10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

R QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

or

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 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	78249
(Address of principal executive offices)	(Zip code)

(210) 697-8888

(Registrant's telephone number, including area code)

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 þ    No £

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 filer  £	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 Exchange Act).

Yes  £    No  R

As of October 31, 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 Quarterly Report on Form 10-Q 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 QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended September 30, 2012

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive (Loss) Income	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43
Exhibit Index		44

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Balance Sheets

(in millions, except share and per share data)

	September 30, 2012			December 31, 2011
	(unaudited)			(recasted)
ASSETS
Current assets:
Cash and cash equivalents	$	74.5		$	101.8
Marketable securities	—			56.6
Accounts receivable (net of allowances of $1.3 and $1.8)	142.5			121.3
Inventories	29.5			43.2
Income taxes receivable	0.7			15.7
Deferred tax assets	41.2			25.5
Prepaid expenses and other current assets	61.8			54.0
Total current assets	350.2			418.1
Property, plant and equipment	262.0			216.7
Less accumulated depreciation	(63.4		)	(6.0		)
Property, plant and equipment, net	198.6			210.7
Goodwill	758.7			758.6
Other intangible assets, net	1,566.9			1,659.0
Contract acquisition payments, net	13.7			—
Notes receivable - related party	30.0			30.0
Other assets	47.4			27.3
Total assets	$	2,965.5		$	3,103.7
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	45.2		$	39.1
Deferred revenues	128.5			82.2
Current maturities of long-term debt	75.0			45.1
Accrued liabilities:
Salaries, wages and employee benefits	57.3			58.1
Income and other taxes payable	12.1			12.8
Customer incentives	54.6			57.4
Payable to parent	—			0.2
Other current liabilities	46.0			33.7
Total current liabilities	418.7			328.6
Long-term debt	1,764.3			1,766.9
Deferred tax liabilities	615.4			726.5
Deferred revenues	52.1			28.5
Other liabilities	87.4			105.9
Commitments and contingencies
Stockholder's equity:
Common stock — 200 shares authorized; par value $0.01; 100 shares issued and outstanding at September 30, 2012 and December 31, 2011	—			—
Additional paid-in capital	82.6			145.5
(Accumulated deficit) retained earnings	(55.2		)	1.9
Accumulated other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments	0.3			—
Unrecognized amounts included in postretirement obligations	(0.1		)	(0.1		)
Derivative fair-value adjustments	—			(0.1		)
Unrealized gains on investments, net	—			0.1
Total accumulated other comprehensive income (loss), net of taxes	0.2			(0.1		)
Total stockholder's equity	27.6			147.3
Total liabilities and stockholder's equity	$	2,965.5		$	3,103.7

See Notes to Consolidated Financial Statements

1

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Statements of Operations

(in millions)

(unaudited)

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 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			Successor			Predecessor
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Product revenues, net	$	320.3		$	326.2		$	963.1		$	975.3
Service revenues, net	102.3			81.5			279.2			242.0
Total net revenues	422.6			407.7			1,242.3			1,217.3
Cost of products sold	192.7			196.5			608.5			591.5
Cost of services provided	67.4			41.5			198.3			120.8
Total cost of revenues	260.1			238.0			806.8			712.3
Gross profit	162.5			169.7			435.5			505.0
Selling, general and administrative expenses	92.7			99.2			299.7			304.5
Revaluation of contingent consideration	(0.1		)	(19.5		)	(0.6		)	(24.6		)
Asset impairment charges	0.7			0.1			0.7			2.4
Restructuring costs	11.6			2.3			16.6			8.3
Operating income	57.6			87.6			119.1			214.4
Interest income	0.2			0.1			0.7			0.3
Interest expense	(56.3		)	(27.4		)	(166.0		)	(82.0		)
Loss on early extinguishment of debt	(34.2		)	—			(34.2		)	—
Other (expense) income, net	—			—			(0.2		)	13.2
(Loss) income before income taxes	(32.7		)	60.3			(80.6		)	145.9
(Benefit) provision for income taxes	(13.7		)	13.7			(31.0		)	42.8
Net (loss) income	$	(19.0	)	$	46.6		$	(49.6	)	$	103.1

See Notes to Consolidated Financial Statements

2

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

(in millions)

(unaudited)

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 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			Successor			Predecessor
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net (loss) income	$	(19.0	)	$	46.6		$	(49.6	)	$	103.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	0.7			(1.4		)	0.3			(0.2		)
Changes in derivative instruments:
Changes in fair value of interest rate swaps during period	—			(0.9		)	—			(3.9		)
Less reclassification adjustments for loss included in net (loss) income	—			2.3			0.1			6.8
Net changes in derivative instruments	—			1.4			0.1			2.9
Unrealized (losses) gains on investments:
Unrealized (losses) gains on investments during period	—			—			(0.2		)	0.3
Less reclassification adjustment for amounts included in net (loss) income	—			—			0.1			(8.1		)
Net change in unrealized (losses) gains on investments	—			—			(0.1		)	(7.8		)
Changes in postretirement benefit obligations recognized in other comprehensive income:
Amortization of prior service credits included in net income	—			(0.1		)	—			(0.2		)
Net change in postretirement benefit obligation recognized in other comprehensive income	—			(0.1		)	—			(0.2		)
Total other comprehensive income (loss), net of tax	0.7			(0.1		)	0.3			(5.3		)
Comprehensive (loss) income	$	(18.3	)	$	46.5		$	(49.3	)	$	97.8
Tax Benefit (Expense) of Other Comprehensive Income (Loss) Included in Above Amounts:
Changes in derivative instruments:
Changes in fair value of interest rate swaps during period	$	—		$	0.7		$	—		$	2.6
Less reclassification adjustments for loss included in net income	—			(1.6		)	—			(4.4		)
Unrealized (losses) gains on investments:
Unrealized (losses) gains on investments during period	—			—			—			(0.2		)
Less reclassification adjustment for amounts included in net income	—			—			(0.1		)	5.1
Changes in postretirement benefit obligations recognized in other comprehensive income:
Amortization of prior service credits included in net income	—			—			—			0.1
Total net tax (expense) benefit included in other comprehensive (loss) income	$	—		$	(0.9	)	$	(0.1	)	$	3.2

See Notes to Consolidated Financial Statements

3

Harland Clarke Holdings Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(in millions)

(unaudited)

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 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
	Nine Months Ended
	September 30,
	2012			2011
Operating activities
Net (loss) income	$	(49.6	)	$	103.1
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	57.3			31.6
Amortization of intangible assets	102.9			90.4
Amortization of debt fair value adjustments, original issue discount and deferred financing fees	92.0			5.2
Loss on early extinguishment of debt	34.2			—
Revaluation of contingent consideration	(0.6		)	(24.6		)
Loss (gain) on sale of marketable securities	0.2			(13.2		)
Deferred income taxes	(127.6		)	(31.8		)
Asset impairments	0.7			2.4
Changes in operating assets and liabilities, net of effect of businesses acquired:
Accounts receivable	(21.6		)	(3.6		)
Inventories	13.7			1.9
Prepaid expenses and other assets	(12.5		)	(3.1		)
Contract acquisition payments, net	(13.7		)	(9.3		)
Accounts payable and accrued liabilities	8.6			(5.2		)
Deferred revenues	70.0			15.9
Income and other taxes	8.6			14.6
Payable to parent	(0.2		)	(0.6		)
Other, net	2.1			(0.2		)
Net cash provided by operating activities	164.5			173.5
Investing activities
Purchase of businesses, net of cash acquired	(36.2		)	(134.9		)
Additional purchase price consideration for previous acquisition	—			(0.2		)
Repayments of related party notes receivable	—			1.0
Proceeds from sale of property, plant and equipment	0.1			0.1
Proceeds from sale of marketable securities	56.3			13.4
Capital expenditures	(47.0		)	(39.4		)
Capitalized interest	(0.4		)	(0.2		)
Computer software development	(10.6		)	(4.8		)
Net cash used in investing activities	(37.8		)	(165.0		)
Financing activities
Dividend paid to parent	(25.8		)	—
Acquisition of business from parent	(33.8		)	—
Payments of contingent consideration arrangements	—			(0.3		)
Payments for derivative instruments	(8.7		)	—
Issuance of notes	225.6			—
Borrowings on credit agreements	25.0			—
Repayments of credit agreements and other borrowings	(324.0		)	(14.8		)
Debt issuance costs	(12.3		)	—
Net cash used in financing activities	(154.0		)	(15.1		)
Net decrease in cash and cash equivalents	(27.3		)	(6.6		)
Cash and cash equivalents at beginning of period	101.8			211.5
Cash and cash equivalents at end of period	$	74.5		$	204.9
Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized	$	60.8		$	70.0
Income taxes, net of refunds	87.4			60.1
Non cash financing activities:
Extinguishment of Faneuil debt to parent	$	25.4		$	—

See Notes to Consolidated Financial Statements

4

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements

(dollars in millions)

(unaudited)

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, decreased revenues as a result of fair value adjustments to deferred revenues, increased depreciation and amortization as a result of the revaluation of assets and 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 (three and nine months endedSeptember 30, 2011) are presented in the accompanying consolidated financial statements as "Predecessor." The periods subsequent to the MacAndrews Acquisition (three and nine months endedSeptember 30, 2012) are presented in the accompanying consolidated financial statements as "Successor."

On March 19, 2012, the Company purchased Faneuil, Inc. ("Faneuil") from affiliates of MacAndrews (see Note 3). Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Faneuil is a separate business segment for financial reporting purposes.

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

During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The Harland Technology Services and Medical Device Tracking businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial and commercial institutions. 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, survey services and other business and home office products to consumers and businesses.

The Harland Financial Solutions segment provides technology products and related services to financial institutions 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 and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment and forms.

The Faneuil segment provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients. The Faneuil segment also provides patient information collection and tracking services, managed technical services and related field maintenance services to education, commercial, healthcare and governmental entities.

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

5

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

accounts of businesses acquired from the date of acquisition except for Faneuil as discussed above.

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 and 2018 Senior Secured Notes (as defined hereinafter) (see Note 10). Harland Clarke Holdings is a holding company and has no significant assets at September 30, 2012 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.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

All terms used but not defined elsewhere herein have the meaning ascribed to them in the Company's 2011 Annual Report on Form 10-K.

2. Summary of Significant Accounting Policies

Reference is made to the significant accounting policies of the Company described in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

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.

Reclassifications

Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2012. These reclassifications had no effect on previously reported net income. 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.

Prior period amounts have been reclassified in Notes 6 and 7 in accordance with applicable accounting guidance to conform to the business segment changes described in Note 1 above. Prior period deferred revenues have been reclassified between current and non-current based on further review of fair value adjustments related to the MacAndrews Acquisition.

Recently Adopted Accounting Guidance

Effective January 1, 2012, the Company adopted amended guidance related to the requirement for an annual goodwill impairment test. The amendment provides entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This amendment affects testing steps only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows.

Effective January 1, 2012, the Company adopted amended 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 shareholder's equity. This amendment affects presentation and disclosure only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows.

Effective January 1, 2012, the Company adopted amended guidance related to fair value measurement. The guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between United States generally accepted accounting principles and International Financial Reporting Standards. The adoption of this amended guidance did not have a material effect on the Company's consolidated financial position, results of operations, cash flows or related disclosures.

6

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

3. Acquisitions

Faneuil Acquisition

On March 19, 2012, the Company entered into a Stock Purchase Agreement pursuant to which the Company purchased 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil") for $70.0 in cash (the "Faneuil Acquisition") from affiliates of MacAndrews. The Company financed the Faneuil Acquisition with Harland Clarke Holdings' cash on hand. New Faneuil, through its wholly owned subsidiary, Faneuil, provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients across the United States.

Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Cash paid in excess of the carrying amount of the assets and liabilities assumed in the amount of $33.8 is treated as an equity transaction with the parent in accordance with accounting guidance for transactions among entities under common control.

The following table summarizes the historical cost of assets and liabilities assumed on March 19, 2012, the date of the Faneuil Acquisition:

Cash			$	2.3
Accounts receivable			11.8
Property, plant and equipment			10.3
Goodwill			13.0
Other intangible assets:
Customer relationships	$	0.2
Tradenames	0.8
Software	0.3
Total other intangible assets			1.3
Other assets			7.2
Total assets acquired			45.9
Deferred revenues			1.2
Capital leases			1.0
Other liabilities			7.5
Net assets acquired			$	36.2

The pro forma effects of the Faneuil Acquisition on the consolidated results of operations were not material and are not included in the Pro Forma Financial Information presented below.

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. The transaction was accounted for as a business combination. M & F Worldwide allocated its new equity basis amongst itself, the Company and another operating subsidiary of M & F Worldwide. M & F Worldwide had preliminarily allocated and pushed down $222.3 of the new equity basis to the Company as of the acquisition date. During the first quarter of 2012, M & F Worldwide revised the equity allocation amongst these entities, and, as a result, the equity allocated to the Company was reduced to $142.2. As required by accounting guidance for business combinations, this adjustment was recorded by the Company retrospectively as of the acquisition date resulting in changes to the preliminary amounts of goodwill and additional paid-in capital set forth in the Company's December 31, 2011 consolidated balance sheet included in its Annual Report on Form 10-K for the year ended December 31, 2011. This change had no effect on amounts reported in the consolidated statements of operations for 2011. As discussed in Note 1, the period after the MacAndrews Acquisition has been bifurcated in these financial statements and indicated by the heading "Successor."

7

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

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 *			745.6
Other intangible assets:
Customer relationships	$	1,519.0
Tradenames	101.4
Technology	39.8
Total other intangible assets			1,660.2
Other assets *			149.0
Total assets acquired *			3,057.2
Deferred revenues			96.8
Long-term debt			1,787.4
Deferred tax liabilities *			722.4
Other liabilities *			308.4
Net assets acquired *			$	142.2

* As discussed above, amounts have been adjusted from the preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

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: $415.0 to Harland Clarke, $281.8 to Harland Financial Solutions, $40.1 to Scantron and $8.7 to Faneuil. Acquisition-related fees and expenses for the Company were not material.

As part of the application of fair value accounting for business combinations, the carrying value of inventory was increased by $17.5. The amount of the inventory fair value adjustment was expensed as additional non-cash cost of products sold as the fair-valued inventory was sold (of which $0.0 and $13.9 was expensed during the three and nine months endedSeptember 30, 2012, respectively).

Also as part of the application of fair value accounting for business combinations, the carrying values of 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 $27.2 and $91.2 was reflected as increased non-cash interest expense and $7.9 and $46.1 was reflected as reduced revenues during the three and nine months endedSeptember 30, 2012, respectively). The Company also wrote-off $34.2 of the non-cash fair value adjustment to long-term debt in the third quarter of 2012 as a result of the refinancing transactions (see Note 10).

8

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

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 period 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 period presented, nor does it purport to represent results of operations for future periods.

	Unaudited Pro Forma
	Three Months Ended		Nine Months Ended
	September 30, 2011		September 30, 2011
Net revenues	$	405.0	$	1,187.1
Operating income	80.1		150.8
Net income	22.4		7.7
Depreciation and amortization (excluding amortization of deferred financing fees)	48.2		147.9

In the pro forma information above, the results 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 estimated consideration of $153.4 as of the acquisition date. Contingent consideration would have been 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, 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, $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 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 nine months ended September 30, 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 were 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 12). As of September 30, 2012, the contingent consideration liability was $0.0 and no amount will be paid in 2012 because the revenue targets were not met.

9

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

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 revenue being recognized over the related earnings period (of which $0.9 and $4.6 was reflected as a reduction of revenues for the three and nine months ended September 30, 2011).

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

4. Inventories

Inventories consist of the following:

	September 30, 2012		December 31, 2011
Finished goods	$	7.1	$	12.4
Work-in-process	8.4		17.9
Raw materials	14.0		12.9
	$	29.5	$	43.2

5. Assets Held For Sale

At September 30, 2012, 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. The Company has made appropriate changes to its marketing plan and believes these facilities will be sold within 12 months.

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

	September 30, 2012		December 31, 2011
Land	$	1.0	$	1.0
Buildings and improvements	2.3		2.3
	$	3.3	$	3.3

6. Goodwill and Other Intangible Assets

The change in carrying amount of goodwill by business segment for the nine months ended September 30, 2012 is as follows:

	Harland Clarke		Harland Financial Solutions		Scantron		Faneuil		Total
Balance as of December 31, 2011 *	$	415.0	$	281.8	$	40.1	$	21.7	$	758.6
Effect of exchange rate changes	—		—		0.1		—		0.1
Balance as of September 30, 2012	$	415.0	$	281.8	$	40.2	$	21.7	$	758.7

* As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011. As discussed in Note 1, the Company made business segment changes in the second quarter of 2012. Prior period amounts in the table above have been reclassified to conform to these business segment changes.

10

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

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

		Gross Carrying Amount				Accumulated Amortization
	Useful Life (in years)	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Amortized intangible assets:
Customer relationships	3 - 19	$	1,528.0	$	1,528.0	$	102.4	$	12.3
Tradenames	15 - 25	101.4		101.4		4.0		0.1
Software and other	5 - 9	52.9		42.2		9.8		1.0
		1,682.3		1,671.6		116.2		13.4
Indefinite-lived intangible assets:
Tradename		0.8		0.8		—		—
Total other intangible assets		$	1,683.1	$	1,672.4	$	116.2	$	13.4

Amortization expense was $34.7 and $102.9 for the three and nine months endedSeptember 30, 2012, respectively, and $30.3 and $90.4 for the three and nine months endedSeptember 30, 2011, respectively.

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

Three months ending December 31, 2012	$	34.8
Year ending December 31, 2013	127.8
Year ending December 31, 2014	119.5
Year ending December 31, 2015	111.8
Year ending December 31, 2016	101.3

7. Business Segment Information

The Company has organized its business along four 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 office products to financial and commercial institutions, as well as consumers and other businesses. This segment operates primarily in the United States and Puerto Rico.

• Harland Financial Solutions segment — Provides technology products and related services to financial institutions 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 and governmental entities worldwide. This segment operates primarily in the United States, Canada and India.

• Faneuil segment — Provides call center services, back office operations, staffing services and toll collection services to government and regulated commercial clients and patient information collection and tracking, managed technical services and related field maintenance services to educational, commercial, healthcare and governmental entities. This segment operates primarily in the United States and Canada.

As discussed in Note 1, the Company made business segment changes in the second quarter of 2012. Prior period results in the tables below have been reclassified to conform to these business segment changes.

11

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

Selected summarized financial information for the three months ended September 30, 2012 and 2011 is as follows:

	Harland Clarke(1)		Harland Financial Solutions(1)		Scantron(1)(2)			Faneuil(1)(3)		Corporate and Other(4)			Total
Successor
Three months ended September 30, 2012:
Product revenues, net	$	278.4	$	17.2	$	22.5		$	2.2	$	—		$	320.3
Service revenues, net	8.3		47.5		7.1			39.4		—			102.3
Intersegment revenues	—		—		0.6			—		(0.6		)	—
Operating income (loss)(5)	56.6		7.9		(5.2		)	2.9		(4.6		)	57.6
Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees)	37.2		10.0		4.3			2.9		—			54.4
Capital expenditures (excluding capital leases)	11.8		3.0		0.8			1.2		—			16.8
Predecessor
Three months ended September 30, 2011:
Product revenues, net	$	277.9	$	17.9	$	27.8		$	2.6	$	—		$	326.2
Service revenues, net	7.3		54.5		4.4			15.3		—			81.5
Intersegment revenues	0.1		—		—			0.1		(0.2		)	—
Operating income (loss)(5)	65.8		13.2		9.0			3.1		(3.5		)	87.6
Depreciation and amortization (excluding amortization of deferred financing fees)	23.0		6.8		9.1			2.1		—			41.0
Capital expenditures (excluding capital leases)	9.8		1.8		2.7			0.1		—			14.4

12

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

Selected summarized financial information for the nine months ended September 30, 2012 and 2011 is as follows:

	Harland Clarke(1)		Harland Financial Solutions(1)		Scantron(1)(2)			Faneuil(1)(3)		Corporate and Other(4)			Total
Successor
Nine months ended September 30, 2012:
Product revenues, net	$	841.1	$	48.8	$	67.8		$	5.4	$	—		$	963.1
Service revenues, net	25.2		124.4		19.8			109.8		—			279.2
Intersegment revenues	0.1		—		1.4			0.2		(1.7		)	—
Operating income (loss)(5)	151.8		1.1		(26.0		)	5.6		(13.4		)	119.1
Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees)	110.5		28.6		13.1			8.0		—			160.2
Capital expenditures (excluding capital leases)	32.0		6.3		5.4			3.3		—			47.0
Total assets:
September 30, 2012	$	1,409.5	$	381.2	$	188.4		$	112.2	$	874.2		$	2,965.5
December 31, 2011(6)	$	1,498.5	$	426.7	$	173.1		$	114.9	$	890.5		$	3,103.7
Predecessor
Nine months ended September 30, 2011:
Product revenues, net	$	831.4	$	56.1	$	80.7		$	7.1	$	—		$	975.3
Service revenues, net	21.2		163.6		12.3			44.9		—			242.0
Intersegment revenues	0.1		—		—			0.3		(0.4		)	—
Operating income (loss)(5)	185.8		45.4		(14.0		)	9.0		(11.8		)	214.4
Depreciation and amortization (excluding amortization of deferred financing fees)	69.0		19.9		26.7			6.4		—			122.0
Capital expenditures (excluding capital leases)	25.2		5.1		8.9			0.2		—			39.4

_______________________

(1) See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results.

(2) Includes results of the acquired GlobalScholar business from the date of acquisition.

(3) Includes results of the acquired Faneuil business from the date of common control (see Note 3).

(4) Total assets include goodwill of $758.7 and $758.6 as of September 30, 2012 and December 31, 2011, respectively.

(5) Includes gain from revaluation of contingent consideration arrangements of $0.1 and $19.5 for the three months ended September 30, 2012 and 2011, respectively, and $0.6 and $24.6 for the nine months endedSeptember 30, 2012 and 2011, respectively, restructuring costs of $11.6 and $2.3 for the three months ended September 30, 2012 and 2011, respectively, and $16.6 and $8.3 for the nine months endedSeptember 30, 2012 and 2011, respectively, (see Note 15) and non-cash impairment charges of $0.7 and $0.1 for the three months ended September 30, 2012 and 2011, respectively, and $0.7 and $2.4 for the nine months endedSeptember 30, 2012 and 2011, respectively.

(6) As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

8. Postretirement Defined 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 20 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.

13

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

The components of net periodic postretirement benefit cost for these plans consist of the following:

	Successor		Predecessor			Successor		Predecessor
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2012		2011			2012		2011
Interest cost	$	0.1	$	0.1		$	0.3	$	0.4
Amortization of prior service credits	—		(0.1		)	—		(0.3		)
Net postretirement benefit cost	$	0.1	$	—		$	0.3	$	0.1

9. Income Taxes

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 2009 through 2011 generally remain open. In addition, open tax years related to foreign jurisdictions remain subject to examination but are not considered material.

There are no events that have occurred since December 31, 2011 that had a material impact on amounts accrued for the Company's uncertain tax positions.

10. Long-Term Debt

	September 30, 2012			December 31, 2011
$1,900.0 Senior Secured Credit Facilities:
Extended Term Loans due 2017	$	692.8		$	—
Non-Extended Term Loans due 2014	729.0			1,719.0
Total $1,900.0 Senior Secured Credit Facilities	1,421.8			1,719.0
9.75% Senior Secured Notes due 2018	235.0			—
Senior Floating Rate Notes due 2015	204.3			204.3
9.50% Senior Fixed Rate Notes due 2015	271.3			271.3
Faneuil Revolving Credit Facility	—			25.6
Capital lease obligations and other indebtedness	3.4			4.5
Unamortized original issue discount and acquisition accounting-related fair value discount	(296.5		)	(412.7		)
	1,839.3			1,812.0
Less: current maturities	(75.0		)	(45.1		)
Long-term debt, net of current maturities	$	1,764.3		$	1,766.9

$1,900.0 Senior Secured Credit Facilities

Extended Term Loans

On July 24, 2012, an amendment (the "Amendment") entered into on May 10, 2012 by the Company to its credit agreement dated as of April 4, 2007 (the "Credit Agreement") became effective, thereby extending the maturity of $973.0 of term loans under the Credit Agreement (the "Extended Term Loans") from June 2014 to June 2017 (subject to a springing maturity 90 days prior to the maturity date of the Company's 2015 Senior Notes (as defined hereinafter) if such notes have not been repaid, extended or refinanced). The effectiveness of the Amendment was conditioned on, among other customary conditions, the repayment of $280.2 of the Extended Term Loans, which repayment was made with net proceeds from the issuance of the 2018 Senior Secured Notes (as defined hereinafter) and cash on hand. After giving effect to such repayment and the effectiveness of the Amendment, there were $692.8 of Extended Term Loans outstanding and $729.0 of non-extended term loans (the "Non-Extended Term Loans") outstanding. The Company is required to repay the Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 10% of the original extended amount after giving effect to the $280.2 prepayment thereof required as a condition precedent to the effectiveness of the Amendment. The Amendment also includes several covenants in addition to those covenants in the Credit Agreement. The weighted average interest rate on the principal amount of Extended Term Loans outstanding was 5.5% at September 30, 2012.

14

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

The Extended Term Loans 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 4.25% per annum; or

•A rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin of 5.25% per annum.

Non-Extended Term Loans

On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into 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 with respect to the Non-Extended Term Loans. The Company is required to repay the Non-Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount multiplied by the ratio of Non-Extended Term Loans outstanding on the effective date of the Amendment to the total Non-Extended Term Loans and Extended Term Loans outstanding on the effective date of the Amendment prior to giving effect to the prepayment required as a condition precedent to the effectiveness of the Amendment. 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 Non-Extended Term Loans outstanding was 2.7% at September 30, 2012. As of September 30, 2012, there were no outstanding borrowings under the Revolver and there was $92.2 available for borrowing (giving effect to the issuance of $7.8 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, the 2015 Senior Notes (as defined hereinafter), and the 2018 Senior Secured Notes (as defined hereinafter) allow the Company to incur substantial additional debt.

The Non-Extended Term Loans 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 2.51% 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, certain immaterial subsidiaries, subsidiaries that do not guarantee other debt of the Company and subject to certain other exceptions, 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 loans 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 loans 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. Excess cash flow payments of $12.5 and $3.5 were paid in March 2012 and 2011, respectively, for 2011 and 2010, respectively. Under the terms of the Credit Agreement such excess cash flow payments have been, or will be applied against other mandatory payments due in the same year of the excess cash flow payment.

15

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

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 "2015 Senior Notes 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 September 30, 2012. 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 and the 2018 Senior Secured Notes. The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries and certain other exceptions, are guarantors and may also be co-issuers under the 2015 Senior Notes.

The 2015 Senior Notes 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 2015 Senior Notes 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.

9.75% Senior Secured Notes due 2018

On July 24, 2012, the Company and Harland Clarke Corp., Harland Financial Solutions, Inc., Scantron Corporation and Checks in the Mail, Inc. (together, the "Co-Issuers") completed an offering of $235.0 aggregate principal amount of 9.75% Senior Secured Notes due 2018 (the "2018 Senior Secured Notes"). The Company used the net proceeds from the offering, together with cash on hand, to repay $280.2 aggregate principal amount of outstanding Extended Term Loans under its Credit Agreement.

The 2018 Senior Secured Notes were issued pursuant to an indenture, dated as of July 24, 2012 (the "2018 Senior Secured Notes Indenture"), among the Company, the Co-Issuers, certain of the Company's domestic subsidiaries that guarantee the 2018 Senior Secured Notes (the "Guarantors") and Wells Fargo Bank, National Association, as trustee and collateral agent (the "Trustee"). The Guarantors have guaranteed (the "Guarantees") the Company's and Co-Issuers' obligations under the 2018 Senior Secured Notes and the 2018 Senior Secured Notes Indenture on a senior secured basis. The 2018 Senior Secured Notes and the Guarantees are secured pursuant to a Security Agreement, dated as of July 24, 2012, by and among the Company, the Co-Issuers, the Guarantors and Wells Fargo Bank, National Association, as collateral trustee (the "Collateral Trustee") and a Collateral Trust Agreement, dated as of July 24, 2012, by and among the Company, certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee.

The 2018 Senior Secured Notes will mature on August 1, 2018. The Company will pay interest on the 2018 Senior Secured Notes at 9.75% per annum, semiannually in arrears on each of February 1 and August 1 to holders of record at the close of business on the immediately preceding January 15 and July 15 of each year, commencing on February 1, 2013.

The 2018 Senior Secured Notes are senior secured obligations of the Company and the Co-Issuers and the Guarantees are senior secured obligations of the Guarantors. The 2018 Senior Secured Notes and the Guarantees rank as follows: (i) secured on a first-priority basis, equally and ratably with all obligations of the Company, the Co-Issuers and the Guarantors that are

16

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

secured by pari passu liens on the collateral, including their existing senior secured credit facilities; (ii) effectively junior to all of the Company's, Co-Issuers' and the Guarantors' obligations under any future asset-based revolving credit facility to the extent of the value of the current asset collateral held by the Company, the Co-Issuers and the Guarantors; (iii) structurally subordinated to any existing and future indebtedness and other liabilities of any existing and future subsidiaries of the Company that are not Guarantors; (iv) pari passu in right of payment with all of the existing and future senior indebtedness of the Company, the Co-Issuers and the Guarantors and effectively senior to the extent of the value of the collateral to any future unsecured indebtedness of the Company, the Co-Issuers and the Guarantors that is secured by liens on the collateral that are junior to the liens securing the Senior Secured Notes and the Guarantees or that is unsecured; and (v) senior in right of payment to any existing and future subordinated indebtedness of the Company, the Co-Issuers and the Guarantors.

The 2018 Senior Secured Notes and the Guarantees are secured on a first-priority basis, equally and ratably with the indebtedness under the Credit Agreement, by substantially all of the Company's, the Co-Issuers' and the Guarantors' assets, subject to certain exceptions and permitted liens.

Beginning with the fiscal year of the Company ending December 31, 2013, if the Company's secured leverage ratio exceeds certain levels, the Company will be required to offer to purchase an amount of the 2018 Senior Secured Notes equal to the greater of (1) $15.0 and (2) 50% of its excess cash flow for the applicable period, less any voluntary prepayments of 2018 Senior Secured Notes or credit facility indebtedness and certain mandatory prepayments made during the applicable period and subject to certain other exceptions, at a purchase price equal to 100% of the principal amount of the 2018 Senior Secured Notes, plus accrued and unpaid interest and additional interest. Upon the occurrence of a change of control or if the Company sells certain assets, the Company may be required to make an offer to purchase the 2018 Senior Secured Notes at certain specified prices.

The 2018 Senior Secured Notes Indenture contains covenants that, among other things, limit the Company's, the Co-Issuers' and the Guarantors' ability to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company's subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company's affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all assets; and (x) transfer or sell assets. These covenants are subject to important exceptions and qualifications. The 2018 Senior Secured Notes Indenture contains affirmative covenants and events of default that are customary for indentures governing high-yield debt securities.

Faneuil Revolving Credit Facilities

Faneuil had a $35.5 revolving credit facility (the "Revolving Credit Agreement"), which was to mature on June 1, 2012 and was paid in full on January 25, 2012. At December 31, 2011, Faneuil had $25.6 drawn under the Revolving Credit Agreement. The Revolving Credit Agreement allowed Faneuil to choose from two different interest rate options. The first option was LIBOR plus 2.5% per annum and the second option was Prime Rate minus 1.25%. The effective interest rate on the Revolving Credit Agreement at December 31, 2011 was 3.25%.

The Revolving Credit Agreement contained certain covenants and restrictions including covenants and restrictions related to change of control, mergers, dissolution, accounting methodology, indebtedness, dividends and distributions. The Revolving Credit Agreement was collateralized by substantially all of the assets of Faneuil, and was secured by a pledge of the shares of Faneuil's parent.

On January 25, 2012, Faneuil entered into a new $25.0, two-year, revolving credit agreement with MacAndrews & Forbes Group LLC, which is an indirect wholly owned subsidiary of MacAndrews. This revolver was drawn in full on January 25, 2012 and the proceeds, along with cash on hand, were used to pay in full the outstanding balance of $25.6 plus all accrued interest under the Revolving Credit Agreement. Faneuil terminated the Revolving Credit Agreement and it is no longer available for borrowing.

On March 19, 2012, in connection with the Faneuil Acquisition, Faneuil's $25.0 revolving credit facility with MacAndrews & Forbes Group LLC was extinguished and Faneuil no longer has any loans outstanding.

Loss on Early Extinguishment of Debt

In connection with the repayment of $280.2 of the Extended Term Loans in the third quarter of 2012, the Company recorded a loss on early extinguishment of debt of $34.2 resulting from the write-off of unamortized acquisition accounting-related fair value discount, which was attributable to the MacAndrews Acquisition (see Note 3).

17

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

Capital Lease Obligations and Other Indebtedness

The Company has outstanding capital lease obligations and other indebtedness with principal balances totaling $3.4 and $4.5 at September 30, 2012 and December 31, 2011, respectively. These obligations have imputed interest rates ranging from 0.0% to 9.6% and have required payments of $0.4 remaining in 2012, $1.5 in 2013, $1.3 in 2014, $0.1 in 2015 and $0.1 in 2016.

11. 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 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 and expired on June 30, 2012. This hedge swapped 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 and expired on September 30, 2012. This hedge swapped 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.

Derivatives Designated as Cash Flow Hedging Instruments:	Balance Sheet Classification	September 30, 2012		December 31, 2011
Interest rate swaps	Other current liabilities	$	2.0	$	6.1
	Other liabilities	—		2.9

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 were ineffective during the three and nine months endedSeptember 30, 2012 and had no ineffective portions during the three and nine months endedSeptember 30, 2011. 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		Successor		Predecessor
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Interest Rate Swaps:
Loss recognized in other comprehensive income (effective portion)	$	—	$	1.6	$	—	$	6.5
Loss reclassified from other comprehensive income into interest expense (effective portion)	—		3.9		0.1		11.2
Loss recognized in interest expense (ineffective portion)	0.3		—		1.8		—

18

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

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
	Nine Months Ended September 30,
Balances and Net Changes:	2012			2011
Balance at beginning of period	$	0.1		$	10.9
Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0 and $4.4	(0.1		)	(6.8		)
Net change in fair value of interest rate swaps, net of taxes of $0.0 and $2.6	—			3.9
Balance at end of period	$	—		$	8.0

12. Fair Value Measurements

Nonrecurring Fair Value Measurements

During the nine months ended September 30, 2012, the Company recorded non-cash impairment charges of $0.5 for the Faneuil segment related to abandoned leasehold improvements resulting from the loss of a client and $0.2 for the Harland Clarke segment related to assets that were determined to have limited future use. During the nine months ended September 30, 2011, the Company recorded non-cash impairment charges of $1.9 for the Scantron segment and $0.5 for the Harland Clarke segment primarily related to assets that were determined to have limited future use.

Recurring Fair Value Measurements

Fair values of financial instruments subject to recurring fair value measurements as of September 30, 2012 and December 31, 2011 are as follows:

	Balance at
	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Corporate equity securities	$	0.1	$	0.1	$	—	$	—
Liability for interest rate swaps	2.0		—		2.0		—

	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	0.6		—		—		0.6

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.

19

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

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):

	Successor			Predecessor			Successor			Predecessor
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	0.1		$	19.8		$	0.6		$	8.2
Businesses acquired	—			—			—			17.0
Net changes in fair value	(0.1		)	(19.5		)	(0.6		)	(24.6		)
Payment of contingent consideration	—			—			—			(0.3		)
Balance at end of period	$	—		$	0.3		$	—		$	0.3

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 September 30, 2012 and December 31, 2011 was approximately $1,932.3 and $1,821.4, respectively. The carrying value of long-term debt at September 30, 2012 and December 31, 2011 was $1,839.3 and $1,812.0 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.

13. 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 September 30, 2012:
Corporate equity securities	$	0.1	$	—	$	—	$	0.1
Balance at December 31, 2011:
United States treasury securities	$	56.5	$	0.1	$	—	$	56.6
Corporate equity securities	0.1		—		—		0.1

The Company purchased United States treasury securities, which were to mature in 2014, during the fourth quarter of 2011. During the nine months endedSeptember 30, 2012, the Company sold its United States treasury securities for $56.3 in cash and recognized a loss of $0.2, which is included in other (expense) income, net in the accompanying consolidated statements of operations. During the nine months ended September 30, 2011, the Company sold certain corporate equity securities for $13.4 in cash and recognized a gain of $13.2, which was included in other (expense) income, net in the accompanying consolidated statements of operations.

14. Commitments and Contingencies

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.

20

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

Other

A series of commercial borrowers in various states that allegedly obtained loans from financial institutions employing Harland Financial Solutions' ("HFS") LaserPro software 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.

15. Restructuring

Harland Clarke and Corporate

The Company adopted plans during 2010, 2011 and 2012 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 following table details the components of the Company's restructuring accruals under its plans related to the Harland Clarke segment and Corporate for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed		Paid in Cash			Non-Cash Utilization			Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	4.5	$	7.5	$	(5.1	)	$	—		$	6.9
Facilities closures and other costs	3.0		1.6		(1.4		)	(0.8		)	2.4
Total	$	7.5	$	9.1	$	(6.5	)	$	(0.8	)	$	9.3
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	1.5	$	2.0	$	(2.9	)	$	—		$	0.6
Facilities closures and other costs	4.5		1.7		(2.4		)	(0.2		)	3.6
Total	$	6.0	$	3.7	$	(5.3	)	$	(0.2	)	$	4.2

The non-cash utilization of $0.8 and $0.2 in 2012 and 2011, 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 $2.0 for costs related to these plans. The Company expects to make payments for severance and severance-related costs through 2014. 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.

21

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

During 2012, the Company adopted a plan to realize additional cost savings in the Harland Financial Solutions segment by eliminating certain selling, general and administrative expenses.

The following table details the components of the Company's restructuring accruals related to the Harland Financial Solutions segment for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed			Paid in Cash			Non-Cash Utilization		Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	—	$	0.5		$	(0.4	)	$	—	$	0.1
Facilities and other costs	1.5		(0.1		)	(0.3		)	0.2		1.3
Total	$	1.5	$	0.4		$	(0.7	)	$	0.2	$	1.4
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	0.1	$	0.2		$	(0.3	)	$	—	$	—
Facilities and other costs	2.2		0.1			(0.6		)	—		1.7
Total	$	2.3	$	0.3		$	(0.9	)	$	—	$	1.7

Scantron

The Company adopted plans during 2010, 2011 and 2012 to realize additional cost savings in the Scantron segment by consolidating certain operations and eliminating certain selling, general and administrative expenses.

The following table details the components of the Company's restructuring accruals related to the Scantron segment for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed			Paid in Cash			Non-Cash Utilization		Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	2.0	$	4.1		$	(3.0	)	$	—	$	3.1
Facilities and other costs	1.4		1.2			(1.2		)	—		1.4
Total	$	3.4	$	5.3		$	(4.2	)	$	—	$	4.5
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	0.1	$	5.1		$	(2.8	)	$	—	$	2.4
Facilities and other costs	3.7		(0.8		)	(1.3		)	0.1		1.7
Total	$	3.8	$	4.3		$	(4.1	)	$	0.1	$	4.1

Ongoing lease commitments related to these plans continue to February 2013. The Company expects to make payments for severance and severance-related costs through 2014.

22

Harland Clarke Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(dollars in millions)

(unaudited)

Faneuil

The Company adopted a plan in 2012 to realize cost savings in the Faneuil segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. The following table details the components of the Company's restructuring accruals related to the Faneuil segment for the nine months ended September 30, 2012:

	Beginning Balance		Expensed		Paid in Cash			Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	—	$	0.9	$	—		$	0.9
Facilities and other costs	—		0.9		(0.3		)	0.6
Total	$	—	$	1.8	$	(0.3	)	$	1.5

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. Transactions with Related Parties

The Company participates in MacAndrews’ directors and officers insurance program, which covers the Company as well as MacAndrews and MacAndrews’ 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 premiums the Company could secure were it to secure its own coverage. At September 30, 2012, the Company recorded prepaid expenses and other assets of $0.7 and $1.2, respectively, relating to the directors and officers insurance program. At December 31, 2011, the Company recorded prepaid expenses of $0.0 related to the directors and officers insurance program. The Company paid $1.9 and $0.1 to MacAndrews during the nine months endedSeptember 30, 2012 and 2011, respectively, under the directors and officers insurance program. The Company also participates in certain other insurance programs with MacAndrews under which it pays premiums directly to the insurance broker.

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 September 30, 2012. Interest income of $0.2 and $0.6 was recorded and related payments were received during the three and nine months ended September 30, 2012, respectively.

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 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. Interest income of $0.1 and $0.2 was recorded during the three and nine months endedSeptember 30, 2011, respectively. The senior secured credit facility and note were paid in full and canceled on November 9, 2011.

Other

The Company expensed $0.6 and $2.0 during the three and nine months ended September 30, 2012, respectively, and $0.6 and $2.0 during the three and nine months ended September 30, 2011, respectively, for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses.

During the three months ended March 31, 2012, the Company paid cash dividends of $25.8 to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements.

On March 19, 2012, the Company completed the Faneuil Acquisition from affiliates of MacAndrews, its indirect parent (see Note 3). In connection with the Faneuil Acquisition, Faneuil's revolving credit facility with an affiliate of MacAndrews, which was entered into on January 25, 2012, was extinguished (see Note 10).

23

Harland Clarke Holdings Corp. and Subsidiaries

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion regarding our financial condition and results of operations for the three and nine months ended September 30, 2012 and 2011 should be read in conjunction with the more detailed financial information contained in our consolidated financial statements and their notes included elsewhere in this Quarterly Report on Form 10-Q.

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 (as defined hereinafter) period financial statements reflect a new basis of accounting, while the Predecessor (as defined hereinafter) 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 accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion of the MacAndrews Acquisition.

On March 19, 2012, the Company purchased Faneuil, Inc. ("Faneuil") from affiliates of MacAndrews (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Faneuil is a separate business segment for financial reporting purposes.

During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The Harland Technology Services ("HTS") and Medical Device Tracking ("MDT") businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke Segment.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial and commercial institutions. 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, survey services and other business and home office products to consumers and businesses.

The Harland Financial Solutions segment provides technology products and related services to financial institutions 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 and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment and forms.

The Faneuil segment provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients. The Faneuil segment also provides patient information collection and tracking services, managed technical services and related field maintenance services to educational, commercial, healthcare and governmental entities.

Faneuil Acquisition

On March 19, 2012, the Company entered into a Stock Purchase Agreement pursuant to which the Company purchased 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil") for $70.0 million in cash (the "Faneuil Acquisition") from affiliates of MacAndrews. The Company financed the Faneuil Acquisition with Harland Clarke Holdings' cash on hand. New Faneuil, through its wholly owned subsidiary, Faneuil, provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and

24

Harland Clarke Holdings Corp. and Subsidiaries

regulated commercial clients across the United States.

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 have been payable in 2012 upon achievement of certain revenue targets of GlobalScholar during calendar year 2011 (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). No amount will be paid in 2012 because the revenue targets were not met. The Company financed the acquisition and related fees and expenses with cash on hand.

Refinancing Transactions

On July 24, 2012, the Company completed certain refinancing transactions with respect to its credit agreement dated as of April 4, 2007, as amended on May 10, 2012. See Note 10 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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 and 2012, 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 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.

25

Harland Clarke Holdings Corp. and Subsidiaries

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 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, 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.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for additional information regarding revenue recognition policies.

Faneuil

Faneuil is an outsourcer for government services and highly regulated industries with a focus on industries that remain

26

Harland Clarke Holdings Corp. and Subsidiaries

robust under normal economic conditions, e.g., transportation, utilities, state agencies, municipal governments, healthcare, and education. During economic downturns, the ability of both private and governmental entities to make expenditures may decline. Faneuil cannot be certain that economic or political conditions will be generally favorable or that there will not be significant fluctuations which adversely affect Faneuil's industry as a whole or key markets targeted by Faneuil. As Faneuil's operations are, in part, dependent upon government funding, significant decreases in the level of government funding could have an unfavorable effect on Faneuil's operating results.

Faneuil's business is subject to a variety of program related risks, including changes in political and other circumstances, particularly since contracts for major programs are performed over extended periods of time. These risks include the failure of applicable governing authorities to take necessary actions, opposition by third parties to specific programs and the failure by customers to obtain adequate financing for particular programs. Due to these factors, losses on a select contract or contracts could occur, and Faneuil could experience significant changes in operating results.

Faneuil's primary competition comes from other large providers of toll services such as Affiliated Computer Services, Inc. ("ACS") and TransCore, Inc., and providers of customer contact center services such as ACS and Convergys Corporation. If Faneuil cannot compete effectively, it will negatively affect its operating results. To remain competitive, Faneuil must respond to new technologies and enhance its existing services, and may have to adjust the pricing for its services.

Faneuil's operations are positively affected by the growing trend in government agencies to outsource their internal operations to address shrinking budgets and eliminate the historically higher costs associated with staffing government programs. Tolling operations are expected to increase across the country in an effort to provide new funding for government agencies realizing budgetary cutbacks as a result of the prevailing economic climate. Similarly, governments and other highly regulated businesses are seeking economic efficiencies by outsourcing their customer contact centers. While Faneuil will look to take advantage of these opportunities, some of these opportunities require performance bonds, and there can be no assurance that bonds will be available on reasonable terms.

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 its 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.

Consolidated Operating Results

The Company has organized its businesses along four 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. During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The HTS and MDT businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment. Prior period results in the tables below have been reclassified to conform to these business segment changes.

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 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), including, but not limited to, decreased revenues as a result of fair value adjustments to deferred revenues, increased depreciation and amortization as a result of the revaluation of assets and 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 (as defined below) 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 (three and nine months endedSeptember 30, 2011) are presented in the accompanying consolidated financial statements as "Predecessor." The periods subsequent to the MacAndrews Acquisition (three and nine months endedSeptember 30, 2012) are presented in the accompanying consolidated financial statements as "Successor."

27

Harland Clarke Holdings Corp. and Subsidiaries

In the tables below, dollars are in millions.

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

The operating results for the three months ended September 30, 2011, as reflected in the accompanying consolidated statements of operations and described below, include the operating results of the acquired GlobalScholar business from its date of acquisition. They also include reclassifications related to the business segment changes discussed in the Consolidated Operating Results section above.

Net Revenues:

	Successor			Predecessor
	Three Months Ended
	September 30,
	2012			2011
Consolidated Net Revenues:
Harland Clarke segment	$	286.7		$	285.3
Harland Financial Solutions segment	64.7			72.4
Scantron segment	30.2			32.2
Faneuil segment	41.6			18.0
Eliminations	(0.6		)	(0.2		)
Total	$	422.6		$	407.7

Net revenues increased by $14.9 million, or 3.7%, to $422.6 million in the 2012 period from $407.7 million in the 2011 period.

Net revenues for the Harland Clarke segment increased by $1.4 million, or 0.5%, to $286.7 million in the 2012 period from $285.3 million in the 2011 period. The increase was primarily due to an increase in revenues per unit that increased net revenues by $10.7 million, a net benefit of $6.6 million for non-cash fair value adjustments to client incentives and deferred revenues related to the MacAndrews Acquisition and revenue for a one-time payment of $1.2 million resulting from the loss of a client. These increases were largely offset by volume declines, net of client additions and losses, in check and related products that reduced net revenues by $17.1 million.

Net revenues for the Harland Financial Solutions segment decreased by $7.7 million, or 10.6%, to $64.7 million in the 2012 period from $72.4 million in the 2011 period. In the 2012 period, the Harland Financial Solutions segment incurred a net charge of $7.8 million from non-cash fair value adjustments to deferred revenues related to the MacAndrews Acquisition. In addition, net revenues decreased by $0.9 million due to a decrease in software license revenues as a result of a continuing shift from perpetual licenses to term licenses, which was partially offset by an increase in early termination fees of $0.7 million.

Net revenues for the Scantron segment decreased by $2.0 million, or 6.2%, to $30.2 million in the 2012 period from $32.2 million in the 2011 period. The decline was primarily due to lower volumes in forms, scanners and other services which reduced revenues by $4.2 million. Net revenues for Spectrum K12 and GlobalScholar businesses increased $0.7 million due to increases in the completion of project implementations and intersegment sales. Scantron incurred a net charge of $1.5 million in the 2011 period for non-cash fair value adjustments to deferred revenues related to the acquisitions of the Spectrum K12 and GlobalScholar businesses.

Net revenues for the Faneuil segment increased by $23.6 million to $41.6 million in the 2012 period from $18.0 million in the 2011 period (during which only the HTS and MDT businesses were in the Faneuil segment) due to net revenues of $24.7 million attributable to the Faneuil Acquisition, partially offset by a decrease in net revenues of $1.1 million for the HTS and MDT businesses that were transferred from the Scantron segment. In the 2012 period, those businesses incurred a net charge of $0.5 million from non-cash fair value adjustments to deferred revenues related to the MacAndrews Acquisition. The remaining decrease was primarily due to declines in revenues related to installation and maintenance services.

Elimination of net revenues increased to $0.6 million in the 2012 period from $0.2 million in the 2011 period primarily due to intersegment sales of information technology services from the Scantron segment to the Harland Clarke segment.

28

Harland Clarke Holdings Corp. and Subsidiaries

Cost of Revenues:

	Successor			Predecessor
	Three Months Ended
	September 30,
	2012			2011
Consolidated Cost of Revenues:
Harland Clarke segment	$	180.4		$	173.2
Harland Financial Solutions segment	32.4			30.3
Scantron segment	16.7			22.7
Faneuil segment	31.2			12.0
Eliminations	(0.6		)	(0.2		)
Total	$	260.1		$	238.0

Cost of revenues increased by $22.1 million, or 9.3%, to $260.1 million in the 2012 period from $238.0 million in the 2011 period.

Cost of revenues for the Harland Clarke segment increased by $7.2 million, or 4.2%, to $180.4 million in the 2012 period from $173.2 million in the 2011 period. In the 2012 period, the Harland Clarke segment incurred a net charge of $12.9 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $13.1 million increase in depreciation and amortization and a benefit of $0.2 million for other non-cash adjustments. The increase in cost of revenues was partially offset by decreases in delivery expenses of $1.9 million, other variable expenses related to volume declines of $1.8 million, other general overhead of $1.2 million, and depreciation and amortization not related to acquisition accounting of $0.4 million. Cost of revenues as a percentage of revenues for the Harland Clarke segment was 62.9% in the 2012 period compared to 60.7% in the 2011 period primarily due to the non-cash fair value adjustments related to the MacAndrews Acquisition.

Cost of revenues for the Harland Financial Solutions segment increased by $2.1 million, or 6.9%, to $32.4 million in the 2012 period from $30.3 million in the 2011 period. In the 2012 period, the Harland Financial Solutions segment incurred a net charge of $1.8 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $2.5 million increase in depreciation and amortization and a $0.7 million benefit in other non-cash adjustments. The increase in cost of revenues was also a result of an increase in telecom expense of $0.4 million primarily due to growth in service bureau business. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 50.1% in the 2012 period compared to 41.9% in the 2011 period primarily due to non-cash fair value adjustments related to the MacAndrews Acquisition that increased cost of revenues by $1.8 million and reduced net revenues by $7.8 million.

Cost of revenues for the Scantron segment decreased by $6.0 million, or 26.4%, to $16.7 million in the 2012 period from $22.7 million in the 2011 period. In the 2012 period, the Scantron segment incurred a net benefit of $5.2 million for non-cash fair value adjustments related to the MacAndrews Acquisition as compared to the 2011 period, all of which decreased depreciation and amortization. Cost of revenues also decreased by $1.5 million due to lower volumes of forms and scanners sold. These decreases were partially offset by an increase in labor and other expenses of $0.5 million and lower cost deferrals in the 2012 period of $0.3 million related to implementation services for revenues that have not been recognized. Cost of revenues as a percentage of revenues for the Scantron segment was 55.3% in the 2012 period compared to 70.5% in the 2011 period primarily due to lower non-cash fair value adjustments related to acquisitions.

Cost of revenues for the Faneuil segment increased by $19.2 million to $31.2 million in the 2012 period from $12.0 million in the 2011 period (during which only the HTS and MDT businesses were in the Faneuil segment) due to cost of revenues of $19.7 million attributable to the Faneuil Acquisition, partially offset by a decrease in cost of revenues of $0.5 million for the HTS and MDT businesses that were transferred from the Scantron segment. The decrease was primarily due to volume declines and lower labor and related expenses. In the 2012 period, these businesses incurred a net benefit of $0.3 million related to the MacAndrews Acquisition for depreciation and amortization.

Elimination of cost of revenues increased to $0.6 million in the 2012 period from $0.2 million in the 2011 period primarily due to intersegment sales of information technology services from the Scantron segment to the Harland Clarke segment.

29

Harland Clarke Holdings Corp. and Subsidiaries

Selling, General and Administrative Expenses:

	Successor		Predecessor
	Three Months Ended
	September 30,
	2012		2011
Consolidated Selling, General and Administrative Expenses:
Harland Clarke segment	$	43.1	$	45.8
Harland Financial Solutions segment	24.5		29.2
Scantron segment	15.0		17.8
Faneuil segment	5.5		2.9
Corporate	4.6		3.5
Total	$	92.7	$	99.2

Selling, general and administrative expenses decreased by $6.5 million, or 6.6%, to $92.7 million in the 2012 period from $99.2 million in the 2011 period.

Selling, general and administrative expenses for the Harland Clarke segment decreased by $2.7 million, or 5.9%, to $43.1 million in the 2012 period from $45.8 million in the 2011 period. The decrease was primarily due to cost reduction actions implemented in third quarter of 2012, including decreases in labor costs of $1.6 million, travel expenses of $1.0 million, and advertising and promotion expenses of $0.8 million. These decreases were partially offset by an increase in depreciation and amortization not related to acquisition accounting of $0.9 million. In the 2012 period, the Harland Clarke segment incurred a $0.6 million benefit in other non-cash adjustments and a $0.6 million increase in depreciation and amortization for non-cash fair value adjustments related to the MacAndrews Acquisition. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment were 15.0% in the 2012 period compared to 16.1% in the 2011 period primarily due to the cost reduction actions for selling, general and administrative expenses implemented in the third quarter of 2012.

Selling, general and administrative expenses for the Harland Financial Solutions segment decreased by $4.7 million, or 16.1%, to $24.5 million in the 2012 period from $29.2 million in the 2011 period. In the 2012 period, the Harland Financial Solutions segment incurred a net benefit of $1.5 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $1.8 million benefit in other non-cash adjustments and a $0.3 million increase in depreciation and amortization. The decrease was also due to lower costs of $1.9 million resulting from an increase in capitalized software development costs, a decrease in travel expenses of $0.7 million and a decrease in employee compensation expense of $0.6 million. Selling, general and administrative expenses as a percentage of revenues for the Harland Financial Solutions segment was 37.9% in the 2012 period compared to 40.3% in the 2011 period due to the overall decrease in selling, general and administrative expenses discussed above.

Selling, general and administrative expenses for the Scantron segment decreased by $2.8 million, or 15.7%, to $15.0 million in the 2012 period from $17.8 million in the 2011 period. The decrease was primarily due to cost savings of $1.6 million resulting from cost reduction and restructuring activities, lower costs of $1.2 million resulting from an increase in capitalized software development costs and a decrease of $0.7 million for outside services related to projects to increase efficiencies. These decreases were partially offset by lower cost deferrals in the 2012 period of $0.3 million related to implementation services for revenue not yet recognized. In the 2012 period, the Scantron segment incurred a net charge of $0.4 million for non-cash fair value adjustments related to the MacAndrews Acquisition due to an increase in depreciation and amortization. Selling, general and administrative expenses as a percentage of revenues for the Scantron segment was 49.7% in the 2012 period compared to 55.3% in the 2011 period due to the overall decrease in selling, general and administrative expenses.

Selling, general and administrative expenses for the Faneuil segment increased by $2.6 million to $5.5 million in the 2012 period from $2.9 million in the 2011 period (during which only the HTS and MDT businesses were in the Faneuil segment) due to selling, general and administrative expenses of $2.9 million attributable to the Faneuil Acquisition, partially offset by a decrease in selling, general and administrative expenses of $0.3 million for the HTS and MDT businesses that were transferred from the Scantron segment. The decrease for the HTS and MDT businesses was primarily due to cost reductions.

Corporate selling, general and administrative expenses increased by $1.1 million, or 31.4%, to $4.6 million in the 2012 period from $3.5 million in the 2011 period primarily due to expenses of $1.0 million associated with recent debt refinancing transactions.

Revaluation of Contingent Consideration

Operating expenses decreased by $0.1 million in the 2012 period due to a decrease in the fair value of accrued contingent consideration related to an acquisition in 2010, which resulted from a decrease in revenue projections that would trigger a

30

Harland Clarke Holdings Corp. and Subsidiaries

payment. Operating expenses decreased by $19.5 million in the 2011 period due to a net decrease in the fair value of accrued contingent consideration primarily related to acquisitions in 2009 and 2010, which resulted from a decrease in revenue projections that would trigger a payment.

Asset Impairment Charges

During the 2012 period, the Company recorded non-cash impairment charges of $0.5 million for the Faneuil segment related to abandoned leasehold improvements resulting from the loss of a client and $0.2 million for the Harland Clarke segment related to assets that were determined to have limited future use. During the 2011 period, the Company recorded non-cash impairment charges of $0.1 million for the Harland Clarke segment primarily related to assets that were determined to have limited future use.

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.

In the 2012 period, the Company recorded restructuring costs of $6.4 million for the Harland Clarke segment, $3.7 million for the Scantron segment and $1.5 million for the Faneuil segment related to these plans. In the 2011 period, the Company recorded restructuring costs of $1.9 million for the Scantron segment and $0.4 million for the Harland Clarke segment related to these plans.

Interest Income

Interest income was $0.2 million in the 2012 period compared to $0.1 million in the 2011 period. The increase in interest income was primarily due to an increase in notes receivable outstanding from a related party (see Note 16 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Interest Expense

Interest expense was $56.3 million in the 2012 period compared to $27.4 million in the 2011 period. The increase in interest expense was primarily due to fair value adjustments related to the MacAndrews Acquisition that resulted in $27.2 million of non-cash interest expense during the 2012 period and higher interest rates for extended term loans and senior secured notes, partially offset by a decrease in total debt outstanding.

Loss on Early Extinguishment of Debt

The loss on early extinguishment of debt of $34.2 million in the 2012 period relates to refinancing transactions. The loss consists of the write-off of unamortized acquisition accounting-related fair value discount, which was attributable to the MacAndrews Acquisition (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Provision for Income Taxes

The Company's effective tax rate was a benefit of 41.9% in the 2012 period and a provision of 22.7% in the 2011 period. The benefit for income taxes in the 2012 period reflects tax credits not previously recorded, certain foreign income not subject to tax and a net release of a reserve for uncertain tax positions of $0.6 million. The provision for income taxes in the 2011 period reflects $19.2 million of reductions of contingent consideration that are not subject to income taxes.

Nine Months EndedSeptember 30, 2012 Compared to Nine Months EndedSeptember 30, 2011

The operating results for the nine months ended September 30, 2011, as reflected in the accompanying consolidated statements of operations and described below, include the operating results of the acquired GlobalScholar business from its date of acquisition. The operating results for the nine months endedSeptember 30, 2012, as reflected in the accompanying consolidated statements of operations and described below, include the operating results of the acquired Faneuil business for the full period since Faneuil and the Company were under common control during the period. The operating results for the nine months endedSeptember 30, 2011 and 2012 include reclassifications related to the business segment changes discussed in the Consolidated Operating Results section above.

31

Harland Clarke Holdings Corp. and Subsidiaries

Net Revenues:

	Successor			Predecessor
	Nine Months Ended
	September 30,
	2012			2011
Consolidated Net Revenues:
Harland Clarke segment	$	866.4		$	852.7
Harland Financial Solutions segment	173.2			219.7
Scantron segment	89.0			93.0
Faneuil segment	115.4			52.3
Eliminations	(1.7		)	(0.4		)
Total	$	1,242.3		$	1,217.3

Net revenues increased by $25.0 million or 2.1%, to $1,242.3 million in the 2012 period from $1,217.3 million in the 2011 period.

Net revenues for the Harland Clarke segment increased by $13.7 million, or 1.6%, to $866.4 million in the 2012 period from $852.7 million in the 2011 period. This increase was primarily due to a net benefit of $23.4 million for non-cash fair value adjustments to deferred revenues and client incentives related to the MacAndrews Acquisition and an increase in revenues per unit that increased net revenues by $19.6 million. These increases were partially offset by volume declines, net of client additions and losses, in check and related products that reduced net revenues by $29.1 million.

Net revenues for the Harland Financial Solutions segment decreased by $46.5 million, or 21.2%, to $173.2 million in the 2012 period from $219.7 million in the 2011 period. In the 2012 period, the Harland Financial Solutions segment incurred a net charge of $38.5 million from non-cash fair value adjustments to deferred revenues related to the MacAndrews Acquisition. In addition, net revenues decreased by $5.5 million due to a decrease in software license revenues primarily as a result of the timing of license agreements with certain international customers, a $1.9 million decrease in software license revenues as a result of a continuing shift from perpetual licenses to term licenses, a $1.9 million decrease in one-time service revenues and a $0.8 million decrease in early termination fees. These decreases were partially offset by a $1.4 million increase in service bureau revenues and a $0.4 million increase in maintenance revenues.

Net revenues for the Scantron segment decreased by $4.0 million, or 4.3%, to $89.0 million in the 2012 period from $93.0 million in the 2011 period. The decrease in net revenues was primarily due to volume declines in forms, scanners and services that reduced revenues by $9.1 million. The decrease was partially offset by increased revenues for GlobalScholar and Spectrum K12 of $2.5 million and increased intersegment sales of $1.3 million. In the 2012 period, the Scantron segment incurred a net charge of $5.5 million for non-cash fair value adjustments to deferred revenues related to the MacAndrews Acquisition compared to a net charge of $6.8 million in the 2011 period for non-cash fair value adjustments to deferred revenues related to the acquisitions of the Spectrum K12 and GlobalScholar businesses, resulting in an increase in net revenues of $1.3 million.

Net revenues for the Faneuil segment increased by $63.1 million to $115.4 million in the 2012 period from $52.3 million in the 2011 period (during which only the HTS and MDT businesses were in the Faneuil segment) due to net revenues of $69.7 million attributable to the Faneuil Acquisition, partially offset by a decrease in net revenues of $6.6 million for the HTS and MDT businesses that were transferred from the Scantron segment. In the 2012 period, these businesses incurred a net charge of $4.7 million from non-cash fair value adjustments to deferred revenues related to the MacAndrews Acquisition. The remaining decrease was primarily due to declines in revenues related to installation and maintenance services.

Elimination of net revenues increased to $1.7 million in the 2012 period from $0.4 million in the 2011 period primarily due to intersegment sales of information technology services from the Scantron segment to the Harland Clarke segment.

32

Harland Clarke Holdings Corp. and Subsidiaries

Cost of Revenues:

	Successor			Predecessor
	Nine Months Ended
	September 30,
	2012			2011
Consolidated Cost of Revenues:
Harland Clarke segment	$	568.8		$	524.0
Harland Financial Solutions segment	94.1			89.7
Scantron segment	55.1			64.5
Faneuil segment	90.5			34.5
Eliminations	(1.7		)	(0.4		)
Total	$	806.8		$	712.3

Cost of revenues increased by $94.5 million, or 13.3%, to $806.8 million in the 2012 period from $712.3 million in the 2011 period.

Cost of revenues for the Harland Clarke segment increased by $44.8 million, or 8.5%, to $568.8 million in the 2012 period from $524.0 million in the 2011 period. In the 2012 period, the Harland Clarke segment incurred a net charge of $53.9 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $41.6 million increase in depreciation and amortization and a $12.3 million charge for other non-cash adjustments. The increase in cost of revenues was also a result of an increase in delivery expenses of $3.4 million. These increases were partially offset by decreases in other variable expenses related to volume declines of $7.3 million, depreciation and amortization not related to acquisition accounting of $2.5 million and other general overhead expenses of $2.1 million. Cost of revenues as a percentage of revenues for the Harland Clarke segment was 65.7% in the 2012 period compared to 61.5% in the 2011 period primarily due to the non-cash fair value adjustments related to the MacAndrews Acquisition.

Cost of revenues for the Harland Financial Solutions segment increased by $4.4 million, or 4.9%, to $94.1 million in the 2012 period from $89.7 million in the 2011 period. In the 2012 period, the Harland Financial Solutions segment incurred a net charge of $5.1 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $7.4 million increase in depreciation and amortization and a $2.3 million benefit for other non-cash adjustments. The increase in cost of revenues was also a result of an increase in telecom expense of $0.9 million primarily due to growth in service bureau business and an increase in internal software expense of $0.7 million. These increases were partially offset by decreases in depreciation and amortization not related to acquisition accounting of $0.9 million, a decrease in hardware expense of $0.8 million due to a change in product mix and a decrease in travel expenses of $0.3 million. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 54.3% in the 2012 period compared to 40.8% in the 2011 period primarily due to non-cash fair value adjustments related to the MacAndrews Acquisition that increased cost of revenues by $5.1 million and reduced net revenues by $38.5 million.

Cost of revenues for the Scantron segment decreased by $9.4 million, or 14.6%, to $55.1 million in the 2012 period from $64.5 million in the 2011 period. In the 2012 period, the Scantron segment incurred a net benefit of $16.4 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $16.5 million decrease in depreciation and amortization and a $0.1 million charge for other non-cash adjustments. Cost of revenues also decreased by $1.2 million due to lower volumes of forms and scanners sold. These decreases were partially offset by increased labor and other expenses of $5.7 million due to investments in implementation resources, $1.0 million of increased amortization expense resulting from new product releases and lower cost deferrals in the 2012 period of $0.5 million related to implementation services for revenues that have not yet been recognized. Cost of revenues as a percentage of revenues for the Scantron segment was 61.9% in the 2012 period compared to 69.4% in the 2011 period primarily due to lower non-cash fair value adjustments related to the MacAndrews Acquisition.

Cost of revenues for the Faneuil segment increased by $56.0 million to $90.5 million in the 2012 period from $34.5 million in the 2011 period (during which only the HTS and MDT businesses were in the Faneuil segment) due to cost of revenues of $57.3 million attributable to the Faneuil Acquisition, partially offset by a decrease in cost of revenues of $1.3 million for the HTS and MDT businesses that were transferred from the Scantron segment. In the 2012 period, these businesses incurred a net benefit of $1.6 million related to the MacAndrews Acquisition including a decrease in amortization of $2.3 million and a net charge of $0.7 million for other non-cash adjustments.

Elimination of cost of revenues increased to $1.7 million in the 2012 period from $0.4 million in the 2011 period primarily due to intersegment sales of information technology services from the Scantron segment to the Harland Clarke segment.

33

Harland Clarke Holdings Corp. and Subsidiaries

Selling, General and Administrative Expenses:

	Successor		Predecessor
	Nine Months Ended
	September 30,
	2012		2011
Consolidated Selling, General and Administrative Expenses:
Harland Clarke segment	$	136.5	$	139.5
Harland Financial Solutions segment	78.2		85.3
Scantron segment	54.6		59.1
Faneuil segment	17.0		8.8
Corporate	13.4		11.8
Total	$	299.7	$	304.5

Selling, general and administrative expenses decreased by $4.8 million, or 1.6%, to $299.7 million in the 2012 period from $304.5 million in the 2011 period.

Selling, general and administrative expenses for the Harland Clarke segment decreased by $3.0 million, or 2.2%, to $136.5 million in the 2012 period from $139.5 million in the 2011 period. In the 2012 period, the Harland Clarke segment incurred a net benefit of $2.7 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $4.0 million benefit for other non-cash adjustments and a $1.3 million increase in depreciation and amortization. The decrease was also due to a decrease in overhead costs of $2.3 million due in part to cost reduction initiatives implemented in the third quarter of 2012. These decreases were partially offset by increases in depreciation and amortization not related to acquisition accounting of $1.1 million, labor costs of $0.3 million, and selling expenses of $0.4 million. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment were 15.8% in the 2012 period compared to 16.4% in the 2011 period primarily due to the increase in net revenues in the 2012 period as discussed above, the benefit in other non-cash adjustments related to the MacAndrews Acquisition and cost reduction actions for selling, general and administrative expenses implemented in the third quarter of 2012.

Selling, general and administrative expenses for the Harland Financial Solutions segment decreased by $7.1 million, or 8.3%, to $78.2 million in the 2012 period from $85.3 million in the 2011 period. In the 2012 period, the Harland Financial Solutions segment incurred a net benefit of $3.9 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $4.8 million benefit for other non-cash adjustments and a $0.9 million increase in depreciation and amortization. The decrease was also due to lower costs of $3.6 million resulting from an increase in capitalized software development costs, a decrease in travel expenses of $1.0 million and a decrease in occupancy costs of $0.7 million. These decreases were partially offset by an increase in depreciation and amortization not related to acquisition accounting of $1.2 million, an increase in professional fees of $0.6 million and an increase in labor and benefit expenses of $0.5 million. Selling, general and administrative expenses as a percentage of revenues for the Harland Financial Solutions segment was 45.2% in the 2012 period compared to 38.8% in the 2011 period due to non-cash fair value adjustments related to the MacAndrews Acquisition that reduced net revenues by $38.5 million.

Selling, general and administrative expenses for the Scantron segment decreased by $4.5 million, or 7.6%, to $54.6 million in the 2012 period from $59.1 million in the 2011 period. The decrease was primarily due to cost savings of $4.6 million resulting from cost reductions and restructuring activities and lower costs of $2.7 million resulting from an increase in capitalized software development costs. These decreases were partially offset by lower cost deferrals of $1.2 million related to implementation services for revenues that have not yet been recognized and by an increased charge of $1.0 million for non-cash fair value adjustments related to the MacAndrews Acquisition, including a $0.8 million increase in depreciation and amortization and a $0.2 million increase for other non-cash adjustments. The decreases were also partially offset by expenses of $0.5 million for outside services related to projects to increase efficiencies. Selling, general and administrative expenses as a percentage of revenues for the Scantron segment was 61.3% in the 2012 period compared to 63.5% in the 2011 period due to the overall decrease in selling, general and administrative expenses discussed above.

Selling, general and administrative expenses for the Faneuil segment increased by $8.2 million to $17.0 million in the 2012 period from $8.8 million in the 2011 period (during which only the HTS and MDT businesses were in the Faneuil segment) due to selling, general and administrative expenses of $8.8 million attributable to the Faneuil Acquisition, partially offset by a decrease in selling, general and administrative expenses of $0.6 million for the HTS and MDT businesses that were transferred from the Scantron segment. The decrease in selling, general and administrative expenses for the HTS and MDT businesses was primarily due to cost reductions.

Corporate selling, general and administrative expenses increased by $1.6 million, or 13.6% to $13.4 million in the 2012 period from $11.8 million in the 2011 period primarily due to expenses associated with recent debt refinancing transactions of

34

Harland Clarke Holdings Corp. and Subsidiaries

$1.0 million and costs associated with the MacAndrews Acquisition.

Revaluation of Contingent Consideration

Operating expenses decreased by $0.6 million in the 2012 period due to a decrease in the fair value of accrued contingent consideration related to an acquisition in 2010, which resulted from a decrease in revenue projections that would trigger a payment. Operating expenses decreased by $24.6 million in the 2011 period due to a net decrease in the fair value of accrued contingent consideration primarily related to acquisitions in 2009 and 2010, which resulted from a decrease in revenue projections that would trigger a payment.

Asset Impairment Charges

During the 2012 period, the Company recorded non-cash impairment charges of $0.5 million for the Faneuil segment related to abandoned leasehold improvements resulting from the loss of a client and $0.2 million for the Harland Clarke segment related to assets that were determined to have limited future use. During the 2011 period, the Company recorded non-cash impairment charges of $1.9 million for the Scantron segment and $0.5 million for the Harland Clarke segment primarily related to assets that were determined to have limited future use.

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.

In the 2012 period, the Company recorded restructuring costs of $9.1 million for the Harland Clarke segment, $5.3 million for the Scantron segment, $1.8 million for the Faneuil segment and $0.4 million for the Harland Financial Solutions segment related to these plans. In the 2011 period, the Company recorded restructuring costs of $4.3 million for the Scantron segment, $3.7 million for the Harland Clarke segment and $0.3 million for the Harland Financial Solutions segment related to these plans.

Interest Income

Interest income was $0.7 million in the 2012 period compared to $0.3 million in the 2011 period. The increase in interest income was primarily due to an increase in notes receivable outstanding from a related party (see Note 16 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Interest Expense

Interest expense was $166.0 million in the 2012 period compared to $82.0 million in the 2011 period. The increase in interest expense was primarily due to fair value adjustments related to the MacAndrews Acquisition that resulted in $91.2 million of non-cash interest expense during the 2012 period and higher interest rates for extended term loans and senior secured notes, partially offset by a decrease in total debt outstanding.

Loss on Early Extinguishment of Debt

The loss on early extinguishment of debt of $34.2 million in the 2012 period relates to refinancing transactions. The loss consists of the write-off of unamortized acquisition accounting-related fair value discount, which was attributable to the MacAndrews Acquisition (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Other (Expense) Income, Net

Other (expense) income, net was an expense of $0.2 million in the 2012 period compared to income of $13.2 million in the 2011 period due to a loss in the 2012 period and a gain in the 2011 period on the sale of marketable securities.

Provision for Income Taxes

The Company's effective tax rate was a benefit of 38.5% in the 2012 period and a provision of 29.3% in the 2011 period. The benefit for income taxes in the 2012 period reflects tax credits not previously recorded, certain foreign income not subject to tax and a net release of a reserve for uncertain tax positions of $0.6 million, partially offset by foreign losses for which no benefit has been recorded. The effective tax rate for the 2011 period reflects $22.8 million of reductions of contingent consideration related to acquisitions that are not subject to income taxes. The effective tax rate for the 2011 period also reflects a release of a reserve for uncertain tax positions of $1.2 million and a release of a valuation allowance reserve for capital loss carryovers utilized of $0.9 million.

35

Harland Clarke Holdings Corp. and Subsidiaries

Liquidity and Capital Resources

Cash Flow Analysis

The following table summarizes the Company's historical cash flows:

	Successor			Predecessor
	Nine Months Ended
	September 30,
(In millions)	2012			2011
Cash Provided By (Used In):
Operating activities	$	164.5		$	173.5
Investing activities	(37.8		)	(165.0		)
Financing activities	(154.0		)	(15.1		)

The Company's net cash provided by operating activities during the nine months ended September 30, 2012 was $164.5 million compared to $173.5 million during the nine months ended September 30, 2011. The decrease in net cash provided by operating activities of $9.0 million was due to a decrease in cash flow from operations partially offset by a decrease in working capital. The decrease in cash flow from operations was primarily due to a decrease in net income which was partially offset by increased depreciation and amortization for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 and the non-cash loss on early extinguishment of debt in the nine months ended September 30, 2012. The decrease in working capital was primarily due to increases in deferred revenues and accounts payable and accrued liabilities and a decrease in inventories, partially offset by an increase in accounts receivable and an increase in income tax payments during the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011.

The Company's net cash used in investing activities was $37.8 million during the nine months ended September 30, 2012 compared to $165.0 million during the nine months ended September 30, 2011. The decrease in cash used in investing activities was primarily due to a decrease in cash expended on acquisitions and an increase in proceeds from the sale of marketable securities during the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011, partially offset by an increase in capital expenditures primarily due to the timing of expenditures and an increase in capitalized computer software development expenditures during the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011.

The Company's net cash used in financing activities was $154.0 million during the nine months ended September 30, 2012 compared to $15.1 million during the nine months ended September 30, 2011. The increase in net cash used in financing activities was primarily due to an increase in repayments of credit agreements and other borrowings of $309.2 million, a payment to parent of $33.8 million for the Faneuil Acquisition, dividends paid to parent of $25.8 million, debt issuance costs of $12.3 million related to refinancing activities and payments of $8.7 million related to derivative instruments during the nine months ended September 30, 2012, partially offset by proceeds of $225.6 million from the issuance of 9.75% senior secured notes and borrowings by Faneuil on a revolving credit facility with an affiliate of MacAndrews during the nine months ended September 30, 2012 as further described in Note 10 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. The consolidated statements of cash flows reflected borrowings of $25.0 million and repayments of $25.6 million made by Faneuil in January 2012.

Accounting guidance for acquisitions among entities under common control requires the $33.8 million of cash paid in excess of the carrying amount of the assets and liabilities assumed for the Faneuil Acquisition to be treated as an equity transaction with the parent in financing activities. The $36.2 million remaining balance of the $70.0 million purchase price is treated as consideration paid to purchase the affiliate in investing activities.

36

Harland Clarke Holdings Corp. and Subsidiaries

The Company's Consolidated Contractual Obligations and Commitments

There were no material changes to the Company's contractual obligations and commitments as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 during the three months ended September 30, 2012 except for obligations related to outstanding debt. On July 24, 2012, the Company completed certain refinancing transactions with respect to its credit agreement dated as of April 4, 2007, as amended on May 10, 2012. See Note 10 - Long-Term Debt to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. At September 30, 2012, contractual obligations related to outstanding debt 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)(6)	$	—	$	—	$	—	$	—	$	—
Senior secured term loans(2)(6)	1,421.8		73.5		861.4		486.9		—
Senior notes(3)(6)	475.6		—		475.6		—
Senior secured notes(4)(6)	235.0		—		—		—		235.0
Interest on long-term debt(5)(6)	412.0		120.0		184.9		88.0		19.1
Total	$	2,544.4	$	193.5	$	1,521.9	$	574.9	$	254.1

_______________________

⁽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 Quarterly Report on Form 10-Q.

⁽²⁾  The senior secured term loans will mature on June 30, 2014 and June 30, 2017, and the Company is required to make payments of principal in quarterly installments. See to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

⁽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 Quarterly Report on Form 10-Q.

⁽⁴⁾  The senior secured notes will mature on August 1, 2018. See to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

⁽⁵⁾  Interest on long-term debt assumes that all floating rates of interest remain the same as those in effect at September 30, 2012 and includes the effect of the Company's interest rate derivative arrangement on future cash payments for the remaining period of that derivative. The payments noted above also assume that the level of borrowing under the revolving credit facility remains at zero, as it was on September 30, 2012 , and all mandatory payments are made.

⁽⁶⁾  The credit facilities, senior notes and senior secured 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 Quarterly Report on Form 10-Q. Payments in the table above assume that only mandatory principal payments will be made and that there will be no prepayments.

Liquidity Assessment

The Company believes that its cash and cash equivalents, borrowings available under its credit agreement (as further discussed in Note 10 to the accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q) 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:

• 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 nine months ended September 30, 2012 and 2011, the Company incurred $47.0 million and $39.4 million of capital expenditures and $0.4 million and $0.2 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 fiscal year ending December 31, 2012.

• Contract Acquisition Payments. During the nine months ended September 30, 2012 and 2011, the Company made $36.6 million and $33.7 million of contract acquisition payments to its clients, respectively.

37

Harland Clarke Holdings Corp. and Subsidiaries

• 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 operations. During the nine months ended September 30, 2012 and 2011, the Company made $11.7 million and $10.3 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. The Company used cash on hand to fund the $70.0 million purchase price for the acquisition of Faneuil that was consummated on March 19, 2012. The Company used proceeds from the issuance of senior secured notes and cash on hand to fund the repayment of $280.2 million of extended term loans in July 2012.

Cash Flow 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 September 30, 2012, the Company had $92.2 million of availability under its revolving credit facility (after giving effect to the issuance of $7.8 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 are 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.

Critical Accounting Policies and Estimates

There were no material changes to the Company's Critical Accounting Policies and Estimates included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 as filed on March 21, 2012 with the United States Securities and Exchange Commission ("SEC"), which is available on the SEC's website at www.sec.gov.

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, 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 Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q. 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2011 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 and/or pricing pressure and reductions in information technology budgets which could result in adverse effects on our businesses;

• 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;

38

Harland Clarke Holdings Corp. and Subsidiaries

• 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 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;

• 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 and Faneuil segments;

• 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.

39

Harland Clarke Holdings Corp. and Subsidiaries

The Company encourages investors to read carefully the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 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 3. Quantitative and Qualitative Disclosures About Market Risk

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 September 30, 2012, the Company had $1,421.8 million of term loans outstanding under its credit agreement, $7.8 million of letters of credit outstanding under its revolving credit facility, $204.3 million of floating rate senior notes, $271.3 million of 9.50% fixed rate senior notes and $235.0 million of 9.75% senior secured notes. All of these outstanding loans bear interest at variable rates, with the exception of the $271.3 million of fixed rate senior notes and $235.0 million of senior secured 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 floating rate debt outstanding at September 30, 2012 would have resulted in an increase in its interest expense for the nine months ended September 30, 2012 of approximately $8.8 million, including the effect of the interest rate derivative transaction 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 an interest rate derivative transaction in 2010 in the form of a swap with a notional amount of $255.0 million currently outstanding as further described in Note 11 to the accompanying consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. This derivative currently swaps the underlying variable rate for a fixed rate of 1.264%.

Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2011 presents additional quantitative and qualitative disclosures about exposure to risk in foreign currency exchange rates. There have been no material changes to the disclosures regarding foreign currency exchange rates as of September 30, 2012.

Item 4. Controls and Procedures

(a)    Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.

(b)    Internal Control Over Financial Reporting. There have not been any 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 quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

40

Harland Clarke Holdings Corp. and Subsidiaries

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

A series of commercial borrowers in various states that allegedly obtained loans from financial institutions employing Harland Financial Solutions' ("HFS") LaserPro software 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.

Item 1A. Risk Factors

There was no material change to the Company's risk factors as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 during the three months ended September 30, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

There was no event of default upon senior securities during the three months ended September 30, 2012.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

No additional information need be presented.

41

Harland Clarke Holdings Corp. and Subsidiaries

Item 6. Exhibits

4.15	Credit Agreement, dated as of April 4, 2007, as amended by the First Amendment dated as of May 4, 2007 and the Second Amendment dated as of May 10, 2012, by and among the Lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent, Harland Clarke Holdings Corp. as Borrower and subsidiaries of Harland Clarke Holdings Corp. party thereto, as subsidiary Co-Borrowers (incorporated by reference to Exhibit 4.15 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.16	Indenture, dated as of July 24, 2012, by and among Harland Clarke Holdings Corp., as Issuer, the Co-Issuers named therein, the Guarantors named therein, and Wells Fargo Bank, National Association, as trustee and collateral agent (incorporated by reference to Exhibit 4.16 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.17	Purchase Agreement, dated as of July 17, 2012, by and among Harland Clarke Holdings Corp., as Issuer, certain Co-Issuers named therein, and the Initial Purchasers named therein (incorporated by reference to Exhibit 4.17 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.18	Security Agreement, dated as of July 24, 2012, by and among Harland Clarke Holdings Corp., certain subsidiaries of Harland Clarke Holdings Corp. named therein, and Wells Fargo Bank, National Association, as collateral trustee (incorporated by reference to Exhibit 4.18 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.19	Collateral Trust Agreement, dated as of July 24, 2012, by and among, Harland Clarke Holdings Corp., certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands Branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee (incorporated by reference to Exhibit 4.19 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.20	Amendment Agreement, dated as of May 10, 2012, by and among the Lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent, Harland Clarke Holdings Corp. as Borrower and subsidiaries of Harland Clarke Holdings Corp. party thereto, as subsidiary Co-Borrowers.
31.1	Certification of Charles T. Dawson, Chief Executive Officer, dated November 2, 2012.
31.2	Certification of Peter A. Fera, Jr., Chief Financial Officer, dated November 2, 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)
(1)	Furnished, not filed. Furnished with this Quarterly Report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, (iii) the Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2012 and 2011, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 and (v) Notes to Consolidated Financial Statements.

42

SIGNATURES

Pursuant to the requirements 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.

Date:	November 2, 2012	By:	/s/ Peter A. Fera, Jr.
			Peter A. Fera, Jr.
			Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date:	November 2, 2012	By:	/s/ J. Michael Riley
			J. Michael Riley
			Vice President and Controller (Principal Accounting Officer)

43

EXHIBIT INDEX

4.15	Credit Agreement, dated as of April 4, 2007, as amended by the First Amendment dated as of May 4, 2007 and the Second Amendment dated as of May 10, 2012, by and among the Lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent, Harland Clarke Holdings Corp. as Borrower and subsidiaries of Harland Clarke Holdings Corp. party thereto, as subsidiary Co-Borrowers (incorporated by reference to Exhibit 4.15 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.16	Indenture, dated as of July 24, 2012, by and among Harland Clarke Holdings Corp., as Issuer, the Co-Issuers named therein, the Guarantors named therein, and Wells Fargo Bank, National Association, as trustee and collateral agent (incorporated by reference to Exhibit 4.16 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.17	Purchase Agreement, dated as of July 17, 2012, by and among Harland Clarke Holdings Corp., as Issuer, certain Co-Issuers named therein, and the Initial Purchasers named therein (incorporated by reference to Exhibit 4.17 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.18	Security Agreement, dated as of July 24, 2012, by and among Harland Clarke Holdings Corp., certain subsidiaries of Harland Clarke Holdings Corp. named therein, and Wells Fargo Bank, National Association, as collateral trustee (incorporated by reference to Exhibit 4.18 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.19	Collateral Trust Agreement, dated as of July 24, 2012, by and among, Harland Clarke Holdings Corp., certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands Branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee (incorporated by reference to Exhibit 4.19 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).
4.20	Amendment Agreement, dated as of May 10, 2012, by and among the Lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent, Harland Clarke Holdings Corp. as Borrower and subsidiaries of Harland Clarke Holdings Corp. party thereto, as subsidiary Co-Borrowers.
31.1	Certification of Charles T. Dawson, Chief Executive Officer, dated November 2, 2012.
31.2	Certification of Peter A. Fera, Jr., Chief Financial Officer, dated November 2, 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)
(1)	Furnished, not filed. Furnished with this Quarterly Report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, (iii) the Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2012 and 2011, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 and (v) Notes to Consolidated Financial Statements.

44

EX-4.20

Exhibit 4.20

EXECUTION VERSION

HARLAND CLARKE HOLDINGS CORP.

AMENDMENT AGREEMENT

This AMENDMENT AGREEMENT, dated as of May 10, 2012 (this "Amendment Agreement"), is entered into by and among Harland Clarke Holdings Corp., a Delaware corporation (the "Borrower"), CA Acquisition Holdings, Inc., a Delaware corporation ("Holdings"), the Subsidiary Co-Borrowers, the Subsidiary Guarantors, the Issuing Bank, the Swingline Lender, the Lenders party hereto and Credit Suisse AG, Cayman Islands Branch ("Credit Suisse"), as administrative agent and collateral agent for the Lenders (in such capacities, the "Agent") and is made with reference to that certain Credit Agreement, dated as of April 4, 2007 (as amended by that certain first amendment dated May 4, 2007, the "Existing CreditAgreement"), entered into by and among the Borrower, the Subsidiary Co-Borrowers, the Lenders party thereto and the Agent and to that certain Guarantee and Collateral Agreement, dated as of May 1, 2007, entered into by and among Holdings, the Borrower, the Subsidiary Guarantors and the Agent. Capitalized terms used herein and not otherwise defined herein or otherwise amended hereby shall have the meanings ascribed to them in the Existing Credit Agreement.

A.Each existing Lender with outstanding Tranche B Term Loans (an "Existing Tranche B Term Loan Lender") that executes and delivers a signature page to this Amendment Agreement specifically checking the box labeled "Extending Lender" (an "Extending Tranche B Term Loan Lender") will be deemed (x) upon the Amendment Agreement Closing Date (as defined below) to have agreed to the terms of this Amendment Agreement and (y) upon the Second Amendment Effective Date (as defined below) to have (i) irrevocably offered for conversion its Tranche B Term Loans outstanding immediately prior to the Second Amendment Effective Date ("Existing Tranche B Term Loans"), or a portion thereof equal to the amount set forth on Schedule I to such Lender's signature page hereto (such Lender's "Submitted Amount"), into Tranche B-2 Term Loans, (ii) agreed that its Existing Tranche B Term Loans in the amount of its Submitted Amount will be converted into Tranche B-2 Term Loans (such Lender's "Converted Tranche B-2 Amount"), and (iii) agreed that the remainder of its Existing Tranche B Term Loans will be converted into Tranche B-1 Term Loans. Each Extending Lender that executes and delivers a signature page to this Amendment Agreement specifically checking the box labeled "Accepts the Payment" will be deemed to have irrevocably elected to receive its pro rata portion of any prepayment of Tranche B-2 Term Loans described in Section 4.A of this Amendment Agreement (each such Extending Lender, an "Opt-In Lender"). Each Extending Lender that executes and delivers a signature page to this Amendment Agreement specifically checking the box labeled "Rejects the Payment" (or who executes and delivers a signature page to this Amendment Agreement but fails to specifically check the box labeled "Accepts the Payment") will be deemed to have irrevocably elected not to receive its pro rata portion of any prepayment of Tranche B-2 Term Loans described in Section 4.A of this Amendment Agreement. Each Existing Tranche B Term Loan Lender that executes and delivers this Amendment Agreement solely in the capacity as an Existing Tranche B Term Loan Lender and not specifically as an Extending Tranche B Term Loan Lender, as set forth on such Lender's signature page hereto, shall continue its Existing Tranche B Term Loans as Tranche B-1 Term Loans and shall be deemed to have agreed to this Amendment Agreement, but will not be deemed by virtue of such execution and delivery to have agreed to convert any of its Existing Tranche B Term Loans into Tranche B-2 Term Loans.

B.Any other Lender that executes and delivers a signature page to this Amendment Agreement shall be deemed to have agreed to this Amendment Agreement.

C.The Required Lenders are willing to effect the amendments set forth herein, and the Extending Tranche B Term Loan Lenders are willing to convert their Existing Tranche B Term Loans into Tranche B-2 Term Loans, in each case, on the terms and subject to the conditions of this Amendment Agreement.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. AMENDMENTS

The parties hereto agree that (x) the Existing Credit Agreement (and, to the extent provided in Exhibit A, any exhibits and schedules thereto) shall be amended on the Second Amendment Effective Date such that, on such date, the terms set forth in the composite form of Credit Agreement attached hereto as Exhibit A (the "Amended Credit Agreement") shall replace the terms of the Existing Credit Agreement as in effect immediately prior to the Second Amendment Effective Date; provided, that for purposes of permitting the Borrower to effect the prepayment contemplated by Section 4.A. below, and, in connection therewith, to issue senior secured notes the net proceeds of which would be applied to such prepayment, the amendments to the Existing Credit Agreement set forth in the Amended Credit Agreement which add Sections 2.09(b)(i) and 6.01(b)(xxv) and the definition of "Credit Agreement Refinancing Indebtedness" and modify the definition of "Permitted Collateral Sharing Liens" and Section 2.08 (and any related modifications made to any of the defined terms used in such provisions and definitions) shall be effective on the Amendment Agreement Closing Date; provided, further that prior to the Second Amendment Effective Date the term "Tranche B-2 Term Loans" shall mean the Submitted Amount of all Existing Tranche B Term Loans of Extending Tranche B Term Loan Lenders, and "Tranche B-1 Term Loans" shall mean all Existing Tranche B Term Loans other than such Tranche B-2 Term Loans and (y) the Guarantee and Collateral Agreement shall be amended on the Second Amendment Effective Date such that, on such date, the terms set forth in the composite form of Guarantee and Collateral Agreement hereto as Exhibit B (the "Amended Guarantee and Collateral Agreement" and, together with the Amended Credit Agreement, the "Amended Loan Documents") shall replace the terms of the Guarantee and Collateral Agreement as in effect immediately prior to the Second Amendment Effective Date.

SECTION 2. REPRESENTATIONS AND WARRANTIES

A.Organization.

Each Loan Party has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into this Amendment Agreement.

B.    Due Authorization, Non-Contravention, etc.

The execution, delivery and performance by each Loan Party of this Amendment Agreement have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party charter documents or (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower, where such contravention, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

2

C.    Validity, etc.

This Amendment Agreement constitutes the legal, valid and binding obligation of each Loan Party enforceable against each Loan Party in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

D.    Credit Agreement Representations.

The representations and warranties set forth in the Loan Documents shall be true and correct in all material respects as of the Amendment Agreement Closing Date except (x) to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date and (y) to the extent any such representation and warranty is qualified as to "materiality" or "Material Adverse Effect", in which case such representations and warranties shall be true and correct in all respects.

SECTION 3. CONDITIONS TO AMENDMENT AGREEMENT CLOSING DATE.

The effectiveness of this Amendment Agreement (including the amendments to the Existing Credit Agreement contemplated by the proviso to Section 1 above, but not the other amendments contemplated by Section 1 above the effectiveness of which is also subject to Section 4 below), is subject to the satisfaction of the following conditions (the date on which such conditions are satisfied, the "Amendment Agreement Closing Date"):

A.Due Execution and Delivery.

Counterparts of this Amendment Agreement, duly executed by the Loan Parties, the Agent, the Issuing Bank, the Swingline Lender, the Lenders who comprise the Required Lenders and Extending Tranche B Term Loan Lenders representing an amount of Existing Tranche B Term Loans acceptable to the Borrower (but in no event less than fifty percent (50%) of the Tranche B Term Loans), shall have been delivered to the Agent.

B.Legal Opinions.

The Agent shall have received executed legal opinions from (i) Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel to the Co-Borrowers and Holdings, (ii) Troutman Sanders LLP, local Georgia counsel, and (iii) Schwabe Williamson & Wyatt, local Oregon counsel, in each case as to such matters as are reasonably required by the Agent (but excluding opinions relating to Mortgaged Properties), which opinions shall be reasonably satisfactory to the Agent.

Each Lender that submits an executed counterpart to this Amendment Agreement acknowledges and agrees that such submission is irrevocable in the absence of a modification to the terms and conditions of this Amendment Agreement (including Exhibit A hereto), in each case, that is (x) made after the submission of such Lender's executed counterpart and (y) materially adverse to the Lenders.

SECTION 4. CONDITIONS TO SECOND AMENDMENT EFFECTIVE DATE.

The effectiveness of the amendments to the Existing Credit Agreement and the Guarantee and Collateral Agreement contemplated by Section 1 above (other than those contemplated by the proviso

3

to Section 1 above which shall become effective on the Amendment Agreement Closing Date) is subject to the satisfaction of the following conditions (the date on which such conditions are satisfied, the "Second Amendment Effective Date"):

A.Prepayment of Tranche B -2 Term Loans.

On or prior to the date that is ninety (90) days (or such longer period as may be agreed in writing by the Extending Tranche B Lenders having more than 50% of the aggregate Submitted Amount of all Extending Tranche B Lenders) after the Amendment Agreement Closing Date, and concurrently with the conversion of the Submitted Amounts of Tranche B Term Loans of Extending Tranche B Term Loan Lenders into Tranche B-2 Term Loans, the Borrower shall prepay an aggregate principal amount equal to thirty percent (30%) of the aggregate principal amount of Tranche B-2 Term Loans of Opt-In Lenders outstanding on the Second Amendment Effective Date (after giving effect to such conversion) in accordance with Section 2.08 or 2.09, as applicable, of the Amended Credit Agreement.

B.Fees and Expenses.

The Agent shall have received (i) on behalf of each Lender who has executed this Amendment Agreement, a nonrefundable amendment fee equal to 0.05% of the sum of such Lender's Revolving Credit Commitment (whether used or unused) and outstanding Term Loans as of the Second Amendment Effective Date (provided that such amendment fee payable in respect of an Extending Tranche B Lender's Term Loans shall be determined (x) by treating such Lender's Submitted Amount on an as-converted basis and (y) after giving effect to the prepayment of Tranche B-2 Term Loans required under Section 4.A above), which fee shall be fully earned and payable upon the Second Amendment Effective Date, (ii) on behalf of each Lender who has executed this Amendment Agreement as an Extending Tranche B Term Loan Lender, a nonrefundable extension fee equal to 0.20% of the sum of such Lender's Term Loan Converted Tranche B-2 Amount after giving effect to the prepayment of Tranche B-2 Term Loans required under Section 4.A above, which fee shall be fully earned and payable upon the Second Amendment Effective Date, (iii) the fees payable to the joint lead arrangers pursuant to that certain Engagement Letter dated as of May 1, 2012 between the Borrower and Credit Suisse and (iv) to the extent invoiced before the Second Amendment Effective Date, reimbursement or other payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document (including all reasonable fees, charges and disbursements of Latham & Watkins LLP, counsel to the Agent), incurred in connection with this Amendment Agreement.

C.No Default.

No Default or Event of Default shall have occurred and be continuing either before or immediately after giving effect to this Amendment Agreement and the occurrence of the Second Amendment Effective Date.

Notwithstanding anything herein to the contrary, if the Borrower has not elected to satisfy the conditions set forth in this Section 4 by the time specified in Section 4.A., then the amendments referred to in this Section 4 shall not become effective and the fees set forth in clauses (i), (ii) and (iii) of Section 4.B shall not be payable.

4

SECTION 5. POST-EFFECTIVE DATE COVENANTS

The Loan Parties shall deliver, or cause to be delivered, to the Agent no later than the date occurring ninety (90) days after the Second Amendment Effective Date (or such later date as may be acceptable to the Agent in its reasonable discretion), to the extent determined by the Agent to be reasonably necessary or desirable, each of the following items:

(i)to the extent necessary, fully executed and notarized mortgage modifications (each, a "Mortgage Modification"), in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering each applicable Mortgaged Property;

(ii)an opinion of counsel (which counsel shall be reasonably satisfactory to the Agent) in each state in which a Mortgaged Property for which a Mortgage Modification is required, is located with respect to the enforceability of such Mortgage as modified by the form of Mortgage Modification to be recorded in such state with respect to the Mortgaged Properties located therein and such other matters as the Agent may reasonably request, in each case in form and substance reasonably satisfactory to the Agent; and

(iii)In the Agent's sole discretion, either (a) with respect to the lender's title insurance policy insuring each Mortgaged Property for which a Mortgage Modification is required, a mortgage modification endorsement with respect to such Mortgaged Property, executed by a title company reasonably satisfactory to the Agent, in form and substance reasonably satisfactory to the Agent, insuring that the validity, enforceability and priority of the applicable mortgage, and the effectiveness of such title policy, shall remain unchanged following recordation of the related Mortgage Modification or (b) a title search conducted by a title company reasonably acceptable to the Agent with respect to each applicable Mortgaged Property.

SECTION 6.ACKNOWLEDGEMENT AND CONSENT

Holdings and each Subsidiary Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Existing Credit Agreement and the Guarantee and Collateral Agreement and this Amendment Agreement and consents to the amendment of the Existing Credit Agreement and the Guarantee and Collateral Agreement effected pursuant to this Amendment Agreement. Holdings and each Subsidiary Guarantor hereby confirms that each Loan Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guarantee or secure, as the case may be, in accordance with the Loan Documents, as amended by this Amendment Agreement, the payment and performance of all "Obligations" under each of the Loan Documents to which is a party (as each such term is defined in the applicable Loan Document).

Holdings and each Subsidiary Guarantor acknowledges and agrees that each of the Loan Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment Agreement.

Holdings and each Subsidiary Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment Agreement, the consent of Holdings and the Subsidiary Guarantors are not required by the terms of the Existing Credit Agreement or any other Loan Document for the amendments to the Existing Credit Agreement or the Guarantee and Collateral Agreement effected pursuant to this Amendment Agreement and (ii) nothing in the Existing Credit Agreement, the

5

Guarantee and Collateral Agreement, this Amendment Agreement or any other Loan Document shall be deemed to require the consent of Holdings or such Subsidiary Guarantor, as the case may be, to any future amendments to the Existing Credit Agreement, the Guarantee and Collateral Agreement or any Amended Loan Document.

SECTION 7. MISCELLANEOUS

A.Binding Effect

This Amendment Agreement shall be binding upon and shall inure to the benefit of the parties hereto and each of the Lenders and their respective successors and assigns.

B.    Severability

Any provision of this Amendment Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

C.    Reference to Credit Agreement and Guarantee and Collateral Agreement

On and after the Amendment Agreement Closing Date, each reference in the Existing Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import referring to the Existing Credit Agreement, and each reference in the other Loan Documents to the "Credit Agreement," "thereunder," "thereof," or words of like import referring to the Credit Agreement shall mean and be a reference to the Existing Credit Agreement as amended by this Amendment Agreement. On and after the Amendment Agreement Closing Date, each reference in the Guarantee and Collateral Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import referring to the Guarantee and Collateral Agreement, and each reference in the other Loan Documents to the "Guarantee and Collateral Agreement," "thereunder," "thereof," or words of like import referring to the Guarantee and Collateral Agreement shall mean and be a reference to the Guarantee and Collateral Agreement as amended by this Amendment Agreement.

D.    Effect on Credit Agreement and other Loan Documents

Except as specifically amended by this Amendment Agreement, the Existing Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

E.    Execution

The execution, delivery and performance of this Amendment Agreement shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Agent or any Lender under the Existing Credit Agreement or any of the other Loan Documents.

F.    Headings

The various headings of this Amendment Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment Agreement or any provisions hereof.

6

G.    APPLICABLE LAW

THIS AMENDMENT AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

H.    Counterparts

This Amendment Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

I.    Loan Document

This Amendment Agreement is a Loan Document.

[The remainder of this page is intentionally left blank ]

7

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

HARLAND CLARKE HOLDINGS CORP.

By:/s/ Peter A. Fera, Jr.

Name:Peter A. Fera, Jr.

Title:Executive Vice President and Chief

Financial Officer

CA ACQUISITION HOLDINGS, INC.

By: /s/ Paul G. Savas

Name:Paul G. Savas

Title:Executive Vice President and Chief

Financial Officer

CHECKS IN THE MAIL, INC.

By:/s/ Peter A. Fera, Jr.

Name:Peter A. Fera, Jr.

Title:Executive Vice President and Chief

Financial Officer

SCANTRON CORPORATION

By:/s/ Peter A. Fera, Jr.

Name:Peter A. Fera, Jr.

Title:Executive Vice President and Chief

Financial Officer

HARLAND CLARKE CORP.

By:/s/ Peter A. Fera, Jr.

Name:Peter A. Fera, Jr.

Title:Executive Vice President and Chief

Financial Officer

HARLAND FINANCIAL SOLUTIONS, INC.

By:/s/ Peter A. Fera, Jr.

Name:Peter A. Fera, Jr.

Title:Executive Vice President and Chief

Financial Officer

JOHN H. HARLAND COMPANY OF PUERTO RICO

By:/s/ Peter A. Fera, Jr.

Name:Peter A. Fera, Jr.

Title:Executive Vice President and Chief

Financial Officer

HFS SCANTRON HOLDINGS CORP.

By:/s/ Peter A. Fera, Jr.

Name:Peter A. Fera, Jr.

Title:Executive Vice President and Chief

Financial Officer

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as Agent

By: /s/ Robert Hetu

Name: Robert Hetu

Title: Managing Director

By: /s/ Patrick Freytag

Name: Patrick Freytag

Title: Associate

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as Issuing Bank and Swingline Lender

By: /s/ Robert Hetu

Name: Robert Hetu

Title: Managing Director

By: /s/ Patrick Freytag

Name: Patrick Freytag

Title: Associate

LENDER:

_________________________________________    

(Name of Lender)

By:     _________________________________________    

Name:

Title:

For any Lender requiring a second signature line:

By:     _________________________________________    

Name:

Title:

The above-referenced institution is executing this signature page in the capacity indicated by the box or boxes checked below:¹ 

o Consenting Lender: agrees to the terms of the Amendment Agreement and the Amended Credit Agreement and elects notto convert its Existing Tranche B Term Loans, if any, into Tranche B-2 Term Loans.

OR

o Extending Lender:agrees to the terms of the Amendment Agreement and the Amended Credit Agreement and elects to convert its Existing Tranche B Term Loans (in each case, in the amounts and for the Loans and Commitments as set forth on Schedule I below) into Tranche B-2 Term Loans, as applicable, on the Second Amendment Effective Date, subject to the terms of the Amendment Agreement.

The Extending Lender named above hereby irrevocably accepts or rejects ALL (but not less than ALL) the prepayment referenced in Section 4.A of the Amendment Agreement.²

oAccepts the Payment

o    Rejects the Payment

__________________________

¹A Lender who executes this signature page but does not specifically check the box “Consenting Lender” or “ Extending Lender” below shall be deemed to have agreed to the Amendment Agreement as a Consenting Lender.

²A Lender's failure to indicate either acceptance or rejection of the prepayment will be deemed a rejection of the total amount of such prepayment.

Schedule I³ 

PLEASE NOTE THAT THE AMOUNTS SET FORTH BELOW FOR CURRENT AMOUNTS HELD MUST BE CONSISTENT WITH THE AMOUNT IN THE REGISTER MAINTAINED BY THE AGENT. If more than one Lender is listed on the signature page, please fill in the following information for each Lender listed on the signature page.

TERM LOANS

Lender Name Amount ($) Held of Existing Tranche B Term Loans Submitted Amount ($) of Existing Tranche B Term Loans Offered for Conversion into Tranche B-2 Term Loans

__________________________

³If any Lender's Submitted Amount is greater than the amount of Tranche B Term Loans of such Lender recorded in the Agent's Register, such Lender shall be deemed to have offered for conversion all of its Tranche B Term Loans into Tranche B-2 Term Loans.

EX-31.1

Exhibit 31.1

Harland Clarke Holdings Corp. and Subsidiaries

Certification of Chief 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 Quarterly Report on Form 10-Q 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 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 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:	November 2, 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 Chief 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 Quarterly Report on Form 10-Q 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 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 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:	November 2, 2012		/s/ Peter A. Fera, Jr.
		Name:	Peter A. Fera, Jr.
		Title:	Chief Financial Officer (Principal Financial Officer)

XML

Goodwill and Other Intangible Assets 1 (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Goodwill [Roll Forward]
Balance as of December 31, 2011	$ 758.6	[1]
Effect of exchange rate changes	0.1
Balance as of September 30, 2012	758.7
Harland Clark Segment [Member]
Goodwill [Roll Forward]
Balance as of December 31, 2011	415.0	[1]
Effect of exchange rate changes	0
Balance as of September 30, 2012	415.0
Harland Financial Solutions Segment [Member]
Goodwill [Roll Forward]
Balance as of December 31, 2011	281.8	[1]
Effect of exchange rate changes	0
Balance as of September 30, 2012	281.8
Scantron Segment [Member]
Goodwill [Roll Forward]
Balance as of December 31, 2011	40.1	[1]
Effect of exchange rate changes	0.1
Balance as of September 30, 2012	40.2
Faneuil Segment [Member]
Goodwill [Roll Forward]
Balance as of December 31, 2011	21.7	[1]
Effect of exchange rate changes	0
Balance as of September 30, 2012	$ 21.7

[1] * As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

XML

Marketable Securities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2011 Equity Securities [Member]	Sep. 30, 2012 Equity Securities [Member]	Dec. 31, 2011 Equity Securities [Member]	Sep. 30, 2012 US Treasury Securities [Member]	Dec. 31, 2011 US Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis		$ 0.1	$ 0.1		$ 56.5
Available-for-sale Securities, Gross Unrealized Gains		0	0		0.1
Available-for-sale Securities, Gross Unrealized Losses		0	0		0
Available-for-sale Securities, Fair Value Disclosure		0.1	0.1		56.6
Proceeds from sale of marketable securities	13.4			56.3
Available-for-sale Securities, Gross Realized Losses				0.2
Available-for-sale Securities, Gross Realized Gains	$ 13.2

XML

Fair Value Measurements 2 (Details) (Contingent consideration arrangements [Member], USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012 Successor [Member]	Sep. 30, 2012 Successor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2011 Predecessor [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period	$ 0.1	$ 0.6	$ 19.8	$ 8.2
Businesses acquired	0	0	0	17.0
Net changes in fair value	(0.1)	(0.6)	(19.5)	(24.6)
Payment of contingent consideration	0	0	0	(0.3)
Balance at end of period	$ 0	$ 0	$ 0.3	$ 0.3

XML

Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2012

Marketable Securities [Abstract]

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 September 30, 2012:
Corporate equity securities	$	0.1	$	—	$	—	$	0.1
Balance at December 31, 2011:
United States treasury securities	$	56.5	$	0.1	$	—	$	56.6
Corporate equity securities	0.1		—		—		0.1

XML

Inventories (Tables)

9 Months Ended

Sep. 30, 2012

Inventories [Abstract]

Inventories

Inventories consist of the following:

	September 30, 2012		December 31, 2011
Finished goods	$	7.1	$	12.4
Work-in-process	8.4		17.9
Raw materials	14.0		12.9
	$	29.5	$	43.2

XML

Transactions with Related Parties (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	9 Months Ended		9 Months Ended				3 Months Ended	9 Months Ended		3 Months Ended			9 Months Ended
	Sep. 30, 2012 MacAndrews [Member] Notes Receivable [Member]	Sep. 30, 2012 MacAndrews [Member] Notes Receivable [Member]	Dec. 27, 2011 MacAndrews [Member] Notes Receivable [Member]	Sep. 30, 2012 MacAndrews [Member] Directors And Officers Insurance Program [Member]	Sep. 30, 2011 MacAndrews [Member] Directors And Officers Insurance Program [Member]	Dec. 31, 2011 MacAndrews [Member] Directors And Officers Insurance Program [Member]	Sep. 30, 2012 Delphax [Member]	Sep. 30, 2011 Delphax [Member] Notes Receivable [Member]	Sep. 30, 2011 Delphax [Member] Notes Receivable [Member]	Dec. 31, 2008 Delphax [Member] Notes Receivable [Member]	Mar. 31, 2012 M & F WorldWide [Member]	Sep. 30, 2012 M & F WorldWide [Member] Services provided to the Company [Member]	Sep. 30, 2011 M & F WorldWide [Member] Services provided to the Company [Member]	Sep. 30, 2012 M & F WorldWide [Member] Services provided to the Company [Member]	Sep. 30, 2011 M & F WorldWide [Member] Services provided to the Company [Member]
Related Party Transaction [Line Items]
Related Party Prepaid Insurance				$ 0.7		$ 0
Related Party Prepaid Insurance In Other assets				1.2
Related Party Transaction, Purchases from Related Party				1.9	0.1
Maximum Lending Amount Per Agreement			30.0							14.0
Loans Receivable, Basis Spread on Variable Rate			2.00%
Notes Receivable, Related Parties, Noncurrent	30.0	30.0	30.0
Related Party Interest Income	0.2	0.6						0.1	0.2
Proceeds from Related Party Interest Received	0.2	0.6
Investment Owned, Balance, Shares							250,000
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party												0.6	0.6	2.0	2.0
Dividend paid to parent											$ 25.8

XML

Postretirement Defined Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012 Plans	Sep. 30, 2012 Successor [Member]	Sep. 30, 2012 Successor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2011 Predecessor [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of postretirement defined benefit plans	2
Minimum number of years of service at December 31, 2000 for retirees who retired prior to December 31, 2002 to be eligible to participate in the medical postretirement plan	20 years
Interest cost		$ 0.1	$ 0.3	$ 0.1	$ 0.4
Amortization of prior service credits		0	0	(0.1)	(0.3)
Net postretirement benefit cost		$ 0.1	$ 0.3	$ 0	$ 0.1

XML

Inventories (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Inventory, Net, Items Net of Reserve Alternative [Abstract]
Finished goods	$ 7.1	$ 12.4
Work in-process	8.4	17.9
Raw materials	14.0	12.9
Total	$ 29.5	$ 43.2

XML

Fair Value Measurements 3 (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value of Financial Instruments [Abstract]
Carrying Value of Long-term Debt	$ 1,839.3	$ 1,812.0
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value of Financial Instruments [Abstract]
Fair Value of Long-term Debt	1,932.3	1,821.4
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value of Financial Instruments [Abstract]
Carrying Value of Long-term Debt	$ 1,839.3	$ 1,812.0

XML

Acquisitions

9 Months Ended

Sep. 30, 2012

Acquisitions [Abstract]

Acquisitions

Acquisitions

Faneuil Acquisition

On March 19, 2012, the Company entered into a Stock Purchase Agreement pursuant to which the Company purchased 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil") for $70.0 in cash (the "Faneuil Acquisition") from affiliates of MacAndrews. The Company financed the Faneuil Acquisition with Harland Clarke Holdings' cash on hand. New Faneuil, through its wholly owned subsidiary, Faneuil, provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients across the United States.

Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Cash paid in excess of the carrying amount of the assets and liabilities assumed in the amount of $33.8 is treated as an equity transaction with the parent in accordance with accounting guidance for transactions among entities under common control.

The following table summarizes the historical cost of assets and liabilities assumed on March 19, 2012, the date of the Faneuil Acquisition:

Cash			$	2.3
Accounts receivable			11.8
Property, plant and equipment			10.3
Goodwill			13.0
Other intangible assets:
Customer relationships	$	0.2
Tradenames	0.8
Software	0.3
Total other intangible assets			1.3
Other assets			7.2
Total assets acquired			45.9
Deferred revenues			1.2
Capital leases			1.0
Other liabilities			7.5
Net assets acquired			$	36.2

The pro forma effects of the Faneuil Acquisition on the consolidated results of operations were not material and are not included in the Pro Forma Financial Information presented below.

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. The transaction was accounted for as a business combination. M & F Worldwide allocated its new equity basis amongst itself, the Company and another operating subsidiary of M & F Worldwide. M & F Worldwide had preliminarily allocated and pushed down $222.3 of the new equity basis to the Company as of the acquisition date. During the first quarter of 2012, M & F Worldwide revised the equity allocation amongst these entities, and, as a result, the equity allocated to the Company was reduced to $142.2. As required by accounting guidance for business combinations, this adjustment was recorded by the Company retrospectively as of the acquisition date resulting in changes to the preliminary amounts of goodwill and additional paid-in capital set forth in the Company's December 31, 2011 consolidated balance sheet included in its Annual Report on Form 10-K for the year ended December 31, 2011. This change had no effect on amounts reported in the consolidated statements of operations for 2011. 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 *			745.6
Other intangible assets:
Customer relationships	$	1,519.0
Tradenames	101.4
Technology	39.8
Total other intangible assets			1,660.2
Other assets *			149.0
Total assets acquired *			3,057.2
Deferred revenues			96.8
Long-term debt			1,787.4
Deferred tax liabilities *			722.4
Other liabilities *			308.4
Net assets acquired *			$	142.2

* As discussed above, amounts have been adjusted from the preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

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: $415.0 to Harland Clarke, $281.8 to Harland Financial Solutions, $40.1 to Scantron and $8.7 to Faneuil. Acquisition-related fees and expenses for the Company were not material.

As part of the application of fair value accounting for business combinations, the carrying value of inventory was increased by $17.5. The amount of the inventory fair value adjustment was expensed as additional non-cash cost of products sold as the fair-valued inventory was sold (of which $0.0 and $13.9 was expensed during the three and nine months endedSeptember 30, 2012, respectively).

Also as part of the application of fair value accounting for business combinations, the carrying values of 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 $27.2 and $91.2 was reflected as increased non-cash interest expense and $7.9 and $46.1 was reflected as reduced revenues during the three and nine months endedSeptember 30, 2012, respectively). The Company also wrote-off $34.2 of the non-cash fair value adjustment to long-term debt in the third quarter of 2012 as a result of the refinancing transactions (see Note 10).

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 period 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 period presented, nor does it purport to represent results of operations for future periods.

	Unaudited Pro Forma
	Three Months Ended		Nine Months Ended
	September 30, 2011		September 30, 2011
Net revenues	$	405.0	$	1,187.1
Operating income	80.1		150.8
Net income	22.4		7.7
Depreciation and amortization (excluding amortization of deferred financing fees)	48.2		147.9

In the pro forma information above, the results 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 estimated consideration of $153.4 as of the acquisition date. Contingent consideration would have been 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, 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, $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 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 nine months ended September 30, 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 were 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 12). As of September 30, 2012, 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 revenue being recognized over the related earnings period (of which $0.9 and $4.6 was reflected as a reduction of revenues for the three and nine months ended September 30, 2011).

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

XML

Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified					9 Months Ended						9 Months Ended			0 Months Ended								9 Months Ended				9 Months Ended					9 Months Ended								0 Months Ended				9 Months Ended						9 Months Ended		3 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 1,900.0 Senior Secured Credit Facilities [Member]	Dec. 31, 2011 1,900.0 Senior Secured Credit Facilities [Member]	Sep. 30, 2012 1,900.0 Senior Secured Credit Facilities [Member] Secured Debt [Member]	Sep. 30, 2012 Term Loan [Member] Secured Debt [Member]	Mar. 31, 2012 Term Loan [Member] Secured Debt [Member]	Mar. 31, 2011 Term Loan [Member] Secured Debt [Member]	Apr. 04, 2007 Term Loan [Member] Secured Debt [Member]	Jul. 24, 2012 Total Extended Term Loans [Member]	Sep. 30, 2012 Extended Term Loans [Member]	Jul. 24, 2012 Extended Term Loans [Member]	Dec. 31, 2011 Extended Term Loans [Member]	Jul. 24, 2012 Extended Term Loans [Member] Secured Debt [Member]	Sep. 30, 2012 Extended Term Loans [Member] Secured Debt [Member]	Jul. 24, 2012 Extended Term Loans [Member] Secured Debt [Member] Option 1 Rate Per Annum equal to the higher of [Member] Federal Funds Rate Plus 0.5% [Member]	Jul. 24, 2012 Extended Term Loans [Member] Secured Debt [Member] Option 1 Rate Per Annum equal to the higher of [Member] Prime Rate of Credit Suisse [Member]	Jul. 24, 2012 Extended Term Loans [Member] Secured Debt [Member] Option 2 Rate Per Annum equal to [Member] Reserve Adjusted LIBOR Interest Rate [Member]	Sep. 30, 2012 Non-Extended Term Loans [Member]	Jul. 24, 2012 Non-Extended Term Loans [Member]	Dec. 31, 2011 Non-Extended Term Loans [Member]	Sep. 30, 2012 Non-Extended Term Loans [Member] Secured Debt [Member]	Sep. 30, 2012 Non-Extended Term Loans [Member] Secured Debt [Member] Option 1 Rate Per Annum equal to the higher of [Member] Federal Funds Rate Plus 0.5% [Member]	Sep. 30, 2012 Non-Extended Term Loans [Member] Secured Debt [Member] Option 1 Rate Per Annum equal to the higher of [Member] Prime Rate of Credit Suisse [Member]	Sep. 30, 2012 Non-Extended Term Loans [Member] Secured Debt [Member] Option 2 Rate Per Annum equal to [Member] Reserve Adjusted LIBOR Interest Rate [Member]	Sep. 30, 2012 Revolving Credit Facility [Member] Secured Debt [Member]	Apr. 04, 2007 Revolving Credit Facility [Member] Secured Debt [Member]	Sep. 30, 2012 Letter of Credit [Member] Secured Debt [Member]	Apr. 04, 2007 Letter of Credit [Member] Secured Debt [Member]	Apr. 04, 2007 Subfacility Swing Loans [Member] Secured Debt [Member]	Sep. 30, 2012 Senior Subordinated Notes [Member]	Sep. 30, 2012 Senior Floating Rate Notes due 2015 [Member]	Dec. 31, 2011 Senior Floating Rate Notes due 2015 [Member]	May 01, 2007 Senior Floating Rate Notes due 2015 [Member]	May 01, 2007 Senior Floating Rate Notes due 2015 [Member] Applicable LIBOR Rate As Defined in the Indenture Subject To a Floor of 1.25%[Member]	Sep. 30, 2012 9.50% Senior Fixed Rate Notes due 2015 [Member]	Dec. 31, 2011 9.50% Senior Fixed Rate Notes due 2015 [Member]	May 01, 2007 9.50% Senior Fixed Rate Notes due 2015 [Member]	Jul. 24, 2012 9.75% Senior Secured Notes due 2018 [Member]	Sep. 30, 2012 9.75% Senior Secured Notes due 2018 [Member]	Dec. 31, 2011 9.75% Senior Secured Notes due 2018 [Member]	Jul. 24, 2012 9.75% Senior Secured Notes due 2018 [Member] Secured Debt [Member]	Sep. 30, 2012 Faneuil Revolving Credit Facility [Member]	Dec. 31, 2011 Faneuil Revolving Credit Facility [Member]	Sep. 30, 2012 Faneuil Revolving Credit Facility [Member] Faneuil Option 1 Rate Per Annum Equal To [Member] LIBOR [Member]	Sep. 30, 2012 Faneuil Revolving Credit Facility [Member] Faneuil Option 2 Rate Per Annum Equal To [Member] Prime Rate [Member]	Jan. 25, 2012 Faneuil Revolving Credit Facility [Member] Secured Debt [Member]	Dec. 31, 2011 Faneuil Revolving Credit Facility [Member] Secured Debt [Member]	Sep. 30, 2012 Revolving Credit Agreement With Macandrews & Forbes Group Llc [Member]	Jan. 25, 2012 Revolving Credit Agreement With Macandrews & Forbes Group Llc [Member]	Sep. 30, 2012 Capital lease obligations and other indebtedness [Member]	Dec. 31, 2011 Capital lease obligations and other indebtedness [Member]
Debt Instrument [Line Items]
Secured Debt			$ 1,421.8	$ 1,719.0						$ 973.0	$ 692.8	$ 692.8	$ 0						$ 729.0	$ 729.0	$ 1,719.0					$ 0														$ 235.0	$ 0		$ 0	$ 25.6
Subordinated Debt																																204.3	204.3			271.3	271.3
Capital Lease Obligations																																																			3.4	4.5
Unamortized original issue discount and acquisition accounting-related fair value discount	(296.5)	(412.7)
Debt and Capital Lease Obligations	1,839.3	1,812.0
Less current maturities	(75.0)	(45.1)
Long-term debt, net of current maturities	1,764.3	1,766.9
Springing maturity date expressed in number of days prior to the maturity date of 2015 Senior Notes														90 days
Repayments of Long-term Debt														280.2																													25.6
Annual Required Repayment Of A Loan Expressed As A Percentage Of The Original Principal Amount														10.00%								1.00%
Debt Instrument, Interest Rate at Period End															5.50%							2.70%										6.00%
Fixed Percentage added to Federal Funds Rate prior to Applicable Margin Percentage																0.50%							0.50%
Applicable Margin Percentage Added to Interest Rate Index to determine Interest Rate																4.25%	4.25%	5.25%					1.50%	1.50%	2.50%										4.75%										2.50%	(1.25%)
Original Loan Principal Amount									1,800.0
Line of Credit Facility, Maximum Borrowing Capacity																											100.0		60.0	30.0																	35.5			25.0
Debt Instrument, Unused Borrowing Capacity, Amount																										92.2
Letters of Credit Outstanding, Amount																												7.8
Aggregate Principal Amount Of Incremental Indebtedness Permitted Under Certain Circumstances					250.0
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage																										0.50%
Debt, Weighted Average Interest Rate																												2.51%
Percent of Outstanding Voting Stock	65.00%
Percentage Of Excess Cash Flow As Defined In The Credit Agreement					50.00%
Percentage Of The Net Proceeds Of Certain Issuances, Offerings Or Placements Of Debt Obligations					100.00%
Excess Cash Flow Prepayment of Long-Term Debt							12.5	3.5
Percentage Of Outstanding Principal Amount To Prepay If Change Of Control Ocurrs					101.00%																										101.00%
Percentage Of Principal Amount To Be Prepaid With The Proceeds Of Certain Asset Sales Under Certain Circumstances						100.00%																									100.00%
Debt Instrument, Face Amount																																		305.0				310.0				235.0
Debt Instrument, Interest Rate, Stated Percentage																																						9.50%	9.75%
Floor Interest Index Rate Percentage Of A Variable Interest Rate Instrument																																			1.25%
Amount Of Notes Required To Be Repurchased By The Company (If Greater Than 50% Of Excess Cash Flows) In The Event Secured Leverage Ratio Exceeds Certain Levels																																							15.0
Percentage Of Excess Cash Flows To Be Used To Repurchase Notes (If Greater Than $15 Million) In The Event Secured Leverage Ratio Exceeds Certain Levels																																							50.00%
Redemption Price Expressed As A Percentage of Principal Amount																																							100.00%
Line of Credit Facility, Interest Rate at Period End																																																3.25%
Extinguishment of Faneuil debt to parent																																																	25.0
Loss on early extinguishment of debt											34.2
Capital Leases, Interest Rate, Effective Percentage Rate Range, Minimum																																																			0.00%
Capital Leases, Interest Rate, Effective Percentage Rate Range, Maximum																																																			9.60%
Capital Leases Required Payments Due In Remainder of Year																																																			0.4
Capital Leases Required Payments Due In One Year																																																			1.5
Capital Leases Required Payments Due in Two Years																																																			1.3
Capital Leases Required Payments Due in Three Years																																																			0.1
Capital Leases Required Payments Due in Four Years																																																			$ 0.1

XML

Postretirement Defined Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2012

Postretirement Defined Benefit Plans [Abstract]

Net Periodic Postretirement Benefit Costs

The components of net periodic postretirement benefit cost for these plans consist of the following:

	Successor		Predecessor			Successor		Predecessor
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2012		2011			2012		2011
Interest cost	$	0.1	$	0.1		$	0.3	$	0.4
Amortization of prior service credits	—		(0.1		)	—		(0.3		)
Net postretirement benefit cost	$	0.1	$	—		$	0.3	$	0.1

XML

Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2012

Business Segment Information [Abstract]

Business Segment Information

Selected summarized financial information for the three months ended September 30, 2012 and 2011 is as follows:

	Harland Clarke(1)		Harland Financial Solutions(1)		Scantron(1)(2)			Faneuil(1)(3)		Corporate and Other(4)			Total
Successor
Three months ended September 30, 2012:
Product revenues, net	$	278.4	$	17.2	$	22.5		$	2.2	$	—		$	320.3
Service revenues, net	8.3		47.5		7.1			39.4		—			102.3
Intersegment revenues	—		—		0.6			—		(0.6		)	—
Operating income (loss)(5)	56.6		7.9		(5.2		)	2.9		(4.6		)	57.6
Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees)	37.2		10.0		4.3			2.9		—			54.4
Capital expenditures (excluding capital leases)	11.8		3.0		0.8			1.2		—			16.8
Predecessor
Three months ended September 30, 2011:
Product revenues, net	$	277.9	$	17.9	$	27.8		$	2.6	$	—		$	326.2
Service revenues, net	7.3		54.5		4.4			15.3		—			81.5
Intersegment revenues	0.1		—		—			0.1		(0.2		)	—
Operating income (loss)(5)	65.8		13.2		9.0			3.1		(3.5		)	87.6
Depreciation and amortization (excluding amortization of deferred financing fees)	23.0		6.8		9.1			2.1		—			41.0
Capital expenditures (excluding capital leases)	9.8		1.8		2.7			0.1		—			14.4

Selected summarized financial information for the nine months ended September 30, 2012 and 2011 is as follows:

	Harland Clarke(1)		Harland Financial Solutions(1)		Scantron(1)(2)			Faneuil(1)(3)		Corporate and Other(4)			Total
Successor
Nine months ended September 30, 2012:
Product revenues, net	$	841.1	$	48.8	$	67.8		$	5.4	$	—		$	963.1
Service revenues, net	25.2		124.4		19.8			109.8		—			279.2
Intersegment revenues	0.1		—		1.4			0.2		(1.7		)	—
Operating income (loss)(5)	151.8		1.1		(26.0		)	5.6		(13.4		)	119.1
Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees)	110.5		28.6		13.1			8.0		—			160.2
Capital expenditures (excluding capital leases)	32.0		6.3		5.4			3.3		—			47.0
Total assets:
September 30, 2012	$	1,409.5	$	381.2	$	188.4		$	112.2	$	874.2		$	2,965.5
December 31, 2011(6)	$	1,498.5	$	426.7	$	173.1		$	114.9	$	890.5		$	3,103.7
Predecessor
Nine months ended September 30, 2011:
Product revenues, net	$	831.4	$	56.1	$	80.7		$	7.1	$	—		$	975.3
Service revenues, net	21.2		163.6		12.3			44.9		—			242.0
Intersegment revenues	0.1		—		—			0.3		(0.4		)	—
Operating income (loss)(5)	185.8		45.4		(14.0		)	9.0		(11.8		)	214.4
Depreciation and amortization (excluding amortization of deferred financing fees)	69.0		19.9		26.7			6.4		—			122.0
Capital expenditures (excluding capital leases)	25.2		5.1		8.9			0.2		—			39.4

_______________________

(1) See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results.

(2) Includes results of the acquired GlobalScholar business from the date of acquisition.

(3) Includes results of the acquired Faneuil business from the date of common control (see Note 3).

(4) Total assets include goodwill of $758.7 and $758.6 as of September 30, 2012 and December 31, 2011, respectively.

(5) Includes gain from revaluation of contingent consideration arrangements of $0.1 and $19.5 for the three months ended September 30, 2012 and 2011, respectively, and $0.6 and $24.6 for the nine months endedSeptember 30, 2012 and 2011, respectively, restructuring costs of $11.6 and $2.3 for the three months ended September 30, 2012 and 2011, respectively, and $16.6 and $8.3 for the nine months endedSeptember 30, 2012 and 2011, respectively, (see Note 15) and non-cash impairment charges of $0.7 and $0.1 for the three months ended September 30, 2012 and 2011, respectively, and $0.7 and $2.4 for the nine months endedSeptember 30, 2012 and 2011, respectively.

(6) As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

XML

Derivative Financial Instruments (Details) (USD $) In Millions, unless otherwise specified			3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended							3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Successor [Member]	Sep. 30, 2012 Successor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2012 Interest Rate Swap [Member] Successor [Member]	Sep. 30, 2011 Interest Rate Swap [Member] Predecessor [Member]	Sep. 30, 2012 Interest Rate Swap [Member] Other current liabilities [Member]	Dec. 31, 2011 Interest Rate Swap [Member] Other current liabilities [Member]	Sep. 30, 2012 Interest Rate Swap [Member] Other liabilities [Member]	Dec. 31, 2011 Interest Rate Swap [Member] Other liabilities [Member]	Sep. 30, 2012 Designated as Hedging Instrument [Member] Interest Rate Swap [Member] Successor [Member]	Sep. 30, 2012 Designated as Hedging Instrument [Member] Interest Rate Swap [Member] Successor [Member]	Sep. 30, 2011 Designated as Hedging Instrument [Member] Interest Rate Swap [Member] Predecessor [Member]	Sep. 30, 2011 Designated as Hedging Instrument [Member] Interest Rate Swap [Member] Predecessor [Member]	Jun. 30, 2012 Designated as Hedging Instrument [Member] Interest Rate Swap [Member] June 30, 2009 3-Yr Interest Rate Contract Notional Amount $350 [Member]	Sep. 30, 2012 Designated as Hedging Instrument [Member] Interest Rate Swap [Member] September 30, 2009 3-Yr Interest Rate Contract Notional Amount $250 [Member]	Sep. 30, 2010 Designated as Hedging Instrument [Member] Interest Rate Swap [Member] June 30, 2010 3-Yr Interest Rate Contract Notional Amount $255 [Member]
Derivative [Line Items]
Derivative, Notional Amount																	$ 350.0	$ 250.0	$ 255.0
Derivative, Fixed Interest Rate																	2.353%	2.14%	1.264%
Derivative Liabilities, Current									2.0	6.1
Derivative Liabilities, Noncurrent											0	2.9
Loss recognized in other comprehensive income (effective portion)													0	0	1.6	6.5
Loss reclassified from other comprehensive income into interest expense (effective portion)													0	0.1	3.9	11.2
Loss recognized in interest expense (ineffective portion)													0.3	1.8	0	0
Balances and net changes in other comprehensive loss (income) related to derivative instruments [Roll Forward]
Balance at beginning of period	0	0.1					0.1	10.9
Loss reclassified from accumulated other comprehensive loss into interest expense, net of taxes			0	(0.1)	(2.3)	(6.8)	(0.1)	(6.8)
Net change in fair value of interest rate swaps, net of taxes			0	0	0.9	3.9	0	3.9
Balance at end of period	0	0.1					0	8.0
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, Tax			0	0	(1.6)	(4.4)	0	(4.4)
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Tax			$ 0	$ 0	$ 0.7	$ 2.6	$ 0	$ 2.6

XML

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2012

Debt Instruments [Abstract]

Long-Term Debt

	September 30, 2012			December 31, 2011
$1,900.0 Senior Secured Credit Facilities:
Extended Term Loans due 2017	$	692.8		$	—
Non-Extended Term Loans due 2014	729.0			1,719.0
Total $1,900.0 Senior Secured Credit Facilities	1,421.8			1,719.0
9.75% Senior Secured Notes due 2018	235.0			—
Senior Floating Rate Notes due 2015	204.3			204.3
9.50% Senior Fixed Rate Notes due 2015	271.3			271.3
Faneuil Revolving Credit Facility	—			25.6
Capital lease obligations and other indebtedness	3.4			4.5
Unamortized original issue discount and acquisition accounting-related fair value discount	(296.5		)	(412.7		)
	1,839.3			1,812.0
Less: current maturities	(75.0		)	(45.1		)
Long-term debt, net of current maturities	$	1,764.3		$	1,766.9

XML

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

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

Derivatives Designated as Cash Flow Hedging Instruments:	Balance Sheet Classification	September 30, 2012		December 31, 2011
Interest rate swaps	Other current liabilities	$	2.0	$	6.1
	Other liabilities	—		2.9

Derivative Financial Instruments

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		Successor		Predecessor
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Interest Rate Swaps:
Loss recognized in other comprehensive income (effective portion)	$	—	$	1.6	$	—	$	6.5
Loss reclassified from other comprehensive income into interest expense (effective portion)	—		3.9		0.1		11.2
Loss recognized in interest expense (ineffective portion)	0.3		—		1.8		—

Derivative Financial Instruments in Other Comprehensive Loss

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
	Nine Months Ended September 30,
Balances and Net Changes:	2012			2011
Balance at beginning of period	$	0.1		$	10.9
Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0 and $4.4	(0.1		)	(6.8		)
Net change in fair value of interest rate swaps, net of taxes of $0.0 and $2.6	—			3.9
Balance at end of period	$	—		$	8.0

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Reference is made to the significant accounting policies of the Company described in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

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.

Reclassifications

Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2012. These reclassifications had no effect on previously reported net income. 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.

Prior period amounts have been reclassified in Notes 6 and 7 in accordance with applicable accounting guidance to conform to the business segment changes described in Note 1 above. Prior period deferred revenues have been reclassified between current and non-current based on further review of fair value adjustments related to the MacAndrews Acquisition.

Recently Adopted Accounting Guidance

Effective January 1, 2012, the Company adopted amended guidance related to the requirement for an annual goodwill impairment test. The amendment provides entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This amendment affects testing steps only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows.

Effective January 1, 2012, the Company adopted amended 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 shareholder's equity. This amendment affects presentation and disclosure only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows.

Effective January 1, 2012, the Company adopted amended guidance related to fair value measurement. The guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between United States generally accepted accounting principles and International Financial Reporting Standards. The adoption of this amended guidance did not have a material effect on the Company's consolidated financial position, results of operations, cash flows or related disclosures.

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value of Assets and Liabilities Measured On A Recurring Basis

Fair values of financial instruments subject to recurring fair value measurements as of September 30, 2012 and December 31, 2011 are as follows:

	Balance at
	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Corporate equity securities	$	0.1	$	0.1	$	—	$	—
Liability for interest rate swaps	2.0		—		2.0		—

	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	0.6		—		—		0.6

Fair Value of Liabilities Measured On A Recurring Basis

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):

	Successor			Predecessor			Successor			Predecessor
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	0.1		$	19.8		$	0.6		$	8.2
Businesses acquired	—			—			—			17.0
Net changes in fair value	(0.1		)	(19.5		)	(0.6		)	(24.6		)
Payment of contingent consideration	—			—			—			(0.3		)
Balance at end of period	$	—		$	0.3		$	—		$	0.3

XML

Goodwill and Other Intangible Assets 2 (Details) (USD $) In Millions, unless otherwise specified			3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended					9 Months Ended				9 Months Ended				9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Successor [Member]	Sep. 30, 2012 Successor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2012 Tradenames [Member]	Dec. 31, 2011 Tradenames [Member]	Sep. 30, 2012 Customer relationships [Member]	Dec. 31, 2011 Customer relationships [Member]	Sep. 30, 2012 Customer relationships [Member] Minimum [Member]	Sep. 30, 2012 Customer relationships [Member] Maximum [Member]	Sep. 30, 2012 Tradenames [Member]	Dec. 31, 2011 Tradenames [Member]	Sep. 30, 2012 Tradenames [Member] Minimum [Member]	Sep. 30, 2012 Tradenames [Member] Maximum [Member]	Sep. 30, 2012 Software and other [Member]	Dec. 31, 2011 Software and other [Member]	Sep. 30, 2012 Software and other [Member] Minimum [Member]	Sep. 30, 2012 Software and other [Member] Maximum [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Useful Life (in years)											3 years	19 years			15 years	25 years			5 years	9 years
Gross Carrying Amount	$ 1,682.3	$ 1,671.6							$ 1,528.0	$ 1,528.0			$ 101.4	$ 101.4			$ 52.9	$ 42.2
Accumulated Amortization	116.2	13.4							102.4	12.3			4.0	0.1			9.8	1.0
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
Indefinite-lived intangible assets							0.8	0.8
Intangible Assets Excluding Goodwill [Abstract]
Gross Carrying Amount	1,683.1	1,672.4
Amortization of Intangible Assets			34.7	102.9	30.3	90.4
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
Three months ending December 31, 2012	34.8
Year ending December 31, 2013	127.8
Year ending December 31, 2014	119.5
Year ending December 31, 2015	111.8
Year ending December 31, 2016	$ 101.3

XML

Consolidated Balance Sheets (unaudited) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 74.5	$ 101.8
Marketable securities	0	56.6
Accounts receivable (net of allowances of $1.3 and $1.8)	142.5	121.3
Inventories	29.5	43.2
Income taxes receivable	0.7	15.7
Deferred tax assets	41.2	25.5
Prepaid expenses and other current assets	61.8	54.0
Total current assets	350.2	418.1
Property, plant and equipment	262.0	216.7
Less accumulated depreciation	(63.4)	(6.0)
Property, plant and equipment, net	198.6	210.7
Goodwill	758.7	758.6
Other intangible assets, net	1,566.9	1,659.0
Contract acquisition payments, net	13.7	0
Notes receivable - related party	30.0	30.0
Other assets	47.4	27.3
Total assets	2,965.5	3,103.7
Current liabilities:
Accounts payable	45.2	39.1
Deferred revenues	128.5	82.2
Current maturities of long-term debt	75.0	45.1
Accrued liabilities:
Salaries, wages and employee benefits	57.3	58.1
Income and other taxes payable	12.1	12.8
Customer incentives	54.6	57.4
Payable to parent	0	0.2
Other current liabilities	46.0	33.7
Total current liabilities	418.7	328.6
Long-term debt	1,764.3	1,766.9
Deferred tax liabilities	615.4	726.5
Deferred revenues	52.1	28.5
Other liabilities	87.4	105.9
Commitments and contingencies
Stockholder's equity:
Common stock - 200 shares authorized; par value $0.01; 100 shares issued and outstanding at September 30, 2012 and December 31, 2011	0	0
Additional paid-in capital	82.6	145.5
(Accumulated deficit) retained earnings	(55.2)	1.9
Accumulated other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments	0.3	0
Unrecognized amounts included in postretirement obligations	(0.1)	(0.1)
Derivative fair-value adjustments	0	(0.1)
Unrealized gains on investments, net	0	0.1
Total accumulated other comprehensive income (loss), net of taxes	0.2	(0.1)
Total stockholder's equity	27.6	147.3
Total liabilities and stockholder's equity	$ 2,965.5	$ 3,103.7

XML

Fair Value Measurements 1 (Details) (USD $) In Millions, unless otherwise specified				9 Months Ended
	Sep. 30, 2012 Equity Securities [Member]	Dec. 31, 2011 Equity Securities [Member]	Dec. 31, 2011 US Treasury Securities [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Faneuil Segment [Member]	Sep. 30, 2011 Fair Value, Measurements, Nonrecurring [Member] Scantron Segment [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Harland Clark Segment [Member]	Sep. 30, 2011 Fair Value, Measurements, Nonrecurring [Member] Harland Clark Segment [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Interest Rate Swap [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Interest Rate Swap [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] US Treasury Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member] Interest Rate Swap [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member] Interest Rate Swap [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member] US Treasury Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member] Interest Rate Swap [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member] Interest Rate Swap [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member] US Treasury Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member] Interest Rate Swap [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member] Interest Rate Swap [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member] Equity Securities [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member] US Treasury Securities [Member]
Nonrecurring Fair Value Measurements [Abstract]
Asset impairment charges				$ 0.5	$ 1.9	$ 0.2	$ 0.5
Recurring Fair Value Measurements [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0.1	0.1	56.6								0.1	0.1	56.6				0.1	0.1	56.6				0	0	0				0	0	0
Liability for interest rate swaps									2.0	9.0					0	0					2.0	9.0					0	0
Liability for contigent consideration related to business combinations								$ 0.6						$ 0						$ 0						$ 0.6

XML

Consolidated Statements of Cash Flows (unaudited) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Successor [Member]	Sep. 30, 2011 Predecessor [Member]
Operating activities
Net (loss) income	$ (49.6)	$ 103.1
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	57.3	31.6
Amortization of intangible assets	102.9	90.4
Amortization of debt fair value adjustments, original issue discount and deferred financing fees	92.0	5.2
Loss on early extinguishment of debt	34.2	0
Revaluation of contingent consideration	(0.6)	(24.6)
Loss (gain) on sale of marketable securities	0.2	(13.2)
Deferred income taxes	(127.6)	(31.8)
Asset impairments	0.7	2.4
Changes in operating assets and liabilities, net of effect of businesses acquired:
Accounts receivable	(21.6)	(3.6)
Inventories	13.7	1.9
Prepaid expenses and other assets	(12.5)	(3.1)
Contract acquisition payments, net	(13.7)	(9.3)
Accounts payable and accrued liabilities	8.6	(5.2)
Deferred revenues	70.0	15.9
Income and other taxes	8.6	14.6
Payable to parent	(0.2)	(0.6)
Other, net	2.1	(0.2)
Net cash provided by operating activities	164.5	173.5
Investing activities
Purchase of business, net of cash acquired	(36.2)	(134.9)
Additional purchase price consideration for previous acquisition	0	(0.2)
Repayments of related party notes receivable	0	1.0
Proceeds from sale of property, plant and equipment	0.1	0.1
Proceeds from sale of marketable securities	56.3	13.4
Capital expenditures	(47.0)	(39.4)
Capitalized interest	(0.4)	(0.2)
Computer software development	(10.6)	(4.8)
Net cash used in investing activities	(37.8)	(165.0)
Financing activities
Dividend paid to parent	(25.8)	0
Acquisition of business from parent	(33.8)	0
Payments of contingent consideration arrangements	0	(0.3)
Payments for derivative instruments	(8.7)	0
Issuance of notes	225.6	0
Borrowings on credit agreements	25.0	0
Repayments of credit agreements and other borrowings	(324.0)	(14.8)
Debt issuance costs	(12.3)	0
Net cash used in financing activities	(154.0)	(15.1)
Net decrease in cash and cash equivalents	(27.3)	(6.6)
Cash and cash equivalents at beginning of period	101.8	211.5
Cash and cash equivalents at end of period	74.5	204.9
Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized	60.8	70.0
Income taxes, net of refunds	87.4	60.1
Non cash financing activities:
Extinguishment of Faneuil debt to parent	$ 25.4	$ 0

XML

Description of Business and Basis of Presentation (Details)	9 Months Ended
	Sep. 30, 2012 Business_Segments
Description of Business and Basis of Presentation [Abstract]
Number of Reportable Segments	4

XML

Transactions with Related Parties

9 Months Ended

Sep. 30, 2012

Transactions with Related Parties [Abstract]

Transactions with Related Parties

Transactions with Related Parties

The Company participates in MacAndrews’ directors and officers insurance program, which covers the Company as well as MacAndrews and MacAndrews’ 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 premiums the Company could secure were it to secure its own coverage. At September 30, 2012, the Company recorded prepaid expenses and other assets of $0.7 and $1.2, respectively, relating to the directors and officers insurance program. At December 31, 2011, the Company recorded prepaid expenses of $0.0 related to the directors and officers insurance program. The Company paid $1.9 and $0.1 to MacAndrews during the nine months endedSeptember 30, 2012 and 2011, respectively, under the directors and officers insurance program. The Company also participates in certain other insurance programs with MacAndrews under which it pays premiums directly to the insurance broker.

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 September 30, 2012. Interest income of $0.2 and $0.6 was recorded and related payments were received during the three and nine months ended September 30, 2012, respectively.

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 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. Interest income of $0.1 and $0.2 was recorded during the three and nine months endedSeptember 30, 2011, respectively. The senior secured credit facility and note were paid in full and canceled on November 9, 2011.

Other

The Company expensed $0.6 and $2.0 during the three and nine months ended September 30, 2012, respectively, and $0.6 and $2.0 during the three and nine months ended September 30, 2011, respectively, for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses.

During the three months ended March 31, 2012, the Company paid cash dividends of $25.8 to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements.

On March 19, 2012, the Company completed the Faneuil Acquisition from affiliates of MacAndrews, its indirect parent (see Note 3). In connection with the Faneuil Acquisition, Faneuil's revolving credit facility with an affiliate of MacAndrews, which was entered into on January 25, 2012, was extinguished (see Note 10).

XML

Acquisitions (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended					3 Months Ended		9 Months Ended											3 Months Ended	9 Months Ended
	Sep. 30, 2012 Faneuil [Member]	Mar. 19, 2012 Faneuil [Member]	Mar. 19, 2012 Faneuil [Member] Tradename [Member]	Mar. 19, 2012 Faneuil [Member] Customer relationships [Member]	Mar. 19, 2012 Faneuil [Member] Software [Member]	Sep. 30, 2012 MacAndrews Acquisition [Member]	Sep. 30, 2011 MacAndrews Acquisition [Member]	Sep. 30, 2012 MacAndrews Acquisition [Member]	Sep. 30, 2011 MacAndrews Acquisition [Member]	Dec. 21, 2011 MacAndrews Acquisition [Member]		Dec. 21, 2011 MacAndrews Acquisition [Member] Customer relationships [Member]	Dec. 21, 2011 MacAndrews Acquisition [Member] Tradename [Member]	Dec. 21, 2011 MacAndrews Acquisition [Member] Technology [Member]	Dec. 21, 2011 MacAndrews Acquisition [Member] Harland Clark Segment [Member]	Dec. 21, 2011 MacAndrews Acquisition [Member] Harland Financial Solutions Segment [Member]	Dec. 21, 2011 MacAndrews Acquisition [Member] Scantron Segment [Member]	Dec. 21, 2011 MacAndrews Acquisition [Member] Faneuil Segment [Member]	Sep. 30, 2011 GlobalScholar [Member]	Sep. 30, 2012 GlobalScholar [Member]	Sep. 30, 2011 GlobalScholar [Member]	Jan. 03, 2011 GlobalScholar [Member]
Business Acquisition [Line Items]
Date of Acquisition	Mar. 19, 2012							Dec. 21, 2011												Jan. 03, 2011
Percentage of issued and outstanding shares acquired		100.00%
Cash paid for acquisition		$ 70.0																				$ 134.9
Paid in excess of the carrying amount of the assets and liabilities assumed	33.8
Business Acquisition, Purchase Price Allocation [Abstract]
Cash		2.3								185.2
Accounts receivables		11.8								110.1
Property, plant and equipment		10.3								207.1
Goodwill		13.0								745.6	[1]				415.0	281.8	40.1	8.7				93.1
Other intangible assets: [Abstract]
Amortizable intangible assets				0.2	0.3							1,519.0	101.4	39.8								92.3
Acquired Indefinite-lived Intangible Asset, Amount			0.8
Total other intangible assets		1.3								1,660.2
Other assets		7.2								149.0	[1]
Total assets acquired		45.9								3,057.2	[1]
Deferred revenues		1.2								96.8												11.6
Long-term debt										1,787.4
Capital leases		1.0
Deferred tax liabilities										722.4	[1]
Other liabilities		7.5								308.4	[1]
Net assets acquired		36.2								142.2	[1]
Preliminary allocation of pushed down equity basis										222.3
Expected tax deductible amount of goodwil										178.7												5.6
Expected tax deductible amount of intangible assets other than goodwill										142.7
Inventory Adjustments										17.5
Inventory fair value adjustment expensed						0		13.9
Debt discount recognized as part of the fair value of long term-debt										417.8
Unamortized fair value adjustment to deferred revenues										68.1												14.9
Non-cash interest expense						27.2		91.2
Amortization of deferred revenue fair value adjustment						7.9		46.1											0.9		4.6
Write-off of non-cash fair value adjusment to long-term debt resulting from financing transactions								34.2
Pro Forma Financial Information [Abstract]
Net revenues							405.0		1,187.1
Operating income							80.1		150.8
Net income							22.4		7.7
Depreciation and amortization (excluding amortization of deferred financing fees)							48.2		147.9
Pro forma estimated effective tax rate								39.00%
Fair value of contingent consideration																						18.5
Total estimated consideration																						153.4
Additional deferred income tax assets recorded																					2.9
Acquisition related transaction costs																				1.6
Acquisition related transaction costs																					0.2
Contingent consideration maximum potential cash payment																						20.0
Contingent consideration fair value																				0
Contigent consideration to be paid in 2012																				$ 0

[1] As discussed above, amounts have been adjusted from the preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011

XML

Acquisitions (Tables)

9 Months Ended

Sep. 30, 2012

Faneuil [Member]

Business Acquisition [Line Items]

Assets and Liabilities Assumed

The following table summarizes the historical cost of assets and liabilities assumed on March 19, 2012, the date of the Faneuil Acquisition:

Cash			$	2.3
Accounts receivable			11.8
Property, plant and equipment			10.3
Goodwill			13.0
Other intangible assets:
Customer relationships	$	0.2
Tradenames	0.8
Software	0.3
Total other intangible assets			1.3
Other assets			7.2
Total assets acquired			45.9
Deferred revenues			1.2
Capital leases			1.0
Other liabilities			7.5
Net assets acquired			$	36.2

MacAndrews Acquisition [Member]

Business Acquisition [Line Items]

Assets and Liabilities Assumed

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 *			745.6
Other intangible assets:
Customer relationships	$	1,519.0
Tradenames	101.4
Technology	39.8
Total other intangible assets			1,660.2
Other assets *			149.0
Total assets acquired *			3,057.2
Deferred revenues			96.8
Long-term debt			1,787.4
Deferred tax liabilities *			722.4
Other liabilities *			308.4
Net assets acquired *			$	142.2

Business Acquisition, Pro Forma 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 period 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 period presented, nor does it purport to represent results of operations for future periods.

	Unaudited Pro Forma
	Three Months Ended		Nine Months Ended
	September 30, 2011		September 30, 2011
Net revenues	$	405.0	$	1,187.1
Operating income	80.1		150.8
Net income	22.4		7.7
Depreciation and amortization (excluding amortization of deferred financing fees)	48.2		147.9

XML

Description of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2012

Description of Business and Basis of Presentation [Abstract]

Description of Business and Basis of Presentation

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, decreased revenues as a result of fair value adjustments to deferred revenues, increased depreciation and amortization as a result of the revaluation of assets and 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 (three and nine months endedSeptember 30, 2011) are presented in the accompanying consolidated financial statements as "Predecessor." The periods subsequent to the MacAndrews Acquisition (three and nine months endedSeptember 30, 2012) are presented in the accompanying consolidated financial statements as "Successor."

On March 19, 2012, the Company purchased Faneuil, Inc. ("Faneuil") from affiliates of MacAndrews (see Note 3). Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Faneuil is a separate business segment for financial reporting purposes.

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

During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The Harland Technology Services and Medical Device Tracking businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial and commercial institutions. 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, survey services and other business and home office products to consumers and businesses.

The Harland Financial Solutions segment provides technology products and related services to financial institutions 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 and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment and forms.

The Faneuil segment provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients. The Faneuil segment also provides patient information collection and tracking services, managed technical services and related field maintenance services to education, commercial, healthcare and governmental entities.

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 except for Faneuil as discussed above.

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 and 2018 Senior Secured Notes (as defined hereinafter) (see Note 10). Harland Clarke Holdings is a holding company and has no significant assets at September 30, 2012 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.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

All terms used but not defined elsewhere herein have the meaning ascribed to them in the Company's 2011 Annual Report on Form 10-K.

XML

Consolidated Balance Sheets (Parenthetical) (unaudited) (USD $) In Millions, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current Assets:
Allowance for doubtful accounts	$ 1.3	$ 1.8
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

XML

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

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 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 and expired on June 30, 2012. This hedge swapped 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 and expired on September 30, 2012. This hedge swapped 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.

Derivatives Designated as Cash Flow Hedging Instruments:	Balance Sheet Classification	September 30, 2012		December 31, 2011
Interest rate swaps	Other current liabilities	$	2.0	$	6.1
	Other liabilities	—		2.9

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 were ineffective during the three and nine months endedSeptember 30, 2012 and had no ineffective portions during the three and nine months endedSeptember 30, 2011. 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		Successor		Predecessor
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Interest Rate Swaps:
Loss recognized in other comprehensive income (effective portion)	$	—	$	1.6	$	—	$	6.5
Loss reclassified from other comprehensive income into interest expense (effective portion)	—		3.9		0.1		11.2
Loss recognized in interest expense (ineffective portion)	0.3		—		1.8		—

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
	Nine Months Ended September 30,
Balances and Net Changes:	2012			2011
Balance at beginning of period	$	0.1		$	10.9
Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0 and $4.4	(0.1		)	(6.8		)
Net change in fair value of interest rate swaps, net of taxes of $0.0 and $2.6	—			3.9
Balance at end of period	$	—		$	8.0

XML

Document and Entity Information Document	9 Months Ended
	Sep. 30, 2012	Oct. 31, 2012
Document Information
Entity Registrant Name	Harland Clarke Holdings Corp.
Entity Central Index Key	0001354752
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2012
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		100

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Fair Value Measurements

Nonrecurring Fair Value Measurements

During the nine months ended September 30, 2012, the Company recorded non-cash impairment charges of $0.5 for the Faneuil segment related to abandoned leasehold improvements resulting from the loss of a client and $0.2 for the Harland Clarke segment related to assets that were determined to have limited future use. During the nine months ended September 30, 2011, the Company recorded non-cash impairment charges of $1.9 for the Scantron segment and $0.5 for the Harland Clarke segment primarily related to assets that were determined to have limited future use.

Recurring Fair Value Measurements

Fair values of financial instruments subject to recurring fair value measurements as of September 30, 2012 and December 31, 2011 are as follows:

	Balance at
	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Corporate equity securities	$	0.1	$	0.1	$	—	$	—
Liability for interest rate swaps	2.0		—		2.0		—

	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	0.6		—		—		0.6

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 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):

	Successor			Predecessor			Successor			Predecessor
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	0.1		$	19.8		$	0.6		$	8.2
Businesses acquired	—			—			—			17.0
Net changes in fair value	(0.1		)	(19.5		)	(0.6		)	(24.6		)
Payment of contingent consideration	—			—			—			(0.3		)
Balance at end of period	$	—		$	0.3		$	—		$	0.3

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 September 30, 2012 and December 31, 2011 was approximately $1,932.3 and $1,821.4, respectively. The carrying value of long-term debt at September 30, 2012 and December 31, 2011 was $1,839.3 and $1,812.0 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.

XML

Consolidated Statements of Operations (unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012 Successor [Member]		Sep. 30, 2012 Successor [Member]		Sep. 30, 2011 Predecessor [Member]		Sep. 30, 2011 Predecessor [Member]
Product revenues, net	$ 320.3		$ 963.1		$ 326.2		$ 975.3
Service revenues, net	102.3		279.2		81.5		242.0
Total net revenues	422.6		1,242.3		407.7		1,217.3
Cost of products sold	192.7		608.5		196.5		591.5
Cost of services provided	67.4		198.3		41.5		120.8
Total cost of revenues	260.1		806.8		238.0		712.3
Gross profit	162.5		435.5		169.7		505.0
Selling, general and administrative expenses	92.7		299.7		99.2		304.5
Revaluation of contingent consideration	(0.1)		(0.6)		(19.5)		(24.6)
Asset impairment charges	0.7		0.7		0.1		2.4
Restructuring costs	11.6		16.6		2.3		8.3
Operating income	57.6	[1]	119.1	[1]	87.6	[1]	214.4	[1]
Interest income	0.2		0.7		0.1		0.3
Interest expense	(56.3)		(166.0)		(27.4)		(82.0)
Loss on early extinguishment of debt	(34.2)		(34.2)		0		0
Other (expense) income, net	0		(0.2)		0		13.2
(Loss) income before income taxes	(32.7)		(80.6)		60.3		145.9
(Benefit) provision for income taxes	(13.7)		(31.0)		13.7		42.8
Net (loss) income	$ (19.0)		$ (49.6)		$ 46.6		$ 103.1

[1] Includes gain from revaluation of contingent consideration arrangements of $0.1 and $19.5 for the three months ended September 30, 2012 and 2011, respectively, and $0.6 and $24.6 for the nine months ended September 30, 2012 and 2011, respectively, restructuring costs of $11.6 and $2.3 for the three months ended September 30, 2012 and 2011, respectively, and $16.6 and $8.3 for the nine months ended September 30, 2012 and 2011, respectively, (see Note 15) and non-cash impairment charges of $0.7 and $0.1 for the three months ended September 30, 2012 and 2011, respectively, and $0.7 and $2.4 for the nine months ended September 30, 2012 and 2011, respectively.

XML

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Intangible Assets

Goodwill and Other Intangible Assets

The change in carrying amount of goodwill by business segment for the nine months ended September 30, 2012 is as follows:

	Harland Clarke		Harland Financial Solutions		Scantron		Faneuil		Total
Balance as of December 31, 2011 *	$	415.0	$	281.8	$	40.1	$	21.7	$	758.6
Effect of exchange rate changes	—		—		0.1		—		0.1
Balance as of September 30, 2012	$	415.0	$	281.8	$	40.2	$	21.7	$	758.7

* As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011. As discussed in Note 1, the Company made business segment changes in the second quarter of 2012. Prior period amounts in the table above have been reclassified to conform to these business segment changes.

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

		Gross Carrying Amount				Accumulated Amortization
	Useful Life (in years)	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Amortized intangible assets:
Customer relationships	3 - 19	$	1,528.0	$	1,528.0	$	102.4	$	12.3
Tradenames	15 - 25	101.4		101.4		4.0		0.1
Software and other	5 - 9	52.9		42.2		9.8		1.0
		1,682.3		1,671.6		116.2		13.4
Indefinite-lived intangible assets:
Tradename		0.8		0.8		—		—
Total other intangible assets		$	1,683.1	$	1,672.4	$	116.2	$	13.4

Amortization expense was $34.7 and $102.9 for the three and nine months endedSeptember 30, 2012, respectively, and $30.3 and $90.4 for the three and nine months endedSeptember 30, 2011, respectively.

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

Three months ending December 31, 2012	$	34.8
Year ending December 31, 2013	127.8
Year ending December 31, 2014	119.5
Year ending December 31, 2015	111.8
Year ending December 31, 2016	101.3

XML

Assets Held For Sale

9 Months Ended

Sep. 30, 2012

Assets Held For Sale [Abstract]

Assets Held For Sale

Assets Held For Sale

At September 30, 2012, 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. The Company has made appropriate changes to its marketing plan and believes these facilities will be sold within 12 months.

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

	September 30, 2012		December 31, 2011
Land	$	1.0	$	1.0
Buildings and improvements	2.3		2.3
	$	3.3	$	3.3

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Use of Estimates

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.

Reclassifications

Reclassifications

Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2012.

XML

Marketable Securities

9 Months Ended

Sep. 30, 2012

Marketable Securities [Abstract]

Marketable Securities

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 September 30, 2012:
Corporate equity securities	$	0.1	$	—	$	—	$	0.1
Balance at December 31, 2011:
United States treasury securities	$	56.5	$	0.1	$	—	$	56.6
Corporate equity securities	0.1		—		—		0.1

The Company purchased United States treasury securities, which were to mature in 2014, during the fourth quarter of 2011. During the nine months endedSeptember 30, 2012, the Company sold its United States treasury securities for $56.3 in cash and recognized a loss of $0.2, which is included in other (expense) income, net in the accompanying consolidated statements of operations. During the nine months ended September 30, 2011, the Company sold certain corporate equity securities for $13.4 in cash and recognized a gain of $13.2, which was included in other (expense) income, net in the accompanying consolidated statements of operations.

XML

Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Income Taxes

Income Taxes

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 2009 through 2011 generally remain open. In addition, open tax years related to foreign jurisdictions remain subject to examination but are not considered material.

There are no events that have occurred since December 31, 2011 that had a material impact on amounts accrued for the Company's uncertain tax positions.

XML

Business Segment Information

9 Months Ended

Sep. 30, 2012

Business Segment Information [Abstract]

Business Segment Information

Business Segment Information

The Company has organized its business along four 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 office products to financial and commercial institutions, as well as consumers and other businesses. This segment operates primarily in the United States and Puerto Rico.

• Harland Financial Solutions segment — Provides technology products and related services to financial institutions 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 and governmental entities worldwide. This segment operates primarily in the United States, Canada and India.

• Faneuil segment — Provides call center services, back office operations, staffing services and toll collection services to government and regulated commercial clients and patient information collection and tracking, managed technical services and related field maintenance services to educational, commercial, healthcare and governmental entities. This segment operates primarily in the United States and Canada.

As discussed in Note 1, the Company made business segment changes in the second quarter of 2012. Prior period results in the tables below have been reclassified to conform to these business segment changes.

Selected summarized financial information for the three months ended September 30, 2012 and 2011 is as follows:

	Harland Clarke(1)		Harland Financial Solutions(1)		Scantron(1)(2)			Faneuil(1)(3)		Corporate and Other(4)			Total
Successor
Three months ended September 30, 2012:
Product revenues, net	$	278.4	$	17.2	$	22.5		$	2.2	$	—		$	320.3
Service revenues, net	8.3		47.5		7.1			39.4		—			102.3
Intersegment revenues	—		—		0.6			—		(0.6		)	—
Operating income (loss)(5)	56.6		7.9		(5.2		)	2.9		(4.6		)	57.6
Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees)	37.2		10.0		4.3			2.9		—			54.4
Capital expenditures (excluding capital leases)	11.8		3.0		0.8			1.2		—			16.8
Predecessor
Three months ended September 30, 2011:
Product revenues, net	$	277.9	$	17.9	$	27.8		$	2.6	$	—		$	326.2
Service revenues, net	7.3		54.5		4.4			15.3		—			81.5
Intersegment revenues	0.1		—		—			0.1		(0.2		)	—
Operating income (loss)(5)	65.8		13.2		9.0			3.1		(3.5		)	87.6
Depreciation and amortization (excluding amortization of deferred financing fees)	23.0		6.8		9.1			2.1		—			41.0
Capital expenditures (excluding capital leases)	9.8		1.8		2.7			0.1		—			14.4

Selected summarized financial information for the nine months ended September 30, 2012 and 2011 is as follows:

	Harland Clarke(1)		Harland Financial Solutions(1)		Scantron(1)(2)			Faneuil(1)(3)		Corporate and Other(4)			Total
Successor
Nine months ended September 30, 2012:
Product revenues, net	$	841.1	$	48.8	$	67.8		$	5.4	$	—		$	963.1
Service revenues, net	25.2		124.4		19.8			109.8		—			279.2
Intersegment revenues	0.1		—		1.4			0.2		(1.7		)	—
Operating income (loss)(5)	151.8		1.1		(26.0		)	5.6		(13.4		)	119.1
Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees)	110.5		28.6		13.1			8.0		—			160.2
Capital expenditures (excluding capital leases)	32.0		6.3		5.4			3.3		—			47.0
Total assets:
September 30, 2012	$	1,409.5	$	381.2	$	188.4		$	112.2	$	874.2		$	2,965.5
December 31, 2011(6)	$	1,498.5	$	426.7	$	173.1		$	114.9	$	890.5		$	3,103.7
Predecessor
Nine months ended September 30, 2011:
Product revenues, net	$	831.4	$	56.1	$	80.7		$	7.1	$	—		$	975.3
Service revenues, net	21.2		163.6		12.3			44.9		—			242.0
Intersegment revenues	0.1		—		—			0.3		(0.4		)	—
Operating income (loss)(5)	185.8		45.4		(14.0		)	9.0		(11.8		)	214.4
Depreciation and amortization (excluding amortization of deferred financing fees)	69.0		19.9		26.7			6.4		—			122.0
Capital expenditures (excluding capital leases)	25.2		5.1		8.9			0.2		—			39.4

_______________________

(1) See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results.

(2) Includes results of the acquired GlobalScholar business from the date of acquisition.

(3) Includes results of the acquired Faneuil business from the date of common control (see Note 3).

(4) Total assets include goodwill of $758.7 and $758.6 as of September 30, 2012 and December 31, 2011, respectively.

(5) Includes gain from revaluation of contingent consideration arrangements of $0.1 and $19.5 for the three months ended September 30, 2012 and 2011, respectively, and $0.6 and $24.6 for the nine months endedSeptember 30, 2012 and 2011, respectively, restructuring costs of $11.6 and $2.3 for the three months ended September 30, 2012 and 2011, respectively, and $16.6 and $8.3 for the nine months endedSeptember 30, 2012 and 2011, respectively, (see Note 15) and non-cash impairment charges of $0.7 and $0.1 for the three months ended September 30, 2012 and 2011, respectively, and $0.7 and $2.4 for the nine months endedSeptember 30, 2012 and 2011, respectively.

(6) As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

XML

Postretirement Defined Benefit Plans

9 Months Ended

Sep. 30, 2012

Postretirement Defined Benefit Plans [Abstract]

Postretirement Defined Benefit Plans

Postretirement Defined 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 20 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.

The components of net periodic postretirement benefit cost for these plans consist of the following:

	Successor		Predecessor			Successor		Predecessor
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2012		2011			2012		2011
Interest cost	$	0.1	$	0.1		$	0.3	$	0.4
Amortization of prior service credits	—		(0.1		)	—		(0.3		)
Net postretirement benefit cost	$	0.1	$	—		$	0.3	$	0.1

XML

Long-Term Debt

9 Months Ended

Sep. 30, 2012

Debt Instruments [Abstract]

Long-Term Debt

Long-Term Debt

	September 30, 2012			December 31, 2011
$1,900.0 Senior Secured Credit Facilities:
Extended Term Loans due 2017	$	692.8		$	—
Non-Extended Term Loans due 2014	729.0			1,719.0
Total $1,900.0 Senior Secured Credit Facilities	1,421.8			1,719.0
9.75% Senior Secured Notes due 2018	235.0			—
Senior Floating Rate Notes due 2015	204.3			204.3
9.50% Senior Fixed Rate Notes due 2015	271.3			271.3
Faneuil Revolving Credit Facility	—			25.6
Capital lease obligations and other indebtedness	3.4			4.5
Unamortized original issue discount and acquisition accounting-related fair value discount	(296.5		)	(412.7		)
	1,839.3			1,812.0
Less: current maturities	(75.0		)	(45.1		)
Long-term debt, net of current maturities	$	1,764.3		$	1,766.9

$1,900.0 Senior Secured Credit Facilities

Extended Term Loans

On July 24, 2012, an amendment (the "Amendment") entered into on May 10, 2012 by the Company to its credit agreement dated as of April 4, 2007 (the "Credit Agreement") became effective, thereby extending the maturity of $973.0 of term loans under the Credit Agreement (the "Extended Term Loans") from June 2014 to June 2017 (subject to a springing maturity 90 days prior to the maturity date of the Company's 2015 Senior Notes (as defined hereinafter) if such notes have not been repaid, extended or refinanced). The effectiveness of the Amendment was conditioned on, among other customary conditions, the repayment of $280.2 of the Extended Term Loans, which repayment was made with net proceeds from the issuance of the 2018 Senior Secured Notes (as defined hereinafter) and cash on hand. After giving effect to such repayment and the effectiveness of the Amendment, there were $692.8 of Extended Term Loans outstanding and $729.0 of non-extended term loans (the "Non-Extended Term Loans") outstanding. The Company is required to repay the Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 10% of the original extended amount after giving effect to the $280.2 prepayment thereof required as a condition precedent to the effectiveness of the Amendment. The Amendment also includes several covenants in addition to those covenants in the Credit Agreement. The weighted average interest rate on the principal amount of Extended Term Loans outstanding was 5.5% at September 30, 2012.

The Extended Term Loans 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 4.25% per annum; or

•A rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin of 5.25% per annum.

Non-Extended Term Loans

On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into 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 with respect to the Non-Extended Term Loans. The Company is required to repay the Non-Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount multiplied by the ratio of Non-Extended Term Loans outstanding on the effective date of the Amendment to the total Non-Extended Term Loans and Extended Term Loans outstanding on the effective date of the Amendment prior to giving effect to the prepayment required as a condition precedent to the effectiveness of the Amendment. 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 Non-Extended Term Loans outstanding was 2.7% at September 30, 2012. As of September 30, 2012, there were no outstanding borrowings under the Revolver and there was $92.2 available for borrowing (giving effect to the issuance of $7.8 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, the 2015 Senior Notes (as defined hereinafter), and the 2018 Senior Secured Notes (as defined hereinafter) allow the Company to incur substantial additional debt.

The Non-Extended Term Loans 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 2.51% 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, certain immaterial subsidiaries, subsidiaries that do not guarantee other debt of the Company and subject to certain other exceptions, 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 loans 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 loans 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. Excess cash flow payments of $12.5 and $3.5 were paid in March 2012 and 2011, respectively, for 2011 and 2010, respectively. Under the terms of the Credit Agreement such excess cash flow payments have been, or will be applied against other mandatory payments due in the same year of the excess cash flow payment.

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 "2015 Senior Notes 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 September 30, 2012. 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 and the 2018 Senior Secured Notes. The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries and certain other exceptions, are guarantors and may also be co-issuers under the 2015 Senior Notes.

The 2015 Senior Notes 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 2015 Senior Notes 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.

9.75% Senior Secured Notes due 2018

On July 24, 2012, the Company and Harland Clarke Corp., Harland Financial Solutions, Inc., Scantron Corporation and Checks in the Mail, Inc. (together, the "Co-Issuers") completed an offering of $235.0 aggregate principal amount of 9.75% Senior Secured Notes due 2018 (the "2018 Senior Secured Notes"). The Company used the net proceeds from the offering, together with cash on hand, to repay $280.2 aggregate principal amount of outstanding Extended Term Loans under its Credit Agreement.

The 2018 Senior Secured Notes were issued pursuant to an indenture, dated as of July 24, 2012 (the "2018 Senior Secured Notes Indenture"), among the Company, the Co-Issuers, certain of the Company's domestic subsidiaries that guarantee the 2018 Senior Secured Notes (the "Guarantors") and Wells Fargo Bank, National Association, as trustee and collateral agent (the "Trustee"). The Guarantors have guaranteed (the "Guarantees") the Company's and Co-Issuers' obligations under the 2018 Senior Secured Notes and the 2018 Senior Secured Notes Indenture on a senior secured basis. The 2018 Senior Secured Notes and the Guarantees are secured pursuant to a Security Agreement, dated as of July 24, 2012, by and among the Company, the Co-Issuers, the Guarantors and Wells Fargo Bank, National Association, as collateral trustee (the "Collateral Trustee") and a Collateral Trust Agreement, dated as of July 24, 2012, by and among the Company, certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee.

The 2018 Senior Secured Notes will mature on August 1, 2018. The Company will pay interest on the 2018 Senior Secured Notes at 9.75% per annum, semiannually in arrears on each of February 1 and August 1 to holders of record at the close of business on the immediately preceding January 15 and July 15 of each year, commencing on February 1, 2013.

The 2018 Senior Secured Notes are senior secured obligations of the Company and the Co-Issuers and the Guarantees are senior secured obligations of the Guarantors. The 2018 Senior Secured Notes and the Guarantees rank as follows: (i) secured on a first-priority basis, equally and ratably with all obligations of the Company, the Co-Issuers and the Guarantors that are secured by pari passu liens on the collateral, including their existing senior secured credit facilities; (ii) effectively junior to all of the Company's, Co-Issuers' and the Guarantors' obligations under any future asset-based revolving credit facility to the extent of the value of the current asset collateral held by the Company, the Co-Issuers and the Guarantors; (iii) structurally subordinated to any existing and future indebtedness and other liabilities of any existing and future subsidiaries of the Company that are not Guarantors; (iv) pari passu in right of payment with all of the existing and future senior indebtedness of the Company, the Co-Issuers and the Guarantors and effectively senior to the extent of the value of the collateral to any future unsecured indebtedness of the Company, the Co-Issuers and the Guarantors that is secured by liens on the collateral that are junior to the liens securing the Senior Secured Notes and the Guarantees or that is unsecured; and (v) senior in right of payment to any existing and future subordinated indebtedness of the Company, the Co-Issuers and the Guarantors.

The 2018 Senior Secured Notes and the Guarantees are secured on a first-priority basis, equally and ratably with the indebtedness under the Credit Agreement, by substantially all of the Company's, the Co-Issuers' and the Guarantors' assets, subject to certain exceptions and permitted liens.

Beginning with the fiscal year of the Company ending December 31, 2013, if the Company's secured leverage ratio exceeds certain levels, the Company will be required to offer to purchase an amount of the 2018 Senior Secured Notes equal to the greater of (1) $15.0 and (2) 50% of its excess cash flow for the applicable period, less any voluntary prepayments of 2018 Senior Secured Notes or credit facility indebtedness and certain mandatory prepayments made during the applicable period and subject to certain other exceptions, at a purchase price equal to 100% of the principal amount of the 2018 Senior Secured Notes, plus accrued and unpaid interest and additional interest. Upon the occurrence of a change of control or if the Company sells certain assets, the Company may be required to make an offer to purchase the 2018 Senior Secured Notes at certain specified prices.

The 2018 Senior Secured Notes Indenture contains covenants that, among other things, limit the Company's, the Co-Issuers' and the Guarantors' ability to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company's subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company's affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all assets; and (x) transfer or sell assets. These covenants are subject to important exceptions and qualifications. The 2018 Senior Secured Notes Indenture contains affirmative covenants and events of default that are customary for indentures governing high-yield debt securities.

Faneuil Revolving Credit Facilities

Faneuil had a $35.5 revolving credit facility (the "Revolving Credit Agreement"), which was to mature on June 1, 2012 and was paid in full on January 25, 2012. At December 31, 2011, Faneuil had $25.6 drawn under the Revolving Credit Agreement. The Revolving Credit Agreement allowed Faneuil to choose from two different interest rate options. The first option was LIBOR plus 2.5% per annum and the second option was Prime Rate minus 1.25%. The effective interest rate on the Revolving Credit Agreement at December 31, 2011 was 3.25%.

The Revolving Credit Agreement contained certain covenants and restrictions including covenants and restrictions related to change of control, mergers, dissolution, accounting methodology, indebtedness, dividends and distributions. The Revolving Credit Agreement was collateralized by substantially all of the assets of Faneuil, and was secured by a pledge of the shares of Faneuil's parent.

On January 25, 2012, Faneuil entered into a new $25.0, two-year, revolving credit agreement with MacAndrews & Forbes Group LLC, which is an indirect wholly owned subsidiary of MacAndrews. This revolver was drawn in full on January 25, 2012 and the proceeds, along with cash on hand, were used to pay in full the outstanding balance of $25.6 plus all accrued interest under the Revolving Credit Agreement. Faneuil terminated the Revolving Credit Agreement and it is no longer available for borrowing.

On March 19, 2012, in connection with the Faneuil Acquisition, Faneuil's $25.0 revolving credit facility with MacAndrews & Forbes Group LLC was extinguished and Faneuil no longer has any loans outstanding.

Loss on Early Extinguishment of Debt

In connection with the repayment of $280.2 of the Extended Term Loans in the third quarter of 2012, the Company recorded a loss on early extinguishment of debt of $34.2 resulting from the write-off of unamortized acquisition accounting-related fair value discount, which was attributable to the MacAndrews Acquisition (see Note 3).

Capital Lease Obligations and Other Indebtedness

The Company has outstanding capital lease obligations and other indebtedness with principal balances totaling $3.4 and $4.5 at September 30, 2012 and December 31, 2011, respectively. These obligations have imputed interest rates ranging from 0.0% to 9.6% and have required payments of $0.4 remaining in 2012, $1.5 in 2013, $1.3 in 2014, $0.1 in 2015 and $0.1 in 2016.

XML

Restructuring (Tables)

9 Months Ended

Sep. 30, 2012

Harland Clarke and Corporate [Member]

Restructuring Cost and Reserve [Line Items]

Components of Restructuring Accruals

The following table details the components of the Company's restructuring accruals under its plans related to the Harland Clarke segment and Corporate for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed		Paid in Cash			Non-Cash Utilization			Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	4.5	$	7.5	$	(5.1	)	$	—		$	6.9
Facilities closures and other costs	3.0		1.6		(1.4		)	(0.8		)	2.4
Total	$	7.5	$	9.1	$	(6.5	)	$	(0.8	)	$	9.3
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	1.5	$	2.0	$	(2.9	)	$	—		$	0.6
Facilities closures and other costs	4.5		1.7		(2.4		)	(0.2		)	3.6
Total	$	6.0	$	3.7	$	(5.3	)	$	(0.2	)	$	4.2

Harland Financial Solutions Segment [Member]

Restructuring Cost and Reserve [Line Items]

Components of Restructuring Accruals

The following table details the components of the Company's restructuring accruals related to the Harland Financial Solutions segment for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed			Paid in Cash			Non-Cash Utilization		Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	—	$	0.5		$	(0.4	)	$	—	$	0.1
Facilities and other costs	1.5		(0.1		)	(0.3		)	0.2		1.3
Total	$	1.5	$	0.4		$	(0.7	)	$	0.2	$	1.4
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	0.1	$	0.2		$	(0.3	)	$	—	$	—
Facilities and other costs	2.2		0.1			(0.6		)	—		1.7
Total	$	2.3	$	0.3		$	(0.9	)	$	—	$	1.7

Scantron Segment [Member]

Restructuring Cost and Reserve [Line Items]

Components of Restructuring Accruals

The following table details the components of the Company's restructuring accruals related to the Scantron segment for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed			Paid in Cash			Non-Cash Utilization		Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	2.0	$	4.1		$	(3.0	)	$	—	$	3.1
Facilities and other costs	1.4		1.2			(1.2		)	—		1.4
Total	$	3.4	$	5.3		$	(4.2	)	$	—	$	4.5
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	0.1	$	5.1		$	(2.8	)	$	—	$	2.4
Facilities and other costs	3.7		(0.8		)	(1.3		)	0.1		1.7
Total	$	3.8	$	4.3		$	(4.1	)	$	0.1	$	4.1

Faneuil Segment [Member]

Restructuring Cost and Reserve [Line Items]

Components of Restructuring Accruals

The following table details the components of the Company's restructuring accruals related to the Faneuil segment for the nine months ended September 30, 2012:

	Beginning Balance		Expensed		Paid in Cash			Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	—	$	0.9	$	—		$	0.9
Facilities and other costs	—		0.9		(0.3		)	0.6
Total	$	—	$	1.8	$	(0.3	)	$	1.5

XML

Restructuring

9 Months Ended

Sep. 30, 2012

Restructuring [Abstract]

Restructuring

Restructuring

Harland Clarke and Corporate

The Company adopted plans during 2010, 2011 and 2012 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 following table details the components of the Company's restructuring accruals under its plans related to the Harland Clarke segment and Corporate for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed		Paid in Cash			Non-Cash Utilization			Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	4.5	$	7.5	$	(5.1	)	$	—		$	6.9
Facilities closures and other costs	3.0		1.6		(1.4		)	(0.8		)	2.4
Total	$	7.5	$	9.1	$	(6.5	)	$	(0.8	)	$	9.3
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	1.5	$	2.0	$	(2.9	)	$	—		$	0.6
Facilities closures and other costs	4.5		1.7		(2.4		)	(0.2		)	3.6
Total	$	6.0	$	3.7	$	(5.3	)	$	(0.2	)	$	4.2

The non-cash utilization of $0.8 and $0.2 in 2012 and 2011, 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 $2.0 for costs related to these plans. The Company expects to make payments for severance and severance-related costs through 2014. 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.

During 2012, the Company adopted a plan to realize additional cost savings in the Harland Financial Solutions segment by eliminating certain selling, general and administrative expenses.

The following table details the components of the Company's restructuring accruals related to the Harland Financial Solutions segment for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed			Paid in Cash			Non-Cash Utilization		Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	—	$	0.5		$	(0.4	)	$	—	$	0.1
Facilities and other costs	1.5		(0.1		)	(0.3		)	0.2		1.3
Total	$	1.5	$	0.4		$	(0.7	)	$	0.2	$	1.4
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	0.1	$	0.2		$	(0.3	)	$	—	$	—
Facilities and other costs	2.2		0.1			(0.6		)	—		1.7
Total	$	2.3	$	0.3		$	(0.9	)	$	—	$	1.7

Scantron

The Company adopted plans during 2010, 2011 and 2012 to realize additional cost savings in the Scantron segment by consolidating certain operations and eliminating certain selling, general and administrative expenses.

The following table details the components of the Company's restructuring accruals related to the Scantron segment for the nine months ended September 30, 2012 and 2011:

	Beginning Balance		Expensed			Paid in Cash			Non-Cash Utilization		Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	2.0	$	4.1		$	(3.0	)	$	—	$	3.1
Facilities and other costs	1.4		1.2			(1.2		)	—		1.4
Total	$	3.4	$	5.3		$	(4.2	)	$	—	$	4.5
Predecessor:
Nine months ended September 30, 2011:
Severance and severance-related	$	0.1	$	5.1		$	(2.8	)	$	—	$	2.4
Facilities and other costs	3.7		(0.8		)	(1.3		)	0.1		1.7
Total	$	3.8	$	4.3		$	(4.1	)	$	0.1	$	4.1

Ongoing lease commitments related to these plans continue to February 2013. The Company expects to make payments for severance and severance-related costs through 2014.

Faneuil

The Company adopted a plan in 2012 to realize cost savings in the Faneuil segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. The following table details the components of the Company's restructuring accruals related to the Faneuil segment for the nine months ended September 30, 2012:

	Beginning Balance		Expensed		Paid in Cash			Ending Balance
Successor:
Nine months ended September 30, 2012:
Severance and severance-related	$	—	$	0.9	$	—		$	0.9
Facilities and other costs	—		0.9		(0.3		)	0.6
Total	$	—	$	1.8	$	(0.3	)	$	1.5

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.

XML

Assets Held For Sale (Tables) (Harland Clark Segment [Member])

9 Months Ended

Sep. 30, 2012

Harland Clark Segment [Member]

Assets Held For Sale [Line Items]

Assets Held For Sale

At September 30, 2012, 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

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

	September 30, 2012		December 31, 2011
Land	$	1.0	$	1.0
Buildings and improvements	2.3		2.3
	$	3.3	$	3.3

XML

Restructuring (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012 Successor [Member]	Sep. 30, 2012 Successor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2012 Harland Clarke and Corporate [Member]	Sep. 30, 2012 Harland Clarke and Corporate [Member] Successor [Member]	Sep. 30, 2012 Harland Clarke and Corporate [Member] Successor [Member] Employee Severance [Member]	Sep. 30, 2012 Harland Clarke and Corporate [Member] Successor [Member] Facilities closure and other costs [Member]	Sep. 30, 2011 Harland Clarke and Corporate [Member] Predecessor [Member]	Sep. 30, 2011 Harland Clarke and Corporate [Member] Predecessor [Member] Employee Severance [Member]	Sep. 30, 2011 Harland Clarke and Corporate [Member] Predecessor [Member] Facilities closure and other costs [Member]	Sep. 30, 2012 Harland Financial Solutions Segment [Member] Successor [Member]	Sep. 30, 2012 Harland Financial Solutions Segment [Member] Successor [Member] Employee Severance [Member]	Sep. 30, 2012 Harland Financial Solutions Segment [Member] Successor [Member] Facilities closure and other costs [Member]	Sep. 30, 2011 Harland Financial Solutions Segment [Member] Predecessor [Member]	Sep. 30, 2011 Harland Financial Solutions Segment [Member] Predecessor [Member] Employee Severance [Member]	Sep. 30, 2011 Harland Financial Solutions Segment [Member] Predecessor [Member] Facilities closure and other costs [Member]	Sep. 30, 2012 Scantron Segment [Member] Successor [Member]	Sep. 30, 2012 Scantron Segment [Member] Successor [Member] Employee Severance [Member]	Sep. 30, 2012 Scantron Segment [Member] Successor [Member] Facilities closure and other costs [Member]	Sep. 30, 2011 Scantron Segment [Member] Predecessor [Member]	Sep. 30, 2011 Scantron Segment [Member] Predecessor [Member] Employee Severance [Member]	Sep. 30, 2011 Scantron Segment [Member] Predecessor [Member] Facilities closure and other costs [Member]	Sep. 30, 2012 Faneuil Segment [Member] Successor [Member]	Sep. 30, 2012 Faneuil Segment [Member] Successor [Member] Employee Severance [Member]	Sep. 30, 2012 Faneuil Segment [Member] Successor [Member] Facilities closure and other costs [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance						$ 7.5	$ 4.5	$ 3.0	$ 6.0	$ 1.5	$ 4.5	$ 1.5	$ 0	$ 1.5	$ 2.3	$ 0.1	$ 2.2	$ 3.4	$ 2.0	$ 1.4	$ 3.8	$ 0.1	$ 3.7	$ 0	$ 0	$ 0
Expensed	11.6	16.6	2.3	8.3		9.1	7.5	1.6	3.7	2.0	1.7	0.4	0.5	(0.1)	0.3	0.2	0.1	5.3	4.1	1.2	4.3	5.1	(0.8)	1.8	0.9	0.9
Paid in Cash						(6.5)	(5.1)	(1.4)	(5.3)	(2.9)	(2.4)	(0.7)	(0.4)	(0.3)	(0.9)	(0.3)	(0.6)	(4.2)	(3.0)	(1.2)	(4.1)	(2.8)	(1.3)	(0.3)	0	(0.3)
Non-Cash Utilization						(0.8)	0	(0.8)	(0.2)	0	(0.2)	0.2	0	0.2	0	0	0	0	0	0	0.1	0	0.1
Ending Balance						9.3	6.9	2.4	4.2	0.6	3.6	1.4	0.1	1.3	1.7	0	1.7	4.5	3.1	1.4	4.1	2.4	1.7	1.5	0.9	0.6
Restructuring and Related Cost, Expected Cost					$ 2.0

XML

Business Segment Information (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended		3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended
	Sep. 30, 2012 Business_Segments	Dec. 31, 2011	Sep. 30, 2012 Successor [Member]		Sep. 30, 2012 Successor [Member]		Dec. 31, 2011 Successor [Member]		Sep. 30, 2011 Predecessor [Member]		Sep. 30, 2011 Predecessor [Member]		Sep. 30, 2012 Harland Clark Segment [Member] Successor [Member]		Sep. 30, 2012 Harland Clark Segment [Member] Successor [Member]		Dec. 31, 2011 Harland Clark Segment [Member] Successor [Member]	Sep. 30, 2011 Harland Clark Segment [Member] Predecessor [Member]		Sep. 30, 2011 Harland Clark Segment [Member] Predecessor [Member]		Sep. 30, 2012 Harland Financial Solutions Segment [Member] Successor [Member]		Sep. 30, 2012 Harland Financial Solutions Segment [Member] Successor [Member]		Dec. 31, 2011 Harland Financial Solutions Segment [Member] Successor [Member]	Sep. 30, 2011 Harland Financial Solutions Segment [Member] Predecessor [Member]		Sep. 30, 2011 Harland Financial Solutions Segment [Member] Predecessor [Member]		Sep. 30, 2012 Scantron Segment [Member] Successor [Member]		Sep. 30, 2012 Scantron Segment [Member] Successor [Member]		Dec. 31, 2011 Scantron Segment [Member] Successor [Member]	Sep. 30, 2011 Scantron Segment [Member] Predecessor [Member]		Sep. 30, 2011 Scantron Segment [Member] Predecessor [Member]		Sep. 30, 2012 Faneuil Segment [Member] Successor [Member]		Sep. 30, 2012 Faneuil Segment [Member] Successor [Member]		Dec. 31, 2011 Faneuil Segment [Member] Successor [Member]	Sep. 30, 2011 Faneuil Segment [Member] Predecessor [Member]		Sep. 30, 2011 Faneuil Segment [Member] Predecessor [Member]		Sep. 30, 2012 Corporate [Member] Successor [Member]		Sep. 30, 2012 Corporate [Member] Successor [Member]		Dec. 31, 2011 Corporate [Member] Successor [Member]	Sep. 30, 2011 Corporate [Member] Predecessor [Member]		Sep. 30, 2011 Corporate [Member] Predecessor [Member]
Business Segment Information [Abstract]
Number of Reportable Segments	4
Segment Reporting [Abstract]
Product revenues, net			$ 320.3		$ 963.1				$ 326.2		$ 975.3		$ 278.4	[1]	$ 841.1	[1]		$ 277.9	[1]	$ 831.4		$ 17.2	[1]	$ 48.8	[1]		$ 17.9	[1]	$ 56.1		$ 22.5	[1],[2]	$ 67.8	[1],[2]		$ 27.8	[1],[2]	$ 80.7	[2]	$ 2.2	[1],[3]	$ 5.4	[1],[3]		$ 2.6	[1],[3]	$ 7.1	[3]	$ 0		$ 0			$ 0		$ 0
Service revenues, net			102.3		279.2				81.5		242.0		8.3	[1]	25.2	[1]		7.3	[1]	21.2		47.5	[1]	124.4	[1]		54.5	[1]	163.6		7.1	[1],[2]	19.8	[1],[2]		4.4	[1],[2]	12.3	[2]	39.4	[1],[3]	109.8	[1],[3]		15.3	[1],[3]	44.9	[3]	0		0			0		0
Intersegment revenues			0		0				0		0		0	[1]	0.1	[1]		0.1	[1]	0.1		0	[1]	0	[1]		0	[1]	0		0.6	[1],[2]	1.4	[1],[2]		0	[1],[2]	0	[2]	0	[1],[3]	0.2	[1],[3]		0.1	[1],[3]	0.3	[3]	(0.6)		(1.7)			(0.2)		(0.4)
Operating income (loss)			57.6	[4]	119.1	[4]			87.6	[4]	214.4	[4]	56.6	[1],[4]	151.8	[1],[4]		65.8	[1],[4]	185.8	[4]	7.9	[1],[4]	1.1	[1],[4]		13.2	[1],[4]	45.4	[4]	(5.2)	[1],[2],[4]	(26.0)	[1],[2],[4]		9.0	[1],[2],[4]	(14.0)	[2],[4]	2.9	[1],[3],[4]	5.6	[1],[3],[4]		3.1	[1],[3],[4]	9.0	[3],[4]	(4.6)	[4]	(13.4)	[4]		(3.5)	[4]	(11.8)	[4]
Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees)			54.4		160.2				41.0		122.0		37.2	[1]	110.5			23.0	[1]	69.0		10.0	[1]	28.6			6.8	[1]	19.9		4.3	[1],[2]	13.1			9.1	[1],[2]	26.7		2.9	[1],[3]	8.0			2.1	[1],[3]	6.4		0		0			0		0
Capital expenditures (excluding capital leases)			16.8		47.0				14.4		39.4		11.8	[1]	32.0	[1]		9.8	[1]	25.2		3.0	[1]	6.3	[1]		1.8	[1]	5.1		0.8	[1],[2]	5.4	[1],[2]		2.7	[1],[2]	8.9	[2]	1.2	[1],[3]	3.3	[1],[3]		0.1	[1],[3]	0.2	[3]	0		0			0		0
Assets	2,965.5	3,103.7	2,965.5		2,965.5		3,103.7	[5]					1,409.5		1,409.5		1,498.5					381.2		381.2		426.7					188.4	[2]	188.4	[2]	173.1					112.2	[3]	112.2	[3]	114.9					874.2	[6]	874.2	[6]	890.5
Segment Reporting Information, Additional Information [Abstract]
Goodwill	758.7	758.6	758.7		758.7		758.6
Gains from revaluation of contingent consideration arrangements			0.1		0.6				19.5		24.6
Restructuring costs			11.6		16.6				2.3		8.3													0.4					0.3				5.3					4.3				1.8
Asset impairment charges			$ 0.7		$ 0.7				$ 0.1		$ 2.4

[1] See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results.

[2] Includes results of the acquired GlobalScholar business from the date of acquisition.

[3] Includes results of the acquired Faneuil business from the date of common control (see Note 3).

[4] Includes gain from revaluation of contingent consideration arrangements of $0.1 and $19.5 for the three months ended September 30, 2012 and 2011, respectively, and $0.6 and $24.6 for the nine months ended September 30, 2012 and 2011, respectively, restructuring costs of $11.6 and $2.3 for the three months ended September 30, 2012 and 2011, respectively, and $16.6 and $8.3 for the nine months ended September 30, 2012 and 2011, respectively, (see Note 15) and non-cash impairment charges of $0.7 and $0.1 for the three months ended September 30, 2012 and 2011, respectively, and $0.7 and $2.4 for the nine months ended September 30, 2012 and 2011, respectively.

[5] As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

[6] Total assets include goodwill of $758.7 and $758.6 as of September 30, 2012 and December 31, 2011, respectively.

XML

Consolidated Statements of Comprehensive (Loss) Income (unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012 Successor [Member]	Sep. 30, 2012 Successor [Member]	Sep. 30, 2011 Predecessor [Member]	Sep. 30, 2011 Predecessor [Member]
Net (loss) income	$ (19.0)	$ (49.6)	$ 46.6	$ 103.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	0.7	0.3	(1.4)	(0.2)
Changes in derivative instruments:
Changes in fair value of interest rate swaps during period	0	0	(0.9)	(3.9)
Less reclassification adjustments for loss included in net (loss) income	0	0.1	2.3	6.8
Net changes in derivative instruments	0	0.1	1.4	2.9
Unrealized (losses) gains on investments:
Unrealized (losses) gains on investments during period	0	(0.2)	0	0.3
Less reclassification adjustment for amounts included in net (loss) income	0	0.1	0	(8.1)
Net change in unrealized (losses) gains on investments	0	(0.1)	0	(7.8)
Changes in postretirement benefit obligations recognized in other comprehensive income:
Amortization of prior service credits included in net income	0	0	(0.1)	(0.2)
Net change in postretirement benefit obligation recognized in other comprehensive income	0	0	(0.1)	(0.2)
Total other comprehensive income (loss), net of tax	0.7	0.3	(0.1)	(5.3)
Comprehensive (loss) income	(18.3)	(49.3)	46.5	97.8
Changes in derivative instruments:
Changes in fair value of interest rate swaps during period	0	0	0.7	2.6
Less reclassification adjustments for loss included in net (loss) income	0	0	(1.6)	(4.4)
Unrealized (losses) gains on investments:
Unrealized (losses) gains on investments during period	0	0	0	(0.2)
Less reclassification adjustment for amounts included in net (loss) income	0	(0.1)	0	5.1
Changes in postretirement benefit obligations recognized in other comprehensive income:
Amortization of prior service credits included in net income	0	0	0	0.1
Total net tax (expense) benefit included in other comprehensive (loss) income	$ 0	$ (0.1)	$ (0.9)	$ 3.2

XML

Inventories

9 Months Ended

Sep. 30, 2012

Inventories [Abstract]

Inventories

Inventories

Inventories consist of the following:

	September 30, 2012		December 31, 2011
Finished goods	$	7.1	$	12.4
Work-in-process	8.4		17.9
Raw materials	14.0		12.9
	$	29.5	$	43.2

XML

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill and Other Intangible Assets [Abstract]

Goodwill

The change in carrying amount of goodwill by business segment for the nine months ended September 30, 2012 is as follows:

	Harland Clarke		Harland Financial Solutions		Scantron		Faneuil		Total
Balance as of December 31, 2011 *	$	415.0	$	281.8	$	40.1	$	21.7	$	758.6
Effect of exchange rate changes	—		—		0.1		—		0.1
Balance as of September 30, 2012	$	415.0	$	281.8	$	40.2	$	21.7	$	758.7

* As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

Other Intangible Assets

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

		Gross Carrying Amount				Accumulated Amortization
	Useful Life (in years)	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Amortized intangible assets:
Customer relationships	3 - 19	$	1,528.0	$	1,528.0	$	102.4	$	12.3
Tradenames	15 - 25	101.4		101.4		4.0		0.1
Software and other	5 - 9	52.9		42.2		9.8		1.0
		1,682.3		1,671.6		116.2		13.4
Indefinite-lived intangible assets:
Tradename		0.8		0.8		—		—
Total other intangible assets		$	1,683.1	$	1,672.4	$	116.2	$	13.4

Estimated Amortization Expense

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

Three months ending December 31, 2012	$	34.8
Year ending December 31, 2013	127.8
Year ending December 31, 2014	119.5
Year ending December 31, 2015	111.8
Year ending December 31, 2016	101.3

XML

Assets Held For Sale (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets Held For Sale [Line Items]
Future period in months during which the Company believes its held for sale facilities will be sold	12 months
Assets held for sale	$ 3.3	$ 3.3
Land [Member]
Assets Held For Sale [Line Items]
Assets held for sale	1.0	1.0
Building and improvements [Member]
Assets Held For Sale [Line Items]
Assets held for sale	$ 2.3	$ 2.3

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Commitments and Contingencies

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 Harland Financial Solutions' ("HFS") LaserPro software 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.