any subsidiary or affiliate of the Company, without any compensation therefor other than that specified in this Agreement, if elected to any such position by the shareholders or by the Board or of any subsidiary or affiliate, as the case may be.

1.3    Location. The duties to be performed by the Executive hereunder shall be performed at the offices of Eagan, Minnesota and home office of South Orange, New Jersey and other locations mutually agreed with the CEO, subject to reasonable travel requirements on behalf of the Company.

1.4    Other Board Memberships. Without prejudice to any other provision of this Agreement, the Executive shall be entitled to continue to serve on the board of directors of ASI Government hereto for so long as no actual or potential conflict of interest is created with Harland Clarke Holdings or the Company or their ultimate parent. The Executive agrees to provide notice to the Company and Harland Clarke Holdings of any potential conflict of interest.

2.    Term of Employment; Certain Post-Term Benefits.

2.1    The Term. This Agreement and the term of the Executive's employment under this Agreement (the “Term”) shall become effective as of February 14, 2011 (the “Effective Date”) and will continue until December 31, 2013 (the “Termination Date”), subject to earlier termination pursuant to Section 4.

2.2    End-of-Term Provisions. Prior to the end of the Term, the Company and the Executive shall meet to discuss whether the Term should be extended. The Company shall have the right at any time, however, to give written notice of non-renewal of the Term. In the event of non-renewal of the Term by the Company and the Executive's employment is terminated by the Company after the end of the Term, other than for (i) Cause (as defined below), (ii) Disability (as defined below) or (iii) death, in each case following such Company notice of non-renewal, then such termination shall be treated as a termination without Cause and the Restricted Period (as defined below) shall be reduced to a period of one year post termination of employment (the “Reduced Restricted Period”). During such Restricted Period, the Executive shall receive as severance pay, an amount equal to the greater of (A) 50% of the payments set forth in Sections 4.4(i) and 4.4(ii) or (B) severance and benefits in accordance with Company policy as in effect at that time, in each case payable in installments in accordance with the Company's normal payroll practices, subject to Executive's signing and not revoking the release of claims as set forth in Section 4.6. For the avoidance of doubt, if the Executive's employment is terminated by the Company after the end of the Term (x) for Cause, the Executive will not be entitled to receive any severance or other benefits, or (y) for death or Disability, the Executive will receive severance and benefits in accordance with Company policy as in effect at that time. For

the avoidance of doubt, if the Company is willing to extend the Term and Executive does not agree to extend the Term, then upon termination of employment at or after the end of the Term, the Executive shall be bound by the restrictive covenants set forth in Section 5 below, the Restricted Period shall not be reduced and Executive shall not be entitled to receive any severance benefits with respect to such termination. Notwithstanding the foregoing, the terms of this Section 2.2 will not impact any payments or other benefits to which the Executive would then be entitled under normal Company policies or the LTIP (as defined below) pursuant to the terms thereof.

3.    Compensation; Benefits.

3.1    Salary. As compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Executive a base salary, payable in accordance with the Company's normal payroll practices, at the annual rate of not less than $400,000 (effective on the Effective Date of this agreement) less such deductions or amounts to be withheld as required by applicable law and regulations (the “Base Salary”). In the event that the Company, in its sole discretion, from time to time determines to increase the Base Salary, such increased amount shall, from and after the effective date of the increase, constitute “Base Salary” for purposes of this Agreement.

3.2    Incentive Compensation.

3.2.1    Annual Bonus. Commencing with the 2011 fiscal year, the Executive will be eligible to receive a bonus with respect to 2011 and each later fiscal year ending during the Term computed in accordance with the provisions hereafter. If, with respect to any such fiscal year, the Business Unit achieves “Consolidated EBITDA” (as defined below) of at least the percentage set forth in the table below of its business plan for such fiscal year, such bonus shall be the percentage set forth in the table below of Base Salary (prorated based on the Effective Date) with respect to the fiscal year for which the bonus (any such bonus, an “Annual Bonus”) was earned. For 2011 fiscal year, 50% of the Annual Bonus at 100% of Consolidated EBITDA (prorated based on Effective Date) shall be guaranteed provided that, except as otherwise specifically provided in this Agreement (including, without limitation, Section 4.4), as a condition precedent to any bonus entitlement the Executive must remain in employment with the Company at the time that the Annual Bonus is paid. For the purpose of clarity, 50% of the Annual Bonus for 2011 fiscal year at 100% of Consolidated EBITDA is $200,000, prorated based on Effective Date.

Percentage of Consolidated EBITDA in Business Plan	Percentage of Base Salary
89.9% and below	Nil
90 - 94.9	90
95 - 99.9	95
100 - 105	100
105.1 - 110	105.56
110.1 - 115	111.11
115.1 - 120 120.1 - 125 125.1 - 130 130.1 - 135 135.1 - 140 140.1 - 145 145.1 and over	116.67 122.22 127.78 133.33 138.89 144.44 150

An Annual Bonus if earned in accordance with this Agreement shall be paid no later than the fifteenth day of the third month next following the year with respect to which such bonus was earned, provided that, except as otherwise specifically provided in this Agreement (including, without limitation, Section 4.4), as a condition precedent to any bonus entitlement the Executive must remain in employment with the Company at the time that the Annual Bonus is paid. Notwithstanding the foregoing, to the extent that Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), may be applicable, such Annual Bonus shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the Annual Bonus to qualify as “performance-based compensation” under Section 162(m) of the Code and the regulations promulgated thereunder as well as approval of this Section 3.2.1 by the M&F Worldwide Corp. (“MFW”) Compensation Committee and any other required committees.

For the purposes of this Agreement, “Consolidated EBITDA” means for any fiscal year of the

Business Unit, consolidated operating income for such fiscal year of the Business Unit plus, without duplication and to the extent reflected as a charge in the statement of such operating income for such fiscal year, the sum of (i) depreciation and amortization expense (excluding amounts of prepaid incentives under customer contracts), (ii) any extraordinary non-cash expenses or losses, (iii) allocation of fees charged by MFW or a subsidiary to the Business Unit relating to the operation of the Business Unit, (iv) all restructuring costs (as defined under U.S. generally accepted accounting principles (“GAAP”), (v) fees paid to the Business Unit's external advisors in connection with acquisitions (whether or not consummated) and (vi) effects of changes in accounting policy and GAAP, in the case of clauses (i) through (vi) above, solely with respect to the Business Unit, and minus without duplication and to the extent included in the statement of such operating income for such period, the sum of (a) any extraordinary or non-recurring non-cash income or gains (including, whether or not otherwise includable as a separate item in the statement of such operating income for such period, gains on the sales of assets outside of the ordinary course of business), (b) effects of changes in accounting policy and GAAP, and (c) any cash payments made during such period in respect of items described in clause (ii) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of operating income, in the case of clauses (a) through (c) above, solely with respect to the Business Unit, all as determined on a consolidated basis, all of the foregoing to be determined by the Board of MFW or the MFW Compensation Committee, as applicable. For the purposes of determining compensation milestones for any fiscal year, Consolidated EBITDA will be adjusted by the Board of MFW or the MFW Compensation Committee, as applicable, as appropriate for material acquisitions or dispositions of any business or assets of or by the Business Unit or its subsidiaries for such fiscal year and thereafter.

3.2.2    Long Term Incentive Plan. During the Term, the Executive shall participate in the M&F Worldwide Corp. 2011 Long Term Incentive Plan (the “LTIP”). The specific terms of award or awards under the LTIP shall be set forth in one or more Award Agreements entered into with the Executive on or about the date hereof. If the Term is extended, the Executive shall participate in a new Long Term Incentive Plan that shall commence after the LTIP ends. Notwithstanding the foregoing, to the extent that Section 162(m) of the Code may be applicable, the LTIP (and any subsequent Long Term Incentive Plan) shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the LTIP to qualify as “performance-based compensation” under Section 162(m) of the Code and the regulations promulgated thereunder.

3.3    Business Expenses. The Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive during the Term in the performance of the Executive's services under this Agreement, upon presentation of expense statements or vouchers or such other supporting information as the Company customarily may require of its officers provided, however, that the maximum amount available for such expenses during any period may be fixed in advance by the CEO.

3.4    Paid Time Off. During the Term, the Executive shall be entitled to Paid Time Off in accordance with the Paid Time Off policy of the Company during each year of the Term.

3.5    Fringe Benefits. During the Term, the Executive shall be entitled to all benefits for which the Executive shall be eligible under any qualified pension plan, 401(k) plan, group insurance or other so-called “fringe” benefit plan which the Company provides to its executive employees generally, which benefits may be amended, modified or terminated in the Company's discretion.

4.    Termination.

4.1    Death. If the Executive dies during the Term, the Term shall terminate forthwith upon the Executive's death. The Company shall pay to the Executive's estate: (i) any Base Salary earned but not paid; (ii) a pro rated Annual Bonus based on the number of days of the fiscal year worked by the Executive, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment; (iii) amounts payable under the LTIP in accordance with the terms thereof, and (iv) Annual Bonus for the year prior to the year in which the Executive dies if at the time of death the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such Annual Bonus, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such prior year Annual Bonus. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement, except to the extent already earned and vested as of the day immediately prior to his death, or as earned, vested, or accrued by virtue of his death.

4.2    Disability. If, during the Term the Executive is unable to perform his duties hereunder due to a physical or mental incapacity for a period of 6 months within any 12 month period (hereinafter a “Disability”), the Company shall have the right at any time thereafter to terminate the Term upon sending written notice of termination to the Executive. If

the Company elects to terminate the Term by reason of Disability, the Company shall pay to the Executive promptly after the notice of termination: (i) any Base Salary earned but not paid, (ii) a pro rated Annual Bonus based on the number of days of the fiscal year worked by the Executive until the date of the notice of termination, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment; (iii) amounts payable under the LTIP in accordance with the terms thereof and (iv) Annual Bonus for the year prior to the year in which the Executive is terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such Annual Bonus, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such prior year Annual Bonus, in each case less any other benefits payable to the Executive under any disability plan provided for hereunder or otherwise furnished to the Executive by the Company. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement except to the extent already earned and vested as of the day immediately prior to his termination by reason of Disability, or as earned, vested, or accrued by virtue of his Disability.

4.3    Cause. The Company may at any time by written notice to the Executive terminate the Term for “Cause” (as defined below) and, upon such termination, this Agreement shall terminate and the Executive shall be entitled to receive no further amounts or benefits hereunder, except for any Base Salary earned but not paid prior to such termination. For the purposes of this Agreement, “Cause” means: (i) continued neglect by the Executive of the Executive's duties hereunder, (ii) continued incompetence or unsatisfactory attendance, (iii) conviction of any felony, (iv) violation of the rules, regulations, procedures or instructions relating to the conduct of employees, directors, officers and/or consultants of the Company, (v) willful misconduct by the Executive in connection with the performance of any material portion of the Executive's duties hereunder, (vi) breach of fiduciary obligation owed to the Company or commission of any act of fraud, embezzlement, disloyalty or defalcation, or usurpation of a Company opportunity, (vii) breach of any provision of this Agreement, including any non-competition, non-solicitation and/or confidentiality provisions hereof, (viii) any act that has a material adverse effect upon the reputation of and/or the public confidence in the Company, (ix) failure to comply with a reasonable order, policy or rule that constitutes material insubordination, (x) engaging in any discriminatory or sexually harassing behavior, or (xi) using, possessing or being impaired by or under the influence of illegal drugs or the abuse of controlled substances or alcohol on the premises of the Company or any of its subsidiaries or affiliates or while working or representing the Company or any of its subsidiaries or affiliates. A termination for Cause by the Company of any of the events described in clauses (i), (ii), (iv), (ix), (x) and (xi) shall only be effective on 15 days advance written notification, providing Executive the opportunity to cure, if reasonably capable of cure within said 15-day period; provided, however, that no such notification is required if the Cause event is not reasonably capable of cure or the Board determines that its fiduciary obligation requires it to effect a termination of Executive for Cause immediately.

4.4    Termination by Company without Cause or by the Executive for Good Reason. If the Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability) or by the Executive for Good Reason (as defined below), the Executive shall receive: (i) as severance pay, an amount equal to two times the Base Salary payable in installments in accordance with the Company's normal payroll practices, (ii) continuation for a 12-month period following the date of termination of group health plan benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the Employee as in effect on the date of termination (provided that the Company shall not be required to pay any portion of the premium if such payment would result in penalty taxes imposed on the Company), (iii) Annual Bonus for the year in which termination occurred if the Executive would have been eligible to receive such bonus hereunder (including due to satisfaction by the Company of performance milestones) had the Executive been employed at the time such Annual Bonus is normally paid, which Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment, (iv) Annual Bonus for the year prior to the year in which the Executive is so terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such due to such termination, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such prior year Annual Bonus and (v) amounts payable, if any, under the LTIP in accordance with the terms thereof. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement. For purposes of this Agreement, "Good Reason" means, without the advance written consent of the Executive: (i) a reduction in Base Salary, unless such reduction is made generally to other senior executives of the Company or (ii) a material and continuing reduction in the Executive's responsibilities, provided, that a change in reporting responsibilities shall not constitute Good Reason and furtherprovided, that a termination by the Executive for Good Reason shall be effective only if the Executive provides the Company with written notice specifying the event which constitutes Good Reason within thirty (30) days following the occurrence of such event or date Executive became aware or should have become aware of such event and the Company fails to cure the circumstances giving rise to Good Reason within 30 days after such notice.

4.5    Termination by Executive other than for Good Reason. The Executive is required to provide the Company with 30 days' prior written notice of termination to the Company. Subject to Section 4.4, upon termination of employment by the Executive, the Executive shall receive any Base Salary earned but not paid prior to such termination and shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement, except to the extent already earned and vested as of the day immediately prior to such termination.

4.6    Release. Notwithstanding any other provision of this Agreement to the contrary, the Executive acknowledges and agrees that any and all payments, other than payment of any accrued and unpaid Base Salary to which the Executive is entitled under this Section 4 are conditioned upon and subject to the Executive's execution of a general waiver and release (for the avoidance of doubt, the restrictive covenants contained in Section 5 of this Agreement shall survive the termination of this Agreement), in such form as may be prepared by the Company, of all claims, except for such matters covered by provisions of this Agreement which expressly survive the termination of this Agreement. Notwithstanding anything to the contrary, the severance payments and benefits are conditioned on the Executive's execution, delivery and nonrevocation of the general waiver and release of claims within fifty-five days following the Executive's termination of employment (the “Release Condition”). Payments and benefits of amounts which do not constitute nonqualified deferred compensation and are not subject to Section 409A (as defined below) shall commence five (5) days after the Release Condition is satisfied and payments and benefits which are subject to Section 409A shall commence on the 60th day after termination of employment (subject to further delay, if required pursuant to Section 4.7.2 below) provided that the Release Condition is satisfied.

4.7    Section 409A.

4.7.1     This Agreement is intended to satisfy the requirements of Section 409A of the Code (“Section 409A”) with respect to amounts, if any, subject thereto and shall be interpreted and construed and shall be performed by the parties consistent with such intent. If either party notifies the other in writing that one or more or the provisions of this Agreement contravenes any Treasury Regulations or guidance promulgated under Section 409A or causes any amounts to be subject to interest, additional tax or penalties under Section 409A, the parties shall agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith are necessary or desirable, to (i) maintain to the maximum extent reasonably practicable the original intent of the applicable provisions without violating the provisions of Section 409A or increasing the costs to the Company of providing the applicable benefit or payment and (ii) to the extent possible, to avoid the imposition of any interest, additional tax or other penalties under Section 409A upon the parties.

4.7.2     To the extent the Executive would otherwise be entitled to any payment or benefit under this Agreement, or any plan or arrangement of the Company or its affiliates, that constitutes a “deferral of compensation” subject to Section 409A and that if paid during the six (6) months beginning on the date of termination of the Executive's employment would be subject to the Section 409A additional tax because the Executive is a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment or benefit will be paid or provided to the Executive on the earlier of the first day following the six (6) month anniversary of the Executive's termination of employment or death.

4.7.3     Any payment or benefit due upon a termination of the Executive's employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Executive only upon a “separation from service” as defined in Treas. Reg. § 1.409A-1(h). Each payment made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A. Amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation §§ 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation § 1.409A-1 through A-6.

4.7.4     Notwithstanding anything to the contrary in Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation § 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided to the Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which the Executive's “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which the Executive's “separation from service” occurs.  To the extent any expense reimbursement or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year

(except for any life-time or other aggregate limitation applicable to medical expenses), and in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

5.    Protection of Confidential Information; Restrictive Covenants.

5.1    Prior to the Effective Date, the Company has shared confidential and trade secret information of the Company and its subsidiaries and affiliates with the Executive. From the Effective Date, the Company will share with Executive confidential and trade secret information regarding not only the Company but also its subsidiaries and affiliates. In view of the fact that the Executive's work for the Company will bring the Executive into close contact with many confidential affairs of the Company not readily available to the public, trade secret information and plans for future developments, the Executive agrees:

5.1.1    To keep and retain in the strictest confidence all confidential matters of the Company, including, without limitation, “know how”, trade secrets, customer lists, pricing policies, operational methods, technical processes, formulae, inventions and research projects, other business affairs of the Company, and any material confidential information whatsoever concerning any director, officer, employee, shareholder, partner, customer or agent of the Company or their respective family members learned by the Executive heretofore or hereafter, and not to disclose them to anyone outside of the Company, either during or after the Executive's employment with the Company, except in the course of performing the Executive's duties hereunder or with the Company's express written consent. The foregoing prohibitions shall include, without limitation, directly or indirectly publishing (or causing, participating in, assisting or providing any statement, opinion or information in connection with the publication of) any diary, memoir, letter, story, photograph, interview, article, essay, account or description (whether fictionalized or not) concerning any of the foregoing, publication being deemed to include any presentation or reproduction of any written, verbal or visual material in any communication medium, including any book, magazine, newspaper, theatrical production or movie, or television or radio programming or commercial; and

5.1.2    To deliver promptly to the Company on termination of the Executive's employment by the Company, or at any time the Company may so request, all memoranda, notes, records, reports, manuals, drawings, blueprints and other documents (and all copies thereof), including data stored in computer memories or on other media used for electronic storage or retrieval, relating to the Company's business and all property associated therewith, which the Executive may then possess or have under the Executive's control, and not retain any copies, notes or summaries; provided Executive shall be entitled to keep a copy of this Agreement and compensation and benefit plans to which Executive is entitled to receive benefits thereunder.

5.2    In support of Executive's commitments to maintain the confidentiality of the Company's confidential and trade secret information, (i) during the Term and for any period the Executive is employed by the Company after the Term, and (ii) for a period of two years following termination of the Executive's employment for any reason (the “Restricted Period”), the Executive shall not in the United States and in any non-US jurisdiction where the Company may then do business: (a) directly or indirectly, enter the employ of, or render any services to, any person, firm or entity engaged in any business competitive with any business of the Company or of any of its subsidiaries or affiliates; (b) engage in such business on the Executive's own account; and the Executive shall not become interested in any such business, directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity; (c) directly or indirectly, solicit or encourage (or cause to be solicited or encouraged) or cause any client, customer or supplier of the Company to cease doing business with the Company, or to reduce the amount of business such client, customer or supplier does with the Company or (d) directly or indirectly, solicit or encourage (or cause to be solicited or encouraged) to cease to work with the Company, or hire (or cause to be hired), any person who is an employee of or consultant then under contract with the Company or who was an employee of or consultant then under contract with the Company within the six month period preceding such activity without the Company's written consent, provided however that this clause (d) shall not apply during the Restricted Period to a consulting or advisory firm which is also then currently engaged or under a retainer relationship (in each case, without any action by the Executive, whether directly or indirectly) by a subsequent employer of the Executive.

5.3    If the Executive commits a breach, or poses a serious and objective threat to commit a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company shall have the following rights and remedies:

5.3.1    The right and remedy to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause

irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company;

5.3.2    The right and remedy to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by the Executive as the result of any transactions constituting a breach of any of the provisions of the preceding paragraph, and the Executive hereby agrees to account for and pay over such benefits to the Company. Each of the rights and remedies enumerated above shall be independent of the other, and shall be severally enforceable, and all of such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity; and

5.3.3    In addition to any other remedy which may be available (i) at law or in equity, or (ii) pursuant to any other provision of this Agreement, the payments by the Company of Base Salary and the regular premium for group health benefits pursuant to Section 4.4 will cease as of the date on which such violation first occurs. In addition, if the Executive breaches any of the covenants contained in Sections 5.1 and 5.2 and the Company obtains injunctive relief with respect thereto (that is not later reversed or otherwise terminated or vacated by judicial order), the period during which the Executive is required to comply with that particular covenant shall be extended by the same period that the Executive was in breach of such covenant prior to the effective date of such injunctive relief.

5.4    If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, hereafter are held by a court to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to those portions found invalid.

5.5    If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, are held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and, in its reduced form, said provision shall then be enforceable.

5.6    The Executive agrees (whether during or after the Executive's employment with the Company) not to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the Company or its affiliates or the officers, directors, managers, customers, partners, or shareholders of the Company or its affiliates, provided that nothing herein shall prohibit the Executive from providing truthful testimony if such testimony is required by law.

5.7    For purposes of this Section 5 only, the term “Company” includes the Company and its subsidiaries and affiliates.

6.    Inventions and Patents.

6.1    The Executive agrees that all processes, technologies and inventions (collectively, “Inventions”), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made by him during the Term shall belong to the Company, provided that such Inventions grew out of the Executive's work with the Company or any of its subsidiaries or affiliates, are related in any manner to the business (commercial or experimental) of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company's time or with the use of the Company's facilities or materials. The Executive shall further: (a) promptly disclose such Inventions to the Company; (b) assign to the Company, without additional compensation, all patent and other rights to such Inventions for the United States and foreign countries; (c) sign all papers necessary to carry out the foregoing; and (d) give testimony in support of the Executive's inventorship.

6.2    If any Invention is described in a patent application or is disclosed to third parties, directly or indirectly, by the Executive within two years after the termination of the Executive's employment by the Company, it is to be presumed that the Invention was conceived or made during the Term.

6.3    The Executive agrees that the Executive will not assert any rights to any Invention as having been made or acquired by the Executive prior to the date of this Agreement, except for Inventions, if any, disclosed to the Company in writing prior to the date hereof.

7.    Intellectual Property.

The Company shall be the sole owner of all the products and proceeds of the Executive's services hereunder, including, but not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages, programs and other intellectual properties that the Executive may acquire, obtain, develop or create in connection with and

during the Term, free and clear of any claims by the Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than the Executive's right to receive payments hereunder). The Executive shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title or interest in or to any such properties.

8.    Notices.

All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by overnight courier or mailed first class, postage prepaid, by registered or certified mail (notices mailed shall be deemed to have been given on the date mailed), as follows (or to such other address as either party shall designate by notice in writing to the other in accordance herewith):

If to the Company, to:

Harland Clarke Holdings Corp.

10931 Laureate Drive

San Antonio, TX 78249

Attention: General Counsel

If to the Executive, to:

Such address as shall most currently appear on the records of the Company.

9.    Governing Law; Dispute Resolution.

9.1    It is the intent of the parties hereto that all questions with respect to the construction of this Agreement and the rights and liabilities of the parties hereunder shall be determined in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws thereof that would call for the application of the substantive law of any jurisdiction other than the State of Delaware.

9.2    Each party irrevocably agrees for the exclusive benefit of the other that any and all suits, actions or proceedings relating to Section 5 of this Agreement (a “Proceeding”) shall be maintained in either the courts of the State of Delaware or the federal District Courts sitting in Essex County, New Jersey or Wilmington, Delaware (collectively, the “Chosen Courts”) and that the Chosen Courts shall have exclusive jurisdiction to hear and determine or settle any such Proceeding and that any such Proceedings shall only be brought in the Chosen Courts. Each party irrevocably waives any objection that it may have now or hereafter to the laying of the venue of any Proceedings in the Chosen Courts and any claim that any Proceedings have been brought in an inconvenient forum and further irrevocably agrees that a judgment in any Proceeding brought in the Chosen Courts shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction.

9.3    Each of the parties hereto agrees that this Agreement involves at least $100,000 and that this Agreement has been entered into in express reliance on Section 2708 of Title 6 of the Delaware Code. Each of the parties hereto irrevocably and unconditionally agrees (i) that, to the extent such party is not otherwise subject to service of process in the State of Delaware, it will appoint (and maintain an agreement with respect to) an agent in the State of Delaware as such party's agent for acceptance of legal process and notify the other parties hereto of the name and address of said agent, (ii) that service of process may also be made on such party by pre-paid certified mail with a validated proof of mailing receipt constituting evidence of valid service sent to such party at the address set forth in Section 8 of this Agreement, as such address may be changed from time to time pursuant hereto, and (iii) that service made pursuant to clause (i) or (ii) above shall, to the fullest extent permitted by applicable law, have the same legal force and effect as if served upon such party personally within the State of Delaware.

9.4    Any controversy or claim arising out of or related to any other provision of this Agreement shall be settled by final, binding and non-appealable arbitration in Essex County, New Jersey or Wilmington, Delaware by a single arbitrator. Subject to the following provisions, the arbitration shall be conducted in accordance with the applicable rules of JAMS then in effect. Any award entered by the arbitrator shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrator shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the

Agreement. Each party shall be responsible for its own expenses relating to the conduct of the arbitration or litigation (including reasonable attorneys' fees and expenses) and shall share the fees of JAMS and the arbitrator, if applicable, equally.

10.    General.

10.1     JURY TRIAL WAIVER. THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE EVENT ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE EXECUTIVE'S EMPLOYMENT WITH THE COMPANY IS LITIGATED OR HEARD IN ANY COURT.

10.2    Continuation of Employment. Unless the parties otherwise agree in writing, continuation of the Executive's employment with the Company beyond the expiration of the Term shall be deemed an employment at will and shall not be deemed to extend any of the provisions of this Agreement, and Executive's employment may thereafter be terminated “at will” by the Executive or the Company and Executive will be entitled to fringe benefits which the Executive is eligible to receive for so long as the Executive continues to be employed with the Company and the Executive shall be eligible for severance in accordance with the terms of the Company's severance policy then in effect. Notwithstanding the foregoing, the Executive shall be subject to the restrictive covenants set forth in Section 5.2 for the Restricted Period or if applicable, the Reduced Restricted Period in accordance with Section 2.2.

10.3    Headings. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

10.4    Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the Executive's employment by the Company, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the Executive's employment by the Company and its affiliates including, without limitation, effective as of the Effective Date, the Prior Employment Agreement and any severance, retention, change in control or similar types of benefits. Notwithstanding the preceding sentence, to the extent not yet paid, the Executive will be entitled to receive payment of (i) his Annual Bonus, if any, for 2010 and (ii) amounts payable in accordance with the LTIP, if any with respect to 2008-2010, in each case in accordance with the terms of (and at the times provided for in) the Prior Employment Agreement. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

10.5    Assignment. This Agreement, and the Executive's rights and obligations hereunder, may not be assigned by the Executive. The Company may assign its rights, together with its obligations, hereunder (i) to any affiliate or (ii) to third parties in connection with any sale, transfer or other disposition of all or substantially all of the business or assets of the Company; in any event the obligations of the Company hereunder shall be binding on its successors or assigns, whether by merger, consolidation or acquisition of all or substantially all of its business or assets.

10.6    Waiver. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived, only by a written instrument executed by all of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

10.7    Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state, local and other taxes as may be required to be withheld pursuant to any applicable law or regulation.

11.    Subsidiaries and Affiliates.

11.1    As used herein, the term “subsidiary” shall mean any corporation or other business entity controlled directly or indirectly by the corporation or other business entity in question, and the term “affiliate” shall mean and include any corporation or other business entity directly or indirectly controlling, controlled by or under common control with the corporation or other business entity in question.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

HARLAND CLARKE HOLDINGS CORP
By:	/s/ Charles Dawson
Name:	Charles Dawson
Title:	President and Chief Executive Officer
SCANTRON CORPORATION
By:	/s/ Peter A. Fera, Jr.
Name:	Peter A. Fera, Jr.
Title:	Executive Vice President and Chief Financial Officer
EXECUTIVE
	/s/ John Lawler
	John Lawler

EX-10.23

Exhibit 10.23

AMENDED AND RESTATED TAX SHARING AGREEMENT

This Amended and Restated Tax Sharing Agreement (the "Agreement"), dated as of December 21, 2011, is entered into by and among MACANDREWS & FORBES HOLDINGS INC. ("Mafco"), M&F WORLDWIDE CORP., a Delaware corporation ("MFW"), HARLAND CLARKE HOLDINGS CORP. (formerly CLARKE AMERICAN CORP.), a Delaware corporation ("Clarke"), and PCT INTERNATIONAL HOLDINGS INC., a Delaware corporation (“PCT”).

R E C I T A L S

WHEREAS, prior to the date hereof, MFW was the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"), that elected to file consolidated federal income tax returns and Clarke and PCT are members of such group;

WHEREAS, on the effective date of this Agreement, Mafco will acquire 100% of the stock of MFW, and MFW and its Subsidiaries will join the affiliated group of corporations within the meaning of Section 1504(a) of the Code of which Mafco is the common parent;

WHEREAS, MFW, Clarke and PCT desire, to the extent permitted by the Code, and the regulations promulgated thereunder (the "Treasury Regulations"), that the PCT Group and the Clarke Group (each as defined below) be included in the Parent Consolidated Group as defined below;

WHEREAS, MFW, Clarke and PCT desire, to the extent permitted by applicable foreign, state and local law, that members of the Parent Consolidated Group shall be included in the filing of consolidated, combined or unitary tax returns for state tax purposes if so requested by MFW;

WHEREAS, MFW, Clarke and PCT wish to allocate and settle among themselves in an equitable manner (i) the consolidated federal income tax liability, (ii) any applicable consolidated, combined or unitary tax liability for foreign, state and/or local tax purposes, and (iii) certain other tax matters, for Agreement Years (as defined herein);

WHEREAS, Clarke and PCT desire to be indemnified by MFW with respect to certain tax liabilities, and MFW is willing to so indemnify such parties; and

WHEREAS, MFW, Clarke and PCT are parties to a Tax Sharing Agreement entered into as of December 15, 2005 (the "Original TSA") providing for the foregoing with respect to the affiliated group of corporations within the meaning of Section 1504(a) of the Code of which MFW was the common parent and now wish to amend and restate such agreement and

to add Mafco as a party in order to provide for the foregoing with respect to the affiliated group of corporations within the meaning of Section 1504(a) of the Code of which Mafco is the common parent.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:

1.    Definitions.

For purposes of this Agreement, the following terms shall be defined as follows:

(a)    "Agreement Year" for each Subgroup shall mean, (i) with respect to federal income taxes, any taxable year or portion thereof beginning on or after the date of the Original TSA with respect to which a consolidated federal income tax return is properly filed by Parent on behalf of the Parent Consolidated Group which includes the PCT Subgroup or the Clarke Subgroup, as applicable, and (ii) with respect to foreign, state or local income or franchise taxes, any taxable year or portion thereof beginning on or after the date of the Original TSA with respect to which a Combined Return is properly filed.

(b)    "Clarke Subgroup" shall mean the affiliated group of corporations (including any predecessors and successors thereto) within the meaning of Section 1504(a) of the Code, of which Clarke would be the common parent if it were not included in the Parent Consolidated Group.

(c)    "Combined Return" shall mean any consolidated, combined or unitary tax return filed for foreign, state or local income or franchise tax purposes which includes (x) one or more members of the PCT Subgroup and one or more other members of the Parent Consolidated Group (without reference to the PCT Subgroup) or (y) one or more members of the Clarke Subgroup and one or more other members of the Parent Consolidated Group (without reference to the Clarke Subgroup).

(d)    "Estimated Tax Payments" for any Agreement Year shall mean, with respect to each of the Clarke Subgroup and the PCT Subgroup, the aggregate payments by each of Clarke and PCT, respectively, to Parent for such Agreement Year pursuant to Section 3 hereof.

(e)    "Final Determination" shall mean a closing agreement with the Internal Revenue Service or the relevant state or local taxing authorities, an agreement contained on Internal Revenue Service Form 870-AD or other comparable form, an agreement that constitutes a determination under Section 1313(a)(4) of the Code, a claim for refund which has been allowed, a deficiency notice with respect to which the period for filing a petition with the Tax Court or the relevant state or local tribunal has expired or a decision of any court of competent jurisdiction that is not subject to appeal or as to which the time for appeal has expired.

(f)    "Other Tax" shall mean any consolidated, combined or unitary foreign, state or local income or franchise taxes.

(g)    "Parent" shall mean, for all taxable periods beginning on or after the date of the Original

TSA and ending prior to the effective date of this Agreement, MFW, and for all taxable periods beginning on or after the effective date of this Agreement, Mafco.

(h)    "Parent Consolidated Group" shall mean the affiliated group of corporations (including any predecessors and successors thereto) within the meaning of Section 1504(a) of the Code electing to file consolidated federal income tax returns and of which Parent is the common parent.

(i)    "PCT Subgroup" shall mean the affiliated group of corporations (including any predecessors and successors thereto) within the meaning of Section 1504(a) of the Code, of which PCT would be the common parent if it were not included in the Parent Consolidated Group.

(j)    "Pro Forma Federal Tax Liability" for each respective Subgroup shall mean, with respect to each Agreement Year, the consolidated federal taxable income liability or, if applicable, the consolidated federal alternative minimum tax liability that such Subgroup would have incurred if it had not been included in the Parent Consolidated Group for such Agreement Year, but had instead filed its own consolidated return for such Agreement Year and all prior Agreement Years; provided, that in computing such tax liability for any Agreement Year, such Subgroup shall not take into account any amounts paid or payable by such Subgroup to Parent under Sections 2, 3 or 5 hereof or by Parent to the Subgroup under Sections 2, 3, 5 or 7 hereof. In computing the Pro Forma Federal Tax Liability of a Subgroup, the Subgroup shall be entitled to take into account deductions and/or credits attributable to the carryover or carryback of any losses and/or credits of any member of such Subgroup, after taking into account any limitations on the use of such losses and credits imposed pursuant to Sections 172, 382, 383, 384, 904 or 1212 of the Code or by Treasury Regulations Sections 1.1502-15, 1.1502-20, 1.1502-21, 1.1502-22, 1.1502-91, 1.1502-92, 1.1502-93 or 1.1502-94, provided, further, that any Code Section 199 tax benefit shall be determined by Parent for the entire Parent Consolidated Group and allocated to each of its Subsidiaries in accordance with the methodology of the Treasury Regulations and IRS guidance under Section 199 of the Code. If the computation of Pro Forma Federal Tax Liability of a Subgroup does not result in a positive number, such Pro Forma Federal Tax Liability shall be deemed to be zero.

(k)    "Pro Forma Other Tax Liability" for each respective Subgroup shall mean, with respect to each Agreement Year, the aggregate Other Tax, computed in a manner consistent with the computation of the Pro Forma Federal Tax Liability as defined above, that the Subgroup or any of the members of such Subgroup would have incurred with respect to each relevant foreign, state and local taxing jurisdiction for any Agreement Year if such Subgroup or any member thereof had filed with such jurisdiction either a separate return (in a case where only one member of such Subgroup joins in the filing of the applicable Combined Return) or a combined return (in a case where more than one member of such Subgroup joins in the filing of the applicable Combined Return).

(l)    "Subgroup" shall mean each of the Clarke Subgroup and the PCT Subgroup.

(m)    "Subsidiary" as to any entity (the parent corporation) shall mean a corporation that would

be an includible corporation that is a member of an affiliated group of corporations of which the parent corporation would be the common parent, all within the meaning attributable to such terms in Section 1504 of the Code and Treasury Regulations thereunder.

2.    Tax Payments.

(a)    For each Agreement Year, each of Clarke and PCT, respectively, shall pay to Parent an amount equal to the excess, if any, of the Clarke Subgroup's Pro Forma Federal Tax Liability or the PCT Subgroup's Federal Tax Liability, as applicable, for such Agreement Year over the aggregate amount of the Estimated Tax Payments actually made by Clarke or PCT, as applicable, to Parent pursuant to Section 3(a) hereof for such Agreement Year. If the aggregate amount of the Estimated Tax Payments actually made to Parent by each of Clarke and/or PCT pursuant to Section 3(a) hereof for such Agreement Year exceeds the Clarke Subgroup's Pro Forma Federal Tax Liability or the PCT Subgroup's Pro Forma Federal Tax Liability, as applicable, for such Agreement Year, Parent shall pay to Clarke and/or PCT, as applicable, an amount equal to such excess.

(b) For each Agreement Year, each of Clarke and PCT, respectively, shall pay to Parent an amount equal to the excess, if any, of the Clarke Subgroup's Pro Forma Other Tax Liability or the PCT Subgroup's Other Tax Liability, as applicable, for such Agreement Year over the aggregate amount of the Estimated Tax Payments actually made by Clarke or PCT, as applicable, to Parent pursuant to Section 3(b) hereof for such Agreement Year. If the aggregate amount of the Estimated Tax Payments actually made to Parent by each of Clarke and/or PCT pursuant to Section 3(b) hereof for such Agreement Year exceeds the Clarke Subgroup's Pro Forma Other Tax Liability or the PCT Subgroup's Pro Forma Other Tax Liability, as applicable, for such Agreement Year, Parent shall pay to Clarke and/or PCT, as applicable, an amount equal to such excess.

3.    Estimated Tax Payments.

(a)    During each Agreement Year, each of Clarke and PCT shall pay to Parent, no later than the tenth day of each of the third, sixth, ninth and twelfth months of such Agreement Year, the amount of estimated federal income taxes that each of the Clarke Subgroup and the PCT Subgroup, as applicable, would have been required to pay on or before the fifteenth day of each such month if such Subgroup were filing its own consolidated federal income tax return for such Agreement Year and was not part of the Parent Consolidated Group. Such estimated federal income tax liability shall be determined in a manner consistent with the calculation of the Pro Forma Federal Tax Liability the applicable Subgroup and shall reflect the estimated taxable income of such Subgroup projected for three, six, nine and twelve months, respectively.

(b)    During each Agreement Year, each of Clarke and PCT shall pay to Parent, no later than the fifth day prior to the date an estimated foreign, state or local payment is due, the amount of estimated taxes that each of the Clarke Subgroup and the PCT Subgroup, as applicable, would have been required to pay if such Subgroup (or any member

thereof) had filed for such period either a separate return (in the case where only one member of such Subgroup joins in the filing of the applicable Combined Return) or a combined return (in a case where more than one member of such Subgroup joins in the filing of the applicable Combined Return). The estimated foreign, state or local income or franchise tax liability of the Clarke Subgroup and the PCT Subgroup shall be determined in a manner consistent with the calculation of the Pro Forma Other Tax Liability of such Subgroup.

4.    Time and Form of Payment.

(a) Payments to be made by each of Clarke and PCT pursuant to Section 2 hereof shall be made no later than the fifth day prior to the due date of the Parent Consolidated Group's consolidated federal income tax return or any relevant Combined Return for the period with respect to which such a payment is due. If the due date for any such return is extended, any amounts due at the time of filing a request for extension of time to file shall be paid on an estimated basis. No later than five (5) days prior to the extended due date for such return for such Agreement Year, the payment due from each of Clarke and PCT shall be recalculated, and any difference between (i) the Pro Forma Federal Tax Liability and the Pro Forma Other Tax Liability of each respective Subgroup for such Agreement Year and (ii) all prior Estimated Tax Payments by Clarke or PCT, as applicable, with respect to such Agreement Year shall be paid by such fifth day to the party entitled thereto, with interest from the original due date at the relevant statutory rate.

(b)    The parties agree to cause each Subsidiary of Clarke and PCT to pay to Clarke or PCT, as applicable, its share of each of the items of the applicable Subgroup's Pro Forma Federal Tax Liability and Pro Forma Other Tax Liability as well as such Subsidiary's allocable share of Estimated Tax Payments, each such share to be determined in accordance with the principles of Sections 1(i), 1(j), 3(a) and 3(b) hereof, no later than one (1) business day prior to the date upon which the relevant payment by Clarke or PCT, as applicable, is required to be made under the terms hereof. Each of Clarke and PCT agrees to pay its respective Subsidiaries, such Subsidiary's share of any payment received by such party from Parent pursuant to this Agreement, each such share to be determined in accordance with the principles of Sections 1(i), 1(j), 3(a) and 3(b) hereof, as promptly as practicable following the receipt of any such payment and the determination of such share.

5.    Adjustments.

(a)    Redeterminations of Tax Liability. In the event of any redetermination of the consolidated federal income tax liability of the Parent Consolidated Group for any Agreement Year (or of the consolidated, combined or unitary foreign, state or local income or franchise tax liability for any Agreement Year) as the result of an audit by the Internal Revenue Service (or the relevant foreign, state or local taxing authorities), a claim for refund or otherwise, the Pro Forma Federal Tax Liability and/or the Pro Forma Other Tax Liability, as applicable, of each Subgroup shall be recomputed for such Agreement Year and any prior and subsequent Agreement Years to take into account such redetermination, and payments due pursuant to Section 2 hereof shall be appropriately adjusted. Any payment pursuant to Section 2 hereof that is required

pursuant to this Section 5(a) as a result of such adjustment shall be paid within seven (7) days after the date of a Final Determination with respect to such redetermination or as soon as such adjustment can practicably be calculated, if later, together with interest for the period at the rate provided for in the relevant statute.

(b) Refund of Tax Sharing Payment. In the event that the calculation of the taxable income of each of the Subgroups (determined in accordance with the principles of Sections 1(i) and 1(j) hereof) for any Agreement Year results in a loss, such loss may be carried back and deducted in calculating such Subgroup's Pro Forma Federal Tax Liability or Pro Forma Other Tax Liability, as applicable, for prior Agreement Years in the same manner as it would have been carried back and deducted had it constituted a net operating loss deduction under Section 172 of the Code or a net capital loss deduction under Section 1212 of the Code (or in the case of foreign, state or local tax, under applicable foreign, state or local provisions), as such provisions would have been applied if such Subgroup had not been included in the Parent Consolidated Group (or joined in the filing of the applicable Combined Return) for such Agreement Year, but had instead filed its own consolidated return (or its own separate return or combined return, as applicable) for such Agreement Year and all prior Agreement Years, but in each case after taking into account any limitation on the use of such loss imposed pursuant to Section 382, 383, 384 or 904 of the Code or Treasury Regulations Sections 1.1502-15, 1.1502-20, 1.1502-21, 1.1502-22, 1.1502-91, 1.1502-92, 1.1502-93 or 1.1502-94 (or with respect to foreign, state and local tax, applicable foreign, state or local provisions). In such case, the applicable Subgroup's Pro Forma Federal Tax Liability and/or Pro Forma Other Tax Liability shall be recomputed for the Agreement Year or Years to which such loss is carried and for any subsequent Agreement Years to take into account the deduction of such loss, and payments made pursuant to Section 2 hereof shall be appropriately adjusted. Any payment pursuant to Section 2 hereof that is required pursuant to this Section 5(b) as a result of any such adjustment shall be paid within seven (7) days after the date of filing the consolidated federal income tax return of the Parent Consolidated Group (or the applicable Combined Return) for the year in which such loss arises. Excess credits for any Agreement Year shall be carried back and otherwise treated in a manner consistent with the provisions of this Section 5.

6.    Interest on Unpaid Amounts.

In the event that any party fails to pay any amount owed pursuant to this Agreement within ten (10) days after the date when due, interest shall accrue on any unpaid amount at the "designated rate" from the due date until such amounts are fully paid. For purposes of this Agreement, the "designated rate" shall mean ten percent (10%).

7.    Indemnification.

Parent shall indemnify each member of the Clarke Subgroup and the PCT Subgroup, respectively, on an after-tax basis (taking into account, when realized, any tax detriment or tax benefit to such Subgroup of (x) a payment hereunder or (y) the liability to the Internal Revenue Service or any applicable foreign, state or local taxing authority giving rise to such a payment), with respect to and in the amount of:

(a) any liability to the Internal Revenue Service for federal income tax incurred by such Subgroup for any Agreement Year with respect to which such Subgroup is included in the Parent Consolidated Group for purposes of filing a consolidated federal income tax return;

(b) any liability for Other Taxes to a foreign, state or local taxing authority incurred by such Subgroup with respect to any such jurisdiction for any Agreement Year with respect to which the Subgroup or any member thereof participates in the filing of a Combined Return;

(c) any liability for federal income tax to the Internal Revenue Service or any Other Tax to any applicable foreign, state or local taxing authority, as the case may be, incurred by any member of such Subgroup to the extent attributable to any member of the Parent Consolidated Group (determined without reference to other members of such Subgroup) and for which the Subgroup or any member thereof is liable as a result of being included in the Parent Consolidated Group or as a result of participating in the filing of a Combined Return; and

(d) interest, penalties and additions to tax, and costs and expenses in connection with any liabilities described in Sections 7(a), (b) and (c) above.

Parent shall pay to Clarke and/or PCT, as applicable, any amount due under Sections 7(a), (b) and (c) and Section 7(d) (to the extent such amounts are related to amounts under Sections 7(a), (b) and (c)) no later than seven (7) days after the date of a Final Determination with respect thereto.

8.    Filing of Returns, Payment of Tax.

(a) Appointment of Parent as Agent. Each of Clarke and PCT hereby appoint (and hereby appoint on behalf of each of their respective Subsidiaries) Parent as their agent, so long as Clarke and PCT, as applicable, are members of the Parent Consolidated Group for the purpose of (i) filing consolidated federal income tax returns and, (ii) for making any election or application or taking any action in connection therewith on behalf of any member of the Clarke Subgroup or the PCT Subgroup, as applicable, consistent with the terms of this Agreement. Each of Clarke and PCT hereby appoint (and hereby appoint on behalf of each of their respective Subsidiaries) Parent as their agent, so long as any member of the Clarke Subgroup or the PCT Subgroup, as applicable, is eligible to join in the filing of any Combined Return, for the purpose of (i) filing any such Combined Return that Parent may elect to file, and (ii) for making any election or application or taking any action in connection therewith on behalf of any member of the Clarke Subgroup or the PCT Subgroup, as applicable, consistent with the terms of this Agreement. Each of Clarke and PCT hereby consent (and hereby consent on behalf of their respective Subsidiaries) to the filing of such returns, and to the making of such elections and applications. Parent agrees that to the extent that the filing of any Combined Return would reduce the Other Tax liability of any Subgroup (or any member thereof) without causing an increase in Other Tax liability of any other member of the Parent Consolidated Group (determined without reference to such Subgroup) in such period, Parent will file or cause to be filed for such taxable period a Combined Return; provided,

however, that such filing is permitted by applicable state or local law. Except as provided in this Paragraph 8, nothing herein shall be construed as requiring Parent or any Subsidiary of Parent to file any Combined Return for any Agreement Year.

(b)    Cooperation. Each of Clarke and PCT shall cooperate, and shall cause their respective Subsidiaries to cooperate, with Parent in the filing, to the extent permitted by law, of a consolidated federal income tax return and such Combined Returns as Parent elects to file or cause to be filed, by maintaining such books and records and providing such information as may be necessary or useful in the filing of such returns and executing any documents and taking any actions which Parent may reasonably request in connection therewith. Clarke, PCT and the Parent shall provide one another with such information concerning such returns and the application of payments made under this Agreement as Parent, Clarke or PCT may reasonably request of one another.

(c)    Payment of Tax. For each Agreement Year, Parent shall timely pay or discharge, or cause to be timely paid or discharged, the consolidated federal income tax liability of the Parent Consolidated Group for such Agreement Year and the Other Tax liability shown on any Combined Return that Parent elects or is required to file.

9.    Resolution of Disputes.

Any dispute concerning the calculation or basis of determination of any payment provided for hereunder shall be resolved by the independent certified public accountants for Parent, whose judgment shall be conclusive and binding upon the parties, in the absence of manifest error.

10.    Adjudications.

In any audit, conference, or other proceeding with the Internal Revenue Service or the relevant foreign, state or local authorities, or in any judicial proceedings concerning the determination of (i) the federal income tax liabilities of the Parent Consolidated Group, (ii) any tax item of any member of either Subgroup, or (iii) the Other Tax liability with respect to any Combined Return, the parties shall be represented by persons selected by Parent. Parent shall undertake any settlement or other action that it is permitted to take pursuant to this Section 10 affecting (x) the federal income tax or Other Tax liability of any member of a Subgroup or (y) any amount payable by or receivable to either Clarke or PCT pursuant to this Agreement, with the same diligence and care as if such action pertained to an income tax liability of Parent and as if any amount that might be so payable by or receivable to such party were payable by or receivable to Parent. Each of Clarke and PCT hereby appoint (and hereby appoint on behalf of their respective Subsidiaries) Parent as their agent for the purpose of proposing and concluding any such settlement.

11.    Binding Effect; Successors and Assigns.

This Agreement shall be binding upon Mafco, MFW, Clarke, PCT and each of their respective present and future Subsidiaries, and any predecessor or successor to any of the foregoing. This Agreement shall inure to the benefit of, and be binding upon, any successors or assigns of the persons described in the preceding sentence. Mafco, MFW, Clarke and PCT

may assign their right to receive payments under this Agreement but may not assign or delegate their obligations hereunder.

12.    Interpretation.

This Agreement is intended to calculate and allocate certain federal, foreign, state and local income and franchise tax liabilities of members of Parent, the Clarke Subgroup and the PCT Subgroup, and any situation or circumstance concerning such calculation and allocation that is not specifically contemplated hereby or provided for herein shall be dealt with in a manner consistent with the underlying principles of calculation and allocation in this Agreement.

13.    Legal, Accounting and Other Fees.

Any (a) fees or expenses for legal, accounting or other professional services rendered in connection with (i) the preparation of a consolidated federal or combined state or local income tax return for the Parent Consolidated Group or for members of the Parent Consolidated Group, (ii) the application of the provisions of this Agreement or (iii) the conduct of any audit, conference or proceeding of the Internal Revenue Service or relevant state or local authorities or judicial proceedings relevant to any determination required to be made hereunder and (b) upfront costs associated with the appeal of a redetermination of the consolidated federal income tax liability of the Parent Consolidated Group for any Agreement Year as described in Section 5(a) shall be allocated between Parent, Clarke and PCT in a manner resulting in each of Clarke and PCT, as applicable, bearing a reasonable approximation of the actual amount of such fees or expenses hereunder reasonably related to, and for the benefit of, the Clarke Subgroup or the PCT Subgroup, as applicable, rather than to or for other members of the Parent Consolidated Group.

14.    Effect of the Agreement.

This Agreement shall determine the liability as between (i) Parent and the members of the Clarke Subgroup to each other, and (ii) Parent and the members of the PCT Subgroup to each other, in each case as to the matters provided for herein, whether or not such determination is effective for purposes of the Code or of applicable foreign, state or local revenue laws, or for financial reporting purposes or for any other purposes.

15.    Entire Agreement.

This Agreement embodies the entire understanding among the parties relating to its subject matter and supersedes and terminates any prior agreements and understandings among the parties with respect to such subject matter. Any and all prior correspondence, conversations and memoranda are merged herein and shall be without effect hereon. No promises, covenants or representations of any kind, other than those expressly stated herein, have been made to induce either party to enter into this Agreement. This Agreement, including this provision against oral modification, shall not be modified or terminated except by a writing duly signed by each of the parties hereto, and no waiver of any provisions of this Agreement shall be effective unless in a writing duly signed by the party sought to be bound.

16.    Code References.

Any references to the Code or Treasury Regulations shall be deemed to refer to the relevant provisions of any successor statute or regulation and shall refer to such provisions as in effect from time to time.

17.    Notices.

Any payment, notice or communication required or permitted to be given under this Agreement shall be in writing (including telecopy communication) and mailed, telecopied or delivered:

If to Clarke, to;

Harland Clarke Holdings Corp.

10931 Laureate Drive

San Antonio, Texas 78249

Attention: General Counsel

Facsimile: (210) 558-4370

If to PCT, to:

PCT International Holdings, Inc.

35 East 62nd Street

New York, New York 10065

Attention: General Counsel

Facsimile: (212) 572-5184

If to MFW, to:

M&F Worldwide Corp.

35 East 62nd Street

New York, New York 10065

Attention: General Counsel

Facsimile: (212) 572-5184

If to Mafco, to:

MacAndrews & Forbes Holdings Inc.

35 East 62nd Street

New York, New York 10065

Attention: General Counsel

Facsimile: (212) 572-5184

or to such other address as a party shall furnish in writing to the other parties. All such notices and communications shall be effective when received.

18.    Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

19.    New Members.

Each of the parties to this Agreement recognizes that from time to time, new Subsidiaries of the Parent may be added to the Parent Consolidated Group. Each of the parties agrees that any new Subsidiary of the Parent shall, without the express written consent of the other parties, become a party to this Agreement for all purposes of this Agreement with respect to

taxable periods ending after such Subsidiary was added to the Parent Consolidated Group.

20.    Termination.

This Agreement shall terminate at such time as all obligations and liabilities of the parties hereto have been satisfied. Except as otherwise provided herein, Clarke and/or PCT, as applicable shall not have any obligations or liabilities under this Agreement for any taxable period, or portion thereof, (i) with respect to federal income taxes, during which the Clarke Subgroup or the PCT Subgroup, as applicable, is not included in the Parent Consolidated Group, and (ii) with respect to Other Taxes, during which no member of the Clarke Subgroup or the PCT Subgroup, as applicable, joins in the filing of a Combined Return; provided, however, that the indemnification obligations and liabilities of Parent under Section 7 shall continue and shall not terminate. The obligations and liabilities of the parties arising under this Agreement with respect to any Agreement Year and the indemnification obligations and liabilities of Parent arising under Section 7 shall continue in full force and effect until all such obligations have been met and such liabilities have been paid in full, whether by expiration of time, operation of law, or otherwise. The obligations and liabilities of each party are made for the benefit of, and shall be enforceable by, the other parties and their successors and permitted assigns.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by its respective duly authorized officer as of the date first set forth above.

MACANDREWS & FORBES HOLDINGS INC.
By:	/s/ Adam F. Ingler
Name:	Adam F. Ingler
Title:	Senior Vice President
M&F WORLDWIDE CORP.
By:	/s/ Paul G. Savas
Name:	Paul G. Savas
Title:	Executive Vice President &
	Chief Financial Officer
HARLAND CLARKE HOLDINGS CORP.
By:	/s/ Peter A. Fera, Jr.
Name:	Peter A. Fera, Jr.
Title:	Executive Vice President &
	Chief Financial Officer
PCT INTERNATIONAL HOLDINGS INC.
By:	/s/ Paul G. Savas
Name:	Paul G. Savas
Title:	Executive Vice President &
	Chief Financial Officer

EX-21.1

Exhibit 21.1

SUBSIDIARIES

DOMESTIC SUBSIDIARIES OF THE COMPANY:

NAME OF SUBSIDIARY	STATE OF INCORPORATION
Harland Clarke Corp.	Delaware
Checks In the Mail, Inc.	Delaware
HFS Scantron Holdings Corp.	New York
Scantron Corporation	Delaware
Harland Financial Solutions, Inc.	Oregon
HFS Research & Development, Inc.	Delaware
John H. Harland Company of Puerto Rico	Georgia
Harland Financial Solutions India, LLC	Delaware
Spectrum K12 School Solutions, Inc.	Delaware
Global Scholar, Inc.	Delaware
Global Scholar Sub I, LLC	Delaware
Global Scholar Sub II, LLC	Delaware
Excelsior Software, LLC	Texas

FOREIGN SUBSIDIARIES OF THE COMPANY:

NAME OF SUBSIDIARY	JURISDICTION
Harland Financial Solutions Worldwide Limited	Ireland
Harland Israel Ltd.	Israel
Scantron Canada, Ltd.	Canada
HFS Software India Private Ltd.	India
KUED Education Digital India Private Ltd.	India

EX-31.1

Exhibit 31.1

Harland Clarke Holdings Corp. and Subsidiaries

Certification of Principal Executive Officer

Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, Charles T. Dawson, certify that:

1. I have reviewed this Annual Report on Form 10-K of Harland Clarke Holdings Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	March 21, 2012		/s/ Charles T. Dawson
		Name:	Charles T. Dawson
		Title:	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Harland Clarke Holdings Corp. and Subsidiaries

Certification of Principal Financial Officer

Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, Peter A. Fera, Jr., certify that:

1. I have reviewed this Annual Report on Form 10-K of Harland Clarke Holdings Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	March 21, 2012		/s/ Peter A. Fera, Jr.
		Name:	Peter A. Fera, Jr.
		Title:	Chief Financial Officer (Principal Financial Officer)

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Significant Customers

12 Months Ended

Dec. 31, 2011

Significant Customers [Abstract]

Concentration Risk Disclosure [Text Block]

Significant Customers

The Company's top 20 clients accounted for approximately 30% of the Company's consolidated net revenues during each of the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 and 32% for each of the fiscal years 2010 and 2009, with sales to Bank of America and Wells Fargo representing a significant portion of such revenues in the Harland Clarke segment.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes product and service revenue when persuasive evidence of a non-cancelable arrangement exists, products have been shipped and/or services have been rendered, the price is fixed or determinable, collectibility is reasonably assured, legal title and economic risk is transferred to the customer and an economic exchange has taken place. Revenues are recorded net of any applicable discounts, contract acquisition payments amortization, accrued incentives and allowances for sales returns. As a result of the accounting required in connection with the MacAndrews Acquisition, deferred revenues at December 31, 2011 represent the fair value of the cost to complete contractual obligations for which funds have already been received. Deferred revenues at December 31, 2010 represent amounts billed to the customer in excess of amounts earned.

Revenues for direct response marketing services are recognized from the Company's fixed price direct mail and marketing contracts based on the proportional performance method for specific projects.

For multiple-element software arrangements entered into prior to January 1, 2011, total revenue is allocated to each element based on the relative fair value method or the residual method when applicable. Under the relative fair value method, the total revenue is allocated among the elements based upon the relative fair value of each element as determined through vendor-specific objective evidence ("VSOE") (the price of a bundled element when sold separately). Under the residual method, the fair value of the undelivered software maintenance, training and other service elements, as determined based on VSOE, is deferred and the remaining (residual) arrangement is recognized as revenue at the time of delivery. Maintenance fees are deferred and recognized ratably over the maintenance period, which is usually twelve months. Training and other services revenue is recognized as the services are performed. In the event the Company determines that VSOE is not achieved for any of the elements of a software arrangement, the entire arrangement is bundled as a single unit and revenue is recognized ratably over the initial term of the arrangement commencing upon delivery of the software or the completion of implementation services if such services are essential to the functionality of the software.

New accounting guidance for multiple-deliverable arrangements that was adopted by the Company on January 1, 2011 requires entities to allocate revenue in an arrangement within the scope of the guidance using estimated selling prices based on a selling price hierarchy. The new guidance also eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. Application of this new guidance did not have a material effect on the Company's financial statements.

Revenue from licensing of software under usage-based contracts is recognized ratably over the term of the agreement or on an actual usage basis. Revenue from licensing of software under limited term license agreements is recognized ratably over the term of the agreement.

For software that is installed and integrated by the Company or customer, license revenue is recognized upon shipment if functionality has already been proven and there are no significant customization services. For software that is installed, integrated and customized by the Company, revenue is recognized either on a percentage-of-completion or completed contract basis. Percentage-of-completion recognizes both license and services revenue as the services are performed using an input method based on labor hours. Estimates of efforts to complete a project are used in the percentage-of-completion calculation. Due to the uncertainties inherent in these estimates, actual results could differ from those estimates. Completed contract basis is used either when reliable estimates of effort are not available, or if VSOE does not exist for one or more elements, or if there are substantive customer acceptance provisions. Under this methodology all revenue is deferred until all services are complete, or the acceptance conditions have been met.

Revenue from outsourced data processing services and other transaction processing services is recognized in the month the transactions are processed or the services are rendered.

The contractual terms of software sales do not provide for product returns or allowances. However, on occasion the Company may allow for returns or allowances primarily in the case of a new product release. Provisions for estimated returns and sales allowances are established by the Company concurrently with the recognition of revenue and are based on a variety of factors including actual return and sales allowance history and projected economic conditions.

Service revenues are comprised of revenues derived from software maintenance agreements, software implementation services, software as a service, field maintenance services, direct marketing services, certain contract center services, core processing service bureau deliverables, consulting services, training services, survey services and other services.

Customer Incentives

The Company's Harland Clarke segment has contracts with certain clients that provide both fixed and volume-based rebates. These rebates are recorded as a reduction of revenues to which they apply and as accrued liabilities.

Shipping and Handling

Revenue received from shipping and handling fees is reflected in product revenues, net in the accompanying consolidated statements of operations. Costs related to shipping and handling are included in cost of products sold.

Cash and Cash Equivalents

The Company considers all cash on hand, money market funds and other highly liquid debt instruments with a maturity, when purchased, of three months or less to be cash and cash equivalents.

Investments

The Company has investments which consist of corporate equity securities and United States treasury securities which are classified as available-for-sale securities and are stated at fair value with unrealized gains and losses on such investments reflected net of tax, as other comprehensive income (loss). Realized gains and losses on investments are included in other income, net in the accompanying consolidated statements of operations. The cost of securities sold is based on the specific identification method. The United States treasury securities are classified as current and included in marketable securities in the accompanying consolidated balance sheets. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14.

If the market value of an investment declines below its cost, the Company evaluates whether the decline is temporary or other than temporary. The Company considers several factors in determining whether a decline is temporary including the length of time market value has been below cost, the magnitude of the decline, financial prospects of the issuer or business and the Company's intention to hold the security. If a decline in market value of an investment is determined to be other than temporary, a charge to earnings is recorded for the loss and a new cost basis in the investment is established.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable losses in its existing accounts receivable based on historical losses and current economic conditions. Account balances are charged against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance sheet credit exposure related to its customers.

Inventories

The Company states inventories at the lower of cost or market value. The Company determines cost by average costing or the first-in, first-out method.

Contract Acquisition Payments

Certain contracts with customers of the Company's Harland Clarke segment involve upfront payments to the customer. These payments are capitalized and amortized on a straight-line basis as a reduction of revenue over the life of the related contract. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance. These payments are generally refundable from the customer on a prorated basis if the contract is canceled prior to the contract termination date. When such a termination occurs, the amounts repaid are offset against any unamortized contract acquisition payment balance related to the terminating customer, with any resulting excess reported as an increase in revenue. The Company recorded revenue related to these contract terminations of $0.0 and $7.5 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $5.8 and $0.8 for fiscal years 2010 and 2009, respectively.

Advertising

Advertising costs, which are recorded predominately in selling, general and administrative expenses, consist mainly of marketing new and existing products, re-branding existing products and launching new initiatives throughout the Company.

Direct-response advertising is capitalized and amortized over its expected period of future benefit, while all other advertising costs are expensed as incurred. Direct-response advertising consists primarily of inserts that include order coupons for products offered by a division of the Company's Harland Clarke segment, which are amortized for a period up to 18 months. These costs are amortized following their distribution, and are charged to match the advertising expense with the related revenue streams.

At December 31, 2011 and 2010, the Company had prepaid advertising costs of $0.1 and $4.5, respectively, which are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. The Company's advertising expense was $0.4 and $21.4 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $19.6 and $22.0 for fiscal years 2010 and 2009, respectively.

Property, Plant and Equipment

The Company states property, plant and equipment at cost. Maintenance and repairs are charged to expense as incurred. Additions, improvements and replacements that extend the asset life are capitalized. Depreciation is provided on a straight-line basis over the estimated useful lives of such assets. The Company amortizes leasehold improvements over the shorter of the useful life of the related asset or the lease term. Certain leases also contain tenant improvement allowances, which are recorded as a leasehold improvement and deferred rent and amortized over the lease term. The Company eliminates cost and accumulated depreciation applicable to assets retired or otherwise disposed of from the accounts and reflects any gain or loss on such disposition in operating results. As further discussed below, the Company capitalizes the qualifying costs incurred during the development stage on software to be sold, leased or otherwise marketed, internally developed software and software obtained for internal use and amortizes the costs over the estimated useful life of the software. The Company capitalizes interest on qualified long-term projects and depreciates it over the life of the related asset.

The useful lives for computing depreciation are as follows:

Machinery and equipment	3 - 15 years
Computer software and hardware	3 - 5 years
Leasehold improvements	1 - 20 years
Buildings and improvements	20 - 30 years
Furniture, fixtures and transportation equipment	5 - 8 years

Software and Other Development Costs

The Company expenses research and development expenditures as incurred, including expenditures related to the development of software products that do not qualify for capitalization. The amounts expensed totaled $0.1 and $29.2 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $21.9 and $15.4 for fiscal years 2010 and 2009, respectively, and were primarily costs incurred related to the development of software.

Software development costs incurred for sold, leased, or otherwise marketed software prior to the establishment of technological feasibility are expensed as incurred. Software development costs incurred after establishing the technological feasibility of the subject software product and before its availability for sale are capitalized and are included in other intangible assets, net on the accompanying consolidated balance sheets. Capitalized software development costs are amortized on a product-by-product basis using the estimated economic life of the product on a straight-line basis over three years with related amortization expense in cost of products sold on the accompanying consolidated statements of operations. Unamortized software development costs in excess of estimated net realizable value from a particular product are written down to their estimated net realizable value.

The Company capitalizes costs to develop or obtain computer software for internal use once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project and (3) interest costs incurred, when significant, while developing internal-use software. Capitalization of costs ceases when the project is substantially complete and ready for its intended use and is included in property, plant and equipment, net on the accompanying consolidated balance sheets.

Goodwill and Acquired Intangible Assets

Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets acquired. Acquired intangibles are recorded at fair value as of the date acquired. Goodwill and other intangibles determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired, such as a significant adverse change in the business climate.

The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of the Company's reporting units. In 2010, the Company reduced the number of reporting units from four to three as a result of the integration of two former reporting units into a single reporting unit. The Company's reporting units are now the same as its reportable segments.

The Company utilizes both the income and market approaches to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit's estimated cost of equity and debt ("cost of capital") derived using, both known and estimated, customary market metrics. The Company performs sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies; evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies; and applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. The Company weights the results of the income and market approaches equally, except where guideline companies are not similar enough to provide a reasonable value using the market approach. When that occurs, the market approach is weighted less than the income approach.

If the estimated fair value of a reporting unit is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of the Company's "implied fair value" requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to the corresponding carrying value.

The Company's step one annual impairment test for 2011 indicated goodwill impairment for the Scantron reporting unit as the estimated fair value for the Scantron reporting unit was less than its carrying value. The Company performed the second step of the test to determine the "implied fair value" of goodwill for the Scantron reporting unit, resulting in a non-cash impairment charge of $102.2 (see Note 7). No goodwill impairment was indicated for the Company's other two reporting units as a result of the 2011 test. The results of the Company's annual test for 2010 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values.

The Company measures impairment of its indefinite-lived tradename based on the relief-from-royalty-method. Under the relief-from-royalty method of the income approach, the value of an intangible asset is determined by quantifying the cost savings a company obtains by owning, as opposed to licensing, the intangible asset. Assumptions about royalty rates are based on the rates at which similar tradenames are licensed in the marketplace. The Company also re-evaluates the useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life.

The Company's annual impairment test for its indefinite-lived tradename for 2011 determined the estimated fair value of the indefinite-lived tradename for the Scantron reporting unit was less than its carrying value. As a result, the useful life was reassessed and determined to no longer be indefinite. A non-cash impairment charge of $4.2 was recorded based on the estimated fair value of the tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to an estimated economic life of 15 years (see Note 7).

The annual impairment evaluations for goodwill and the indefinite-lived intangible asset involve significant estimates made by management. The discounted cash flow analyses require various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Changes in estimates could have a material effect on the carrying amount of goodwill and indefinite-lived intangible assets in future periods.

Intangible assets that are deemed to have a finite life are amortized over their estimated useful life generally using accelerated methods that are based on expected cash flows. They are also evaluated for impairment as discussed below in "Long-Lived Assets."

Costs to renew or extend the term of a recognized intangible asset are expensed as incurred and are not significant.

Long-Lived Assets

When events or changes in circumstances indicate that the carrying amount of a long-lived asset other than goodwill and indefinite-lived intangible assets may not be recoverable, the Company assesses the recoverability of such asset based on estimates of future undiscounted cash flows compared to net book value. If the future undiscounted cash flow estimates are less than net book value, net book value would then be reduced to estimated fair value, which generally approximates discounted cash flows. The Company also evaluates the amortization periods of assets to determine whether events or circumstances warrant revised estimates of useful lives. Assets held for sale are carried at the lower of carrying amount or fair value, less estimated costs to sell such assets.

Income and Other Taxes

The Company computes income taxes under the liability method. Under the liability method, the Company generally determines deferred income taxes based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company records net deferred tax assets when it is more likely than not that it will realize the tax benefits.

As part of the process of preparing its consolidated financial statements, the Company is required to calculate the amount of income tax in each jurisdiction in which it operates. On a regular basis, the amount of taxable income is reviewed by various federal, state and foreign taxing authorities. As such, the Company routinely provides reserves for unrecognized tax benefits for items that it believes could be challenged by these taxing authorities.

The Company records any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer, which may include, but is not limited to, sales, use, value added, and excise taxes, on a net basis in the accompanying consolidated statements of operations.

Pensions and Other Postretirement Benefits

The Company has defined benefit postretirement plans and defined contribution 401(k) plans, which cover certain current and former employees of the Company who meet eligibility requirements.

The Company recognizes in its balance sheet the funded status of its defined benefit postretirement benefit plans, measured as the difference between the fair value of the plan assets and the benefit obligation and recognizes changes in the funded status of a defined benefit postretirement benefit plan within accumulated other comprehensive income (loss), net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost (see Note 10).

Translation of Foreign Currencies

The functional currency for each of the Company's foreign subsidiaries is its local currency. The Company translates all assets and liabilities denominated in foreign functional currencies into United States dollars at rates of exchange in effect at the balance sheet date and statement of operations items at the average rates of exchange prevailing during the period. The Company records translation gains and losses as a component of accumulated other comprehensive income (loss) in the stockholder's equity section of the Company's balance sheets. Gains and losses resulting from transactions in other than functional currencies are reflected in operating results, except for transactions of a long-term nature. The Company considers undistributed earnings of certain foreign subsidiaries to be permanently invested. As a result, no income taxes have been provided on these undistributed earnings or on the foreign currency translation adjustments recorded as a part of other comprehensive income (loss).

Self-Insurance

The Company is self-insured for certain workers' compensation and group medical costs. Provisions for losses expected under these programs are recorded based on the Company's estimates of the aggregate liabilities for the claims incurred. Payments for estimated claims beyond one year have been discounted. As of December 31, 2011 and 2010, the combined liabilities for self-insured workers' compensation and group medical were $7.7 and $9.4, respectively.

Derivative Financial Instruments

The Company uses derivative financial instruments to manage interest rate risk related to a portion of its long-term debt. The Company recognizes all derivatives at fair value as either assets or liabilities in the consolidated balance sheets and changes in the fair values of such instruments are recognized in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, the Company recognizes the changes in fair value of these instruments in other comprehensive income (loss) until the underlying debt instrument being hedged is settled or the Company determines that the specific hedge accounting criteria are no longer met.

On the date the interest rate derivative contract is entered into, the Company designates the derivative as either a fair value hedge or a cash flow hedge. The Company formally documents the relationship between hedging instruments and the hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. The Company links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. The Company links all hedges that are designated as cash flow hedges to forecasted transactions or to liabilities on the balance sheet. The Company also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. If an existing derivative were to become not highly effective as a hedge, the Company would discontinue hedge accounting prospectively.

Deferred Financing Fees

Deferred financing fees are being amortized to interest expense using the effective interest method over the term of the respective financing agreements. Unamortized balances are reflected in other assets in the accompanying consolidated balance sheets and were $0.0 and $25.2 as of December 31, 2011 and 2010, respectively. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance.

Restructuring Charges

The Company has restructuring costs related primarily to facility consolidations and workforce rationalization. The costs primarily consist of employee termination benefits which are accrued when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. In addition to employee termination benefits, other restructuring costs include, but are not limited to, equipment moves, training and travel, which are expensed as incurred. Additional restructuring charges related to the Company's existing operations will be incurred as the Company completes its restructuring plans.

Fair Value Measurements

The Company measures fair value using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (see Note 13).

Reclassifications

Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2011 and the consolidated statement of operations for 2011. These reclassifications had no effect on previously reported net income.

Specifically, the net change in the fair value of contingent consideration arrangements is now presented as a separate line item in the consolidated statements of operations. Previously, such amounts had been classified in cost of services provided and selling, general and administrative expenses. In addition, non-current deferred revenues and notes receivable - related party are now presented as separate line items in the consolidated balance sheets. Previously, non-current deferred revenues were included in other liabilities and notes receivable - related party were included in other assets. These reclassifications are also now included in the consolidated statements of cash flows.

Recently Adopted Accounting Guidance

Effective January 1, 2011, the Company adopted new guidance for multiple-deliverable revenue arrangements and certain arrangements that include software elements. The guidance for multiple-deliverable revenue arrangements requires entities to allocate revenue in new arrangements within the scope of the guidance using estimated selling prices based on a selling price hierarchy. It also eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. Application of the new guidance did not have a material effect on the Company's financial statements.

The new guidance for certain arrangements that include software elements removes non-software components of tangible products and software components of tangible products that have software components essential to the functionality of the tangible product from the scope of software revenue recognition. The majority of the Company's software arrangements are not tangible products with software components. Application of the new guidance did not have a material effect on the Company's financial statements.

New Accounting Guidance

In September 2011, the Financial Accounting Standards Board ("FASB") amended existing guidance related to the requirement for an annual goodwill impairment test. This amendment provides entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. The amended provisions are effective for reporting periods beginning on or after December 15, 2011. However, early adoption is permitted if an entity's financial statements for the most recent annual or interim period have not yet been issued. The Company will adopt the new guidance effective January 1, 2012. This amendment affects testing steps only, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

In June 2011, the FASB amended existing guidance related to the presentation of comprehensive income. The amendment requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two separate but consecutive statements. It eliminates the option to report other comprehensive income and its components as part of the statement of changes in shareholders' equity. The amended provisions are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, and full retrospective application is required. The Company will adopt the new guidance effective January 1, 2012. This amendment affects presentation and disclosure only, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

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Valuation And Qualifying Accounts

12 Months Ended

Dec. 31, 2011

Valuation and Qualifying Accounts [Abstract]

Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

Schedule II - Valuation and Qualifying Accounts and Reserves

(in millions)

The following is a summary of the valuation and qualifying accounts and reserves for the period from January 2009 to December 31, 2011.

	Beginning Balance		Effect of Acquisition Accounting			Amounts Reserved		Balance Written Off			Ending Balance
Allowance for Doubtful Accounts and Sales Returns and Allowance Reserves
December 22 to December 31, 2011	$	3.0	$	(1.2	)	$	0.2	$	(0.2	)	$	1.8
January 1 to December 21, 2011	$	2.8	$	—		$	1.7	$	(1.5	)	$	3.0
Year Ended December 31, 2010	$	3.0	$	—		$	4.0	$	(4.2	)	$	2.8
Year Ended December 31, 2009	$	2.8	$	—		$	7.6	$	(7.4	)	$	3.0

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Description of Business and Basis of Presentation

12 Months Ended

Dec. 31, 2011

Description of Business and Basis of Presentation [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Description of the Business and Basis of Presentation

Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its subsidiaries, the "Company") is a holding company that conducts its operations through its direct and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed, subject to various closing conditions, to merge with an indirect wholly owned subsidiary of MacAndrews, and, following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011 (hereafter referred to as the "MacAndrews Acquisition").

As a result of the MacAndrews Acquisition, which resulted in a change in ownership of M & F Worldwide, the Company was required to use the acquisition method of accounting to revalue its assets and liabilities as of the date of the MacAndrews Acquisition. Such accounting results in a number of changes (see Note 3), including, but not limited to, increased depreciation and amortization, as well as increased non-cash interest expense that results from adjusting the Company's long-term debt to fair value as of the date of the MacAndrews Acquisition. Accordingly, the accompanying financial statements for the Predecessor and Successor periods are not comparable in all material respects and the Company is required to present separately its operating results for periods before and after the MacAndrews Acquisition. The periods prior to the MacAndrews Acquisition (the period January 1 to December 21, 2011 and the years ended December 31, 2010 and 2009) are presented in the accompanying consolidated financial statements as "Predecessor." The period subsequent to the MacAndrews Acquisition (December 22 to December 31, 2011) is presented in the accompanying consolidated financial statements as "Successor."

The Company has organized its business and corporate structure along the following three business segments: Harland Clarke, Harland Financial Solutions and Scantron.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial services, retail and software providers. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards and other business and home office products to consumers and small businesses.

The Harland Financial Solutions segment provides technology products and services to financial services clients worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems.

The Scantron segment provides data management and decision support solutions and related services to educational, commercial, healthcare and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management, business operational data collection, patient information collection and tracking, and managed technical services. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment, forms, and related field maintenance services.

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries after the elimination of all material intercompany accounts and transactions. The Company has consolidated the results of operations and accounts of businesses acquired from the date of acquisition.

The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries are guarantors and may also be co-issuers under the 2015 Senior Notes (as hereinafter defined) (see Note 11). Harland Clarke Holdings is a holding company and has no significant assets at December 31, 2011 and no operations. The guarantees and the obligations of the subsidiaries of the Company are full and unconditional and joint and several, and any subsidiaries of the Company other than the subsidiary guarantors and obligors are not significant.

See Note 3 for information regarding recent acquisitions.

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Dec. 31, 2011 Successor [Member]	Dec. 31, 2010 Predecessor [Member]
Current assets:
Cash and cash equivalents	$ 96.5	$ 211.5
Marketable securities	56.6	0
Accounts receivable (net of allowances of $1.8 and $2.8)	109.9	124.7
Inventories	43.2	31.6
Income taxes receivable	15.5	9.3
Deferred tax assets	24.5	19.9
Prepaid expenses and other current assets	44.9	56.0
Total current assets	391.1	453.0
Property, plant and equipment, net	205.3	143.4
Goodwill	824.8	1,526.8
Other intangible assets, net	1,657.6	1,097.4
Contract acquisition payments, net	0	27.2
Notes receivables - related party	30.0	4.0
Other assets	27.1	84.3
Total assets	3,135.9	3,336.1
Current liabilities:
Accounts payable	37.7	36.0
Deferred revenues	88.4	128.9
Current maturities of long-term debt	19.1	19.4
Accrued liabilities:
Salaries, wages and employee benefits	52.6	73.1
Income and other taxes payable	12.8	13.4
Customer incentives	55.7	29.0
Payable to parent	0	0.7
Other current liabilities	32.9	27.5
Total current liabilities	299.2	328.0
Long-term debt	1,766.3	2,200.3
Deferred tax liabilities	727.8	389.5
Deferred revenues	20.4	12.7
Other liabilities	106.0	66.8
Commitments and contingencies
Stockholder's equity:
Common stock - 200 shares authorized; par value $0.01; 100 shares issued and outstanding at December 31, 2011 and December 31, 2010	0	0
Additional paid-in capital	222.3	157.0
(Accumulated deficit) retained earnings	(6.0)	181.0
Accumulated other comprehensive (loss) income, net of taxes:
Foreign currency translation adjustments	0	(0.1)
Unrecognized amounts included in postretirement obligations	(0.1)	4.0
Derivative fair-value adjustments	(0.1)	(10.9)
Unrealized gains on investments, net	0.1	7.8
Total accumulated other comprehensive income, net of taxes	(0.1)	0.8
Total stockholder's equity	216.2	338.8
Total liabilities and stockholder's equity	$ 3,135.9	$ 3,336.1

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Consolidated Statement of Shareholder's Equity Parentheticals (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended
	Dec. 31, 2011 Successor [Member]	Dec. 21, 2011 Predecessor [Member]	Dec. 31, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
Common stock, shares outstanding	100		100
Taxes on foreign currency translation adjustments	$ 0	$ 0	$ 0	$ 0
Taxes on derivative fair-value adjustments	0	(2.7)	1.3	(5.2)
Taxes on changes in unrecognized amounts included in postretirement obligations	0.1	0.6	(3.6)	0.7
Taxes on unrealized losses on investments	0	(0.1)	(4.4)	(0.6)
Taxes on reclassifications of gains on investments included in net income	$ 0	$ 5.1	$ 0.1	$ 0

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Restructuring

12 Months Ended

Dec. 31, 2011

Restructuring [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

 Restructuring

Harland Clarke and Corporate

The Company adopted plans during 2008, 2009, 2010 and 2011 to realize additional cost savings in the Harland Clarke segment and Corporate by further consolidating printing plants, contact centers and selling, general and administrative functions. The Company also recorded restructuring liabilities of $1.5 in connection with an acquisition in 2008. The restructuring liabilities were reduced by $1.1 and $0.2 in 2009 and 2010, respectively, of which, $0.6 is reflected as 2009 non-cash utilization in the table below.

The following table details the components of the Company's restructuring accruals under its plans related to the Harland Clarke segment and Corporate for 2011, 2010 and 2009:

	Beginning Balance		Expensed		Paid in Cash			Non-cash Utilization			Ending Balance
Year ended December 31, 2011:
Severance and severance-related	$	1.5	$	6.1	$	(3.1	)	$	—		$	4.5
Facilities closures and other costs	4.5		1.6		(3.0		)	(0.1		)	3.0
Total	$	6.0	$	7.7	$	(6.1	)	$	(0.1	)	$	7.5
Year ended December 31, 2010:
Severance and severance-related	$	2.5	$	5.1	$	(6.1	)	$	—		$	1.5
Facilities closures and other costs	2.5		7.2		(2.5		)	(2.7		)	4.5
Total	$	5.0	$	12.3	$	(8.6	)	$	(2.7	)	$	6.0
Year ended December 31, 2009:
Severance and severance-related	7.4		$	18.1	$	(23.0	)	$	—		$	2.5
Facilities closures and other costs	2.3		7.6		(2.8		)	(4.6		)	2.5
Total	$	9.7	$	25.7	$	(25.8	)	$	(4.6	)	$	5.0

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period.

The non-cash utilization of $0.1, $2.7 and $4.6 in 2011, 2010 and 2009, respectively, in the table above, includes adjustments to the carrying value of other property, plant and equipment. The Company expects to incur in future periods an additional $1.4 for costs related to these plans. Ongoing lease commitments related to these plans continue through 2017.

Harland Financial Solutions

During 2009, the Company initiated a multi-year plan to reorganize certain operations and sales and support functions within the Harland Financial Solutions segment. The plan, which was completed in 2011, focused on moving from a product-centric organization to a functional organization in order to enhance customer support.

The following table details the Company's restructuring accruals related to the Harland Financial Solutions segment for 2011, 2010 and 2009:

	Beginning Balance		Expensed		Paid in Cash			Non-cash Utilization		Ending Balance
Year ended December 31, 2011:
Severance and severance-related	$	0.1	$	0.3	$	(0.4	)	$	—	$	—
Facilities and other costs	2.2		0.1		(0.8		)	—		1.5
Total	$	2.3	$	0.4	$	(1.2	)	$	—	$	1.5
Year ended December 31, 2010:
Severance and severance-related	$	1.0	$	0.7	$	(1.6	)	$	—	$	0.1
Facilities and other costs	0.1		2.1		(0.1		)	0.1		2.2
Total	$	1.1	$	2.8	$	(1.7	)	$	0.1	$	2.3
Year ended December 31, 2009:
Severance and severance-related	$	1.4	$	3.3	$	(3.7	)	$	—	$	1.0
Facilities and other costs	0.7		0.5		(1.1		)	—		0.1
Total	$	2.1	$	3.8	$	(4.8	)	$	—	$	1.1

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period.

Scantron

As a result of an acquisition, the Company adopted plans to restructure the Scantron segment in 2008. These plans focused on improving operating margins through consolidating manufacturing and printing operations and reducing duplicative selling, general and administrative expenses through workforce rationalization, consolidation of certain redundant outsourcing and the reduction of consulting and other professional services. The Company completed substantially all of the planned employee terminations and consolidation of printing and manufacturing operations related to the acquisition in 2009.

The Company also adopted plans during 2009, 2010 and 2011 to realize additional cost savings in the Scantron segment by further consolidation of operations and elimination of certain selling, general and administrative expenses.

The following table details the components of the Company's restructuring accruals related to the Scantron segment for 2011, 2010 and 2009:

	Beginning Balance		Expensed			Paid in Cash			Non-cash Utilization			Ending Balance
Year ended December 31, 2011:
Severance and severance-related	$	0.1	$	5.2		$	(3.3	)	$	—		$	2.0
Facilities and other costs	3.7		(0.7		)	(1.7		)	0.1			1.4
Total	$	3.8	$	4.5		$	(5.0	)	$	0.1		$	3.4
Year ended December 31, 2010:
Severance and severance-related	$	0.5	$	2.5		$	(2.9	)	$	—		$	0.1
Facilities and other costs	—		4.7			(1.2		)	0.2			3.7
Total	$	0.5	$	7.2		$	(4.1	)	$	0.2		$	3.8
Year ended December 31, 2009:
Severance and severance-related	$	1.0	$	2.7		$	(3.0	)	$	(0.2	)	$	0.5
Facilities and other costs	—		0.3			—			(0.3		)	—
Total	$	1.0	$	3.0		$	(3.0	)	$	(0.5	)	$	0.5

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period.

Ongoing lease commitments related to these plans continue to 2013.

Restructuring accruals for all of the segments' plans are reflected in other current liabilities and other liabilities in the accompanying consolidated balance sheets. The Company expects to pay the remaining severance, facilities and other costs related to the segments' restructuring plans through 201

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Transactions with Related Parties

12 Months Ended

Dec. 31, 2011

Transactions with Related Parties [Abstract]

Related Party Transactions Disclosure [Text Block]

Transactions with Related Parties

The Company participates in MacAndrews directors and officers insurance program, which covers the Company as well as MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews for its allocable portion of the premiums for such coverage, which the Company believes is more favorable than the premiums the Company could secure were it to secure its own coverage. At December 31, 2011 and 2010, the Company recorded prepaid expenses of $0.0 and $0.1, respectively, relating to the directors and officers insurance program in the accompanying consolidated balance sheets. The Company paid $0.0 and $0.1 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $0.0 and $0.1 for the fiscal years 2010 and 2009, respectively, to MacAndrews under the insurance program.

Notes Receivable

On December 27, 2011, the Company entered into a revolving credit agreement with its indirect parent, MacAndrews, whereby MacAndrews could borrow an amount not exceeding $30.0. The facility is unsecured, bears interest at LIBOR plus 2% and matures in December 2013. The facility was drawn in full by MacAndrews on December 27, 2011 and remained outstanding at December 31, 2011.

In 2008, Harland Clarke Holdings acquired the senior secured credit facility and outstanding note of Delphax Technologies, Inc. ("Delphax"), the supplier of Imaggia printing machines and related supplies and service for the Harland Clarke segment. The senior secured credit facility and note were paid in full and canceled on November 9, 2011. The senior secured credit facility was comprised of a revolving credit facility of up to $14.0, subject to borrowing limitations set forth therein that originally matured in September 2011. Contemporaneous with its acquisition of the senior secured credit facility and the note, Harland Clarke Holdings also acquired 250,000 shares of Delphax common stock from the previous holder of the Delphax note. In May 2011, the note was restated to set the interest rate to 8.0%, effective October 1, 2010, and to require the repayment of $1.0 of principal in 2011 and the senior secured credit facility was extended to mature in September 2012.

During 2011, the Company received $4.0 in payments on the note, fully repaying the principal balance of the note. During 2010, the Company received $3.0 in payments on the note, bringing the principal balance of the note and the senior secured credit facility to $4.0 and $0.0, respectively, at December 31, 2010. Interest income of $0.0, $0.2, $0.4 and $0.8 was recorded during the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009, respectively.

Other

The Company expensed $0.0, $2.7, $2.7 and $2.7 during the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009, respectively, for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses.

In the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009 , the Company paid cash dividends of $12.6, $48.7, $31.2 and $41.3, respectively, to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements.

As discussed in Note 8, the Company made net payments to and had net receivables with M & F Worldwide related to the 2005 Tax Sharing Agreement

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	0 Months Ended	12 Months Ended
	Dec. 31, 2011 Successor [Member]	Dec. 21, 2011 Predecessor [Member]	Dec. 31, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
Operating activities
Net (loss) income	$ (6.0)	$ 29.2	$ 114.2	$ 112.1
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	1.8	40.9	48.9	57.9
Amortization of intangible assets	4.1	117.5	109.0	104.2
Amortization of debt fair value adjustments and deferred financing fees	4.1	6.7	7.0	7.3
Revaluation of contingent consideration	0	(24.3)	0.3	0
Loss (gain) on early extinguishment of debt	0.1	0	0	(65.0)
Gain on sale of marketable securities	0	(13.2)	(0.1)	(0.1)
Deferred income taxes	(6.2)	(35.5)	(31.9)	(23.2)
Asset impairments	0	111.6	3.7	44.4
Changes in operating assets and liabilities, net of effect of businesses acquired:
Accounts receivable	0.3	15.0	(1.1)	11.8
Inventories	3.7	2.3	0.9	6.0
Prepaid expenses and other assets	(1.1)	(12.0)	(17.0)	(19.3)
Contract acquisition payments, net	0	(8.9)	1.4	11.2
Accounts payable and accrued liabilities	5.7	(13.8)	18.4	(54.4)
Deferred revenues	12.0	11.8	13.0	11.1
Income and other taxes	2.3	(7.4)	0.6	(3.5)
Payable to parent	(0.8)	0.1	0.7	(0.7)
Other, net	0	0	5.0	5.5
Net cash provided by operating activities	20.0	220.0	273.0	205.3
Investing activities
Purchase of businesses, net of cash acquired	0	(134.9)	(61.2)	(11.4)
Additional purchase price consideration for previous acquisition	0	(0.2)	0	0
Purchase of marketable securities	(56.5)	0	0	(24.6)
Funding of related party note receivable	30.0	0	0	0
Repayments of related party notes receivable	0	(4.0)	(3.0)	(5.2)
Proceeds from sale of property, plant and equipment	0	0.2	2.5	0.7
Proceeds from sale of marketable securities	0	13.4	24.7	0
Capital expenditures	0	(58.6)	(38.6)	(42.2)
Capitalized interest	0	(0.3)	(0.1)	(0.3)
Other, net	(1.5)	(5.9)	(4.2)	(4.2)
Net cash used in investing activities	(88.0)	(182.3)	(73.9)	(76.8)
Financing activities
Dividends to parent	(12.6)	(48.7)	(31.2)	(41.3)
Redemption of notes	(1.7)	0	0	(67.6)
Payments of contingent consideration arrangements	0	(0.3)	(0.7)	0
Payments for hedge financing activities	(1.9)
Repayments of credit agreements and other borrowings	(4.5)	(15.0)	(19.6)	(20.3)
Net cash used in financing activities	(20.7)	(64.0)	(51.5)	(129.2)
Net (decrease) increase in cash and cash equivalents	(88.7)	(26.3)	147.6	(0.7)
Cash and cash equivalents at beginning of period	185.2	211.5	63.9	64.6
Cash and cash equivalents at end of period	96.5	185.2	211.5	63.9
Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized	5.4	94.4	108.0	138.0
Income taxes, net of refunds	$ 0	$ 84.1	$ 97.7	$ 95.5

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Consolidated Balance Sheet Parentheticals (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2011 Successor [Member]	Dec. 31, 2010 Predecessor [Member]
Current Assets:
Allowance for doubtful accounts	$ 1.8	$ 2.8
Stockholder's Equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200	200
Common stock, shares issued	100	100
Common stock, shares outstanding	100	100

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Other Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2011

Other Postretirement Benefit Plans [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Other Postretirement Benefit Plans

The Company sponsors two unfunded postretirement defined benefit plans that cover certain former salaried and non-salaried employees. One plan provides healthcare benefits and the other provides life insurance benefits. The medical plan is contributory and contributions are adjusted annually based on actual claims experience. For retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000, the Company contributes a portion of the cost of the medical plan. For all other retirees, the Company's intent is that the retirees provide the majority of the actual cost of the medical plan. The life insurance plan is noncontributory for those employees that retired by December 31, 2002.

During 2010, the Company amended the medical plan for benefits to be provided after December 31, 2010 for retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000. As a result of these amendments, the Company remeasured its accumulated postretirement benefit obligation ("APBO") as of September 30, 2010. The remeasurement reflected a new discount rate of 5.0% and resulted in a $7.0 decrease in the APBO and the offsetting amount was recorded in other comprehensive income.

As of December 31, 2011 and 2010, the APBO was $11.4 and $10.1, respectively. The Company contributed to these plans $0.0 and $0.4 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $0.5 for fiscal year 2010. The Company expects to contribute $0.6 to these plans in 2012.

The following table presents the beginning and ending balances of the APBO, the changes in the APBO, and reconciles the plans' status to the accrued postretirement healthcare and life insurance liability reflected on the accompanying consolidated balance sheets as of December 31, 2011 and 2010:

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011			Year ended December 31, 2010
APBO at beginning of period	$	11.2	$	10.1		$	18.9
Changes in APBO:
Interest cost	—		0.5			0.9
Benefits paid	—		(0.8		)	(1.5		)
Retiree contributions	—		0.3			0.9
Health benefits subsidy	—		0.1			0.1
Actuarial (gain) loss	0.2		1.0			(0.6		)
Plan amendment	—		—			(8.6		)
APBO at end of period	$	11.4	$	11.2		$	10.1
Included in accrued salaries, wages and employee benefits	$	0.6	$	0.6		$	0.6
Included in other liabilities	10.8		10.6			9.5
APBO at end of period	$	11.4	$	11.2		$	10.1

The following table presents the changes in the fair value of plan assets and the funded status for the periods presented:

	Successor			Predecessor
	December 22 to December 31, 2011			January 1 to December 21, 2011			Year ended December 31, 2010
Fair value of plan assets at beginning of period	$	—		$	—		$	—
Employer contributions	—			0.4			0.5
Retiree contributions	—			0.3			0.9
Health benefits subsidy	—			0.1			0.1
Benefits paid	—			(0.8		)	(1.5		)
Fair value of plan assets at end of period	$	—		$	—		$	—
Funded status	$	(11.4	)	$	(11.2	)	$	(10.1	)

As of December 31, 2011 and 2010, amounts recognized in accumulated other comprehensive income (loss), which have not yet been recognized as a component of net postretirement benefit cost, consist of:

	Successor		Predecessor
	2011		2010
Unrecognized prior service credits	$	—	(8.5		)
Unrecognized actuarial net loss	0.2		1.9
	$	0.2	$	(6.6	)

Net periodic postretirement benefit costs for these plans were as follows:

	Successor		Predecessor
						Years ended December 31,
	December 22 to December 31, 2011		January 1 to December 21, 2011			2010			2009
Interest on accumulated postretirement benefit obligation	$	—	$	0.5		$	0.9		$	1.0
Amortization of prior service credits	—		(0.4		)	(0.1		)	—
Amortization of net actuarial loss	—		—			0.1			—
Net postretirement benefit cost	—		0.1			0.9			1.0
Other changes in benefit obligations recognized in other comprehensive income:
Unrecognized actuarial net loss (gain)	0.2		1.0			(0.6		)	1.6
Amortization of net actuarial loss	—		—			(0.1		)	—
Prior service credits	—		—			(8.6		)	—
Amortization of prior service credits	—		0.4			0.1			—
Total recognized in net periodic benefit cost and other comprehensive income	$	0.2	$	1.5		$	(8.3	)	$	2.6

The weighted average discount rates used to determine benefit obligations for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 and fiscal year 2010 were 4.15%, 4.30% and 5.25%, respectively. The weighted average discount rates used to determine the net periodic postretirement benefit cost for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 were 5.25% for each period and were 5.75% and 6.0% for fiscal years 2010 and 2009, respectively. The annual healthcare cost trend rates used for 2012 to determine benefit obligations at December 31, 2011 were assumed to be 8.0%. The estimated annual healthcare cost trend rates grade down gradually to 4.75% at 2018. Participant contributions are assumed to increase with healthcare cost trend rates.

The healthcare cost trend rate assumptions, which are net of participant contributions, could have a significant effect on amounts reported. A change in the assumed trend rate of 1 percentage point would have the following effects:

	1 Percentage Point Increase	1 Percentage Point Decrease
Effect on total interest cost for 2011	—	—
Effect on postretirement benefit obligation at December 31, 2011	0.3	(0.2	)

The following reflects the estimated future benefit payments, net of estimated participant contributions:

2012	$	0.6
2013	0.6
2014	0.6
2015	0.6
2016	0.6
2017-2021	3.2

There will not be any amortization of accumulated actuarial net loss in 2012.

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Mar. 21, 2012	Jun. 30, 2010
Document Information [Line Items]
Entity Registrant Name	Harland Clarke Holdings Corp.
Entity Central Index Key	0001354752
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
EntityVoluntary Filers	Yes
Entity Filer Category	Non-accelerated Filer
Entity Well-known Seasoned Issuer	No
Entity Public Float			$ 0
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		100

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Long-Term Debt

12 Months Ended

Dec. 31, 2011

Long-term Debt, Unclassified [Abstract]

Long-term Debt [Text Block]

11. Long-Term Debt

	Successor			Predecessor
	December 31, 2011			December 31, 2010
$1,900.0 Senior Secured Credit Facilities	$	1,719.0		$	1,737.0
Senior Floating Rate Notes due 2015	204.3			206.8
9.50% Senior Fixed Rate Notes due 2015	271.3			271.3
Capital lease obligations and other indebtedness	3.5			4.6
Unamortized acquisition accounting-related fair value discount	(412.7		)	—
	1,785.4			2,219.7
Less: current maturities	(19.1		)	(19.4		)
Long-term debt, net of current maturities	$	1,766.3		$	2,200.3

$1,900.0 Senior Secured Credit Facilities

On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into a credit agreement (the "Credit Agreement"). The Credit Agreement provides for a $1,800.0 senior secured term loan (the "Term Loan"), which was fully drawn at closing on May 1, 2007 and matures on June 30, 2014. The Company is required to repay the Term Loan in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount. In addition, the Credit Agreement requires that a portion of the Company's excess cash flow be applied to prepay amounts borrowed, as further described below. The Credit Agreement also provides for a $100.0 revolving credit facility (the "Revolver") that matures on June 28, 2013. The Revolver includes an up to $60.0 subfacility in the form of letters of credit and an up to $30.0 subfacility in the form of short-term swing line loans. The weighted average interest rate on the principal amount of borrowings outstanding under the Term Loan was 2.8% at December 31, 2011. As of December 31, 2011 there were no outstanding borrowings under the Revolver and there was $92.0 available for borrowing (giving effect to the issuance of $8.0 of letters of credit). As of December 31, 2010, there were no outstanding borrowings under the Revolver and there was $91.8 available for borrowing (giving effect to the issuance of $8.2 of letters of credit).

Under certain circumstances, the Company is permitted to incur additional term loan and/or revolving credit facility indebtedness in an aggregate principal amount of up to $250.0. In addition, the terms of the Credit Agreement and the 2015 Senior Notes (as defined below) allow the Company to incur substantial additional debt.

Loans under the Credit Agreement bear, at the Company's option, interest at:

• A rate per annum equal to the higher of (a) the prime rate of Credit Suisse and (b) the Federal Funds rate plus 0.50%, in each case plus an applicable margin of 1.50% per annum for revolving loans and for term loans; or

• A rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin of 2.50% per annum for revolving loans and for term loans.

The Credit Agreement has a commitment fee of 0.50% for the unused portion of the Revolver and a weighted average commitment fee of 2.52% for issued letters of credit. Interest rate margins and commitment fees under the Revolver are subject to reduction in increments based upon the Company achieving certain consolidated leverage ratios.

The Company and each of its existing and future domestic subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries, are guarantors and may also be co-borrowers under the Credit Agreement. In addition, the Company's direct parent, CA Acquisition Holdings, Inc., is a guarantor under the Credit Agreement. The senior secured credit facilities are secured by a perfected first priority security interest in substantially all of the Company's, each of the co-borrowers' and the guarantors' tangible and intangible assets and equity interests (other than voting stock in excess of 65.0% of the outstanding voting stock of each direct foreign subsidiary and certain other excluded property).

The Credit Agreement contains customary affirmative and negative covenants including, among other things, restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale-leaseback transactions. The Credit Agreement requires the Company to maintain a maximum consolidated leverage ratio for the benefit of lenders under the Revolver only. The Company has the right to prepay the Term Loan at any time without premium or penalty, subject to certain breakage costs, and the Company may also reduce any unutilized portion of the Revolver at any time, in minimum principal amounts set forth in the Credit Agreement. The Company is required to prepay the Term Loan with 50% of excess cash flow (as defined in the Credit Agreement, with certain reductions set forth in the Credit Agreement, based on achievement and maintenance of leverage ratios) and 100% of the net proceeds of certain issuances, offerings or placements of debt obligations of the Company or any of its subsidiaries (other than permitted debt). Each such prepayment will be applied first to the next eight unpaid quarterly amortization installments on the term loans and second to the remaining amortization installments on the term loans on a pro rata basis. An excess cash flow payment of approximately $12.5 will be paid in the first quarter of 2012 with respect to 2011 and will be applied against other mandatory payments due in 2012 under the terms of the Credit Agreement. An excess cash flow payment of $3.5 was paid in March 2011 with respect to 2010 and under the terms of the Credit Agreement was applied against other mandatory payments due in 2011. No such excess cash flow payment was required to be paid in 2010 with respect to 2009.

The Credit Agreement also contains certain customary affirmative covenants and events of default. Such events of default include, but are not limited to: non-payment of amounts when due; violation of covenants; material inaccuracy of representations and warranties; cross default and cross acceleration with respect to other material debt; bankruptcy and other insolvency events; certain ERISA events; invalidity of guarantees or security documents; and material judgments. Some of these events of default allow for grace periods.

If a change of control (as defined in the Credit Agreement) occurs, the Company will be required to make an offer to prepay all outstanding term loans under the Credit Agreement at 101% of the outstanding principal amount thereof plus accrued and unpaid interest, and lenders holding a majority of the revolving credit commitments may elect to terminate the revolving credit commitments in full. The Company is also required to offer to prepay outstanding term loans at 100% of the principal amount to be prepaid, plus accrued and unpaid interest, with the proceeds of certain asset sales under certain circumstances.

Senior Notes due 2015

On May 1, 2007, the Company issued $305.0 aggregate principal amount of Senior Floating Rate Notes due 2015 (the "Floating Rate Notes") and $310.0 aggregate principal amount of 9.50% Senior Fixed Rate Notes due 2015 (the "Fixed Rate Notes" and, together with the Floating Rate Notes, the "2015 Senior Notes"). The 2015 Senior Notes mature on May 15, 2015. The Fixed Rate Notes bear interest at a rate per annum of 9.50%, payable on May 15 and November 15 of each year. The Floating Rate Notes bear interest at a rate per annum equal to the Applicable LIBOR Rate (as defined in the indenture governing the 2015 Senior Notes (the "Indenture")), subject to a floor of 1.25%, plus 4.75%, payable on February 15, May 15, August 15 and November 15 of each year. The interest rate on the Floating Rate Notes was 6.0% at December 31, 2011. The Senior Notes are unsecured and are therefore effectively subordinated to all of the Company's senior secured indebtedness, including outstanding borrowings under the Credit Agreement. The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries, are guarantors and may also be co-issuers under the 2015 Senior Notes.

The Indenture contains customary restrictive covenants, including, among other things, restrictions on the Company's ability to incur additional debt, pay dividends and make distributions, make certain investments, repurchase stock, incur liens, enter into transactions with affiliates, enter into sale and lease back transactions, merge or consolidate and transfer or sell assets. The Company must offer to repurchase all of the 2015 Senior Notes upon the occurrence of a "change of control," as defined in the Indenture, at a purchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. The Company must also offer to repurchase the 2015 Senior Notes with the proceeds from certain sales of assets, if it does not apply those proceeds within a specified time period after the sale, at a purchase price equal to 100% of their aggregate principal amount, plus accrued and unpaid interest.

(Loss) Gain on Early Extinguishment of Debt

During 2011, the Company extinguished debt with a total principal amount of $2.5 with a carrying value of $1.6, after acquisition accounting related fair value adjustments, by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7, resulting in a loss of $0.1. During 2009, the Company extinguished debt with a total principal amount of $136.9 by purchasing 2015 Senior Notes in individually negotiated transactions for an aggregate purchase price of $67.6, resulting in a gain of $65.0 after the write-off of $4.3 of unamortized deferred financing fees related to the extinguished debt. The Company did not purchase any 2015 Senior Notes during 2010.

Capital Lease Obligations and Other Indebtedness

The Company has outstanding capital lease obligations and other indebtedness with principal balances totaling $3.5 and $4.6 at December 31, 2011 and December 31, 2010, respectively. These obligations have imputed interest rates ranging from 4.54% to 9.6% and have required payments of $1.1 in 2012, $1.2 in 2013, $1.0 in 2014, $0.1 in 2015 and $0.1 in 2016. During the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009, subsidiaries of the Company entered into capital leases and other indebtedness totaling $0.0, $0.4, $0.4 and $5.1, respectively, and, accordingly, such non-cash transaction amounts have been excluded from the consolidated statements of cash flows.

Annual Maturities

Annual maturities of long-term debt during the next five years are as follows:

2012	$	19.1
2013	19.2
2014	1,684.0
2015	475.7
2016	0.1

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Consolidated Statements of Operations (USD $) In Millions, unless otherwise specified	0 Months Ended	12 Months Ended
	Dec. 31, 2011 Successor [Member]	Dec. 21, 2011 Predecessor [Member]	Dec. 31, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
Product revenues, net	$ 27.4	$ 1,273.2	$ 1,344.8	$ 1,413.0
Service revenues, net	7.6	312.8	326.4	299.3
Total net revenues	35.0	1,586.0	1,671.2	1,712.3
Cost of products sold	22.1	772.0	787.3	845.6
Cost of services provided	5.2	159.2	171.2	152.1
Total cost of revenues	27.3	931.2	958.5	997.7
Gross profit	7.7	654.8	712.7	714.6
Selling, general and administrative expenses	10.9	393.3	389.7	387.4
Revaluation of contingent consideration	0	(24.3)	0.3	0
Asset impairment charges	0	111.6	3.7	44.4
Restructuring costs	0	12.6	22.3	32.5
Operating (loss) income	(3.2)	161.6	296.7	250.3
Interest income	0	0.4	0.7	1.0
Interest expense	(6.5)	(104.8)	(115.5)	(136.9)
(Loss) gain on early extinguishment of debt	(0.1)	0	0	65.0
Other income, net	0	13.2	0.1	0.1
(Loss) income before income taxes	(9.8)	70.4	182.0	179.5
(Benefit) provision for income taxes	(3.8)	41.2	67.8	67.4
Net (loss) income	$ (6.0)	$ 29.2	$ 114.2	$ 112.1

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Property Plant and Equipment

12 Months Ended

Dec. 31, 2011

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Property, Plant and Equipment

Property, plant and equipment consist of the following:

	Successor			Predecessor
	December 31, 2011			December 31, 2010
Machinery and equipment	$	67.0		$	101.4
Computer software and hardware	54.3			153.0
Leasehold improvements	16.8			26.3
Buildings and improvements	29.0			33.3
Furniture, fixtures and transportation equipment	5.9			15.7
Land	8.3			9.1
Construction-in-progress	25.8			15.0
	207.1			353.8
Accumulated depreciation	(1.8		)	(210.4		)
	$	205.3		$	143.4

Depreciation expense was $1.8 and $40.9 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $48.9 and $57.9 for fiscal years 2010 and 2009, respectively, and includes the depreciation of the Company's capital leases. Capitalized lease equipment was $3.1 and $11.6 at December 31, 2011 and 2010, respectively, and the related accumulated depreciation was $0.0 and $7.7 at December 31, 2011 and 2010, respectively.

During the 2011 Predecessor period, non-cash impairment charges of $0.5 were recorded for the Harland Clarke segment related to assets that were determined to have limited future use. During 2010, non-cash impairment charges of $2.8 were recorded for the Harland Clarke segment primarily related to the abandonment of a development project and restructuring-related impairments of property, plant and equipment. These impairment charges are included in asset impairment charges in the accompanying consolidated statements of operations. Construction-in-progress mainly consists of investments in Harland Clarke's information technology infrastructure, contact centers, production bindery and delivery systems.

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Inventories

12 Months Ended

Dec. 31, 2011

Inventories [Abstract]

Inventory Disclosure [Text Block]

Inventories

Inventories consist of the following:

	Successor		Predecessor
	December 31, 2011		December 31, 2010
Finished goods	$	12.4	$	8.8
Work-in-process	17.9		8.7
Raw materials	12.9		14.1
	$	43.2	$	31.6

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Commitments and Contingencies

Lease and Purchase Commitments

The Company leases property, equipment and vehicles under operating leases that expire at various dates through 2020. Certain leases contain renewal options for one- to five-year periods. Rental payments are typically fixed over the initial term of the lease and usually contain escalation factors for the renewal term. At December 31, 2011, future minimum lease payments under non-cancelable operating leases with terms of one year or more are as follows:

2012	$	25.9
2013	21.5
2014	16.6
2015	9.2
2016	7.8
Thereafter	11.7

Minimum annual rental payments in the above table have not been reduced by minimum sublease rentals of $2.2.

Total operating lease expense, excluding operating lease expense included in restructuring costs was $0.5 and $20.8 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $22.4 and $23.8 for fiscal years 2010 and 2009, respectively.

At December 31, 2011, the Company had obligations of $31.2 payable under contracts with third-party service providers primarily for information technology services and obligations to purchase approximately $26.2 of raw materials.

Honeywell Indemnification

Certain of the intermediate holding companies of the predecessor of the Company had issued guarantees on behalf of operating companies formerly owned by these intermediate holding companies, which operating companies are not part of the Company's current businesses. In the stock purchase agreement executed in connection with M & F Worldwide's acquisition of the Company in 2005, Honeywell agreed to use its commercially reasonable efforts to assume, replace or terminate such guarantees and indemnify M & F Worldwide and its affiliates, including the Company and its subsidiaries, with respect to all liabilities arising under such guarantees.

Other

A series of commercial borrowers in various states that allegedly obtained loans from financial institutions employing HFS'sLaserPro

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2011

Derivative Financial Instruments [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Financial Instruments

Interest Rate Hedges

The Company uses hedge transactions, which are accounted for as cash flow hedges, to limit the Company's risk on a portion of its variable-rate debt.

During February 2006, the Company entered into interest rate hedge transactions in the form of three-year interest rate swaps with a total notional amount of $150.0, which became effective on July 1, 2006. The hedges, which expired on June 30, 2009, swapped the underlying variable rate for a fixed rate of 4.992%.

During June 2007, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $255.0, which became effective on June 29, 2007. This hedge, which expired on June 30, 2010, swapped the underlying variable rate for a fixed rate of 5.362%.

During June 2009, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $350.0, which became effective on June 30, 2009. This hedge swaps the underlying variable rate for a fixed rate of 2.353%. During September 2009, the Company entered into an additional interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $250.0, which became effective on September 30, 2009. This hedge swaps the underlying variable rate for a fixed rate of 2.140%.

During June 2010, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $255.0, which became effective on June 30, 2010. This hedge swaps the underlying variable rate for a fixed rate of 1.264%.

The following presents the fair values of these derivative instruments and the classification in the consolidated balance sheets.

		December 31,
Derivatives Designated as Cash Flow Hedging Instruments:	Balance Sheet Classification	2011		2010
Interest rate swaps	Other current liabilities	$	6.1	$	—
	Other liabilities	2.9		17.8

Fair value of interest rate swaps is based on forward-looking interest rate curves as provided by the counterparty, adjusted for the Company's credit risk.

These derivative instruments had no ineffective portions during 2010 and 2009. Accordingly, no amounts were required to be reclassified from accumulated other comprehensive income to the consolidated statements of operations in 2010 and 2009 due to ineffectiveness. The following presents the effect of these derivative instruments (effective and ineffective portion) on other comprehensive income and amounts reclassified from accumulated other comprehensive income into interest expense.

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011		Years ended December 31,
					2010		2009
Interest Rate Swaps:
Loss recognized in other comprehensive income (effective portion)	$	0.1	$	5.8	$	23.3	$	18.3
Loss reclassified from other comprehensive income into interest expense (effective portion)	—		12.9		19.7		31.6
Loss recognized in interest expense (ineffective portion)	0.1		—		—		—

The Company expects to reclassify approximately $0.1 from accumulated other comprehensive income at December 31, 2011 into net income as additional interest expense during the twelve months ending December 31, 2012.

The following presents the balances and net changes in the accumulated other comprehensive income related to these derivative instruments, net of income taxes:

	Successor			Predecessor
Balances and Net Changes:	December 22 to December 31, 2011			January 1 to December 21, 2011			2010
Balance at beginning of period	$	6.5		$	10.9		$	8.6
Change in ownership	(6.5		)	—			—
Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0, $5.0 and $7.7	—			(7.9		)	(12.0		)
Net change in fair value of interest rate swaps (effective portion), net of taxes of $0.0, $2.3 and $9.0	0.1			3.5			14.3
Balance at end of period	$	0.1		$	6.5		$	10.9

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Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

Information pertaining to the Company's (loss) income before income taxes and the applicable (benefit) provision for income taxes is as follows:

	Successor			Predecessor
	December 22 to December 31, 2011			January 1 to December 21, 2011			Years ended December 31,
							2010			2009
(Loss) income before income taxes:
Domestic	$	(9.8	)	$	69.1		$	185.6		$	184.0
Foreign	—			1.3			(3.6		)	(4.5		)
Total (loss) income before income taxes	$	(9.8	)	$	70.4		$	182.0		$	179.5
(Benefit) provision for income taxes:
Current:
Federal	$	2.1		$	61.2		$	83.8		$	76.0
State and local	0.3			14.6			15.8			14.5
Foreign	—			0.9			0.1			0.1
	2.4			76.7			99.7			90.6
Deferred:
Federal	(5.6		)	(29.8		)	(28.7		)	(20.8		)
State and local	(0.6		)	(5.6		)	(3.0		)	(3.2		)
Foreign	—			(0.1		)	(0.2		)	0.8
	(6.2		)	(35.5		)	(31.9		)	(23.2		)
Total (benefit) provision for income taxes	$	(3.8	)	$	41.2		$	67.8		$	67.4

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

	Successor			Predecessor
	December 31, 2011			December 31, 2010
Current:
Prepaid expenses	$	4.1		$	(3.1	)
Inventory	(4.4		)	—
Deferred revenues	(11.1		)	8.1
Net operating loss carryforwards	7.1			0.2
Accrued expenses and other liabilities	30.7			21.8
Net current deferred tax asset before valuation allowance	26.4			27.0
Valuation allowance	(1.9		)	(7.1		)
Net current deferred tax asset	24.5			19.9
Long-term:
Property, plant and equipment	(29.8		)	(5.7		)
Intangible assets	(591.4		)	(387.1		)
Net operating loss carryforwards	11.0			21.1
Deferred gain on debt repurchases	(25.4		)	(25.4		)
Debt fair value adjustments	(161.0		)	—
Deferred financing fees	7.1			—
Accrued rebates	33.8			—
Other	29.8			17.4
Net long-term deferred tax liability before valuation allowance	(725.9		)	(379.7		)
Valuation allowance	(1.9		)	(9.8		)
Net long-term deferred tax liability	(727.8		)	(389.5		)
Net deferred tax liabilities	$	(703.3	)	$	(369.6	)

At December 31, 2011, the Company had domestic federal net operating loss ("NOL") carryforwards of $45.9, which expire between 2021 and 2030. The federal NOL carryforwards relate to acquisitions and therefore are subject to annual limitations under Internal Revenue Code Section 382, which generally restricts the amount of a corporation's taxable income that can be offset by a taxpayer's NOL carryforwards in taxable years after a change in ownership has occurred.

The Company had domestic state net operating loss carryforwards totaling $1.2 (tax effected), with $0.6 expiring between 2012 and 2020 and the remainder expiring after 2020. In addition, the Company had foreign net operating loss carryforwards of $16.6 for Ireland, which have no expiration dates.

The Company has established a valuation allowance for certain federal, state and foreign net operating loss and tax credit carryforwards. Management believes that, based on a number of factors, the available objective evidence creates uncertainty regarding the utilization of these carryforwards. At December 31, 2011, there was a valuation allowance of $3.8 for such items. The valuation allowance for deferred tax assets decreased by $13.1 during 2011. The decrease in this allowance was primarily due to a decrease in the valuation allowance of approximately $12.5 established in connection with the finalization of the Spectrum K12 acquisition accounting and a release of a valuation allowance of $0.6 related to marketable securities.

The effective tax rate varies from the current statutory federal income tax rate as follows:

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011		Years ended December 31,
					2010		2009
Statutory rate	35.0	%	35.0	%	35.0	%	35.0	%
State and local taxes	5.1	%	6.0	%	4.1	%	3.4	%
Goodwill impairment	—	%	34.0	%	—	%	—	%
Contingent consideration	—	%	(11.4	)%	—	%	—	%
Domestic production activities deduction	—	%	(4.0	)%	(2.1	)%	(0.9	)%
Uncertain tax positions	—	%	(0.3	)%	(1.2	)%	(2.0	)%
Other	(1.3	)%	(0.7	)%	1.5	%	2.0	%
	38.8	%	58.6	%	37.3	%	37.5	%

The Company, M & F Worldwide and another subsidiary of M & F Worldwide entered into a tax sharing agreement in 2005 (the "2005 Tax Sharing Agreement") whereby M & F Worldwide files consolidated federal income tax returns on the Company's behalf, as well as on behalf of certain other subsidiaries of M & F Worldwide for periods prior to the MacAndrews Acquisition. Under the 2005 Tax Sharing Agreement, the Company made periodic payments to M & F Worldwide. These payments were based on the applicable federal income tax liability that the Company would have had for each taxable period if the Company had not been included in the M & F Worldwide consolidated group. Similar provisions apply with respect to any foreign, state or local income or franchise tax returns filed by any M & F Worldwide consolidated, combined or unitary group for each period that the Company is included in any such group for foreign, state or local tax purposes. Effective upon the closing of the MacAndrews Acquisition, the 2005 Tax Sharing Agreement was amended and restated to incorporate MacAndrews as the common parent (the "2011 Tax Sharing Agreement"). For the periods beginning on or after December 22, 2011, MacAndrews will file consolidated federal income tax returns on the Company's behalf, as well as on behalf of certain other subsidiaries of MacAndrews. The terms of the 2011 Tax Sharing Agreement are consistent with the terms of the 2005 Tax Sharing Agreement. The Company made net payments to M & F Worldwide of $0.0 and $70.3 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $83.5 and $79.4, for fiscal years 2010 and 2009, respectively, under the tax sharing agreements. At the end of 2011 and 2010, the Company had net receivables of $16.0 and $7.0, respectively, relating to the tax sharing agreements.

To the extent that the Company has losses for tax purposes, the 2005 Tax Sharing Agreement and the 2011 Tax Sharing Agreement permit the Company to carry those losses back to periods beginning on or after December 15, 2005, and forward for so long as the Company is included in the affiliated group of which MacAndrews is the common parent (in both cases, subject to federal, state and local rules on limitation and expiration of net operating losses) to reduce the amount of the payments the Company otherwise would be required to make to M & F Worldwide, under the 2005 Tax Sharing Agreement, or MacAndrews, under the 2011 Tax Sharing Agreement, in years in which it has current income for tax purposes. If the loss is carried back to the previous period, M & F Worldwide, under the 2005 Tax Sharing Agreement, and MacAndrews, under the 2011 Tax Sharing Agreement, shall pay the Company an amount equal to the decrease of the taxes the Company would have benefited as a result of the carry back.

In connection with the 2005 acquisition of Clarke American Corp., Honeywell International Inc. ("Honeywell") agreed to indemnify M & F Worldwide and its affiliates, including the Company, for certain income tax liabilities that arose prior to the acquisition of Clarke American and M & F Worldwide has agreed to reimburse to the Company an amount equal to 100% of any payment received (unless M & F Worldwide incurs any such liabilities directly).

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Successor		Predecessor
	December 22 to December 31, 2011		January 1 to December 21, 2011			Years ended December 31,
						2010			2009
Balance at beginning of period	$	10.9	$	12.0		$	13.6		$	18.6
Additions based on tax positions related to the current year	—		—			—			—
Additions for tax positions for prior years	—		2.5			0.6			1.7
Reductions for tax positions for prior years	—		(3.6		)	(2.2		)	(6.7		)
Settlements	—		—			—			—
Balance at end of period	$	10.9	$	10.9		$	12.0		$	13.6

Of the amounts reflected in the table above at December 31, 2011 and 2010, there were $4.8 and $4.6 of tax benefits that, if recognized in 2011 and 2010, respectively, would have reduced the Company's annual effective tax rate. The Company had accrued interest and penalties of approximately $6.7 and $6.0 as of December 31, 2011 and 2010, respectively. The Company records both accrued interest and penalties related to income tax matters, which is not significant, in the provision for income taxes in the accompanying consolidated statements of operations. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. The statute of limitations for the Company's federal and state tax returns for the tax years 2008 through 2011 generally remain open. In addition, open tax years related to foreign jurisdictions remain subject to examination but are not considered material.

In 2011, the Internal Revenue Service completed its examination of Novar USA Inc., a predecessor of Harland Clarke Holdings, for the tax year 2005 without change. In 2009, the Internal Revenue Service completed examinations of Harland for the tax years 2005 through May 1, 2007 and for Harland's amended tax returns filed for claims of research and development credits relating to tax years 2002 through 2005. In connection with completion of the audits, Harland resolved its research and development credit claims with the Internal Revenue Service. This resulted in a $5.9 reduction of the accrual for the Company's uncertain tax positions, of which $3.4 (inclusive of interest) was recorded as a benefit in the tax provision for the year ended December 31, 2009

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Assets Held for Sale

12 Months Ended

Dec. 31, 2011

Assets Held For Sale [Abstract]

Disclosure of Long Lived Assets Held-for-sale [Table Text Block]

Assets Held For Sale

At December 31, 2011, assets held for sale consist of the following Harland Clarke segment facilities:

Location	Former Use	Year Closed
Atlanta, GA	Operations Support	2008
Atlanta, GA	Printing	2008
Atlanta, GA	Information Technology	2010

During 2010, the Company closed its information technology facility in Atlanta, GA and relocated those operations into an existing facility. The other listed Atlanta facilities were closed as part of the Company's plan to exit duplicative facilities related to an acquisition. Subsequent to the classification of the Atlanta facilities as assets held for sale, there have been significant changes in the real estate market. Non-cash impairment charges of $0.1 and $0.9 were recorded in the Predecessor period in 2011 and in 2010, respectively, to adjust the carrying values of the print facility and information technology facility to reflect an updated estimate of the fair values less costs to sell. These impairment charges are included in asset impairment charges in the accompanying consolidated statements of operations. The Company has made appropriate changes to its marketing plan and believes these facilities will be sold within twelve months. In January 2010, the Company sold its Syracuse facility, which was closed in 2009, for its carrying value of $1.1. In June 2010, the Company sold its Greensboro facility, which was closed in 2009, for $1.3 and realized a gain of $0.3, which is included in restructuring costs in the accompanying consolidated statements of operations.

Assets held for sale are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets and consist of the following:

	Successor		Predecessor
	December 31, 2011		December 31, 2010
Land	$	1.0	$	1.5
Buildings and improvements	2.3		1.9
	$	3.3	$	3.4

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill and Other Intangible Assets

The change in carrying amount of goodwill by business segment for the years ended December 31, 2011, 2010 and 2009 is as follows:

	Harland Clarke			Harland Financial Solutions			Scantron			Total
Predecessor
Balance at December 31, 2009	$	779.4		$	425.2		$	268.6		$	1,473.2
2010 acquisitions	—			27.5			26.6			$	54.1
Effect of exchange rate changes	—			(0.5		)	—			$	(0.5	)
Balance at December 31, 2010	779.4			452.2			295.2			$	1,526.8
2010 acquisitions	—			(1.4		)	(1.4		)	(2.8		)
2011 acquisition	—						90.2			90.2
Impairment	—			—			(102.2		)	(102.2		)
Effect of exchange rate changes	—			(0.2		)	—			(0.2		)
Balance at December 21, 2011	779.4			450.6			281.8			1,511.8
Successor
Change in ownership	(779.4		)	(450.6		)	(281.8		)	(1,511.8		)
MacAndrews Acquisition	459.5			301.9			63.4			824.8
Balance at December 31, 2011	$	459.5		$	301.9		$	63.4		$	824.8

Useful lives, gross carrying amounts and accumulated amortization for other intangible assets are as follows:

		Gross Carrying Amount				Accumulated Amortization
		Successor		Predecessor		Successor		Predecessor
	Useful Life (in years)	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Amortized intangible assets:
Customer relationships	3 - 20	$	1,519.0	$	1,242.5	$	3.6	$	349.5
Trademarks and tradenames	2 - 25	101.4		155.0		0.1		12.3
Software and other	2 - 20	41.3		93.8		0.4		43.1
		1,661.7		1,491.3		4.1		404.9
Indefinite-lived intangible assets:
Tradename		—		11.0		—		—
Total other intangible assets		$	1,661.7	$	1,502.3	$	4.1	$	404.9

Amortization expense was $4.1 and $117.5 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $109.0, and $104.2 for fiscal years 2010 and 2009, respectively.

The weighted average amortization period for all amortizable intangible assets recorded in connection with the MacAndrews Acquisition was 18.6 years. The weighted average amortization period for each major class of amortizable intangible assets recorded in connection with the MacAndrews Acquisition was as follows: customer relationships - 18.6 years, trademarks and tradenames - 23.5 years and software - 5.9 years.

Estimated aggregate amortization expense for intangible assets through December 31, 2016 is as follows:

Year ended December 31, 2012	$	133.8
Year ended December 31, 2013	121.4
Year ended December 31, 2014	113.5
Year ended December 31, 2015	107.0
Year ended December 31, 2016	99.3

As a result of the 2011 step one annual impairment test for goodwill, the Company determined the estimated fair value of the Scantron reporting unit was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. This required the Company to perform the second step of the test and hypothetically allocate the estimated fair value to Scantron's assets and liabilities with the unallocated fair value representing the implied fair value of Scantron's goodwill. As a result of this analysis, a non-cash impairment charge of $102.2 was recorded for the Scantron segment in the fourth quarter of 2011 based on the implied fair value of Scantron's goodwill being less than its carrying value. The Company also performed the 2011 annual impairment test for indefinite-lived tradenames and determined the estimated fair value of the Scantron tradename was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. As a result of this impairment and changes in Scantron's branding strategy, the useful life of the Scantron tradename was reassessed and determined to no longer be indefinite. The Company determined the estimated economic life for the Scantron tradename is 15 years. A non-cash impairment charge of $4.2 was recorded for the Scantron segment in the fourth quarter of 2011 based on the estimated fair value of the Scantron tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to an estimated economic life of 15 years. In addition to the impairment charges resulting from the annual impairment tests, the Company recorded non-cash impairment charges of $4.6 during 2011 for the Scantron segment related to software that was determined to have limited future use. All of these impairment charges were included in asset impairment charges in the accompanying Predecessor consolidated statements of operations. The 2011 impairment charges did not affect consolidated cash flows, current liquidity, capital resources or covenants under existing credit facilities.

As a result of the 2009 annual impairment test for indefinite-lived tradenames, the Company determined the estimated fair value of the Harland Clarke tradename was less than its carrying value due to declines in revenues from check unit volumes that were projected to decline at rates that are higher than recent years and also due to the continuing economic downturn. As a result of this impairment, the useful life of the Harland Clarke tradename was reassessed and determined to no longer be indefinite. Based on an analysis of future cash flows attributable to the Harland Clarke tradename, the Company determined the economic life for the Harland Clarke tradename is 25 years. A non-cash impairment charge of $44.2 ($33.4 for the Harland Clarke segment, $10.6 for the Harland Financial Solutions segment and $0.2 for the Scantron segment) was recorded in the fourth quarter of 2009 based on the estimated fair value of the Harland Clarke tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to a life of 25 years. This impairment charge was included in asset impairment charges in the accompanying consolidated statements of operations. The charge did not affect consolidated cash flows, current liquidity, capital resources or covenants under existing credit facilities. The remaining balance of $145.8 for the Harland Clarke tradename was reclassified from indefinite-lived tradenames to amortized tradenames. The Company began to amortize this intangible asset on an undiscounted cash flow basis in the fourth quarter of 2009 resulting in additional amortization expense of $1.3 in 2009, $8.0 in 2010 and $7.5 in 2011.

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Retirement Plans

12 Months Ended

Dec. 31, 2011

Retirement Plans [Abstract]

RetirementPlansDisclosure [Text Block]

Retirement Plans

The Company, through its subsidiaries, sponsors certain defined contribution benefit plans whereby it generally matches employee contributions up to 4% of base wages. Contributions to the plans totaled $0.1 and $12.7 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $13.2 and $14.5 for fiscal years 2010 and 2009, respectively.

The Company has deferred compensation agreements with certain former officers. The present value of the cash benefits payable under these agreements was $6.9 and $6.6 at December 31, 2011 and 2010, respectively. Accretion expense recognized for these agreements was not significant.

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Marketable Securities

12 Months Ended

Dec. 31, 2011

Marketable Securities [Abstract]

Available-for-sale Securities [Table Text Block]

Marketable Securities

The Company's marketable securities are classified as available-for-sale and are reported at their fair values, which are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Balance at December 31, 2011:
United States treasury securities	$	56.5	$	0.1	$	—		$	56.6
Corporate equity securities	0.1		—		—			0.1
Balance at December 31, 2010:
Corporate equity securities	$	0.3	$	12.9	$	(0.1	)	$	13.1

The Company purchased United States treasury securities, which mature in 2014, during the fourth quarter of 2011. During 2011, the Company sold certain corporate equity securities for $13.4 in cash and recognized a gain of $13.2, which is included in other income, net in the accompanying consolidated statements of operations. During 2010, the Company sold its investment in United States treasury securities, which were to mature in 2012, for $24.7 in cash and recognized a gain of $0.1, which is included in other income, net in the accompanying consolidated statements of operations.

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Business Segment Information

12 Months Ended

Dec. 31, 2011

Business Segment Information [Abstract]

Segment Reporting Disclosure [Text Block]

Business Segment Information

The Company has organized its business along three reportable segments together with a corporate group for certain support services. The Company's operations are aligned on the basis of products, services and industry. Management measures and evaluates the reportable segments based on operating income. The current segments and their principal activities consist of the following:

• Harland Clarke segment — Provides checks and related products, direct marketing services and customized business and home products to financial, retail and software providers, as well as consumers and small businesses. This segment operates primarily in the United States and Puerto Rico.

• Harland Financial Solutions segment — Provides technology products and services to financial services clients worldwide. This segment operates primarily in the United States, Israel, Ireland and India.

• Scantron segment — Provides data management and decision support solutions and related services to educational, commercial, healthcare and governmental entities worldwide. This segment operates primarily in the United States, Canada and India.

Selected summarized financial information for the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal years 2010 and 2009 is as follows:

	Harland Clarke(1)			Harland Financial Solutions(2)			Scantron(3)			Corporate and Other(4)			Total
Successor
Product revenues, net:
December 22 to December 31, 2011	$	23.9		$	1.1		$	2.4		$	—		$	27.4
Service revenues, net:
December 22 to December 31, 2011	$	0.4		$	5.2		$	2.0		$	—		$	7.6
Intersegment revenues:
December 22 to December 31, 2011	$	—		$	—		$	—		$	—		$	—
Operating loss:
December 22 to December 31, 2011	$	(0.6	)	$	(0.9	)	$	(1.4	)	$	(0.3	)	$	(3.2	)
Depreciation and amortization (excluding amortization of deferred financing fees):
December 22 to December 31, 2011	$	4.3		$	1.0		$	0.6		$	—		$	5.9
Non-cash asset impairment charges:
December 22 to December 31, 2011	$	—		$	—		$	—		$	—		$	—
Capital expenditures (excluding capital leases):
December 22 to December 31, 2011	$	—		$	—		$	—		$	—		$	—
Predecessor
Product revenues, net:
January 1 to December 21, 2011	$	1,092.0		$	69.4		$	111.8		$	—		$	1,273.2
2010	1,156.6			72.0			116.2			—			1,344.8
2009	1,216.8			73.0			123.2			—			1,413.0
Service revenues, net:
January 1 to December 21, 2011	$	18.5		$	210.1		$	84.2		$	—		$	312.8
2010	34.3			210.7			81.4			—			326.4
2009	9.2			205.9			84.2			—			299.3
Intersegment revenues:
January 1 to December 21, 2011	$	0.1		$	—		$	0.8		$	(0.9	)	$	—
2010	0.3			—			6.1			(6.4		)	—
2009	—			—			0.6			(0.6		)	—
Operating income (loss):(5)
January 1 to December 21, 2011	$	242.5		$	54.8		$	(120.9	)	$	(14.8	)	$	161.6
2010	238.0			48.6			25.3			(15.2		)	296.7
2009	195.8			32.8			34.5			(12.8		)	250.3
Depreciation and amortization (excluding amortization of deferred financing fees):
January 1 to December 21, 2011	$	88.9		$	26.1		$	43.4		$	—		$	158.4
2010	103.2			28.5			26.2			—			157.9
2009	109.3			26.9			25.9			—			162.1
Non-cash asset impairment charges:
January 1 to December 21, 2011	$	0.6		$	—		$	111.0		$	—		$	111.6
2010	3.7			—			—			—			3.7
2009	33.6			10.6			0.2			—			44.4
Capital expenditures (excluding capital leases):
January 1 to December 21, 2011	$	38.4		$	7.0		$	13.2		$	—		$	58.6
2010	24.0			8.3			6.3			—			38.6
2009	28.3			6.5			7.4			—			42.2
Total assets:
December 31, 2011 - Successor	$	1,495.8		$	426.7		$	256.2		$	957.2		$	3,135.9
December 31, 2010 - Predecessor	$	987.8		$	342.0		$	311.6		$	1,694.7		$	3,336.1

____________

(1) Includes results of the acquired SubscriberMail business from the date of acquisition.

(2) Includes results of the acquired Parsam business from the date of acquisition.

(3) Includes results of the acquired Spectrum K12 and GlobalScholar businesses from their respective dates of acquisition.

(4) Total assets include goodwill of $824.8 and $1,526.8 as of December 31, 2011 and December 31, 2010, respectively, which is not assigned to the operating segments.

(5) Includes restructuring costs of $12.6, $22.3 and $32.5 for 2011, 2010 and 2009, respectively, (see Note 15) and non-cash impairment charges of $111.6, $3.7 and $44.4 for 2011, 2010 and 2009, respectively.

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Consolidated Statement of Shareholder's Equity (USD $) In Millions, except Share data	Predecessor [Member] USD ($)	Predecessor [Member] Common Stock [Member]	Predecessor [Member] Additional Paid-in Capital [Member] USD ($)	Predecessor [Member] Retained Earnings (Accumulated Deficit) [Member] USD ($)	Predecessor [Member] Accumulated Other Comprehensive (Loss) Income [Member] USD ($)	Successor [Member] USD ($)	Successor [Member] Common Stock [Member]	Successor [Member] Additional Paid-in Capital [Member] USD ($)	Successor [Member] Retained Earnings (Accumulated Deficit) [Member] USD ($)	Successor [Member] Accumulated Other Comprehensive (Loss) Income [Member] USD ($)
Balance, at Dec. 31, 2008	$ 166.3		$ 157.0	$ 27.2	$ (17.9)
Shares, Outstanding at Dec. 31, 2008		100
Net (loss) income	112.1			112.1
Foreign currency translation adjustments, net of taxes	0.7				0.7
Derivative fair-value adjustment, net of taxes	8.2				8.2
Change in unrecognized amounts included in postretirement obligations, net of taxes	(0.9)				(0.9)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	0.9				0.9
Total comprehensive income	121.0
Dividends declared to parent	41.3			(41.3)
Balance, at Dec. 31, 2009	246.0		157.0	98.0	(9.0)
Shares, Outstanding at Dec. 31, 2009		100
Net (loss) income	114.2			114.2
Foreign currency translation adjustments, net of taxes	(0.4)				(0.4)
Derivative fair-value adjustment, net of taxes	(2.3)				(2.3)
Change in unrecognized amounts included in postretirement obligations, net of taxes	5.6				5.6
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	6.9				6.9
Total comprehensive income	124.0
Dividends declared to parent	31.2			(31.2)
Balance, at Dec. 31, 2010	338.8		157.0	181.0	0.8
Shares, Outstanding at Dec. 31, 2010		100
Net (loss) income	29.2			29.2
Foreign currency translation adjustments, net of taxes	(0.9)				(0.9)
Derivative fair-value adjustment, net of taxes	4.4				4.4
Change in unrecognized amounts included in postretirement obligations, net of taxes	(1.1)				(1.1)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	0.3				0.3
Reclassification of gains on investments included in net income, net of taxes	(8.1)				(8.1)
Total comprehensive income	23.8
Dividends declared to parent	61.3			(61.3)
Balance, at Dec. 21, 2011	301.3		157.0	148.9	(4.6)
Shares, Outstanding at Dec. 21, 2011		100
Change in ownership						(301.3)		(157.0)	(148.9)	4.6
Allocation of equity consideration from MacAndrews Acquisition						222.3		222.3
Net (loss) income						(6.0)			(6.0)
Derivative fair-value adjustment, net of taxes						(0.1)				(0.1)
Change in unrecognized amounts included in postretirement obligations, net of taxes						(0.1)				(0.1)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax						0.1				0.1
Total comprehensive income						(6.1)
Balance, at Dec. 31, 2011						$ 216.2		$ 222.3	$ (6.0)	$ (0.1)
Shares, Outstanding at Dec. 31, 2011							100

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Acquisitions

12 Months Ended

Dec. 31, 2011

Acquisitions [Abstract]

Business Combination Disclosure [Text Block]

Acquisitions

MacAndrews Acquisition of M & F Worldwide

On September 12, 2011, M & F Worldwide, the indirect parent of the Company, agreed, subject to various closing conditions, to merge with an indirect, wholly owned subsidiary of MacAndrews, and, following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011. M & F Worldwide has allocated its new equity basis to its subsidiaries and $222.3 has been allocated to and pushed down to the Company. The transaction was accounted for as a business combination. As discussed in Note 1, the period after the MacAndrews Acquisition has been bifurcated in these financial statements and indicated by the heading "Successor."

The following table summarizes the estimated fair values of the Company's assets and liabilities assumed at the date of the MacAndrews Acquisition:

Cash			$	185.2
Accounts receivable			110.1
Property, plant and equipment			207.1
Goodwill			824.8
Other intangible assets:
Customer relationships	$	1,519.0
Tradenames	101.4
Technology	39.8
Total other intangible assets			1,660.2
Other assets			148.9
Total assets acquired			3,136.3
Deferred revenues			96.8
Long-term debt			1,787.4
Deferred tax liabilities			723.0
Other liabilities			306.8
Net assets acquired			$	222.3

The above purchase price allocation is preliminary due to the recent acquisition date and the continuing review of assets and liabilities assumed. Goodwill in the amount of approximately $178.7 and intangible assets in the amount of approximately $142.7 are deductible for tax purposes. The goodwill arises because the total consideration for the acquisition allocated to the Company, which reflects its future earnings and cash flow potential, exceeds the fair value of net assets acquired. The goodwill resulting from the acquisition was assigned to the Company's segments as follows: $459.5 to Harland Clarke, $301.9 to Harland Financial Solutions and $63.4 to Scantron. Acquisition-related fees and expenses for the Company were not material.

As part of the application of fair value accounting for business combinations, inventory was increased by $17.5. The amount of the inventory fair value adjustment is being expensed as additional non-cash cost of products sold as the fair-valued inventory is sold (of which $3.6 was expensed during the period from December 22 to December 31, 2011).

Also as part of the application of fair value accounting for business combinations, long-term debt and deferred revenues were decreased by $417.8 and $68.1, respectively. These non-cash fair value adjustments result in higher interest expense and lower revenues being recognized over the related earnings period, both of which are non-cash adjustments (of which $4.1 was reflected as increased interest expense and $3.9 was reflected as reduced revenues during the period from December 22 to December 31, 2011).

Pro Forma Financial Information

The unaudited financial information in the table below summarizes the results of operations of the Company, on a pro forma basis, as though the acquisition had occurred as of the beginning of the earliest year presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if this transaction had taken place at the beginning of the earliest year presented, nor does it purport to represent results of operations for future periods.

	Unaudited Pro Forma
	Years ended December 31,
	2011			2010
Net revenues	$	1,594.2		$	1,641.3
Operating income	151.1			225.3
Net (loss)	(65.8		)	(16.5		)
Depreciation and amortization (excluding amortization of deferred financing fees)	156.4			194.6

In the pro forma information above, the results prior to the acquisition were adjusted to include the pro forma effect of: the adjustment of amortization of intangible assets and depreciation of fixed assets based on the acquisition accounting allocations; the adjustment of interest expense reflecting the amortization of fair value adjustments of Harland Clarke Holdings' outstanding long-term debt; the non-recurring fair value adjustments to contract acquisition payments and commitments, deferred revenues, inventory and other deferred expenses; and to reflect the impact of income taxes with respect to the pro forma adjustments, utilizing an estimated effective tax rate of 39%.

Acquisition of GlobalScholar

On January 3, 2011, Scantron Corporation ("Scantron"), a wholly owned subsidiary of the Company, purchased all of the outstanding capital stock or membership interests of KUE Digital Inc., KUED Sub I LLC and KUED Sub II LLC (collectively "GlobalScholar"). GlobalScholar's instructional management platform supports all aspects of managing education at K-12 schools, including student information systems; performance-based scheduler; gradebook; learning management system; longitudinal data collection, analysis and reporting; teacher development and performance tracking; and online communication and tutoring portals. GlobalScholar's instructional management platform complements Scantron's testing and assessment, response to intervention, student achievement management and special education software solutions thereby expanding Scantron's web-based education solutions. The acquisition-date purchase price was $134.9 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $18.5, as described below, which resulted in total estimate consideration of $153.4 as of the acquisition date. Contingent consideration would be payable in 2012 upon achievement of certain revenue targets of GlobalScholar during calendar year 2011, which targets were not met as discussed below. The transaction was accounted for as a business combination and GlobalScholar's results of operations have been included in the Company's operations since the date of its acquisition.

The allocation of purchase price resulted in identified intangible assets of $92.3 and goodwill of $93.1. During 2011, the Company recorded additional deferred tax assets of $2.9 in accordance with applicable accounting guidance with a corresponding decrease in goodwill. The goodwill arises because the total consideration for GlobalScholar, which reflects its future earnings and cash flow potential, exceeded the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $5.6 is deductible for income tax purposes. The Company financed the GlobalScholar acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. The Company has recognized $1.6 of acquisition related costs through December 21, 2011 for this acquisition, of which $0.2 was expensed and included in selling, general and administrative expenses in the consolidated statements of operations for the period January 1 to December 21, 2011 with the remainder having been expensed and included in selling, general and administrative expenses in the fourth quarter of 2010.

The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $20.0, based on the achievement of certain revenue targets of GlobalScholar measured during the calendar year 2011. The acquisition-date fair value of the contingent consideration arrangement of $18.5 was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions included a projection of certain GlobalScholar revenues for the measurement period. The application of fair value accounting for the contingent consideration arrangement required recurring remeasurement for changes in key assumptions (see Note 13). As of December 31, 2011, the contingent consideration liability was $0.0 and no amount will be paid in 2012 because the revenue targets were not met.

The application of acquisition accounting decreased acquired deferred revenues by $14.9 to $11.6 due to a fair value adjustment. This non-cash fair value adjustment results in lower revenues being recognized over the related earnings period (of which $5.2 was reflected as a reduction of revenues for the period January 1 to December 21, 2011).

The fair value of financial assets acquired was not significant and all receivables are expected to be collected. The pro forma effects for the GlobalScholar acquisition on the consolidated results of operations were not material.

Acquisition of Parsam

On December 6, 2010, Harland Financial Solutions, Inc. ("HFS"), a wholly owned subsidiary of the Company, acquired all of the outstanding membership interests of Parsam Technologies, LLC and the equity of SRC Software Private Limited (collectively "Parsam"). Parsam's solutions allow financial institutions to provide services online, in branches and at call centers, from new account opening and funding to account-to-account money transfers, person-to-person payments, account and adviser-client relationship management, and bill presentment and payment. HFS has integrated Parsam's solutions into its existing solution offerings. The acquisition-date purchase price was $32.8 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $1.2, as described below, which resulted in total estimated consideration of $34.0 as of the acquisition date. Contingent consideration would be payable upon achievement of certain revenue targets of Parsam during calendar years 2011 and 2012. The transaction was accounted for as a business combination and Parsam's results of operations have been included in the Company's operations since the date of its acquisition.

The contingent consideration arrangement provides for cash payments of up to an aggregate maximum of $25.0, which may be payable upon the achievement of certain future revenue targets of Parsam measured during calendar years 2011 and 2012. The acquisition-date fair value of the contingent consideration arrangement was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions include a projection of certain Parsam revenues for the measurement periods. During the first quarter of 2011, the Company identified a $1.6 decrease in the initial estimate of acquisition-date fair value of contingent consideration with a corresponding $1.6 decrease in goodwill. The application of fair value accounting for the contingent consideration arrangement requires recurring remeasurement for changes in key assumptions (see Note 13). As of December 31, 2011, the contingent consideration liability was $0.6. The decrease in the estimate of contingent consideration fair value was due to a decrease in the projection of certain Parsam revenues for the measurement periods, partially offset by the passage of time which reduced the effect of discounting to present value.

The allocation of purchase price resulted in identified intangible assets of $7.8 and goodwill of $26.2. The goodwill arises because the total consideration for Parsam, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Harland Financial Solutions segment. Of the goodwill recognized, $23.1 is expected to be deductible for income tax purposes. The Company financed the Parsam acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. Acquisition-related fees and expenses were not material.

The application of acquisition accounting decreased acquired deferred revenues by $1.6 to $0.4 due to a fair value adjustment. This non-cash fair value adjustment results in lower revenues being recognized over the related earnings period (of which $1.0 was reflected as a reduction of revenues for the period January 1 to December 21, 2011). The reduction of revenues resulting from this acquisition accounting fair value adjustment was negligible for the period December 7, 2010 to December 31, 2010.

The fair value of financial assets acquired was not significant and all receivables are expected to be collected. The pro forma effects for the Parsam acquisition on the consolidated results of operations were not material.

Acquisition of Spectrum K12

On July 21, 2010, Scantron acquired 100% of the equity of Spectrum K12 School Solutions, Inc. ("Spectrum K12"). Spectrum K12 develops, markets and sells student achievement management, response to intervention and special education software solutions. Spectrum K12's software solutions complement Scantron's software solutions for educational assessments, content and data management. The acquisition-date purchase price was $28.6 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $4.0, as described below, which resulted in total estimated consideration of $32.7 as of the acquisition date. The transaction was accounted for as a business combination and Spectrum K12's results of operations have been included in the Company's operations since the date of its acquisition.

The allocation of purchase price resulted in identified intangible assets of $6.6 and goodwill of $25.2. During 2011, the Company recorded additional deferred tax assets of $1.4 in accordance with current accounting guidance with a corresponding decrease in goodwill. The goodwill arises because the total consideration for Spectrum K12, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $1.5 is expected to be deductible for income tax purposes. The Company financed the Spectrum K12 acquisition and related fees and expenses with cash on hand. Acquisition-related fees and expenses were not material.

The contingent consideration arrangement provides for cash payments of up to an aggregate maximum of $20.0, which may be payable upon the achievement of certain future revenue targets of Spectrum K12 measured during the twelve-month periods ending June 30, 2011 and 2012. Certain of the contingent consideration payments may be payable under the terms of the acquisition to eligible employees who remain employed by Spectrum K12 during the twelve-month periods ending June 30, 2011 and 2012. These contingent consideration payments of up to an aggregate of $5.0 to eligible employees are considered incentive compensation and recorded as compensation expense as earned. The acquisition-date fair value of the contingent consideration arrangement of $4.9, of which $0.9 is considered to be incentive compensation, was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions include a projection of Spectrum K12 revenues for the measurement periods. The application of fair value accounting for the contingent consideration arrangement requires recurring remeasurement for changes in key assumptions (see Note 13). As of December 31, 2011, the fair value of the contingent consideration arrangement was $0.0. The reduction in fair value from the acquisition date was the result of a decline in projected revenues during the measurement periods.

The application of acquisition accounting decreased acquired deferred revenues by $10.5 to $5.0 due to a fair value adjustment. This non-cash fair value adjustment results in lower revenues being recognized over the related earnings period (of which $3.6 and $1.8 was reflected as a reduction of revenues for the period January 1 to December 21, 2011 and the year ended December 31, 2010, respectively).

The fair value of financial assets acquired was not significant and all receivables have been collected. The pro forma effects for the Spectrum K12 acquisition on the consolidated results of operations were not material.

Acquisition of Protocol IMS and SubscriberMail

During December 2009, Harland Clarke Corp., a wholly owned subsidiary of the Company, acquired in separate transactions 100% of the equity of SubscriberMail and certain assets and liabilities of Protocol IMS. The acquisition-date aggregate consideration of $13.1 for these transactions includes contingent consideration of $1.8 for SubscriberMail upon the achievement of certain revenue targets in 2010 and 2011, with a maximum aggregate contingent consideration of $2.0 if the targets are met. In 2010, $1.0 of contingent consideration was earned under this contingent consideration arrangement, of which $0.7 was paid in 2010 and the remainder was paid in 2011. As of December 31, 2011, the fair value of the contingent consideration arrangement was $0.0 and no future payments will be made. SubscriberMail is a leading email marketing service provider that offers patented tools to develop and deliver professional email communications. SubscriberMail results of operations have been included in the Company's operations since December 31, 2009, the date of its acquisition. Protocol IMS focuses on direct marketing services with solutions that include business to business strategic services, business to consumer strategic services, database marketing and analytics, outbound business to business teleservices, production and fulfillment. Protocol IMS results of operations have been included in the Company's operations since December 4, 2009, the date of its acquisition. The allocations of purchase price resulted in identified intangible assets of $4.2 and goodwill of $7.2, which are deductible for tax purposes.

The pro forma effects for the Protocol IMS and SubscriberMail acquisitions on the consolidated results of operations were not material.

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Subsequent Event

12 Months Ended

Dec. 31, 2011

Subsequent Event [Abstract]

Subsequent Events [Text Block]

Subsequent Event

Harland Clarke Holdings entered into a Stock Purchase Agreement, dated as of March 19, 2012, with FLX Holdings LLC and Faneuil Holdco LLC (together with FLX Holdings LLC, "Sellers"), pursuant to which Harland Clarke Holdings purchased (the "Purchase") from the Sellers 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil"), for $70.0 in cash. New Faneuil, through its wholly owned subsidiary Faneuil, Inc., engages in the business of call center operations, staffing and related activities, toll collection operations, toll road services and back office operations (including violations processing).

The issued and outstanding limited liability company interest of each Seller are 100% owned, directly or indirectly, by Mr. Ronald O. Perelman, who indirectly owns 100% of the issued and outstanding shares of capital stock of Harland Clarke Holdings. The Purchase was financed with available cash on hand at Harland Clarke Holdings.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements [Abstract]

Fair Value Disclosures [Text Block]

Fair Value Measurements

Nonrecurring Fair Value Measurements

The following table presents the Company's nonfinancial assets that were measured at fair value on a nonrecurring basis during 2011:

	Fair Value at November 1, 2011		(Level 1)	(Level 2)	(Level 3)		Impairment Charges
Goodwill - Scantron	$	281.9	—	—	$	281.9	$	102.2
Indefinite-lived tradename - Scantron	6.8		—	—	6.8		4.2

Goodwill and indefinite-lived tradename for the Scantron segment were measured for impairment during the fourth quarter of 2011 as part of the Company's annual measurements for impairment testing and resulted in non-cash impairment charges totaling $102.2 and $4.2, respectively. The impairments were primarily due to declines in projected revenues and margins and a higher discount rate for the Scantron segment.

The following table presents the Company's nonfinancial assets that were measured at fair value on a nonrecurring basis during 2009:

	Fair Value at November 1, 2009		(Level 1)	(Level 2)	(Level 3)		Impairment Charges
Indefinite-lived trademarks and tradenames	$	156.8	—	—	$	156.8	$	44.2

Indefinite-lived trademarks and tradenames were measured for impairment during the fourth quarter of 2009 as part of the Company's annual measurements for impairment testing and resulted in non-cash impairment charges totaling $44.2. The charges consisted of $33.4 related to the Harland Clarke segment, $10.6 related to the Harland Financial Solutions segment and $0.2 related to the Scantron segment. The impairments were primarily due to declines in revenues from check unit volumes that were projected to decline at rates that are higher than recent years and also due to the continuing economic downturn.

See Note 2 for more information on the fair value measurement process for goodwill and indefinite-lived trademarks and tradenames.

Recurring Fair Value Measurements

Fair values of financial instruments subject to recurring fair value measurements as of December 31, 2011 and 2010, are as follows:

	Balance at December 31, 2011		(Level 1)		(Level 2)		(Level 3)
United States treasury securities	$	56.6	$	56.6	$	—	$	—
Corporate equity securities	0.1		0.1		—		—
Liability for interest rate swaps	9.0		—		9.0		—
Liability for contingent consideration related to business combinations	0.5		—		—		0.5

	Balance at December 31, 2010		(Level 1)		(Level 2)		(Level 3)
Corporate equity securities	$	13.1	$	13.1	$	—	$	—
Liability for interest rate swaps	17.8		—		17.8		—
Liability for contingent consideration related to business combinations	8.2		—		—		8.2

Fair value of interest rate swaps is based on forward-looking interest rate curves as provided by the counterparty, adjusted for the Company's credit risk. Fair value of corporate equity securities and United States treasury securities are based on quoted market prices. Fair value of the liability for contingent consideration related to business combinations is estimated utilizing a discounted cash flow analysis. The analysis considers, among other things, estimates of future revenues and the timing of expected future contingent consideration payments. The liability for contingent consideration that is considered to be incentive compensation is recorded as compensation expense as earned.

The following table presents the Company's liability for contingent consideration related to business combinations measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	2011			2010
Balance at beginning of period	$	8.2		1.8
Businesses acquired	17.0			6.8
Net changes in fair value	(24.3		)	0.3
Payment on contingent consideration arrangement	(0.3		)	(0.7		)
Balance at end of period	$	0.6		$	8.2

Fair Value of Financial Instruments

Most of the Company's clients are in the financial services and educational industries. The Company performs ongoing credit evaluations of its clients and maintains allowances for potential credit losses. The Company does not generally require collateral. Actual losses and allowances have been within management's expectations.

The carrying amounts for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues as of the measurement date. The estimated fair value of long-term debt at December 31, 2011 and 2010, was approximately $1,794.8 and $2,009.2, respectively. The carrying value of long-term debt at December 31, 2011 and 2010, was $1,785.4 and $2,219.7, respectively.