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UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM10-K

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|   | ANNUAL REPORTPURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF1934 |

For the fiscal year endedDecember  31,  2005

or

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|   | TRANSITION REPORT PURSUANTTO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the transition periodfrom                    to                    

Commission FileNumber 1-13780

M & F WORLDWIDE CORP.

(Exact name of registrant as specified in itscharter)

|                                                               |  |                                     |            |        |  |  |
|---------------------------------------------------------------|--|-------------------------------------|------------|--------|--|--|
| Delaware                                                      |  |                                | 02-0423416 |   |
| (State orother jurisdiction of incorporation or organization) |  | (I.R.S.Employer Identification No.) |
| 35 East 62nd Street, NewYork, N.Y.                            |  | 10021                               |
| (Address of principal executive offices)                      |  | (ZipCode)                           |
|                                                               |

212-572-8600

(Registrant’s telephone number,including area code)

Securities registeredpursuant to Section 12(b) of the Act:

|                                       |  |                                          |  |  |  |  |
|---------------------------------------|--|------------------------------------------|--|--|--|--|
| Title of each class                   |  | Name of each exchange on whichregistered |
| CommonStock, par value $.01 per share |  | New York Stock Exchange,Inc.             |
|                                       |

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

Indicate bycheck mark if the registrant is a well-known seasoned issuer, asdefined in Rule 405 of the Securities Act.Yes     No

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

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

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405of Regulation S-K (§229.405 of this chapter) is not containedherein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporatedby reference in Part III of this Form 10-K or any amendment to thisForm  10-K. 

Indicate bycheck mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of‘‘accelerated filer and large acceleratedfiler’’ in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filerNon-accelerated filer 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Act).

 Yes      No

The aggregate market value of the Common Stock heldby non-affiliates of the registrant (using the New York Stock Exchangeclosing price as of June  30,  2005, the last business dayof the registrant’s most recently completed second fiscalquarter) was approximately $158,335,639. The number of shares of CommonStock outstanding as of March  1, 2006 was 19,330,492.

Portions of the registrant’s 2006 definitiveProxy Statement issued in connection with the annual meeting ofstockholders are incorporated by reference into Part III of this Form10-K.

This Form 10-K is being distributed tostockholders in lieu of a separate annual report.

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M & FWORLDWIDE CORP.

INDEX TO ANNUAL REPORT ON FORM 10-K

For the Year Ended December  31,  2005

|             |  |                                                                                                                     |  |        |        |         |  |  |  |  |
|-------------|--|---------------------------------------------------------------------------------------------------------------------|--|--------|--------|---------|--|--|--|--|
|        |  |                                                                                                                |  | PAGE   |
| **PARTI**   |
| Item1       |  | Business                                                                                                            |  |   |   |    |
|        |  | LicoriceProducts                                                                                                    |  |   | 1      |    |
|        |  | Checks, RelatedProducts and Direct Marketing Services                                                               |  |   | 5      |    |
| Item 1A     |  | Risk Factors                                                                                                        |  |   | 12     |    |
| Item 2      |  | Properties                                                                                                          |  |   | 26     |    |
| Item 3      |  | Legal Proceedings                                                                                                   |  |   | 27     |    |
| Item 4      |  | Submission ofMatters to a Vote of Security Holders                                                                  |  |   | 27     |    |
| **PARTII**  |
| Item 5      |  | Market forRegistrant’s Common Equity, Related Stockholders Matters andIssuer Repurchases of Equity Securities |  |   | 28     |    |
| Item 6      |  | Selected Financial Data                                                                                             |  |   | 28     |    |
| Item 7      |  | Management’sDiscussion and Analysis of Financial Condition and Results ofOperations                           |  |   | 30     |    |
| Item7A      |  | Quantitative and Qualitative Disclosures about MarketRisks                                                          |  |   | 49     |    |
| Item8       |  | Financial Statements and Supplementary Data                                                                         |  |   | 49     |    |
| Item 9      |  | Changes in andDisagreements with Accountants on Accounting and FinancialDisclosure                                  |  |   | 50     |    |
| Item9A      |  | Controls and Procedures                                                                                             |  |   | 50     |    |
| **PARTIII** |
| Item 10     |  | Directors andExecutive Officers of the Registrant                                                                   |  |   |        | *  |
| Item 11     |  | Executive Compensation                                                                                              |  |   |        | *  |
| Item 12     |  | Security Ownershipof Certain Beneficial Owners and Management and Related StockholderMatters                        |  |   |        | *  |
| Item13      |  | Certain Relationships and Related Transactions                                                                      |  |   |        | *  |
| Item 14     |  | PrincipalAccountant Fees and Services                                                                               |  |   |        | *  |
| **PARTIV**  |
| Item 15     |  | Exhibits andFinancial Statement Schedules                                                                           |  |   | 55     |    |
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| * | Incorporatedby reference from M & F Worldwide Corp. 2006 ProxyStatement |

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PART I

Item 1.    Business

M & F Worldwide Corp.(‘‘M & F Worldwide’’ and, together with itssubsidiaries, the ‘‘Company’’) was incorporatedin Delaware on June  1,  1988. M & F Worldwide is aholding company that conducts its operations through its indirectwholly owned subsidiaries, Mafco Worldwide Corporation(‘‘Mafco Worldwide’’) and, sinceDecember  15,  2005, Clarke American Corp.(‘‘Clarke American’’). At December31,  2005, MacAndrews & Forbes Holdings Inc.(‘‘Holdings’’), through its wholly ownedsubsidiary Mafco Consolidated Group Inc.(‘‘MCG’’), beneficially owned approximately38% of the outstanding M & F Worldwide Common Stock.

On December  15,  2005, M & F Worldwide acquired theissued and outstanding shares of Novar USA Inc.(‘‘Novar’’) from Honeywell International Inc.(‘‘Honeywell’’) for a purchase price of$800  million in cash, subject to a post-closing working capitaladjustment. Clarke American is the successor by merger to Novar.

As a result of the acquisition of Clarke American, the Company hastwo business lines, which are operated by Mafco Worldwide and ClarkeAmerican. Mafco Worldwide’s business is the production oflicorice products for sale to the tobacco, food, pharmaceutical andconfectionery industries (which is the Company’s LicoriceProducts segment). Clarke American’s business is providingchecks, check-related products and direct marketing services. ClarkeAmerican’s business consists of two divisions: the FinancialInstitution division, which is focused on financial institution clientsand their customers (the Company’s Financial Institutionsegment), and the Direct-to-Consumer division, which is focused onindividual customers (the Company’s Direct-to-Consumer segment).See Note 22 to the Company’s consolidated financial statementsincluded elsewhere in this Annual Report on Form 10-K for additionalsegment information.

Licorice Products

MafcoWorldwide produces a variety of licorice products from licorice root,intermediary licorice extracts produced by others and certain otheringredients at its facilities in Camden, New Jersey; Richmond,Virginia; and Gardanne, France; and at the facilities of its jointventures in Zhangjiagang, Jiangsu and Weihai, Shandong, People’sRepublic of China. Approximately 73% of Mafco Worldwide’slicorice product sales are to the worldwide tobacco industry for use astobacco flavor enhancing and moistening agents in the manufacture ofAmerican blend cigarettes, moist snuff, chewing tobacco and pipetobacco. While licorice represents a small percentage of the total costof manufacturing American blend cigarettes and other tobacco products,the particular formulation and quantity used by each brand is animportant element in the brand’s quality. In addition, MafcoWorldwide manufactures and sells cocoa and carob products for use inthe tobacco industry.

Mafco Worldwide also sells licoriceworldwide to confectioners, food processors, cosmetic companies andpharmaceutical manufacturers for use as flavoring and masking agents,including its Magnasweet brand flavor enhancer, which is used invarious brands of chewing gum, lip balm, energy bars, non-carbonatedbeverages, chewable vitamins, aspirin and other products.

MafcoWorldwide also sells licorice root residue as garden mulch under thename Right Dress.

Mafco Worldwide has achieved itsposition as the world’s leading manufacturer of licoriceproducts through its experience in obtaining licorice root, itstechnical expertise at maintaining the consistency and quality of itsproduct and its ability to develop and manufacture proprietaryformulations for individual customers and applications.

Mafco Worldwide’s Operating Strategies

MafcoWorldwide intends to maintain its position as the world leader inlicorice products by improving its manufacturing process and rawmaterial procurement in order to achieve stable costs and by continuingto operate ventures in strategic areas of the world to enhance itsoverall licorice business.

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Mafco Worldwide’s Products andManufacturing

Licorice products.    MafcoWorldwide produces a variety of licorice products from licorice root,intermediary licorice extracts produced by others and certain otheringredients at its facilities in Camden, New Jersey, Richmond,Virginia, and Gardanne, France; produces licorice derivatives at itsjoint ventures facilities in Zhangjiagang, Jiangsu, People’sRepublic of China (‘‘ZFTZ’’) and manufacturesand distributes certain tobacco flavorings at its joint venturefacility in Weihai, Shandong, People’s Republic of China. MafcoWorldwide selects licorice root from various sources to optimize flavorenhancing and chemical characteristics and then shreds the root tomatchstick size. Licorice solids are then extracted from the shreddedroot with hot water. After filtration and evaporation, the concentratedextract is converted into powder, semi fluid or blocks, depending onthe customer’s requirements, and then packaged and shipped. Forcertain customers, extracts from root may be blended with intermediarylicorice extracts from other producers and non-licorice ingredients toproduce licorice products that meet the individual customer’srequirements. Licorice extracts are further purified at MafcoWorldwide’s joint venture facilities to produce licoricederivatives. Mafco Worldwide maintains finished goods inventories ofsufficient quantity to normally provide immediate shipment to itstobacco and non-tobacco customers.

Non-licoriceproducts.    Mafco Worldwide also sells flavoring agents andplant products to the tobacco, spice, pharmaceutical and health foodindustries. Mafco Worldwide cleans and grinds natural plant productsinto finished products.

Mafco Worldwide’s RawMaterials

Licorice is derived from the roots of thelicorice plant, a shrub-like leguminous plant that is indigenous to theMiddle East and Central Asia. The plant’s roots, which can be upto several inches thick and up to 25 feet long, are harvested when theplant is about four years old. They are then cleaned, dried and baggedor pressed into bales. Through its foreign suppliers, the Companyacquires the root in local markets for shipment to MafcoWorldwide’s processing facilities in Camden, New Jersey orGardanne, France. Most of the licorice root processed by MafcoWorldwide originates in Afghanistan, the People’s Republic ofChina, Pakistan, Iraq, Azerbaijan, Kazakhstan, Tajikistan,Turkmenistan, Uzbekistan and Turkey. Through many years of experience,Mafco Worldwide has developed extensive knowledge and relationshipswith its suppliers in these areas. Although the amount of licorice rootMafco Worldwide purchases from any individual source or country variesfrom year to year depending on cost and quality, Mafco Worldwideendeavors to purchase some licorice root from all available sources.This sourcing strategy enables Mafco Worldwide to maintain multiplesources of supply and relationships with many suppliers so that, if thelicorice root from any one source becomes temporarily unavailable oruneconomic, Mafco Worldwide will be able to replace that source withlicorice root from another area or supplier. Mafco Worldwide hastherefore been able to obtain licorice root raw materials withoutinterruption since World War II, even though there has been periodicinstability in the areas of the world where licorice root raw materialsare obtained. During 2005, Mafco Worldwide had numerous suppliers ofroot, and one vendor who supplied approximately 60% of MafcoWorldwide’s total root purchases. Mafco Worldwide tries tomaintain a sufficient licorice root raw material inventory and openpurchase contracts to meet normal production needs for three years. AtDecember  31,  2005, Mafco Worldwide had on hand a supplyof licorice root raw material approaching three years. Licorice roothas an indefinite retention period as long as it is kept dry, andtherefore Mafco Worldwide has experienced little, if any, raw materialspoilage.

In addition to licorice root, Mafco Worldwide alsouses intermediary licorice extracts and licorice derivatives producedby Mafco Worldwide’s joint venture facilities in ZFTZ andpurchases licorice extracts and derivatives from other manufacturersfor use as a raw material. These products are available from producersprimarily in the People’s Republic of China and Central Asia inquantities sufficient to meet Mafco Worldwide’s currentrequirements and anticipated requirements for the foreseeablefuture.

Other raw materials for Mafco Worldwide’snon-licorice products and plant products are commercially availablethrough many domestic and foreign sources.

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Mafco Worldwide’s Sales andMarketing

All sales in the U.S. (including sales oflicorice products to U.S. cigarette manufacturers for use in Americanblend cigarettes to be exported) are made through MafcoWorldwide’s offices located in Camden, New Jersey or Richmond,Virginia, with technical support from Mafco Worldwide’s researchand development department. Outside the U.S., Mafco Worldwide sells itsproducts from its Camden, New Jersey offices, through its Frenchsubsidiaries, Chinese joint ventures and through exclusive agents aswell as independent distributors.

Mafco Worldwide hasestablished strong relationships with its customers in the tobacco,confectionery and other industries because of its expertise inproducing and supplying consistent quality licorice products and otherflavor enhancing agents with a high level of service and security ofsupply. Mafco Worldwide ships products worldwide and provides technicalassistance for product development for both tobacco and non-tobaccoapplications.

Mafco Worldwide sells licorice root residue, aby-product of the licorice extract manufacturing process, as gardenmulch under the name Right Dress. Distribution of RightDress is generally limited to the area within a 200-mile radius ofCamden, New Jersey due to shipping costs and supply limitations.

In 2005, Mafco Worldwide’s ten largest customers, eight ofwhich are manufacturers of tobacco products, accounted forapproximately 69% of Mafco Worldwide’s net revenues andapproximately 56% of the Company’s consolidated netrevenues. One customer, Altria Group Inc., accounted for approximately36% of Mafco Worldwide’s 2005 net revenues andapproximately 29% of the Company’s consolidated netrevenues. If Altria Group Inc. were to stop purchasing licorice fromMafco Worldwide, it would have a significant adverse effect on thefinancial results of Mafco Worldwide.

MafcoWorldwide’s Competition

Mafco Worldwide’sposition as the largest manufacturer of licorice products in the worldarises from its long-standing ability to provide its customers with asteady supply of high quality and consistent products, together withsuperior technical support. Producing licorice products of consistentlyhigh quality requires an experienced work force, careful manufacturingand rigorous quality control. Mafco Worldwide’s long-termrelationships and knowledge of the licorice root market are of greatvalue in enabling it to consistently acquire quality raw materials.Although Mafco Worldwide could face increased competition in thefuture, Mafco Worldwide currently encounters limited competition insales of licorice products to tobacco companies in many of its marketsas a result of the factors described above and the large investments ininventories of raw materials and production facilities that arerequired to adequately fulfill its customers’ needs. Othermarkets in which Mafco Worldwide operates, particularly theconfectionery licorice market in Europe, are more competitive.Significant competing producers of licorice products aregovernment-owned and private corporations in the People’sRepublic of China and Iran and a private corporation based inIsrael.

The Tobacco Industry

Developments andtrends within the tobacco industry may have a material effect on theoperations of Mafco Worldwide.

U.S. cigarette consumptiondeclined an estimated 2.6% during 2005 and approximately2% to 3% annually over the previous ten years due tosignificant price increases introduced by the cigarette manufacturersin part to recover costs related to the 1998 Master SettlementAgreement with the state attorneys general, as well as greaterawareness of health risks by consumers, continuing restrictions onsmoking areas and sales tax increases on cigarettes. Sales of Americanblend cigarettes also declined in Western Europe during 2005 due toincreased regulation, smoking restrictions and tax increases. The rateof sales decline during 2005 far exceeded the average rate of declineexperienced by this region over the past several years.

Consumption of chewing tobacco and moist snuff is concentratedprimarily in the U.S. Domestic consumption of chewing tobacco productshas declined for more than a decade by approximately 4.0%

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per year. Chewing tobacco appeals to a limitedand declining customer base, primarily males living in rural areas.Moist snuff consumption has risen steadily since the mid-1970’sdue at least in part to the shift away from cigarettes and other typesof smoking tobacco. Consumption of moist snuff has increasedapproximately 4% to 5% per year over the past tenyears.

Producers of tobacco products are subject to regulationin the U.S. at the federal, state and local levels, as well as inforeign countries. Together with changing public attitudes towardtobacco products, a constant expansion of tobacco regulations in theU.S. since the early 1970s has been a major cause for the decline inconsumption. Moreover, the trend is toward increasing regulation of thetobacco industry. Restrictive foreign tobacco legislation has been onthe rise in recent years as well, including restrictions on wheretobacco may be sold and used, warning labels and other graphicpackaging images, product constituent limitations and a generalincrease in taxes.

For more than 40 years, the sale and use oftobacco products has been subject to opposition from government andhealth officials in the U.S. and other countries due to claims thattobacco consumption is harmful to an individual’s health. Inaddition, the World Health Organization has identified smoking as asignificant world health risk. These claims have resulted in a numberof substantial restrictions on the marketing, advertising, sale and useof cigarettes and other tobacco products, in diminished socialacceptability of smoking and in activities by anti-tobacco groupsdesigned to inhibit tobacco product sales. The effects of these claimstogether with substantial increases in state, federal and foreign taxeson cigarettes have resulted in lower tobacco consumption, which islikely to continue in the future. Mafco Worldwide cannot predict thefuture course of tobacco regulation. Any substantial increase intobacco regulation may adversely affect tobacco product sales, whichcould indirectly have a material adverse effect on Mafco Worldwide.

Over the years, there has been substantial litigation betweentobacco product manufacturers and individuals, various governmentalunits and private health care providers regarding increased medicalexpenditures and losses allegedly caused by use of tobacco products. Inpart as a result of settlements in certain of this litigation, thecigarette companies have significantly increased the wholesale price ofcigarettes in order to recoup the cost of the settlements. Since 1999,cigarette consumption in the U.S. has decreased due to the higherprices of cigarettes, the increased emphasis on the health effects ofcigarettes and the continuing restrictions on smoking areas. At thistime Mafco Worldwide is unable to determine whether additional priceincreases in the future will reduce tobacco consumption or the effectof reduced consumption on Mafco Worldwide’s financialperformance. There may be an increase in health-related litigationagainst the tobacco industry, and it is possible that Mafco Worldwide,as a supplier to the tobacco industry, may be party to such litigation.This litigation, if successful, could have a material adverse effect onMafco Worldwide.

The tobacco industry, including cigarettes andsmokeless tobacco, has been subject to federal, state, local andforeign excise taxes for many years. In recent years, federal, state,local and foreign governments have increased or proposed increases tosuch taxes as a means of both raising revenue and discouraging theconsumption of tobacco products. Mafco Worldwide is unable to predictthe likelihood of enactment of such proposals or the extent to whichenactment of such proposals would affect tobacco sales. A significantreduction in consumption of cigarettes and other tobacco products couldhave a material adverse effect on Mafco Worldwide.

Environmental Matters related to Mafco Worldwide

Mafco Worldwide is subject to applicable state, federal and foreignenvironmental laws. Management believes that Mafco Worldwide’soperations are in substantial compliance with all applicableenvironmental laws. Although no other material capital or operatingexpenditures relating to environmental controls or other environmentalmatters are currently anticipated, there can be no assurance that MafcoWorldwide will not incur costs in the future relating to environmentalmatters that would have a material adverse effect on MafcoWorldwide’s business or financial condition.

Seasonality in Mafco Worldwide’s Business

Thelicorice product business is generally non-seasonal. However, sales ofRight Dress garden mulch occur primarily in the first sevenmonths of the year.

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Sales Backlog in MafcoWorldwide’s Business

The sales backlog of MafcoWorldwide at any time is generally not significant. Domestic andforeign orders from tobacco and non-tobacco customers are received withshipment requirements annually, quarterly, monthly or weekly dependingupon the customer’s needs. Certain confectionery and health foodcustomers negotiate annual contracts, which were not significant atDecember  31, 2005.

Mafco Worldwide’sEmployees

At December  31,  2005, MafcoWorldwide had approximately 207 employees. Mafco Worldwide has 156employees covered under collective bargaining agreements. The MafcoWorldwide collective bargaining agreement covering employees at theCamden, New Jersey facility expires at the end of May  2008.Management of Mafco Worldwide believes that employee relations aregood.

Checks, Related Products, and Direct MarketingServices

Clarke American is one of the three largestproviders of checks and check-related products and services in theUnited States based on revenues, and it is a leading provider of directmarketing services to financial institutions. Clarke American servesfinancial institutions through the Clarke American and Alcott Routonbrands and consumers and businesses directly through the Checks In TheMail (‘‘CITM’’) and B2Direct brands.Clarke American has an industry leading reputation for quality and haswon several third party and customer awards.

ClarkeAmerican’s two business divisions are the Financial Institutiondivision (84% of its revenues for the full fiscal year 2005) andthe Direct-to-Consumer division (16% of its revenues for thefull fiscal year 2005). Customers ordering through the FinancialInstitution division order checks from Clarke American’sfinancial institution clients, and Clarke American manages that checkorder process on their behalf. The Direct-to-Consumer division servescustomers who prefer to order checks directly from a checkprovider.

Clarke American’s products primarily consist ofchecks and check-related products, such as deposit tickets andcheckbook covers, and Clarke American provides related deliveryservices. Clarke American also offers specialized direct marketingservices to its financial institution partners and other enterprises.Clarke American manages customer orders on behalf of its financialinstitution clients through its contact centers or its websites, whichare the preferred channels for orders. Orders received throughpreferred channels generally produce higher revenue than ordersreceived from Clarke American’s other channels, and ClarkeAmerican has been successful in working with financial institutions tomigrate their customers to these preferred channels.

Financialinstitutions recognize consumer checking accounts as one of the primaryrelationships with their customers which they use to sell services suchas credit cards, auto financing and investment services, and to improvecustomer retention. Clarke American has developed an expertise inpartnering with financial institutions to integrate platforms for highquality order management. Clarke American adds value to the customerchecking account relationship on behalf of financial institutionsby:

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|  | •  | improving customersatisfaction through consistent product quality and expertise inmatching customer preferences with the right product and deliveryoptions; |

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|  | •  | expanding customerrelationships through cross-selling and up-selling checks and relatedfinancial products on behalf of its financial institution clients;and |

|  |              |                                                                                                                                                                                      |
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|  | •  | leveraging ClarkeAmerican’s integration with its financial institutionclients’ checking account processes to improve their customerservice and operational efficiencies. |

ClarkeAmerican’s Industry

Clarke American’smanagement believes the U.S. check market is the largest in the world.The check industry has two main segments: the financial institutionsegment and the direct segment. Clarke 

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American believes the number of checks printedis driven by the number of checks written, the number of new checkingaccounts opened and reorders reflecting changes in consumers’personal situations, such as name or address. Checks written remain thelargest form of non-cash payment in the U.S., representing moretransactions than credit and debit transactions combined. According toa 2004 Federal Reserve Payments Study, the total number of all non-cashpayments (including checks and electronic payments) in the U.S. hasincreased from approximately 72.5 billion in 2000 toapproximately 81.2  billion in 2003. According to GlobalConcepts, Inc., an independent consulting firm hired by the FederalReserve to analyze check writing patterns, the number of checks writtenhas declined approximately 4.0% annually from 2000 to 2003, andis forecast to decline by approximately 3.7% annually from 2004to 2009.

Clarke American’s Financial InstitutionDivision

Clarke American’s Financial Institutiondivision provides checks and check-related services to financialinstitutions and to the account holders of such financial institutions.Clarke American serves this segment through its Clarke American andAlcott Routon brands. For the full fiscal year 2005, Clarke Americanderived approximately 84% of its revenues and 91% of itsoperating income from this segment.

Clarke American offers itsfinancial institution clients a complete line of standard andspecialized check products and accessories. Clarke American earnsproduct and delivery fees from each client, who in turn earn a mark-upon the final sale to an account holder or customer. As a result, ClarkeAmerican’s clients benefit from the sale of products andaccessories along with Clarke American. In addition, Clarke Americanalso provides complete fulfillment, including delivery to the end-userand offers check users the option to place orders directly through itscontact centers and websites as opposed to placing orders throughclient branches or by way of mail order forms. Furthermore, ClarkeAmerican also provides marketing services for its financial institutionclients. By relying on Clarke American for these day-to-day services,its financial institution clients are able to focus on their coreactivities, while also providing account holders with ClarkeAmerican’s high-quality products and services.

Products and Services

Checks andCheck-Related Products and Services

In addition to offeringbasic personal checks, Clarke American also offers customized checkproducts and services. Specialized check products include increasinglypopular checks customized with licensed designs and characters, such ascartoon characters, collegiate designs and photographs. Clarke Americanalso offers accessories, such as leather checkbook covers, calculators,customized labels, recording registers and bill paying accessories. Inaddition, Clarke American offers various delivery options, includingexpedited and trackable delivery.

Small businesses typicallyrely on their checking accounts as the primary financial managementtool for cash flow and accounting purposes. Clarke American providesits financial institution clients’ small business customers withthe products and services they need to manage deposits, pay suppliers,pay employees and keep track of their cash balances. Clarke Americanalso provides small business products for both manual accountingbookkeeping systems and financial accounting software programs. Itsproducts also include accessories for bill payment and management, suchas self-sticking labels, stamps, file boxes, calculators and recordingregisters.

Direct Marketing Services

Directmarketing services consist of marketing messages delivered directly tofinancial institution account holders on behalf of ClarkeAmerican’s financial institution clients. Direct marketingservices generate incremental revenue and profit opportunities andenable Clarke American to participate directly in the growth of itsclients.

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With the acquisition of Alcott Routon in2004, Clarke American expanded its direct marketing capabilities toinclude customized direct marketing campaigns. Alcott Routon’sdirect marketing campaigns are based on sophisticated analytics andpredictive models that identify high-quality direct marketingopportunities. For example, financial institutions employ Alcott Routonto analyze their account holder databases and identify attractive leadsfor marketing specific financial products, such as home equity lines ofcredit.

Clarke American also provides its clients with directmarketing services consisting of marketing messages delivered thoughexisting contact channels such as mail, Internet, and phone directly toits clients’ account holders. Direct marketing services includepromoting products such as money market accounts and credit cards, andcan be delivered through multiple channels. Clarke American iswell-positioned to deliver this type of product in a timely manner byvirtue of its integration with the new account platforms of ClarkeAmerican’s clients. Clarke American is enhancing the marketingmessages delivered through existing contact channels utilizing AlcottRouton’s analytics capabilities to increase the effectiveness ofClarke American clients’ promotions.

Sales andMarketing

Clarke American manages relationships with largeand complex financial institutions through dedicated account managementteams composed of relationship management, marketing, operations andservice-oriented skill sets. Clarke American has deployed a sales forceon a regional basis, targeting distinct financial institution segmentsranging from major nationwide and large regional banks and securitiesfirms to community banks and credit unions.

Clients andCustomers

The customers of the Financial Institutiondivision range from major nationwide and large regional banks andsecurities firms to community banks and credit unions. Clarke Americangenerally contracts with its clients to be the sole and often‘‘exclusive’’ supplier of checks andcheck-related products to its clients’ customers. The initialterms of its agreements generally range from three to five years, andare generally terminable for cause only, although a few of thesefinancial institution clients, including Bank of America, can terminatetheir contracts for convenience. See ‘‘Risk Factors —Risks Related to Clarke American’s Business and Industry —Clarke American is dependent on a few large financial institutionclients, and adverse changes in its relationships with thesehighly-concentrated clients may adversely affect its revenues andprofitability.’’

Clarke American’sDirect-to-Consumer Division

Clarke American’sDirect-to-Consumer division provides checks and check-related productsand services directly to consumers. Clarke American is one of the topthree providers in the consumer direct segment through its CITM andB2Direct brands. For the full fiscal year 2005, ClarkeAmerican derived approximately 16% of its revenues and 9%of its operating income from this segment.

Products andServices

Checks and Check-Related Products andServices

CITM has innovative designs and products, with over 90different check designs available. Clarke American’s checkdesigns have matching address labels and coordinating covers, whichoffer customers product personalization and provide Clarke Americanwith complementary products to cross-sell and drive increased value perorder. CITM has also expanded its product suite to include photoproducts, color imaging and stationery. Clarke American’sDirect-to-Consumer division also offers various delivery options,including expedited and trackable delivery.

CheckPrograms and Customized Business Kits

Clarke American offerscheck programs and customized business kits to retail businesses anddirect-selling organizations through its B2Direct brand.Clarke American’s check programs for retail 

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businesses allow those businesses to marketClarke American’s products, such as checks, checkbook covers,address labels, stamps and delivery services, to their customersthrough the Internet, direct mail, store promotions and contactcenters. Clarke American’s customized business kits providedirect selling organizations, such as large national retailers, withbusiness cards, name tags, stamps, product and address labels andbusiness stationery in addition to checks and check-relatedproducts.

Treasury Management

B2Direct also provides treasury management services, suchas integrated cash deposit products, customized deposit tickets andsecurity bags, to multi-location retail businesses that make frequentcash deposits.

Sales and Marketing

CITMprimarily markets products through personalized check inserts innewspapers and advertisements sent directly to residences, although theInternet has been growing in importance as an advertising channel.Online shopping, contact center access, mail order and an automatedvoice response system enable customers to order ClarkeAmerican’s products directly at their convenience. Additionaladvertising channels include magazine advertisement, statement inserts,in-package inserts and coupon circular inserts.B2Direct’s sales force is divided betweenmulti-location retail businesses and direct-selling organizations.

Clients and Customers

The customers of theDirect-to-Consumer division range from individual consumers to privatelabel resellers of check products, direct-selling organizations andmulti-location retail businesses.

Clarke American’sSuppliers

The main supplies used in check printing arepaper, print ink, binders, boxes, packaging and delivery services. Forall critical supplies, Clarke American has at least two qualifiedsuppliers or multiple qualified production sites in order to ensurethat supplies are available as needed. Clarke American has nothistorically experienced any material shortages and believes it hasredundancy in its supplier network for each of its key inputs.

Clarke American’s Competition

Clarke Americanhas three major competitors: Deluxe Corporation, John H. HarlandCompany and Custom Direct. Clarke American competes on the basis ofservice, convenience, quality, product range and price. Clarke Americanbelieves that it differentiates itself by:

|  |              |                                                                                                                                                              |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | improving customer satisfactionthrough consistent product quality and expertise in matching customerpreferences with the right product and delivery options; |

|  |              |                                                                                                                                                              |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | expanding customerrelationships through cross-selling and up-selling both check andrelated financial products on behalf of financial institution clients;and |

|  |              |                                                                                                                                                                                      |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | leveraging ClarkeAmerican’s integration with its financial institutionclients’ checking account processes to improve their customerservice and operational efficiencies. |

ClarkeAmerican’s Employees

As of December31,  2005, Clarke American had approximately 3,600 employees.None of Clarke American’s employees are represented by laborunions and Clarke American considers its employee relations to begood.

Clarke American’s IntellectualProperty

Clarke American relies on a combination oftrademark, copyright and patent laws, trade secret protection andconfidentiality and license agreements to protect its trademarks,copyrights, software, 

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inventions and know-how. The sale of productsbearing designs licensed from third parties accounts for a significantportion of Clarke American’s revenue. Typically, such licenseagreements are effective for a two- to three-year period, provide forthe retention of ownership of the trade name, know-how or otherintellectual property by the licensor and require the payment of aroyalty to the licensor. There can be no guarantee that such licenseswill be renewed or will continue to be available on terms that wouldallow Clarke American to continue to be profitable with theseproducts.

Environmental Matters related to ClarkeAmerican

Clarke American’s current check printingoperations use hazardous materials in the printing process and generatesolid wastes and wastewater and air emissions. Consequently, itsfacilities are subject to many existing and proposed federal, state andlocal laws and regulations designed to protect human health and theenvironment. While enforcement of these laws may require theexpenditure of material amounts for environmental compliance orcleanup, Clarke American believes that its facilities are currently inmaterial compliance with such laws and regulations.

Historiccheck printing operations at Clarke American’s current andformer facilities used hazardous materials and generated regulatedwastes in greater quantities than Clarke American’s currentoperations do. In some instances Clarke American has sold thesefacilities and agreed to indemnify the buyer of the facility forpotential environmental liabilities. Clarke American may also besubject to liability under environmental laws for environmentalconditions at these current or former facilities or in connection withthe disposal of waste generated at these facilities. Clarke American isnot aware of any fact or circumstance that would require theexpenditure of material amounts for environmental cleanup orindemnification in connection with its historic operations. However, ifenvironmental contamination is discovered at any of these formerfacilities or at locations where wastes were disposed, Clarke Americancould be required to spend material amounts for environmentalcleanup.

Governmental Regulation related to ClarkeAmerican

Clarke American is subject to the federalfinancial modernization law known as the Gramm-Leach-Bliley Act and theregulations implementing its privacy and information securityrequirements, as well as other privacy and data security federal andstate laws and regulations. Clarke American is also subject toadditional privacy and information security requirements in many of itscontracts with financial institution clients, which are often morerestrictive than the regulations. These laws, regulations andagreements require Clarke American to develop and implement policies toprotect the security and confidentiality of consumers’ nonpublicpersonal information and to disclose these policies to consumers beforea customer relationship is established and periodically thereafter.

The laws and regulations require some of Clarke American’sbusinesses to provide a notice to consumers to allow them theopportunity to have their nonpublic personal information removed fromClarke American’s files before Clarke American shares theirinformation with certain third parties. The laws and regulations,including the above provision, may limit Clarke American’sability to use Clarke American’s direct-to-consumer data in itsbusinesses. However, current laws and regulations do allow ClarkeAmerican to transfer consumer information to process a transaction thata consumer requests, but also require Clarke American to protect theconfidentiality of a consumer’s records or to protect against orprevent actual or potential fraud, unauthorized transactions, claims orother liabilities. Clarke American is also allowed to transfer consumerinformation for required institutional risk control and for resolvingcustomer disputes or inquiries. Clarke American may also contributeconsumer information to a consumer-reporting agency under the FairCredit Reporting Act. Clarke American’s financial institutionclients request various contractual provisions in its agreements thatare intended to comply with their obligations under theGramm-Leach-Bliley Act and other laws and regulations.

Congressand many states have passed and are considering additional laws orregulations that, among other things, restrict the use, purchase, saleor sharing of nonpublic personal information about consumers andbusiness customers. For example, legislation has been introduced inCongress to 

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further restrict the sharing of consumerinformation by financial institutions, as well as to require that aconsumer opt-in prior to a financial institution’s use of his orher data in its marketing programs.

New laws and regulations maybe adopted in the future with respect to the Internet, e-commerce ormarketing practices generally relating to consumer privacy. Such lawsor regulations may impede the growth of the Internet and/or use ofother sales or marketing vehicles. For example, new privacy laws coulddecrease traffic to Clarke American’s websites, decreasetelemarketing opportunities and decrease the demand for its productsand services. Additionally, the applicability to the Internet ofexisting laws governing property ownership, taxation and personalprivacy is uncertain and may remain uncertain for a considerable lengthof time.

Non-Operating Contingent Liability,Indemnification and Insurance Matters

General

Pneumo Abex LLC (considered together withits predecessor in interest Pneumo Abex Corporation,‘‘Pneumo Abex’’), an indirect, wholly ownedsubsidiary of M & F Worldwide, has various contingentliabilities, most of which are indemnified by third parties. Among theindemnified liabilities are certain environmental and asbestos-relatedclaims, as well as certain tax and other matters. In 1995, a subsidiaryof MCG, M & F Worldwide and two subsidiaries of M & F Worldwideentered into a transfer agreement (the ‘‘TransferAgreement’’). Under the Transfer Agreement, Pneumo Abexretained the assets and liabilities relating to its former Abex NWLAerospace Division (‘‘Aerospace’’), as well ascertain contingent liabilities and the related assets, including itshistorical insurance and indemnification arrangements. Pneumo Abextransferred substantially all of its other assets and liabilities to asubsidiary of MCG. The Transfer Agreement provides for appropriatetransfer, indemnification and tax sharing arrangements, in a mannerconsistent with applicable law and existing contractualarrangements.

The Transfer Agreement requires such subsidiary ofMCG to undertake certain administrative and funding obligations withrespect to certain categories of asbestos-related claims and otherliabilities, including environmental claims, retained by Pneumo Abex.Pneumo Abex must reimburse the amounts so funded only when it receivesamounts under related indemnification and insurance agreements. Suchadministrative and funding obligations would be terminated as to thesecategories of asbestos-related claims in the case of a bankruptcy ofPneumo Abex or M & F Worldwide or of certain other events affectingthe availability of coverage for such claims from third-partyindemnitors and insurers. In the event of certain kinds of disputeswith Pneumo Abex’s indemnitors regarding their indemnities, theTransfer Agreement permits Pneumo Abex to require such subsidiary tofund 50% of the costs of resolving the disputes.

Prior to1988, a former subsidiary of Pneumo Abex manufactured certainasbestos-containing friction products. Pneumo Abex has been named,typically along with 10 to as many as 100 or more other companies, as adefendant in various personal injury lawsuits claiming damages relatingto exposure to asbestos. Pursuant to indemnification agreements,PepsiAmericas, Inc., formerly known as Whitman Corporation (the‘‘Original Indemnitor’’), has ultimateresponsibility for all the remaining asbestos-related claims assertedagainst Pneumo Abex through August  1998 and for certainasbestos-related claims asserted thereafter. In connection with thesale by Pneumo Abex in December  1994 of its Friction ProductsDivision, a subsidiary (the ‘‘SecondIndemnitor’’) of Cooper Industries, Inc. (now CooperIndustries, LLC, the ‘‘Indemnity Guarantor’’)assumed responsibility for substantially all asbestos-related claimsasserted against Pneumo Abex after August  1998 and notindemnified by the Original Indemnitor. Federal-Mogul Corporationpurchased the Second Indemnitor in October  1998. InOctober  2001, the Second Indemnitor filed a petition underChapter 11 of the U.S. Bankruptcy Code and stopped performing itsindemnity obligations to Mafco Worldwide. Performance of the SecondIndemnitor's indemnity obligation is guaranteed by the IndemnityGuarantor. Following the bankruptcy filing of the Second Indemnitor,Mafco Worldwide confirmed that the Indemnity Guarantor would fulfillthe Second Indemnitor's indemnity obligations to the extent thatthey are no longer being performed by the Second Indemnitor.

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Pneumo Abex’s former subsidiarymaintained product liability insurance covering substantially all ofthe period during which asbestos-containing products were manufactured.The subsidiary commenced litigation in 1982 against a portion of theseinsurers in order to confirm the availability of this coverage. As aresult of settlements in that litigation, other coverage agreementswith other carriers and payments by the Original Indemnitor, the SecondIndemnitor and the Indemnity Guarantor pursuant to their indemnities,the Company has been receiving reimbursement each month forsubstantially all of its monthly expenditures for asbestos-relatedclaims. As of December  31,  2005, the Company incurred orexpected to incur approximately $952,000 of unindemnified costs, as towhich it either has received or expects to receive approximately$739,000 in insurance reimbursements for matters pending or settledthrough December  31,  2005. Management does not expectthese unindemnified matters to have a material adverse effect on theCompany’s financial position or results of operations, but theCompany is unable to forecast either the number of futureasbestos-related claimants or the amount of future defense andsettlement costs associated with present or future asbestos-relatedclaims.

The Transfer Agreement further provides that thesubsidiary of MCG will indemnify Pneumo Abex with respect to allenvironmental matters associated with Pneumo Abex’s and itspredecessor’s operations to the extent not paid by third-partyindemnitors or insurers, other than the operations relating to PneumoAbex’s Aerospace business, which Pneumo Abex sold to ParkerHannifin Corporation in April  1996. Accordingly, environmentalliabilities arising after the 1988 transaction with the OriginalIndemnitor that relate to Pneumo Abex’s former Aerospacefacilities are the Company’s responsibility. The OriginalIndemnitor is obligated to indemnify Pneumo Abex for costs, expensesand liabilities relating to environmental and natural resource mattersto the extent attributable to the pre-1988 operation of the businessesacquired from the Original Indemnitor, subject to certain conditionsand limitations principally relating to compliance with notice,cooperation and other procedural requirements. The Original Indemnitoris generally discharging its environmental indemnification liabilitiesin the ordinary course.

It is generally not possible to predictthe ultimate total costs relating to any remediation that may bedemanded at any environmental site due to, among other factors,uncertainty regarding the extent of prior pollution, the complexity ofapplicable environmental laws and regulations and theirinterpretations, uncertainty regarding future changes to such laws andregulations or their enforcement, the varying costs and effectivenessof alternative cleanup technologies and methods, and the questionableand varying degrees of responsibility and/or involvement by PneumoAbex. However, the aggregate cost of cleanup and related expenses withrespect to matters for which Pneumo Abex, together with numerous otherthird parties, have been named potentially responsible parties shouldbe substantially less than $100.0  million.

OnFebruary  5,  1996, the Company, through Pneumo Abex,entered into a reimbursement agreement with Chemical Bank and MCG (the‘‘Reimbursement Agreement’’). The ReimbursementAgreement provided for letters of credit covering certain environmentalissues relating to a former Pneumo Abex site. During 2000, theEnvironmental Protection Agency reduced the letter of creditrequirements to $2.2  million. During 2005, the OriginalIndemnitor assumed this obligation and Mafco Worldwide was releasedfrom these letters of credit.

The Company has not recognized aliability in its financial statements for matters covered byindemnification agreements from the Original Indemnitor or theIndemnity Guarantor. The Company considers these obligations to bethose of third-party indemnitors and monitors their financial positionsto determine the level of uncertainty associated with their ability tosatisfy their obligations. Based upon the indemnitors’ activemanagement of indemnifiable matters, discharging of the relatedliabilities when required, and financial positions based upon publiclyfiled financial statements, as well as the history of insurancerecovery set forth above, the Company believes that the likelihood offailing to obtain reimbursement of amounts covered by insurance andindemnification is remote.

Pneumo Abex’s former Aerospacebusiness sold certain of its aerospace products to the U.S. Governmentor to private contractors for the U.S. Government. Pneumo Abex retainedin the Aerospace sale certain claims for allegedly defective pricingthat the U.S. Government made with 

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respect to certain of these products. In theremaining unindemnified matter, Pneumo Abex contests theGovernment’s allegations and has been attempting to resolve thematter without litigation.

In addition, various other legalproceedings, claims and investigations are pending against the Company,including those relating to commercial transactions, product liability,environmental, safety and health matters and other matters. Most ofthese matters are covered by insurance, subject to deductibles andmaximum limits, and by third-party indemnities. In the opinion ofmanagement, based upon the information available at this time, theoutcome of these matters will not have a material adverse effect on theCompany’s financial position or results of operations.

Federal-Mogul Bankruptcy

As noted above in‘‘— General,’’ the Second Indemnitorceased performing, upon filing its Chapter 11 petition, the indemnityand other obligations that it owed to Pneumo Abex under the 1994agreements entered into in connection with the sale of PneumoAbex’s Friction Products Division (‘‘the‘‘1994 Sale Agreements’’). As a result, PneumoAbex asserted claims for breach of such indemnity and otherobligations. During December  2003, Pneumo Abex reached anagreement with the Second Indemnitor and certain other parties,subsequently confirmed by the bankruptcy court overseeing the SecondIndemnitor’s bankruptcy, pursuant to which Pneumo Abex paid in2004 to the Second Indemnitor $3.0  million from amountspreviously received by Pneumo Abex in respect of claims indemnified bythe Second Indemnitor. Of the remainder it retained, Pneumo Abex paid$0.7  million in 2004 to a subsidiary of MCG in accordance withthe Transfer Agreement to reimburse expenses that the subsidiaryincurred on behalf of Pneumo Abex while procuring the insurancereimbursements. Pneumo Abex recorded a gain of $1.9  million inthe fourth quarter of 2003 for the remaining amount that itretained.

In December  2005, the Company entered into anon-binding term sheet with the Indemnity Guarantor, the SecondIndemnitor and certain related parties, pursuant to which the partiesagreed on a framework to resolve all of the Pneumo Abexasbestos-related claims subject to the Second Indemnitor’sindemnity through a trust (the ‘‘AsbestosTrust’’) to be established as part of the SecondIndemnitor’s bankruptcy plan of reorganization (the‘‘Bankruptcy Plan’’). This term sheet, whichwas subject to the execution of definitive documentation and courtapproval, would have required the Company to contribute to the AsbestosTrust, on consummation of the Bankruptcy Plan, $10  million incash and its entire membership interest in Pneumo Abex LLC. Inexchange, the Company would have received the benefit of an injunctionunder Section 524(g) of the Bankruptcy Code against the assertion orprosecution of further asbestos-related claims subject to the SecondIndemnitor’s indemnity. The term sheet was conditioned on, amongother things, the entry by the bankruptcy court of a preliminaryinjunction staying the affected asbestos-related claims. InJanuary  2006, the bankruptcy court denied the entry of therequested preliminary injunction. The Indemnity Guarantor has stated ina January  24,  2006 press release that the proposedsettlement will require the renegotiation of certain terms.

Item 1A.    Risk Factors

M & FWorldwide's holding company structure could limit its ability topay its expenses and dividends on its common stock.

M& F Worldwide is a holding company whose only material assets arethe stock of its subsidiaries and approximately $36.2  million incash and cash equivalents as of December  31,  2005. M& F Worldwide conducts all of its operations through itssubsidiaries, Mafco Worldwide and Clarke American. M & FWorldwide's ability to pay its expenses and dividends on itscommon stock depends on its cash and cash equivalents on hand and onthe payment of dividends to it by Mafco Worldwide and Clarke American.Payments to M & F Worldwide by those subsidiaries, in turn, dependupon their consolidated results of operations and cash flows andwhether they meet the criteria to make dividend payments under theinstruments governing their indebtedness.

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Risks Related to theCompany’s Indebtedness

The Company’ssubsidiaries have substantial indebtedness, which could adverselyaffect the subsidiaries’ ability to operate their respectivebusinesses and prevent them from fulfilling their obligations undertheir respective debt agreements.

On December31,  2005, Clarke American had total indebtedness ofapproximately $626.2  million (including $6.1  million ofcapital lease obligations), and $27.0  million of additionalavailability under the Clarke American revolving credit facility (aftergiving effect to the issuance of $5.8  million of letters ofcredit). On December  31,  2005, Mafco Worldwide had totalindebtedness of approximately $107.0  million, and $13.3million of additional availability under the Mafco Worldwide revolvingcredit facility (after giving effect to the issuance of $1.7million of letters of credit). On December  31,  2005, theCompany had total aggregate indebtedness of approximately $733.2million and $40.3  million of aggregate additional availabilityunder the Mafco Worldwide and Clarke American revolving creditfacilities. The Company’s substantial level of indebtednesscould have important consequences. For example, it could:

|  |              |                                                                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | make it more difficult for theCompany’s subsidiaries to satisfy their obligations with respectto their respective indebtedness; |

|  |              |                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------|
|  | •  | increase the Company’sand its subsidiaries’ vulnerability to general adverse economicand industry conditions; |

|  |              |                                                                                                                                                                                                                                                                                                                                          |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | require the Company’ssubsidiaries to dedicate a substantial portion of their cash flow fromoperations to payments on their indebtedness, thereby reducing theavailability of the subsidiaries’ cash flow to fund workingcapital, capital expenditures, research and development efforts andother general corporate purposes; |

|  |              |                                                                                                                                                     |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | limit the Company’ssubsidiaries’ flexibility in planning for, or reacting to,changes in their respective businesses and the industries; |

|  |              |                                                                                                                                      |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | place the Company’ssubsidiaries at a competitive disadvantage compared to their respectivecompetitors that have less debt; and |

|  |              |                                                                                  |
|--|--------------|----------------------------------------------------------------------------------|
|  | •  | limit the Company’ssubsidiaries’ ability to borrow additional funds. |

Holdings has advised the Company that it has pledged shares of M& F Worldwide common stock to secure obligations and thatadditional shares of M & F Worldwide common stock may from time totime be pledged to secure obligations of Holdings. A default under anyof these obligations that are secured by the pledged shares could causea foreclosure with respect to such shares of common stock. Aforeclosure upon any such shares of common stock or dispositions ofshares of common stock could, in a sufficient amount, constitute a"change of control" under the Company'ssubsidiaries financing agreements, which would permit theCompany's lenders to accelerate amounts outstanding under suchindebtedness.

Clarke American’s and MafcoWorldwide’s ability to make payments on their indebtednessdepends on their ability to generate sufficient cash in thefuture.

Clarke American’s and MafcoWorldwide’s ability to make payments on their respectiveindebtedness and to fund planned capital expenditures will depend ontheir ability to generate cash in the future. This is subject togeneral economic, financial, competitive, legislative, regulatory andother factors beyond the Company’s and its subsidiaries’control.

Clarke American will be required to make mandatorypayments under its term loan facility of $15.0  million for 2006,$20.0  million for 2007, $30.0  million for 2008,$35.0  million for 2009 and $40.0  million for 2010. ClarkeAmerican’s term loan facility requires that a portion of itsexcess cash flow be applied to prepay amounts borrowed thereunder.Clarke American is required to repay this facility in full in 2011. IfClarke American does not have sufficient cash to be able to make suchmandatory repayments and cannot refinance the unpaid portions of itsterm loan facility, it will be in default under its credit facility.Clarke American’s revolving credit facility will mature inDecember  2010.

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Mafco Worldwide will be required to makemandatory quarterly payments under its term loan facility of $275,000,beginning on March  31,  2006. Mafco Worldwide’sterm loan facility requires that a portion of its excess cash flow beapplied to prepay amounts borrowed under that facility. Mafco Worldwideis required to repay this facility in full in December  2011. IfMafco Worldwide does not have sufficient cash to be able to make suchmandatory prepayments and cannot refinance the repaid portions of itsterm loan facility required to be prepaid, it will be in default underits credit facility. Mafco Worldwide’s revolving credit facilitywill mature in December  2010.

Clarke American and MafcoWorldwide may not be able to generate sufficient cash flow fromoperations and future borrowings may not be available to them undertheir respective credit facilities in an amount sufficient to enableClarke American or Mafco Worldwide to repay their debt or to fund theirother liquidity needs. If Clarke American’s or MafcoWorldwide’s future cash flow from operations and other capitalresources are insufficient to pay their obligations as they mature orto fund their liquidity needs, Clarke American or Mafco Worldwide, asthe case may be, may be forced to reduce or delay its businessactivities and capital expenditures, sell assets, obtain additionaldebt or equity capital or restructure or refinance all or a portion ofits debt on or before maturity. Clarke American or Mafco Worldwide, asthe case may be, may not be able to accomplish any of thesealternatives on a timely basis or on satisfactory terms, if at all. Inaddition, the terms of Clarke American’s and MafcoWorldwide’s existing and future indebtedness may limit theirrespective ability to pursue any of these alternatives.

Despite the Company’s subsidiaries’ currentindebtedness levels, the Company and such subsidiaries may still beable to incur substantially more debt. Additional indebtedness couldexacerbate the risks associated with Clarke American’s and MafcoWorldwide’s substantial leverage.

The Company andits subsidiaries may be able to incur substantial additionalindebtedness in the future. The terms of Clarke American’scredit facilities or notes and Mafco Worldwide’s creditfacilities do not fully prohibit Clarke American or Mafco Worldwidefrom doing so. In addition, as of December  31,  2005,there was $27.0  million of additional availability under ClarkeAmerican’s $40.0  million revolving credit facility (aftergiving effect to the issuance of $5.8  million of letters ofcredit) and $13.3  million of additional availability under MafcoWorldwide’s $15.0  million revolving credit facility(after giving effect to the issuance of $1.7  million of lettersof credit). If new indebtedness is added to the Company’scurrent debt levels, the related risks that it now faces couldintensify.

Covenant restrictions under the Company’ssubsidiaries’ indebtedness may limit each’s ability tooperate its respective businesses.

The indenture governingthe Clarke American notes and the agreements governing ClarkeAmerican’s and Mafco Worldwide’s respective creditfacilities contain covenants that restrict Clarke American’s,Mafco Worldwide’s and their respective subsidiaries’ability to finance future operations or capital needs or to engage inother business activities. The credit facilities and indenturegoverning the Clarke American notes restrict, among other things, suchentities’ ability to:

|  |              |                                            |
|--|--------------|--------------------------------------------|
|  | •  | incur or guarantee additionalindebtedness; |

|  |              |                          |
|--|--------------|--------------------------|
|  | •  | make certaininvestments; |

|  |              |                          |
|--|--------------|--------------------------|
|  | •  | makerestricted payments; |

|  |              |                                                   |
|--|--------------|---------------------------------------------------|
|  | •  | paycertain dividends or make other distributions; |

|  |              |              |
|--|--------------|--------------|
|  | •  | incur liens; |

|  |              |                                             |
|--|--------------|---------------------------------------------|
|  | •  | enter into transactions withaffiliates; and |

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | merge orconsolidate or transfer and sell assets. |

In addition, ClarkeAmerican’s and Mafco Worldwide’s respective creditfacilities contain covenants requiring them to maintain financialratios, including, with respect to Clarke American, a 

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maximum consolidated secured leverage ratio,a maximum total consolidated leverage ratio and a minimum consolidatedfixed charge coverage ratio, and with respect to Mafco Worldwide, aminimum ratio of total consolidated EBITDA less capital expenditures toconsolidated interest expense and a maximum ratio of consolidated totaldebt outstanding to consolidated EBITDA. These restrictions may limitClarke American’s and Mafco Worldwide’s ability tooperate their respective businesses and may prohibit or limit theirability to enhance their operations or take advantage of potentialbusiness opportunities as they arise.

Risks Related toClarke American’s Business and Industry

Thepaper check industry overall is a mature industry and check usage isdeclining. Clarke American’s business will be harmed if checkusage declines faster than expected.

Check andcheck-related products and services, including delivery services,account for most of Clarke American’s revenues. Check printingis, and is expected to continue to be, an essential part of ClarkeAmerican’s business and the principal source of ClarkeAmerican’s operating income. The check industry overall is amature industry. The number of checks written in the U.S. has declinedin recent years, and Clarke American believes that it will continue todecline due to the increasing use of alternative payment methods,including credit cards, debit cards, smart cards, automated tellermachines, direct deposit, wire transfers, electronic and other billpaying services, home banking applications and Internet-based paymentservices. According to Global Concepts, Inc., an independent consultingfirm hired by the Federal Reserve to analyze check writing patterns,the number of checks written has declined approximately 4.0%annually from 2000 to 2003, and is forecast to decline by approximately3.7% annually from 2004 to 2009. The actual rate and extent towhich alternative payment methods will achieve consumer acceptance andreplace checks, whether as a result of legislative developments,personal preference or otherwise, cannot be predicted with certainty.Changes in technology or the widespread adoption of currenttechnologies may also make alternative payment methods more popular. Anincrease in the use of any of these alternative payment methods couldhave a material adverse effect on the demand for checks and a materialadverse effect on Clarke American’s business, results ofoperations and prospects.

Consolidation among financialinstitutions may adversely affect Clarke American’srelationships with its clients and Clarke American’s ability tosell its products and may therefore result in lower revenues andprofitability.

Mergers, acquisitions and personnel changesat financial institutions may adversely affect Clarke American’sbusiness, financial condition and results of operations. In 2004 and2005, financial institutions accounted for approximately 84% and84%, respectively, of Clarke American’s revenues. Thenumber of financial institutions has declined due to consolidation.Margin pressures arise from such consolidation as merged entities seeknot only the most favorable prices formerly offered to the predecessorinstitutions, but also additional discounts due to the greater volumerepresented by the combined entity. Consolidation among financialinstitutions could also cause Clarke American to lose current andpotential clients as such clients are, for example, acquired byfinancial institutions with pre-existing relationships with ClarkeAmerican’s competitors. This concentration greatly increases theimportance of retaining Clarke American’s major financialinstitution clients and attracting significant additional clients in anincreasingly competitive environment. The increase in generalnegotiating leverage possessed by such consolidated entities alsopresents a risk that new and/or renewed contracts with theseinstitutions may not be secured on terms as favorable as thosehistorically negotiated with these clients. Consolidation amongfinancial institutions could therefore decrease ClarkeAmerican’s revenues and profitability.

ClarkeAmerican is dependent on a few large clients and adverse changes in itsrelationships with these highly-concentrated clients may adverselyaffect its revenues and profitability.

ClarkeAmerican’s sales have been, and very likely will continue to be,concentrated among a small group of customers. In fiscal 2005, ClarkeAmerican’s top 20 clients represented approximately

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47% of its revenues, with sales toBank of America representing a significant portion of such revenues.Clarke American’s contract with Bank of America permits it toterminate the contract ‘‘for convenience’’ uponwritten notice or ‘‘for cause.’’ A significantdecrease or interruption in business from Bank of America or from anyof Clarke American’s other significant clients, or thetermination of Clarke American’s contracts with any of its mostsignificant clients, could have a material adverse effect on ClarkeAmerican’s revenues and profitability.

ClarkeAmerican’s financial results can also be adversely affected bythe business practices and actions of its large clients in a number ofways, including timing, size and mix of product orders and supply chainmanagement. Several of Clarke American’s contracts with itssignificant clients expire over the next several years. Clarke Americanmay not be able to renew them on terms favorable to Clarke American, orat all. The loss of one or more of these clients or a shift in thedemand by, distribution methods of, pricing to, or terms of sale to,one or more of these clients could materially adversely affect ClarkeAmerican. The write-off of any significant receivable due from delaysin payment or return of products by any of Clarke American’ssignificant clients could also adversely impact ClarkeAmerican’s revenues and profitability.

ClarkeAmerican faces intense competition and pricing pressures in certainareas of its business, which could result in lower revenues, highercosts and lower profitability.

The check printing industryis intensely competitive. In addition to competition from alternativepayment methods, Clarke American also faces considerable competitionfrom other check printers such as John H. Harland Company, DeluxeCorporation and Custom Direct. The principal factors on which ClarkeAmerican competes are service, convenience, quality, product range andprice. From time to time, some of its competitors have reduced theprices of their products in an attempt to gain greater volume andretain customers. Price reductions by these competitors have resultedin reduced profit margins for Clarke American in the past. ClarkeAmerican also experiences pricing pressures from its individualcustomer and financial institution client demands. Such demands mayinclude pricing decreases, prepaid incentives, rebates, revenueguarantees or a larger percentage of check revenue sharing. ClarkeAmerican may not be able to compete effectively against current andfuture competitors. Continued competition could result in additionalprice reductions, reduced profit margins, loss of customers and anincrease in prepaid incentives, which are up-front cash payments tofinancial institutions to encourage them to sign long-term contractsupon contract execution or renewal. Any increase in prepaid incentiveswould be detrimental to the prospects of Clarke American’sbusiness.

Clarke American may not successfully implementits business strategies or realize all of its expected cost savings,which could reduce Clarke American’s revenues andprofitability.

Clarke American’s businessstrategies include building market share, strengthening relationshipswith clients, achieving substantial cost savings, making technologyinvestments, rolling out procurement initiatives, reducing general andadministrative expenses and corporate overhead and engaging in otherprocess improvements designed to reduce fixed costs.

ClarkeAmerican’s business strategies also include investing inupgrading certain of the technologies that it uses, including voiceresponse systems, and investing in a state-of-the-art customerrelationship management system that will enable it to more effectivelydeploy targeted direct marketing efforts through its contact centersand websites, increasing the success rate of Clarke American’sup-selling and cross-selling efforts.

Clarke American may not beable to fully implement these business strategies or realize, in wholeor in part or within the time frames anticipated, the efficiencyimprovements or expected cost savings from these strategies. ClarkeAmerican’s strategies are subject to significant business,economic and competitive uncertainties and contingencies, many of whichare beyond its control. Additionally, Clarke American’s businessstrategies may change from time to time. As a result, Clarke Americanmay not be able to achieve its expected results of operations.

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Interruptions or adverse changes inClarke American’s vendor or supplier relationships or deliveryservices could have a material adverse effect on ClarkeAmerican’s business.

Clarke American has strongrelationships with many of the country’s largest paper mills andink suppliers. These relationships afford Clarke American certainpurchasing advantages, including stable supply and favorable pricingarrangements. Clarke American’s supplier arrangements are bypurchase order and terminable at will at the option of either party.While Clarke American has been able to obtain sufficient paper suppliesduring recent paper shortages and otherwise, in part through purchasesfrom foreign suppliers, Clarke American is subject to the risk that itwill be unable to purchase sufficient quantities of paper to meet itsproduction requirements during times of tight supply. Clarke Americanalso relies on a single service provider for the maintenance of itsdigital printers. An interruption in its relationship with this serviceprovider could compromise Clarke American’s ability to fulfillpending orders for checks and check-related products. Any interruptionin supplies or service from these or other vendors or suppliers ordelivery services could result in a disruption to ClarkeAmerican’s business if it is unable to readily find alternativeservice providers at comparable rates.

Increased productionand delivery costs, such as fluctuations in paper costs, couldmaterially adversely affect Clarke American’sprofitability.

Increases in production costs such as paperand labor could adversely affect Clarke American’sprofitability, business, financial condition and results of operations.For example, Clarke American’s principal raw material is paper.Any significant increase in paper prices as a result of a short supplyor otherwise would adversely affect Clarke American’s costs. Inaddition, disruptions in parcel deliveries or increases in deliveryrates, which are often tied to fuel prices, could also increase ClarkeAmerican’s costs. Clarke American’s contracts with itsfinancial institution clients may contain certain restrictions onClarke American’s ability to pass on to clients increasedproduction costs or price increases. In addition, competitive pressuresin the check industry may have the effect of inhibiting ClarkeAmerican’s ability to reflect these increased costs in theprices of its products and services.

Softness in directmail response rates could have an adverse impact on ClarkeAmerican’s operating results.

ClarkeAmerican’s Direct-to-Consumer division has experienced declinesin response and retention rates related to direct mail promotionalmaterials. Clarke American believes that these declines areattributable to a number of factors, including the decline in checkusage, the overall increase in direct mail solicitations received byClarke American’s target customers, and the multi-boxpromotional strategies employed by Clarke American and its competitors.To offset these factors, Clarke American may have to modify and/orincrease its marketing efforts, which could result in increasedexpense.

The profitability of the Direct-to-Consumer divisiondepends in large part on Clarke American’s ability to secureadequate advertising media placements at acceptable rates, as well asthe consumer response rates generated by such advertising. Suitableadvertising media may not be available at a reasonable cost, oravailable at all. Furthermore, the advertising Clarke American utilizesmay not be effective. Competitive pricing pressure may inhibit ClarkeAmerican’s ability to reflect any of these increased costs inthe prices of its products. Clarke American may not be able to sustainits current levels of profitability as a result.

ClarkeAmerican depends upon the talents and contributions of a limited numberof individuals, many of whom would be difficult to replace, and theloss or interruption of their services could materially and adverselyaffect Clarke American’s profitability.

ClarkeAmerican has entered into employment agreements with certain members ofits senior management team, including Charles Dawson, ClarkeAmerican’s President and Chief Executive Officer. However, theservice of these individuals may not continue or Clarke American maynot be able to find individuals to replace them at the same cost toClarke American or at all. The loss or 

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interruption of the services of theseexecutives could have a material adverse effect on ClarkeAmerican’s business, financial condition and results ofoperations.

Technological improvements may reduce ClarkeAmerican’s competitive advantage over some of its competitors,which could reduce its profits.

Improvements in the costand quality of printing technology could enable some of ClarkeAmerican’s competitors to gain access to products of complexdesign and functionality at competitive costs. Increased competitionfrom these competitors could force Clarke American to reduce its pricesto attract and retain customers, which could reduce ClarkeAmerican’s profits.

Account data breaches involvingstored customer data or misuse of such data could adversely affectClarke American’s reputation, revenues and products.

Clarke American, its customers, and other third parties storecustomer account information relating to Clarke American’schecks. Any breach of the systems on which sensitive customer data andaccount information are stored or archived and any misuse by ClarkeAmerican’s own employees, by employees of data archivingservices or by other unauthorized users of such data could lead tofraudulent activity involving Clarke American’s customers andClarke American’s financial institution clients’customers’ information and/or funds, damage the reputation ofClarke American’s brands and result in claims against ClarkeAmerican. If Clarke American is unsuccessful in defending any lawsuitinvolving such data security breaches or misuse, it may be forced topay damages, which could materially and adversely affect itsprofitability and could have a material adverse impact on ClarkeAmerican’s transaction volumes, revenue and future growthprospects. In addition, such breaches could adversely affect ClarkeAmerican’s financial institution clients’ perception asto Clarke American’s reliability, and could lead to thetermination of customer relations and Clarke American’s materialcontracts.

Legislation and contracts relating to consumerprivacy protection could limit or harm Clarke American’s futurebusiness.

Clarke American is subject to the federalfinancial modernization law known as the Gramm-Leach-Bliley Act and theregulations implementing its privacy and information securityrequirements, as well as other privacy and data security federal andstate laws and regulations. Clarke American is also subject toadditional privacy and information security requirements in many of itscontracts with financial institution clients, which are often morerestrictive than the regulations. These laws, regulations andagreements require Clarke American to develop and implement policies toprotect the security and confidentiality of consumers’ nonpublicpersonal information and to disclose these policies to consumers beforea customer relationship is established and periodically thereafter. Thelaws, regulations, and agreements limit Clarke American’sability to use its direct to consumer data in Clarke American’sother businesses and limit its ability to share customerinformation.

The Gramm-Leach-Bliley Act does not prohibit statelegislation or regulations that are more restrictive on ClarkeAmerican’s use of data. More restrictive legislation orregulations have been introduced in the past and could be introduced inthe future in Congress and the states. For example, legislation hasbeen proposed which would require consumers to opt-in to any plan thatwould allow their nonpublic personal information to be disclosed.Clarke American is unable to predict whether more restrictivelegislation or regulations will be adopted in the future. Any futurelegislation or regulations could have a negative impact on itsbusiness, results of operations or prospects. Additionally, futurecontracts may impose even more stringent requirements on ClarkeAmerican which could increase its operating costs, as well as interferewith the cost savings Clarke American is trying to achieve.

Newlaws and regulations may be adopted in the future with respect to theInternet, e-commerce or marketing practices generally relating toconsumer privacy. Such laws or regulations may impede the growth of theInternet and/or use of other sales or marketing vehicles. As anexample, new privacy laws could decrease traffic to ClarkeAmerican’s websites, decrease telemarketing 

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opportunities and decrease the demand forClarke American’s products and services. Additionally, theapplicability to the Internet of existing laws governing propertyownership, taxation, libel and personal privacy is uncertain and mayremain uncertain for a considerable length of time.

ClarkeAmerican may be unable to protect its rights in intellectual property,and third party infringement or misappropriation may materiallyadversely affect its profitability.

Despite ClarkeAmerican’s efforts to protect its intellectual property, thirdparties may infringe or misappropriate Clarke American’sintellectual property or otherwise independently develop substantiallyequivalent products and services. In addition, the sale of productsbearing designs licensed from third parties accounts for a significantportion of Clarke American’s revenues. These license agreementstypically provide for the retention of ownership of the trade name,know-how or other intellectual property by the licensor and the paymentof a royalty to the licensor. In general, the term of each license isshort, between two and three years, and some licenses may be terminatedupon a change of control. Such licenses may not be available to ClarkeAmerican indefinitely or on terms that would allow it to continue to beprofitable with those products. The loss of intellectual propertyprotection or the inability to secure or enforce intellectual propertyprotection could harm Clarke American’s business and ability tocompete. Clarke American relies on a combination of trademark andcopyright laws, trade secret protection and confidentiality and licenseagreements to protect its trademarks, software and know-how. ClarkeAmerican may be required to spend significant resources to protect itstrade secrets and monitor and police its intellectual propertyrights.

Third parties may assert infringement claims againstClarke American in the future. In particular, there has been asubstantial increase in the issuance of patents for Internet-relatedsystems and business methods, which may have broad implications forparticipants in online commerce. Claims for infringement of thesepatents are increasingly becoming a subject of litigation. If ClarkeAmerican becomes subject to an infringement claim, it may be requiredto modify its products, services and technologies or obtain a licenseto permit its continued use of those rights. Clarke American may not beable to do either of these things in a timely manner or upon reasonableterms and conditions. Failure to do so could seriously harm ClarkeAmerican’s business, operating results and prospects as a resultof lost business, increased expenses or being barred from offering itsproducts or implementing its systems or business methods. In addition,future litigation relating to infringement claims could result insubstantial costs to Clarke American and a diversion of managementresources. Adverse determinations in any litigation or proceeding couldalso subject Clarke American to significant liabilities and couldprevent Clarke American from using some of its products, services ortechnologies.

Clarke American is dependent upon third partyproviders for significant information technology needs, and aninterruption of services from these providers could materiallyadversely affect Clarke American’s operations.

Clarke American has entered into agreements with third partyproviders for the licensing of certain software and the provision ofinformation technology services, including software development andsupport services, and personal computer, telecommunications, networkserver and help desk services. In the event that one or more of theseproviders is not able to provide adequate information technologyservices or terminates a license or service, Clarke American would beadversely affected. Although Clarke American believes that informationtechnology services and substantially equivalent software and servicesare available from numerous sources, a failure to perform or atermination by one or more of its service providers could cause adisruption in Clarke American’s business while it obtains analternative source of supply and Clarke American may not be able tofind such an alternative source on commercially reasonable terms, or atall.

Clarke American may experience processing errors orsoftware defects that could harm its business and reputation.

Clarke American uses sophisticated software and computing systems toprocess check orders for its customers. Clarke American may experiencedifficulties in installing or integrating its technologies

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on platforms used by its customers.Furthermore, certain financial institution clients have integratedtheir systems with Clarke American’s, permitting ClarkeAmerican’s operators to effect certain operations directly intoits financial institution clients’ customers’ accounts.Errors or delays in the processing of check orders, software defects orother difficulties could result in:

|  |              |                    |
|--|--------------|--------------------|
|  | •  | loss of customers; |

|  |              |                              |
|--|--------------|------------------------------|
|  | •  | additional developmentcosts; |

|  |              |                                            |
|--|--------------|--------------------------------------------|
|  | •  | diversion oftechnical and other resources; |

|  |              |                        |
|--|--------------|------------------------|
|  | •  | negative publicity; or |

|  |              |                              |
|--|--------------|------------------------------|
|  | •  | exposure to liabilityclaims. |

Clarke American faces uncertainty with respect tofuture acquisitions and unsuitable or unsuccessful acquisitions couldmaterially adversely affect Clarke American’sprofitability.

Clarke American has acquired complementarybusinesses in the past and may pursue acquisitions of complementarybusinesses in the future. Clarke American cannot predict whethersuitable acquisition candidates can be acquired on acceptable terms orwhether future acquisitions, even if completed, will be successful.Future acquisitions by Clarke American could result in the incurrenceof contingent liabilities, debt or amortization expenses relating tointangible assets which could materially adversely affect ClarkeAmerican’s business, results of operations and financialcondition. Moreover, the success of any acquisition will depend uponClarke American’s ability to integrate effectively the acquiredbusinesses. The process of integrating acquired businesses may involvenumerous risks, including, among others:

|  |              |                                                      |
|--|--------------|------------------------------------------------------|
|  | •  | difficulties in assimilatingoperations and products; |

|  |              |                                                                        |
|--|--------------|------------------------------------------------------------------------|
|  | •  | diversion ofmanagement’s attention from other business concerns; |

|  |              |                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------|
|  | •  | risks of operating businessesin which Clarke American has limited or no direct prior experience; |

|  |              |                                                                                               |
|--|--------------|-----------------------------------------------------------------------------------------------|
|  | •  | potential loss of ClarkeAmerican’s key employees or of those of the acquiredbusinesses; |

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | potentialexposure to unknown liabilities; and |

|  |              |                                                                                         |
|--|--------------|-----------------------------------------------------------------------------------------|
|  | •  | possible loss of ClarkeAmerican’s clients or of those of the acquired businesses. |

Clarke American cannot predict whether any acquired products,technologies or businesses will contribute to Clarke American’srevenues or earnings to any material extent.

ClarkeAmerican may be subject to sales and other taxes which could haveadverse effects on its business.

In accordance withcurrent federal, state and local tax laws, and the constitutionallimitations thereon, Clarke American currently collects sales, use orother similar taxes in state and local jurisdictions where ClarkeAmerican has a physical presence. One or more state or localjurisdictions may seek to impose sales tax collection obligations onClarke American and other out-of-state companies which engage in remoteor online commerce. Several U.S. states have recently taken variousinitiatives to prompt retailers to collect local and state sales taxeson purchases made over the Internet. Furthermore, tax law and theinterpretation of constitutional limitations thereon is subject tochange. In addition, any new operations of these businesses in stateswhere they do not currently have a physical presence could subjectshipments of goods by these businesses into such states to sales taxunder current or future laws. If one or more state or localjurisdictions successfully asserts that Clarke American must collectsales or other taxes beyond its current practices, it could have amaterial, adverse affect on Clarke American’s business.

Clarke American may be subject to environmental risks, andliabilities for environmental compliance or cleanup could have amaterial, adverse effect on Clarke American’sprofitability.

Clarke American’s plants are subjectto many existing and proposed federal, state and local laws andregulations designed to protect human health and the environment.Enforcement of these laws 

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may require the expenditure of materialamounts for environmental compliance or cleanup. Clarke American hassold former plants to third parties. In some instances, Clarke Americanhas agreed to indemnify the buyer of the facility for certainenvironmental liabilities. Clarke American may also be subject toliability under environmental laws for environmental conditions atthose former facilities or other locations where ClarkeAmerican’s wastes have been disposed. Although Clarke Americanis not aware of any fact or circumstance which would require theexpenditure of material amounts for environmental compliance orcleanup, if environmental liabilities are discovered at its current orformer printing plants, Clarke American could be required to spendmaterial amounts for environmental compliance or cleanup.

Risks Relating to Mafco Worldwide’s Business andIndustry

Mafco Worldwide’s business is heavilydependent on sales to the worldwide tobacco industry, and negativedevelopments and trends within the tobacco industry could have amaterial adverse effect on Mafco Worldwide’s business, financialcondition and results of operations. 

In 2005, over73% of Mafco Worldwide’s licorice sales and 59% ofthe Company’s consolidated net revenues were to the worldwidetobacco industry for use as tobacco flavor enhancing and moisteningagents in the manufacture of American blend cigarettes, moist snuff,chewing tobacco and pipe tobacco. Negative developments and trendswithin the tobacco industry, such as those described below, could havea material adverse effect on Mafco Worldwide’s business,financial condition and results of operations.

Consumptionof tobacco products in the U.S. has declined steadily foryears.

During the period from 1996-2005, U.S. cigaretteconsumption declined at an estimated average rate of 2.6% peryear due to significant price increases by the cigarette manufacturersin order to recover costs of their 1998 settlement with the stateattorneys general, greater consumer awareness of health risksassociated with smoking, diminishing social acceptance of smoking,increased pressure from anti-smoking groups, continuing restrictions onsmoking in public areas, restrictions on the marketing, advertising andsale of cigarettes and sales tax increases on cigarettes. U.S.production of chewing tobacco products has declined steadily for morethan a decade. This decline has been partially offset by an increase inmoist snuff volumes.

The tobacco industry has been thesubject of increased governmental regulation in recent years, and thistrend is likely to continue.

Producers of tobacco productsare subject to regulation in the U.S. at the federal, state and locallevels, as well as in foreign countries. Together with changing publicattitudes toward tobacco products, a constant expansion of tobaccoregulations in the U.S. since the early 1970s has been a major causefor the decline in consumption of such products. Moreover, the trend istoward increasing regulation of the tobacco industry. Restrictiveforeign tobacco legislation has been on the rise in recent years aswell, including restrictions on where tobacco may be sold and used,warning labels and other graphic packaging images, product constituentlimitations and a general increase in taxes. For more than 35 years,the sale and use of tobacco products has been subject to oppositionfrom government and health officials in the U.S. and other countriesdue to claims that tobacco consumption is harmful to anindividual’s health. In addition, the World Health Organizationhas identified smoking as a significant world health risk. These claimshave resulted in a number of substantial restrictions on the marketing,advertising, sale and use of cigarettes and other tobacco products, indiminished social acceptability of smoking and in activities byanti-tobacco groups designed to inhibit tobacco product sales. Theeffects of these claims together with substantial increases in state,federal and foreign regulation of tobacco products have resulted inlower tobacco consumption, which is likely to continue in the future,and could have a material adverse effect on Mafco Worldwide’sbusiness, financial condition and results of operations.

The tobacco industry has been the subject of substantiallitigation.

There has been substantial litigation betweentobacco product manufacturers and individuals, various governmentalunits and private health care providers regarding increased medicalexpenditures 

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and losses allegedly caused by use oftobacco products. As a result of settlements of some of thislitigation, the cigarette companies have significantly increased thewholesale price of cigarettes in order to recoup the cost of thesettlements. At this time Mafco Worldwide is unable to determinewhether additional price increases in the future will reduce tobaccoconsumption or the effect of reduced consumption on its financialperformance. Health-related litigation against the tobacco industry mayincrease, and Mafco Worldwide, as a supplier to the tobacco industry,may become party to such litigation regardless of the merit of anyclaim. This litigation, if successful, could have a material adverseeffect on Mafco Worldwide’s business, financial condition andresults of operations.

Federal, state, local and foreignexcise tax increases on tobacco products are likely to reduce demandfor tobacco products.

In recent years, federal, state,local and foreign governments have increased or proposed increases toexcise taxes on tobacco products as a means of both raising revenue anddiscouraging the consumption of such products. Substantial increases inexcise duties on tobacco products have reduced, and are likely tocontinue to reduce, the demand for tobacco products, which could have amaterial adverse effect on Mafco Worldwide’s business, financialcondition and results of operations.

Changes in consumerpreferences could decrease Mafco Worldwide’s revenues and cashflow.

Mafco Worldwide is subject to the risks of evolvingconsumer preferences and nutritional and health-related concerns. Aportion of Mafco Worldwide's revenues are derived from the sale oflicorice to worldwide confectioners.  To the extent thatconsumer preferences shift away from licorice flavored candy, operatingresults relating to the sale of licorice to worldwide confectionerscould be impaired, which could have a material adverse effect on MafcoWorldwide's business, financial condition and results ofoperations.  In addition, a portion of Mafco Worldwide'srevenues are derived from the sale of licorice derivatives to foodprocessors for use as flavoring or masking agents, including MafcoWorldwide's Magnasweet brand flavor enhancer, which is used invarious brands of chewing gum, lip balm, energy bars, non-carbonatedbeverages, chewable vitamins, aspirin, and other products and isidentified in the United States as a natural flavor.  To theextent that consumer preferences evolve away from products that uselicorice derivatives, operating results relating to the sale oflicorice derivatives to food processors could be impaired, which couldhave a material adverse effect on Mafco Worldwide's business,financial condition and results of operations.

Competitionand consolidation in the specialty sweetener industry may reduce MafcoWorldwide’s sales and margins.

The artificialsweetener industry is a highly competitive industry. Mafco Worldwidecompetes with companies that have greater capital resources, facilitiesand diversity of product lines. Increased competition as to MafcoWorldwide’s products could result in decreased demand for itsproducts, reduced volumes and/or prices, each of which would reduceMafco Worldwide’s sales and margins and have a material adverseeffect on Mafco Worldwide’s business, financial condition andresults of operations.

Mafco Worldwide’s margins are alsounder pressure from consolidation in the retail food industry in manyregions of the world. In the United States, Mafco Worldwide’scustomers may experience a shift in the channels where consumerspurchase their products from the higher margin retail to the lowermargin club and mass merchandisers. Such consolidation maysignificantly increase Mafco Worldwide’s customers’ costsof doing business and may further result in lower sales of its productsand/or lower margins on sales.

If Mafco Worldwide fails tocomply with the many laws applicable to its business, Mafco Worldwidemay incur significant fines and penalties.

MafcoWorldwide’s facilities and products are subject to laws andregulations administered by the Federal Food and Drug Administration,and other federal, state, local, and foreign governmental agenciesrelating to the processing, packaging, storage, distribution,advertising, labeling, quality, and 

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safety of food products. MafcoWorldwide’s failure to comply with applicable laws andregulations could subject it to administrative penalties and injunctiverelief, civil remedies, including fines, injunctions and recalls ofMafco Worldwide’s products. Mafco Worldwide’s operationsare also subject to regulations administered by the EnvironmentalProtection Agency and other state, local and foreign governmentalagencies. Failure to comply with these regulations can have seriousconsequences, including civil and administrative penalties and negativepublicity. In addition to these possible fines and penalties, changesin laws and regulations in domestic and foreign jurisdictions,including changes in food and drug laws, accounting standards, taxationrequirements (including tax rate changes, new tax laws and revised taxlaw interpretations) and environmental laws could have a significantadverse effect on Mafco Worldwide’s results of operations.

Mafco Worldwide is heavily dependent on certain of itscustomers for a significant percentage of its net revenues. 

In 2005, Mafco Worldwide’s ten largest customers, eight ofwhich are manufacturers of tobacco products, accounted forapproximately 69% of its net revenues, with sales to AltriaGroup Inc. representing a significant portion of such net revenues. IfAltria Group Inc. or any other of Mafco Worldwide’s significantcustomers were to stop purchasing licorice products from MafcoWorldwide, it would have a material adverse effect on MafcoWorldwide’s business, financial condition and results ofoperations.

Many of Mafco Worldwide’s employeesbelong to labor unions and strikes, work stoppages and other labordisturbances could adversely affect Mafco Worldwide’s operationsand could cause its costs to increase.

Mafco Worldwide isa party to a collective bargaining agreement with respect to itsemployees at the Camden, New Jersey facility. This agreement expires inMay, 2008. Disputes with regard to the terms of this agreement or MafcoWorldwide’s potential inability to negotiate an acceptablecontract upon expiration of the existing contract could result in,among other things, strikes, work stoppages or other slowdowns by theaffected workers. If the unionized workers were to engage in a strike,work stoppage or other slowdown, or other employees were to becomeunionized or the terms and conditions in future labor agreements wererenegotiated, Mafco Worldwide could experience a significant disruptionof its operations and higher ongoing labor costs. In addition, MafcoWorldwide’s collective bargaining agreements and labor laws mayimpair its ability to reduce labor costs by streamlining existingmanufacturing facilities and in restructuring its business because oflimitations on personnel and salary changes and similarrestrictions.

Changes in Mafco Worldwide’srelationships with its suppliers could have a material adverse effecton Mafco Worldwide’s business, financial condition and resultsof operations. 

Mafco Worldwide is dependent on itsrelationships with suppliers of licorice root. Licorice is derived fromthe roots of the licorice plant, a shrub-like leguminous plant that isindigenous to the Middle East and Central Asia. Most of the licoriceroot Mafco Worldwide processes originates in Afghanistan, Pakistan,Iraq, Azerbaijan, Uzbekistan and Turkmenistan. During 2005, one ofMafco Worldwide’s suppliers of licorice root suppliedapproximately 60% of its total root purchases. Mafco Worldwideis also dependent on its relationships with suppliers of intermediarylicorice extract. These extracts are available from producers primarilyin the People’s Republic of China, Iraq and Central Asia. During2005, one of Mafco Worldwide’s suppliers of intermediarylicorice extract supplied over 34% of Mafco Worldwide’stotal purchases. If any material licorice root supplier or any materialsupplier of intermediary licorice products terminates or materiallyreduces or modifies its relationship with Mafco Worldwide, such a loss,reduction or modification could have a material adverse effect on MafcoWorldwide’s business, results of operations and financialcondition.

Fluctuations in costs of licorice root andintermediary licorice extract could have a material adverse effect onMafco Worldwide’s business, financial condition and results ofoperations. 

Although the price of licorice root andintermediary licorice extract has been relatively stable in recentyears, the price of licorice root and intermediary licorice extract areaffected by many factors, 

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including monetary fluctuations andeconomic, political and weather conditions in countries where MafcoWorldwide’s suppliers are located. Although Mafco Worldwideoften enters into purchase contracts for these products, significant orprolonged increases in the prices of licorice root and intermediarylicorice extract could have a material adverse effect on MafcoWorldwide’s business, results of operations and financialcondition.

Mafco Worldwide is subject to risks associatedwith economic, climatic or political instability in countries in whichMafco Worldwide sources licorice root and intermediary licoriceextract.

Most of the licorice root Mafco Worldwideprocesses originates in Afghanistan, Pakistan, Azerbaijan, Uzbekistan,and Turkmenistan. Producers of intermediary licorice extract arelocated primarily in the People’s Republic of China, Iraq andCentral Asia. These countries and regions have, from time to time, beensubject to political instability, corruption and violence. Economic,climatic or political instability in these countries and regions couldresult in reduced supply, material shipping delays, fluctuations inforeign currency exchange rates, customs duties, tariffs and import orexport quotas, embargos, sanctions significant raw material priceincreases or exposure to liability under the Foreign Corrupt PracticesAct and could have a material adverse effect on MafcoWorldwide’s business, results of operations and financialcondition. Furthermore, military action in Iraq and Afghanistan,increasing military tension involving Pakistan, as well as theterrorist attacks of September  11,  2001 and subsequentthreats of terrorist attacks and unrest, have caused instability in theworld’s financial and commercial markets and have significantlyincreased political and economic instability in some of the countriesand regions from which Mafco Worldwide’s raw materialsoriginate. Acts of terrorism and threats of armed conflicts in oraround these countries and regions could adversely affect MafcoWorldwide’s business, results of operations and financialcondition in ways the Company cannot predict at this time.

Mafco Worldwide faces competition in the licorice industry andcould face increased competition in the future.

Some ofthe markets in which Mafco Worldwide operates, particularly thelicorice confectionary market in Europe, are competitive. Significantcompeting producers of licorice products are government-owned andprivate corporations in the People’s Republic of China and Iranand a private corporation based in Israel. Mafco Worldwide could alsoface increased competition in sales of licorice products to tobaccocompanies in the future. Increased competition in any of the markets inwhich Mafco Worldwide operates could reduce its sales and profitmargins and have a material adverse effect on Mafco Worldwide’sbusiness, results of operations and financial condition.

Mafco Worldwide’s success depends, in part, on its keyemployees. 

Mafco Worldwide’s success depends, inpart, on its ability to retain key employees. These employees havesubstantial experience and expertise in Mafco Worldwide’sbusiness and have made significant contributions to its success. Theunexpected loss of one or more of such key employees could have amaterial adverse effect on Mafco Worldwide’s business, resultsof operations and financial condition.

MafcoWorldwide’s business is exposed to domestic and foreign currencyfluctuations and changes in interest rates. 

MafcoWorldwide’s international sales are generally denominated inforeign currencies, and this revenue could be materially affected bycurrency fluctuations. Approximately 17% of MafcoWorldwide’s sales were from international operations in 2005.Mafco Worldwide’s primary exposures are to fluctuations inexchange rates for the United States dollar versus the Euro. Changes incurrency exchange rates could also affect the relative prices at whichMafco Worldwide and its foreign competitors sell products in the samemarket. Adverse foreign currency fluctuations could have a materialadverse effect on Mafco Worldwide’s business, results ofoperations and financial condition. Mafco Worldwide is also exposed tochanges in interest rates on its variable rate debt. A hypothetical

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10% increase in the interest ratesapplicable to debt outstanding at December  31,  2005 wouldresult in an increase to interest expense of approximately $0.5million per year. Adverse interest rate changes could have a materialadverse effect on Mafco Worldwide’s business, results ofoperations and financial condition.

If Mafco Worldwidefails to maintain the quality of its manufacturing processes or rawmaterials, its operating results would be harmed.

Themanufacture of Mafco Worldwide’s products is a multi-stageprocess that requires the use of high-quality materials andmanufacturing technologies. In spite of stringent quality controls,weaknesses in process control or minute impurities in materials maycause a substantial percentage of a product in a lot to be defective.If Mafco Worldwide were not able to maintain its manufacturingprocesses or to maintain stringent quality controls, or ifcontamination problems arise, Mafco Worldwide’s operatingresults would be harmed.

Mafco Worldwide is dependent onthe success of its research and development and the failure to developnew and improved products could adversely affect itsbusiness.

Mafco Worldwide has in the past made, andintends to continue in the future to make, investments in research anddevelopment in order to enable Mafco Worldwide to identify and developnew products. The development process for new products can be lengthy.Despite investments in this area, Mafco Worldwide’s research anddevelopment may not result in the discovery or successful developmentof new products. The success of Mafco Worldwide’s new productofferings will depend on several factors, including its ability to:

|  |              |                                                                                      |
|--|--------------|--------------------------------------------------------------------------------------|
|  | •  | accurately anticipate andproperly identify its customers' needs and industry trends; |

|  |              |                                  |
|--|--------------|----------------------------------|
|  | •  | price its productscompetitively; |

|  |              |                                                                                     |
|--|--------------|-------------------------------------------------------------------------------------|
|  | •  | innovate,develop and commercialize new products and applications in a timelymanner; |

|  |              |                                       |
|--|--------------|---------------------------------------|
|  | •  | obtain necessaryregulatory approvals; |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | differentiate its products fromcompetitors' products; and |

|  |              |                                                     |
|--|--------------|-----------------------------------------------------|
|  | •  | use its research anddevelopment budget efficiently. |

The continuous introduction ofnew products is important to the growth of Mafco Worldwide’sbusiness. Mafco Worldwide’s financial condition coulddeteriorate if it is unable to successfully develop and commercializenew products.

Mafco Worldwide’s business is subjectto risks related to weather, disease and pests that could adverselyaffect its business.

Licorice production is subject to avariety of agricultural risks. Extreme weather conditions, disease andpests can materially and adversely affect the quality and quantity oflicorice produced. The Company cannot be sure that these factors willnot affect a substantial portion of Mafco Worldwide’s productionin any year or have a material adverse effect on its business, resultsof operations and financial condition.

Mafco Worldwide issubject to transportation risks.

An extended interruptionin Mafco Worldwide’s ability to ship or distribute productscould have a material adverse effect on its business, financialcondition and results of operations. While the Company believes MafcoWorldwide is adequately insured, the Company cannot be sure that MafcoWorldwide would be able to transport its products by alternative meansif it were to experience an interruption due to strike, naturaldisasters or otherwise, in a timely and cost-effective manner.

Mafco Worldwide’s failure to accurately forecast andmanage inventory could result in an unexpected shortfall or surplus ofits products which could harm its business.

MafcoWorldwide monitors its inventory levels based on its own projections offuture demand. Because of the length of time necessary to harvestlicorice root and produce licorice products, Mafco 

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Worldwide must make production decisionswell in advance of sales. An inaccurate forecast of demand can resultin the unavailability of licorice products in high demand. Thisunavailability may depress sales volumes and adversely affect customerrelationships.

Risks Relating to the Company’sContingent Liabilities

The failure of PneumoAbex’s indemnitors and insurers to pay their obligations timelyand substantially in full could have a material adverse effect on theCompany.

Pneumo Abex has no operating business or regularsource of revenue and is therefore dependent on its indemnitors andinsurers for payment of obligations arising out of the defense andresolution of third-party claims asserted against it. Based upon theindemnitors’ active management of indemnifiable matters,discharging of the related liabilities when required, and financialpositions based upon publicly filed financial statements, as well asthe history of insurance recovery, the Company believes that thelikelihood of failing to obtain reimbursement of amounts covered byinsurance and indemnification is remote, although there can be noassurance.

Availability of Certain Documents Concerning theCompany

M & F Worldwide maintains a websiteat http://www.mandfworldwide.com. Current versions of thefollowing documents are available without charge from the website orupon request to the Secretary, M & F Worldwide Corp.,35 East 62nd Street, New York, New York 10021:

|  |              |                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company’s Code ofBusiness Conduct, which includes its Code of Financial Ethics forSenior Financial Officers. |

|  |              |                                                                                                                                                        |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The charters for all standingcommittees of the Company’s Board of Directors, namely itsAudit, Compensation and Nominating/Governance Committees. |

|  |              |                                                     |
|--|--------------|-----------------------------------------------------|
|  | •  | The Company’s CorporateGovernance Guidelines. |

|  |              |                                                                                                                                                                                    |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Thepolicy that the Nominating/Governance Committee of the Company’sBoard of Directors adopted concerning criteria for the nomination ofcandidates to the Board of Directors. |

Electronic or paper copiesof this annual report on Form 10-K, the Company’s quarterlyreports on Form 10-Q, any current report on Form 8-K and any amendmentto any of these documents are similarly available.

Item2.    Properties

Mafco Worldwide

Mafco Worldwide isheadquartered in Camden, New Jersey. Mafco Worldwide’s principalproperties are as follows:

|                        |  |                                                            |  |                 |        |                                       |  |        |         |        |  |  |  |  |
|------------------------|--|------------------------------------------------------------|--|-----------------|--------|---------------------------------------|--|--------|---------|--------|--|--|--|--|
| Location               |  | Use                                                        |  | Owned or Leased |        | Approximate Floor Space (Square Feet) |
| Camden, New Jersey     |  | Licoricemanufacturing, warehousing and administration      |  |            | Owned  |                                  |  |   | 390,000 |   |
| Pennsauken, New Jersey |  | Warehousing                                                |  |            | Leased | (a)                              |  |   | 40,000  |   |
| Camden, New Jersey     |  | Warehousing                                                |  |            | Leased | (b)                              |  |   | 48,000  |   |
| Gardanne, France       |  | Licoricemanufacturing and administration                   |  |            | Owned  |                                  |  |   | 48,900  |   |
| Richmond, Virginia     |  | Manufacturing and administration for non-licorice products |  |            | Owned  |                                  |  |   | 65,000  |   |
|                        |

|  |
|--|
|  |  |
|  |

|     |                                                                 |
|-----|-----------------------------------------------------------------|
| (a) | Leaseexpires in September  2006 with an option to renew to2007. |

|     |                                 |
|-----|---------------------------------|
| (b) | Lease expires inDecember  2006. |

26

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Clarke American

Clarke Americanis headquartered in San Antonio, Texas. Clarke American also operates afacility in New Braunfels, Texas, which houses manufacturing andcontact center operations. This location serves as the headquarters forthe CITM and B2Direct brands. Clarke American’sprincipal properties are as follows:

|                    |  |                                             |  |                                      |         |                     |  |        |        |        |  |  |  |  |
|--------------------|--|---------------------------------------------|--|--------------------------------------|---------|---------------------|--|--------|--------|--------|--|--|--|--|
| Location           |  | Use                                         |  | Approximate Floor Space(Square Feet) |         | Leased/owned status |
| Charlotte, NC      |  | Printing                                    |  |                                 | 38,120  |                |  |   | Leased |   |
| Charlotte, NC      |  | Administration                              |  |                                 | 4,906   |                |  |   | Leased |   |
| Charlotte, NC      |  | Contact Center                              |  |                                 | 44,687  |                |  |   | Leased |   |
| Columbus, OH       |  | Printing                                    |  |                                 | 19,223  |                |  |   | Leased |   |
| Dallas, TX         |  | Printing                                    |  |                                 | 37,252  |                |  |   | Leased |   |
| DesMoines, IA      |  | Printing                                    |  |                                 | 45,000  |                |  |   | Leased |   |
| Jeffersonville, IN |  | Printing                                    |  |                                 | 57,350  |                |  |   | Leased |   |
| Knoxville, TN      |  | Printing                                    |  |                                 | 10,356  |                |  |   | Owned  |   |
| Louisville, KY     |  | Printing                                    |  |                                 | 50,000  |                |  |   | Leased |   |
| Nashville, TN      |  | Administration                              |  |                                 | 21,309  |                |  |   | Leased |   |
| New Braunfels, TX  |  | Administration, Printing and Contact Center |  |                                 | 96,500  |                |  |   | Owned  |   |
| Phoenix, AZ        |  | Printing                                    |  |                                 | 64,000  |                |  |   | Leased |   |
| Salt Lake City, UT |  | Contact Center                              |  |                                 | 18,120  |                |  |   | Leased |   |
| Salt Lake City, UT |  | Contact Center                              |  |                                 | 12,856  |                |  |   | Leased |   |
| San Antonio, TX    |  | Printing                                    |  |                                 | 159,700 |                |  |   | Leased |   |
| SanAntonio, TX     |  | Printing                                    |  |                                 | 39,600  |                |  |   | Owned  |   |
| San Antonio, TX    |  | Contact Center                              |  |                                 | 68,000  |                |  |   | Leased |   |
| San Antonio, TX    |  | ContactCenter                               |  |                                 | 42,262  |                |  |   | Leased |   |
| San Antonio,TX     |  | Administration                              |  |                                 | 84,150  |                |  |   | Leased |   |
| San Antonio, TX    |  | Administration                              |  |                                 | 7,531   |                |  |   | Leased |   |
| San Antonio, TX    |  | Administration                              |  |                                 | 2,137   |                |  |   | Leased |   |
| San Antonio, TX    |  | Administration                              |  |                                 | 1,936   |                |  |   | Leased |   |
| Syracuse, NY       |  | Printing                                    |  |                                 | 28,900  |                |  |   | Owned  |   |
| Trumball, CT       |  | Administration                              |  |                                 | 670     |                |  |   | Leased |   |
|                    |

Item 3.    Legal Proceedings

Various legal proceedings, claims and investigations are pendingagainst the Company, including those relating to commercialtransactions, product liability, safety and health matters, employmentmatters and other matters. The Company is also involved in variousstages of legal proceedings, claims, investigations and cleanuprelating to environmental or natural resource matters, some of whichrelate to waste disposal sites. Most of these matters are covered byinsurance, subject to deductibles and maximum limits, and bythird-party indemnities.

Pneumo Abex’s former Aerospacebusiness sold certain of its aerospace products to the U.S. Governmentor to private contractors for the U.S. Government. Pneumo Abex retainedin the Aerospace sale certain claims for allegedly defective pricingthat the U.S. Government made with respect to certain of theseproducts. In the remaining unindemnified matter, Pneumo Abex conteststhe U.S. Government’s allegations and has been attempting toresolve the matter without litigation.

The Company believes thatthe outcome of all pending legal proceedings in the aggregate will nothave a material adverse effect on its consolidated financial positionor results of operations. Mafco Worldwide carries general liabilityinsurance but has no health hazard policy, which, to the best of MafcoWorldwide’s knowledge, is consistent with industry practice.

See Item 1. Business: Licorice Products -The Tobacco Industry; andNon-Operating Contingent Liability, Indemnification and InsuranceMatters.

Item 4.    Submission of Matters to a Vote ofSecurity Holders

No matter was submitted to a vote of securityholders during the fourth quarter of2005.

27

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PART II

|               |                                                                                                                    |
|---------------|--------------------------------------------------------------------------------------------------------------------|
| Item 5.  | Market forRegistrant’s Common Equity, Related Stockholder Matters andIssuer Repurchases of Equity Securities |

The M & FWorldwide Common Stock is listed on the New York Stock Exchange, Inc.(‘‘NYSE’’) under the symbol MFW. The followingtable sets forth, for the calendar quarters indicated, the high and lowclosing prices per share of the M & F Worldwide Common Stock on theNYSE based on published financial sources.

|               |  |        |        |        |  |        |        |        |  |  |
|---------------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|          |  | High   |        | Low    |
| Calendar2004  |  |   |   |   |  |   |   |   |
| First Quarter |  | $      | 14.93  |   |  | $      | 12.72  |   |
| SecondQuarter |  |   | 14.00  |   |  |   | 12.40  |   |
| ThirdQuarter  |  |   | 13.80  |   |  |   | 12.49  |   |
| FourthQuarter |  |   | 13.72  |   |  |   | 12.94  |   |
| Calendar2005  |  |   |   |   |  |   |   |   |
| First Quarter |  | $      | 14.64  |   |  | $      | 13.05  |   |
| SecondQuarter |  |   | 13.52  |   |  |   | 12.40  |   |
| ThirdQuarter  |  |   | 15.62  |   |  |   | 13.10  |   |
| FourthQuarter |  |   | 17.75  |   |  |   | 15.38  |   |
|               |

The numberof holders of record of the M & F Worldwide Common Stock as ofMarch  1,  2006 was 5,071.

M & F Worldwide has notpaid any cash dividend on the M & F Worldwide Common Stock to dateand does not intend to pay regular cash dividends on the M & FWorldwide Common Stock. M & F Worldwide's Board of Directorswill review M & F Worldwide's dividend policy from time totime in light of M & F Worldwide's results of operations andfinancial position and such other business considerations as the Boardof Directors considers relevant. Mafco Worldwide’s creditagreement and Clarke American’s credit agreement and indenturelimit Mafco Worldwide’s and Clarke American’s respectiveability to pay dividends to M & F Worldwide, which in turn maylimit the ability of M & F Worldwide to pay dividends. See‘‘Management’s Discussion and Analysis of FinancialCondition and Results of Operations — Liquidity and CapitalResources’’ and the Notes to the Company’sConsolidated Financial Statements included elsewhere in this AnnualReport on Form 10-K.

During the fourth quarter of 2005, M &F Worldwide did not repurchase any of its equity securities.

TheChief Executive Officer of M & F Worldwide certified to the NYSE inApril  2005 that he was not aware of any violation by the Companyof the NYSE’s corporate governance listing standards.

Item 6.    Selected Financial Data

The table belowreflects historical financial data which are derived from the auditedconsolidated financial statements of M & F Worldwide for each ofthe years in the five-year period ended December  31,2005

On December  15,  2005 the Company purchased100% of the issued and outstanding shares of Novar, which wasthe predecessor to Clarke American. The Company includes the accountsand results of Clarke American’s operations from this datethrough December  31,  2005 in its consolidated results.

On April  19,  2001, the Company acquired a majorityinterest in Panavision, Inc. (‘‘Panavision’’).On December  3,  2002, the Company divested itself ofPanavision pursuant to a settlement of certain shareholder litigationrelating to the 2001 acquisition (the‘‘Settlement’’). The Company presents theresults of Panavision’s operations from April  19,2001 until December  3,  2002 as discontinuedoperations.

28

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The selected financial data are notnecessarily indicative of results of future operations, and should beread in conjunction with Item 7. ‘‘Management’sDiscussion and Analysis of Financial Condition and Results ofOperations’’ and the Company’s ConsolidatedFinancial Statements included elsewhere in this Annual Report on Form10-K.

|                                                                                                                                                                          |  |                                        |         |         |  |        |         |         |  |        |         |         |  |        |         |         |  |        |        |         |  |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|----------------------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                                                                                                                                                     |  | YearEnded December  31,                |
|                                                                                                                                                                     |  | 2005(a)                                |         | 2004    |  | 2003   |         | 2002    |  | 2001   |
|                                                                                                                                                                     |  | (in millions, except per shareamounts) |
| Statement of IncomeData:                                                                                                                                                 |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |
| Net revenues                                                                                                                                                             |  | $                                      | 121.4   |    |  | $      | 93.4    |    |  | $      | 95.7    |    |  | $      | 96.9    |    |  | $      | 98.4   |    |
| Cost of revenues                                                                                                                                                         |  |                                   | 66.5    |    |  |   | 45.1    |    |  |   | 46.3    |    |  |   | 47.3    |    |  |   | 51.6   |    |
| Gross profit                                                                                                                                                             |  |                                   | 54.9    |    |  |   | 48.3    |    |  |   | 49.4    |    |  |   | 49.6    |    |  |   | 46.8   |    |
| Selling, general and administrativeexpense                                                                                                                               |  |                                   | 21.4    |    |  |   | 17.2    |    |  |   | 16.3    |    |  |   | 13.6    |    |  |   | 14.9   |    |
| Gain on pension reversion                                                                                                                                                |  |                                   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (11.1  | )  |
| Operating income                                                                                                                                                         |  |                                   | 33.5    |    |  |   | 31.1    |    |  |   | 33.1    |    |  |   | 36.0    |    |  |   | 43.0   |    |
| Interest income                                                                                                                                                          |  |                                   | 3.5     |    |  |   | 1.3     |    |  |   | 1.2     |    |  |   | 0.3     |    |  |   | 0.8    |    |
| Interest expense                                                                                                                                                         |  |                                   | (4.8    | )  |  |   | (1.2    | )  |  |   | (2.9    | )  |  |   | (4.1    | )  |  |   | (5.0   | )  |
| Other(expense) income, net                                                                                                                                               |  |                                   | 3.7     |    |  |   | (2.4    | )  |  |   | 1.7     |    |  |   | (1.4    | )  |  |   | (1.7   | )  |
| Income from continuing operations before income taxes                                                                                                                    |  |                                   | 35.9    |    |  |   | 28.8    |    |  |   | 33.1    |    |  |   | 30.8    |    |  |   | 37.1   |    |
| Income taxes                                                                                                                                                             |  |                                   | (11.9   | )  |  |   | (3.6    | )  |  |   | (10.5   | )  |  |   | (12.2   | )  |  |   | (18.7  | )  |
| Income from continuingoperations                                                                                                                                         |  |                                   | 24.0    |    |  |   | 25.2    |    |  |   | 22.6    |    |  |   | 18.6    |    |  |   | 18.4   |    |
| Gain (loss) from operations ofdiscontinued business, net of taxes of $0.6, $0.2, $8.4, in 2003, 2002and 2001, respectively; (including gain on disposal of $17.6 in2002) |  |                                   | — |    |  |   | — |    |  |   | 0.6     |    |  |   | 5.5     |    |  |   | (12.3  | )  |
| Netincome                                                                                                                                                                |  |                                   | 24.0    |    |  |   | 25.2    |    |  |   | 23.2    |    |  |   | 24.1    |    |  |   | 6.1    |    |
| Preferred stock dividends                                                                                                                                                |  |                                   | — |    |  |   | — |    |  |   | — |    |  |   | (0.3    | )  |  |   | (0.2   | )  |
| Net income available toshareholders                                                                                                                                      |  | $                                      | 24.0    |    |  | $      | 25.2    |    |  | $      | 23.2    |    |  | $      | 23.8    |    |  | $      | 5.9    |    |
| Basic earnings (loss) per commonshare:                                                                                                                                   |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |
| Undistributedearnings from continuing operations                                                                                                                         |  | $                                      | 1.25    |    |  | $      | 1.35    |    |  | $      | 1.23    |    |  | $      | 0.71    |    |  | $      | 0.74   |    |
| Undistributed earnings (loss) from discontinuedoperations                                                                                                                |  |                                   | — |    |  |   | — |    |  |   | 0.04    |    |  |   | 0.21    |    |  |   | (0.50  | )  |
| Totalcommon stock                                                                                                                                                        |  | $                                      | 1.25    |    |  | $      | 1.35    |    |  | $      | 1.27    |    |  | $      | 0.92    |    |  | $      | 0.24   |    |
| Diluted earnings (loss) per commonshare:                                                                                                                                 |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |
| Undistributedearnings from continuing operations                                                                                                                         |  | $                                      | 1.21    |    |  | $      | 1.26    |    |  | $      | 1.18    |    |  | $      | 0.71    |    |  | $      | 0.74   |    |
| Undistributed earnings (loss) from discontinuedoperations                                                                                                                |  |                                   | — |    |  |   | — |    |  |   | 0.03    |    |  |   | 0.21    |    |  |   | (0.50  | )  |
| Totalcommon stock                                                                                                                                                        |  | $                                      | 1.21    |    |  | $      | 1.26    |    |  | $      | 1.21    |    |  | $      | 0.92    |    |  | $      | 0.24   |    |
| Basic and diluted earnings (loss) per preferredshare:                                                                                                                    |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |
| Distributedearnings                                                                                                                                                      |  | $                                      | — |    |  | $      | — |    |  | $      | — |    |  | $      | 0.04    |    |  | $      | 0.05   |    |
| Undistributedearnings from continuing operations                                                                                                                         |  |                                   | — |    |  |   | — |    |  |   | — |    |  |   | 0.71    |    |  |   | 0.74   |    |
| Undistributed loss from discontinued operations                                                                                                                          |  |                                   | — |    |  |   | — |    |  |   | — |    |  |   | 0.21    |    |  |   | (0.50  | )  |
| Total preferredstock                                                                                                                                                     |  | $                                      | — |    |  | $      | — |    |  | $      | — |    |  | $      | 0.96    |    |  | $      | 0.29   |    |
|                                                                                                                                                                          |

|                                                                     |  |                         |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |        |        |  |  |
|---------------------------------------------------------------------|--|-------------------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|--------|--------|--|--|
|                                                                |  | YearEnded December  31, |
|                                                                |  | 2005(a)                 |         | 2004   |  | 2003   |         | 2002   |  | 2001   |
|                                                                |  | (in millions)           |
| Balance SheetData:                                                  |  |                    |    |   |  |   |    |   |  |   |    |   |  |   |    |   |  |   |   |   |
| Totalassets(b)                                                      |  | $                       | 1,462.1 |   |  | $      | 376.5   |   |  | $      | 382.4   |   |  | $      | 373.2   |   |  | $      | 275.2  |   |
| Long-term debt including current portion andshort-termborrowings(c) |  |                    | 733.2   |   |  |   | — |   |  |   | 34.6    |   |  |   | 60.4    |   |  |   | 84.0   |   |
| Participatingpreferred stock(d)                                     |  |                    | — |   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | 41.7   |   |
| Stockholders’ equity                                          |  |                    | 361.4   |   |  |   | 340.2   |   |  |   | 304.7   |   |  |   | 274.1   |   |  |   | 295.9  |   |
|                                                                     |

|  |
|--|
|  |  |
|  |

|     |                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------|
| (a) | Includesthe results of operations of Clarke American from the date of itsacquisition on December  15,  2005. |

|     |                                                                                         |
|-----|-----------------------------------------------------------------------------------------|
| (b) | Excludes the assets ofdiscontinued operations at December  31,  2001 of$636.9  million. |

|     |                                                                                                                                                             |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c) | Excludes long-term debtof discontinued operations at December  31,  2001 of$472.3  million. Includes capital leases of $6.1  million atDecember  31,  2005. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (d) | During 2001, the Companyissued to PX Holding Corporation (‘‘PXHolding’’), an indirect wholly owned subsidiary ofMacAndrews & Forbes Holdings Inc.) 6,182,153 shares of Series BPreferred Stock valued at $31.7  million in connection with the2001 Panavision acquisition and 666,667 shares of Series B PreferredStock in exchange for $10.0  million. PX Holding returned theSeries B Preferred Stock in 2002 as part of the Panavisiondivestiture. |

29

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Item 7.    Management’sDiscussion and Analysis of Financial Condition and Results ofOperations

The following discussion should be read inconjunction with Item 6. ‘‘Selected FinancialData’’ and the M & F Worldwide ConsolidatedFinancial Statements and the Notes thereto included elsewhere in thisAnnual Report on Form 10-K.

Overview

The Company hastwo business lines, which are operated by Mafco Worldwide and ClarkeAmerican. Mafco Worldwide’s business is the production oflicorice products for sale to the tobacco, food, pharmaceutical andconfectionery industries (which is the Company’s LicoriceProducts segment). Clarke American’s business is providingchecks, check-related products and services, and direct marketingservices. Clarke American’s business consists of two divisions:the Financial Institution division, which is focused on financialinstitution clients and their customers (the Company’s FinancialInstitution segment), and the Direct-to-Consumer division, which isfocused on individual customers (the Company’sDirect-to-Consumer segment).

Licorice Products

MafcoWorldwide is the world’s largest producer of licorice products.Mafco Worldwide produces a variety of licorice products from licoriceroot, intermediary licorice extracts produced by others and certainother ingredients at its facilities in the United States, France andthe People’s Republic of China.

Approximately 73%of Mafco Worldwide’s licorice sales are to the worldwide tobaccoindustry for use as tobacco flavor enhancing and moistening agents inthe manufacture of American blend cigarettes, moist snuff, chewingtobacco and pipe tobacco. While licorice represents a small percentageof the total cost of manufacturing American blend cigarettes and othertobacco products, the particular formulation and quality used by eachbrand is an important element in the brand’s quality. Inaddition, Mafco Worldwide manufactures and sells natural products foruse in the tobacco industry. Over the last several years, the rate ofconsumption of tobacco products has declined in the United States.Although Mafco Worldwide has experienced recent sales declines to thedomestic tobacco industry, Mafco Worldwide’s increased sales tothe international tobacco industry have been aided by stable toslightly growing consumption of tobacco products outside of the UnitedStates along with a shift of production to facilities overseas byseveral large customers.

Mafco Worldwide also sells licoriceworldwide to confectioners, food processors, cosmetic companies andpharmaceutical manufacturers for use as flavoring and masking agents,including its Magnasweet brand flavor enhancer, which is used invarious brands of chewing gum, lip balm, energy bars, non-carbonatedbeverages, chewable vitamins, aspirin and other products. AlthoughMafco Worldwide’s licorice sales to its confectionary customershave experienced some decline in recent years, licorice sales to food,cosmetic and pharmaceutical customers, who use Magnasweet as aflavoring or masking agent, have experienced some growth and added toMafco Worldwide’s overall sales stability for its licoriceproducts. One important facet of Mafco Worldwide’s businessstrategy is to focus on growing its business through sales oflicorice-derived products for use in non-tobacco-related applications.Mafco Worldwide is devoting a substantial portion of its research anddevelopment efforts to Magnasweet and its potential food andbeverage applications as well as to finding additional uses forcomponents of licorice extract in cosmetic and pharmaceuticalproducts.

Mafco Worldwide also sells licorice root residue asgarden mulch under the name Right Dress. Other non-licoriceproduct sales have decreased due to Mafco Worldwide’s decisionto discontinue selling these products.

Mafco Worldwide considersrevenue from international business to be that revenue which isgenerated outside the United States.

30

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The Clarke American Acquisition

On October 31, 2005, M & F Worldwide and Honeywellentered into a stock purchase agreement in which M & F Worldwideagreed to purchase 100% of the capital stock of Novar, a whollyowned subsidiary of Honeywell and the indirect parent of the businessof Clarke American, for a cash purchase price of $800  million,subject to a post-closing working capital adjustment. In connectionwith this acquisition, referred to as the‘‘Acquisition’’, M & F Worldwide formed CAInvestment Corp., an indirect wholly owned subsidiary of M & FWorldwide.

The business of Clarke American was owned by Novar,which indirectly wholly owned the operating subsidiaries of the ClarkeAmerican business. In connection with the Acquisition, Novar and itssubsidiaries completed a series of merger transactions to eliminatecertain intermediate holding companies. Concurrent with theAcquisition, Novar and CA Investment Corp. completed a series of mergertransactions, with CA Investment Corp. as the surviving entity. OnDecember 15, 2005, CA Investment Corp. purchased 100% ofthe capital stock of Novar and was renamed ‘‘ClarkeAmerican Corp.’’

In connection with the Acquisitionto fund the purchase price and approximately $22.5  million ofexpenses for the Acquisition and the related financings:

|  |              |                                                                                                                                    |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Mafco Worldwide borrowed$110.0  million under a new senior secured term loan which bearsinterest at the Eurodollar rate plus 2.0%; |

|  |              |                                                                                                                         |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------|
|  | •  | M & F Worldwide used$95.3  million of cash and cash equivalents and proceeds from thesale of marketable securities; |

|  |              |                                                                                                                                                                                                            |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Clarke American entered into aterm loan facility with an aggregate principal amount at maturity of$440.0  million, which bears interest at the Eurodollar rate plus3.25%, for proceeds of $437.8  million; |

|  |              |                                                                                                                                      |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Clarke American borrowed$4.2  million under its revolving credit facility, which bearsinterest at the Eurodollar rate plus 3.0%; and |

|  |              |                                                                        |
|--|--------------|------------------------------------------------------------------------|
|  | •  | Clarke American issued$175.0  million of 11.75% Senior Notes due 2013. |

As a result of the higher leverage, the Company’sinterest expense will be significantly higher in periods after thecompletion of the Acquisition than in prior periods.

TheAcquisition has been accounted for as a purchase, in accordance withthe provisions of Statement of Financial Accounting Standards(‘‘SFAS’’) No. 141, which resulted invaluations for Clarke American’s consolidated assets andliabilities based on fair values as of the date of the Acquisition.These valuations are preliminary and will be finalized within one yearafter the closing of the Acquisition. The allocation of the purchaseprice in the Acquisition will result in higher depreciation andamortization expense in the periods following the Acquisition comparedto prior periods.

In connection with the Acquisition, Honeywellagreed to indemnify the Company for losses caused by breaches ofHoneywell’s representations, warranties and covenants,pre-closing taxes and other specified matters described in the stockpurchase agreement. Claims for breaches of representations andwarranties must be brought by the Company by December  15,2006 and are generally subject to a deductible basket of $8.0million and a cap of $160.0  million, except that claims relatedto certain environmental matters, taxes and the capitalization of Novarand its subsidiaries survive for longer periods of time and are notsubject to any deductible basket or cap. Certain representationsregarding corporate authorization of the transactions, capitalization,the sophistication of the parties and the nonreliance of the parties onthe matters beyond those set forth in the stock purchase agreementsurvive indefinitely. Covenant breaches and other indemnificationevents in the stock purchase agreement are not subject to a deductiblebasket or a cap.

Clarke American is one of the three largestproviders of checks and check-related products and services in theUnited States based on revenues, and Clarke American is a leadingprovider of direct marketing services to financial institutions. ClarkeAmerican serves financial institutions through the 

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Clarke American and Alcott Routon brands andconsumers and businesses directly through the Checks In The Mail andB2Direct brands. Clarke American has an industry leadingreputation for quality and has won several third party and customerawards.

Clarke American’s two business segments are theFinancial Institution division (84% of its revenues for fullfiscal year 2005) and the Direct-to-Consumer division (16% ofits revenues for full fiscal year 2005). Customers ordering through theFinancial Institution division order checks from ClarkeAmerican’s financial institution clients, and Clarke Americanmanages that check order process on their behalf. TheDirect-to-Consumer division serves customers who prefer to order checksdirectly from a check provider.

The Reorganization

OnOctober  29,  2004, the Company completed an internalreorganization (the ‘‘Reorganization’’) withcertain of its subsidiaries to separate the assets and liabilitiesrelated to its licorice products business from the assets andliabilities not related to its licorice products business. Prior to theReorganization, Pneumo Abex Corporation held all the assets andliabilities associated with the licorice products business, as well asother assets and liabilities unrelated to the licorice productsbusiness. In connection with the Reorganization, Mafco Worldwide wasformed, and Pneumo Abex Corporation transferred all of the assets andliabilities related to that licorice products business to MafcoWorldwide. Following the transfer of the licorice products business toMafco Worldwide, Pneumo Abex Corporation merged with Pneumo Abex LLC, anewly formed, wholly owned limited liability company subsidiary ofMafco Worldwide. Mafco Worldwide then transferred all of the membershipinterests in Pneumo Abex LLC to another subsidiary of the Company,which resulted in Pneumo Abex LLC no longer being a subsidiary of MafcoWorldwide. The Reorganization had no effect on the Company’sconsolidated financial statements.

Economic and Other FactorsAffecting the Businesses of the Company

Mafco Worldwide

Developments and trends within the tobacco industry may have amaterial effect on the operations of Mafco Worldwide. U.S. cigaretteconsumption declined an estimated 2.6% during 2005 andapproximately 2% to 3% annually over the previous tenyears due to significant price increases introduced by the cigarettemanufacturers in part to recover costs related to the 1998 MasterSettlement Agreement with the state attorneys general, as well asgreater awareness of health risks by consumers, continuing restrictionson smoking areas and sales tax increases on cigarettes. Sales ofAmerican blend cigarettes also declined in Western Europe during 2005due to increased regulation, smoking restrictions and tax increases.The rate of sales decline during 2005 far exceeded the average rate ofdecline experienced by this region over the past several years.

Consumption of chewing tobacco and moist snuff is concentratedprimarily in the U.S. Domestic consumption of chewing tobacco productshas declined for more than a decade by approximately 4.0% peryear. Chewing tobacco appeals to a limited and declining customer base,primarily males living in rural areas. Moist snuff consumption hasrisen steadily since the mid-1970’s due at least in part to theshift away from cigarettes and other types of smoking tobacco.Consumption of moist snuff has increased approximately 4% to5% per year over the past ten years.

Producers of tobaccoproducts are subject to regulation in the U.S. at the federal, stateand local levels, as well as in foreign countries. Together withchanging public attitudes toward tobacco products, a constant expansionof tobacco regulations in the U.S. since the early 1970s has been amajor cause for the decline in consumption. Moreover, the trend istoward increasing regulation of the tobacco industry. Restrictiveforeign tobacco legislation has been on the rise in recent years aswell, including restrictions on where tobacco may be sold and used,warning labels and other graphic packaging images, product constituentlimitations and a general increase in taxes.

Over the years,there has been substantial litigation between tobacco productmanufacturers and individuals, various governmental units and privatehealth care providers regarding increased medical 

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expenditures and losses allegedly caused byuse of tobacco products. In part as a result of settlements in certainof this litigation, the cigarette companies have significantlyincreased the wholesale price of cigarettes in order to recoup the costof the settlements. Since 1999, cigarette consumption in the U.S. hasdecreased due to the higher prices of cigarettes, the increasedemphasis on the health effects of cigarettes and the continuingrestrictions on smoking areas.

The tobacco industry, includingcigarettes and smokeless tobacco, has been subject to federal, state,local and foreign excise taxes for many years. In recent years,federal, state, local and foreign governments have increased orproposed increases to such taxes as a means of both raising revenue anddiscouraging the consumption of tobacco products.

MafcoWorldwide is continuously fortifying its relationships with itscustomers as well as increasing its development of non-tobacco relatedproducts in order to help offset declines in demand for tobaccoproducts.

Clarke American

The largest factor impactingthe check industry is the continuing decrease in the number of checkswritten per household. Clarke American believes the number of checksprinted is driven by the number of checks written, the number of newchecking accounts opened and reorders reflecting changes inconsumers’ personal situations, such as name or address. Checkswritten remain the largest form of non-cash payment in the U.S.,representing more transactions than credit and debit transactionscombined. According to the 2004 Federal Reserve Payments Study, thetotal number of all non-cash payments (including checks and electronicpayments) in the U.S. has increased from approximately72.5 billion in 2000 to approximately 81.2  billion in2003. According to Global Concepts, Inc., an independent consultingfirm hired by the Federal Reserve to analyze check writing patterns,the number of checks written has declined approximately 4.0%annually from 2000 to 2003, and is forecast to decline by approximately3.7% annually from 2004 to 2009.

Clarke American has alsoexperienced significant pricing pressure as competitors seek toincrease volumes through market share gains. In the FinancialInstitution division, consolidation among financial institutions alsocontributes to pricing pressures as newly combined financialinstitutions often seek additional price concessions. In addition,financial institution consolidation may result in the addition or lossof a client when the consolidation involves financial institutionsserved by our competitors. In the Direct-to-Consumer division,softening customer response rates to direct mail advertisements havenegatively impacted Clarke American’s volumes. Clarke Americanis responding to these challenges by seeking to gain market share, growits long-term relationships with financial institutions and expand itsdirect marketing services.

Critical Accounting Policies andEstimates

The Company reviews its accounting policies on aregular basis. The Company makes estimates and judgments as part of itsfinancial reporting that affect the reported amounts of assets,liabilities, revenues and expenses and related disclosure of contingentassets and liabilities. On an ongoing basis, the Company evaluates itsestimates, including those related to accounts receivable, investments,intangible assets, income taxes, contingencies and litigation. TheCompany bases its estimates on historical experience and on variousother assumptions that it believes reasonable under the circumstances.These estimates form the basis for making judgments about the carryingvalue of assets and liabilities that are not readily apparent fromother sources. Results may differ from these estimates due to actualoutcomes being different from the assumed outcomes. The Companybelieves the following critical accounting policies affect its moresignificant judgments and estimates.

Inventory —The majority of the Company’s inventories consists of licoriceraw materials. Licorice raw materials have an infinite life as long asthey are kept dry; therefore the Company has not been required toestablish an obsolescence reserve for licorice. A reserve for the valueof the products has not been necessary based on the Company’slower of cost or market analysis. The Company also ensures that storagefacilities where the raw materials are inventoried are properlysafeguarded and maintained to preserve its characteristics.

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Prepaid Rebates — ClarkeAmerican has contracts with certain financial institution clients thatrequire prepayment of rebates. The prepaid rebates are amortized on astraight-line basis over the terms of the respective contracts as areduction of sales revenue. This accounting method conforms with theguidance provided by the Emerging Issues Task Force ItemNo. 01-9, ‘‘Accounting for Consideration Given by aVendor to a Customer (Including a Reseller of the Vendor’sProduct)’’. Whenever material events or changes occur thatimpact the related contract, including significant declines in theanticipated profitability, the Company evaluates the carrying value ofthe prepaid rebates to determine if impairment has occurred. Thecontracts allow Clarke American to recoup, at a minimum, theunamortized prepayments in the event that a contract is terminatedearly. The unamortized prepaid rebates balance is included in otherassets.

Advertising — Direct-response advertisingis capitalized and amortized over its expected period of futurebenefits. Direct-response advertising consists primarily of insertsthat include order coupons for Checks In The Mail(‘‘CITM’’) products. These capitalized costsare amortized up to 18 months following their distribution.Amortization is charged to match the advertising expense with therelated revenue streams. Other advertising activities include productcatalogs and price sheets, which are expensed when issued to ClarkeAmerican’s financial institution clients for use.

Income Taxes — The Company estimates actual current taxliability together with temporary differences resulting from differingtreatment of items, such as net operating losses and depreciation, fortax and accounting purposes. These temporary differences result indeferred tax assets and liabilities. The Company must assess thelikelihood that it will recover deferred tax assets from future taxableincome and, to the extent it believes that recovery is not likely,establish a valuation allowance. The balance of the valuation allowanceat December  31,  2005, was $3.1  million. To the extentit establishes a valuation allowance or increases this allowance in aperiod, it must include and expense the allowance within the taxprovision in the consolidated statement of income. Significantmanagement judgment is required in determining the provision for incometaxes, deferred tax assets and liabilities and any valuation allowancerecorded against net deferred tax assets.

As part of the processof preparing its consolidated financial statements, the Company isrequired to calculate the amount of income tax in each of thejurisdictions in which it operates. On a regular basis, the amount oftaxable income is reviewed by various federal, state and foreign taxingauthorities. As such, the Company routinely provides reserves for itemsthat it believes could be challenged by these taxing authorities. Inaddition, the Company routinely provides valuation allowances fordeferred tax assets that it believes may not be realized, e.g., capitallosses.

Long-Lived Assets — The Company assessesthe impairment of property, plant and equipment, amortizable intangibleassets and investments in joint ventures whenever events or changes incircumstances indicate that the carrying value may not be recoverable.Some factors the Company considers important that could trigger animpairment review include the following:

|  |              |                                                                                                   |
|--|--------------|---------------------------------------------------------------------------------------------------|
|  | •  | Significant underperformancerelative to expected historical or projected future operatingresults; |

|  |              |                                                                                                                      |
|--|--------------|----------------------------------------------------------------------------------------------------------------------|
|  | •  | Significant changesin the manner of use of these assets or the strategy for theCompany’s overall business; and |

|  |              |                                                  |
|--|--------------|--------------------------------------------------|
|  | •  | Significant negative industry oreconomic trends. |

When the Company determines that the carryingvalue of long-lived assets may not be recoverable based upon theexistence of one or more indicators of impairment, it measures theimpairment based on a projected discounted cash flow method using adiscount rate determined by management to be commensurate with the riskinherent in the Company’s current business model.

Goodwill and Acquired Intangible Assets — Goodwillrepresents the excess of cost (purchase price) over the fair value ofnet assets acquired. Acquired intangibles are recorded at fair value asof the date acquired. Goodwill and other intangibles determined to havean indefinite life are not amortized, but are tested for impairment atleast annually or when events or changes in circumstances indicate thatthe assets might be impaired. 

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The goodwill impairment test is a two-stepprocess, which requires management to make judgments in determiningwhat assumptions to use in the calculation.  The first step ofthe process consists of estimating the fair value of theCompany’s reporting units based on discounted cash flow modelsusing revenue and profit forecasts and comparing the estimated fairvalues with the carrying values of the Company’s reportingunits, which include the goodwill.  If the estimated fair valuesare less than the carrying values, a second step is performed tocompute the amount of the impairment by determining an‘‘implied fair value’’ of goodwill.  Thedetermination of the Company’s ‘‘implied fairvalue’’ requires the Company to allocate the estimated fairvalue to the assets and liabilities of the reporting unit.  Anyunallocated fair value represents the ‘‘implied fairvalue’’ of goodwill, which is compared to the correspondingcarrying value.

The Company measures impairment of itsindefinite lived intangible assets, which consist of productformulations and certain tradenames and trademarks, based on projecteddiscounted cash flows.  The Company also reevaluates the usefullife of these assets annually to determine whether events andcircumstances continue to support an indefinite useful life.

Theannual impairment evaluations for goodwill and indefinite livedintangible assets involve significant estimates made by management indetermining the fair value of the Company’s reporting units andits indefinite lived intangible assets. There is inherent subjectivityinvolved in estimated future cash flows. These estimates aresusceptible to change from period to period because management mustmake assumptions about future cash flows, profitability, terminalvalues and other items. Changes in estimates could have a materialimpact in the carrying amount of goodwill and indefinite livedintangible assets in future periods.

Intangible assets that aredeemed to have a finite life are evaluated for impairment as discussedabove in ‘‘Long-Lived Assets.’’

Contingencies and Indemnification Agreements — TheCompany records the estimated impacts of various conditions, situationsor circumstances involving uncertain outcomes. These events are‘‘contingencies,’’ and the accounting for suchevents follows SFAS No. 5, ‘‘Accounting forContingencies.’’

The accrual of a contingencyinvolves considerable judgment by management. The Company uses internalexpertise and outside experts (such as lawyers and tax specialists), asnecessary, to help estimate the probability that the Company hasincurred a loss and the amount (or range) of the loss. When evaluatingthe need for an accrual or a change in an existing accrual, the Companyconsiders whether it is reasonably probable to estimate an outcome forthe contingency based on its experience, any experience of othersfacing similar contingencies of which the Company is aware and theparticulars of the circumstances creating the contingency. The Companyhas not recognized any liability in its financial statements formatters covered by indemnification agreements. The Company considersthese obligations to be those of third-party indemnitors and monitorstheir financial positions to determine the level of uncertaintyassociated with their ability to satisfy their obligations. Based uponthe indemnitors’ active management of indemnifiable matters,discharging of the related liabilities when required, and financialpositions based upon publicly filed financial statements, as well asthe history of insurance recovery related to those liabilities, theCompany believes that the likelihood of failing to obtain reimbursementof amounts covered by indemnification is remote. See Item 1. Business— The Tobacco Industry and — Non-Operating ContingentLiability, Indemnification and Insurance Matters; Item 3. LegalProceedings; and Note 19 — Commitments and Contingencies to theConsolidated Financial Statements in this Annual Report on Form10-K.

Pensions — The Company sponsors definedbenefit pension plans, which cover certain current and former employeesof the Company who meet eligibility requirements. The Company’sactuarial consultants use several statistical and other factors thatattempt to estimate future events to calculate the expense andliability related to the plans. These factors include assumptions aboutthe discount rate, expected return on plan assets and rate of futurecompensation increases as determined by the Company, within certainguidelines. In addition, the Company’s actuarial consultantsalso use subjective factors such as withdrawal and mortality rates toestimate these factors. The actuarial assumptions used by the Companymay differ materially from actual results due to changing market

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and economic conditions, higher or lowerwithdrawal rates or longer or shorter life spans of participants, amongother things. Differences from these assumptions may result in asignificant difference with the amount of pension expense/liabilitythat the Company recorded.

Off-Balance Sheet Arrangements

The Company does not have any or participate in any off-balancesheet arrangements.

Consolidated Operating Results

Year Ended December  31,  2005 Compared to Year EndedDecember  31,  2004

On December  15,2005 the Company acquired Clarke American. Accordingly the results ofClarke American are included in the Company’s results ofoperations from that date. Since December  15,  2005, theCompany has operated in three business segments: (a) the LicoriceProducts segment, through which Mafco Worldwide produces a variety oflicorice products from licorice root, intermediary licorice extractsproduced by others and certain other ingredients, which products aresold primarily to the worldwide tobacco industry for use as tobaccoflavor enhancing and moistening agents in the manufacture of Americanblend cigarettes, moist snuff, chewing tobacco and pipe tobacco; (b)the Financial Institution segment, through which Clarke Americanprovides checks, check-related products and services and directmarketing services to financial institutions and to the account holdersof such financial institutions; and (c) the Direct-to-Consumer segment,through which Clarke American provides checks, check-related productsand services and treasury management supplies directly to consumers andbusinesses. Non-segment expenses are expenses of the Company that arenot directly attributable to the operating businesses including, amongother things, expenses incurred in connection with being a publiccompany.

Total net revenues increased by $28.0  million, or30.0% to $121.4  million in the 2005 period from$93.4  million in the 2004 period. Net revenues from the LicoriceProducts segment increased by $3.9  million or 4.2% from$93.4  million to $97.3  million. The increase resulted fromhigher domestic sales to the international tobacco industry of$1.3  million and increased domestic sales to the tobacco industryin the United States of $1.6  million. The increase was due tomajor customers returning to historical order patterns after completingrestructurings of their operations between domestic and foreignfacilities. Other licorice and non-licorice domestic revenues decreasedby $0.1  million in the 2005 period compared to the 2004 periodand the segment’s foreign revenues increased by $1.1million due principally to higher volume. Revenues for the FinancialInstitution and Direct-to-Consumer segments included in the 2005 periodwere $20.3  million and $3.8  million, respectively.

Cost of revenues was $66.5  million in the 2005 period and$45.1  million in the 2004 period, an increase of $21.4million. Cost of revenues for the Licorice Products segment was$49.1  million in the 2005 period and $45.1  million in the2004 period, an increase of $4.0  million or 8.9%. Theincrease in cost of revenues for the Licorice Products segment was dueto the increase in sales, substantially higher energy costs andinflationary pressure on other manufacturing costs, including rawmaterials. Cost of revenues as a percentage of revenues for theLicorice Products segment was 50.5% in the 2005 period ascompared to 48.3% in the 2004 period. Cost of revenues for theFinancial Institution and Direct-to-Consumer segments included in the2005 period were $14.8  million and $2.6  million,respectively. The cost of revenues for Clarke American’ssegments includes a non-recurring charge of $1.8  million relatedto amortizing a fair value adjustment of $3.1  million toinventories in connection with the Acquisition, the balance of whichthe Company expects to charge to cost of revenues in the first quarterof 2006.

Selling, general and administrative expenses were$21.4  million in the 2005 period and $17.2  million in the2004 period, an increase of $4.2  million, or 24.4%.Selling, general and administrative expenses from the Licorice Productssegment were $11.5  million in 2005 and $12.7  million in2004, a decrease of $1.2  million. The decrease in the LicoriceProducts segment was due primarily to lower professional fees in the2005 period. Selling, general and administrative expenses for theFinancial Institution and Direct-to-Consumer segments included in the2005 period 

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were $5.0  million and $1.0million, respectively. Non-segment expenses decreased to $3.9million in 2005, from $4.5  million in 2004 due to lowerprofessional fees in 2005.

Interest income was $3.5million in the 2005 period and $1.3  million in the 2004 period.The increase was due mainly to higher interest rates and increased cashbalances available for investment in cash equivalents and marketablesecurities in the 2005 period.

Interest expense was $4.8million in the 2005 period and $1.2  million in the 2004 period.The increase was due to indebtedness incurred to finance theAcquisition. Interest expense for the 2005 period includes a $1.5million fee for a bridge loan commitment obtained by the Company inconnection with the financing of the Acquisition.

Other income(expense), net was $3.7  million in the 2005 period and $(2.4)million in the 2004 period. In the 2005 period, income of $3.0million was recognized for the gain on the sale of marketablesecurities and $0.9  million related to settlement of litigation.The expense in the 2004 period primarily relates to the amortization ofdeferred financing costs.

The provision for income taxes as apercentage of income was 33.2% in the 2005 period and12.4% in the 2004 period. The effective income tax rate in 2005reflects a $1.0  million reduction in the valuation allowancerelated to the utilization of capital loss carryforwards in connectionwith the sale of marketable securities and a $1.5  millionreduction of reserves for federal and state taxes related to theresolution of uncertainties. The effective income tax rate in 2004reflects a reversal of reserves of $6.8  million for certain prioryear issues due to the resolution of certain tax audits.

Year Ended December  31,  2004 Compared to Year EndedDecember  31,  2003

Total net revenues decreasedby $2.3  million, or 2.4% to $93.4  million in the2004 period from $95.7  million in the 2003 period. Domestic salesto the tobacco industry in the United States declined by $3.3million due to lower shipment volume resulting from inventoryreductions and shifting of production to overseas facilities on thepart of several large customers. Domestic sales to the internationaltobacco industry increased by $1.4  million due to higher shipmentvolume. Non-tobacco revenues decreased by $0.5  million in the2004 period compared to the 2003 period and non-licorice sales declinedby $0.8  million in 2004 due to the Company’s decision todiscontinue selling certain of these products. Foreign sales increasedby $0.9  million, mainly impacted by a favorable exchangetranslation effect on Euro sales of $1.4  million.

Cost ofrevenues was $45.1  million in the 2004 period and $46.3million in the 2003 period, a decrease of $1.2  million. Thedecrease in cost of revenues was due to the decline in sales volume. Asa percentage of revenues, cost of revenues remained stable for theperiods at 48.3% in 2004 and 48.4% in 2003.

Selling, general and administrative expenses were $17.2million in the 2004 period and $16.3  million in the 2003 period,an increase of $0.9  million. Selling, general and administrativeexpenses for the Licorice Products segment were $12.7  million in2004 and $12.8  million in 2003. Non-segment expenses were$4.5  million and $3.5  million in 2004 and 2003,respectively, with the increase primarily due to higher professionalfees.

Interest income was $1.3  million in the 2004 periodcompared to $1.2  million in the 2003 period. The increase of$0.1  million is due to higher average cash and cash equivalentsbalances available for investment in the 2004 period.

Interestexpense was $1.2  million in the 2004 period and $2.9million in the 2003 period. The decrease in expense was due to loweroutstanding debt in the 2004 period.

Other (expense) income, netwas $(2.4) million in the 2004 period and $1.7  million in the2003 period. The expense in 2004 primarily resulted from the write offof deferred financing costs related to the early repayment of MafcoWorldwide’s outstanding debt. The income in 2003 results fromthe reduction of two liabilities associated with the resolution of twoseparate Corporate Indemnification matters partially offset by theamortization of deferred financing costs.

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The provision for income taxes as apercentage of income was 12.5% in the 2004 period and31.7% in the 2003 period. The effective income tax rate in 2004reflects a reversal of reserves of $6.8  million for certain prioryear issues due to the resolution of certain tax audits. The effectivetax rate in 2003 reflects a reversal of reserves of $1.3  millionfor certain prior year issues due to the resolution of uncertainties in2003.

Related Party Transactions

The TransferAgreement

In connection with the 1995 transfer to asubsidiary of MCG of certain of Pneumo Abex’s consolidatedassets and liabilities, with the remainder being retained,M & F Worldwide, a subsidiary of MCG and twosubsidiaries of M & F Worldwide entered into theTransfer Agreement. Under the Transfer Agreement, Pneumo Abex retainedthe assets and liabilities relating to Aerospace, as well as certaincontingent liabilities and the related assets, including its historicalinsurance and indemnification arrangements. Pneumo Abex transferredsubstantially all of its other assets and liabilities to the subsidiaryof MCG. The Transfer Agreement provides for appropriate transfer,indemnification and tax sharing arrangements, in a manner consistentwith applicable law and existing contractual arrangements.

TheTransfer Agreement requires such subsidiary of MCG to undertake certainadministrative and funding obligations with respect to certaincategories of asbestos-related claims and other liabilities, includingenvironmental claims, retained by Pneumo Abex. Pneumo Abex will beobligated to make reimbursement for the amounts so funded only when itreceives amounts under related indemnification and insuranceagreements. Such administrative and funding obligations would beterminated as to these categories of asbestos-related claims in thecase of a bankruptcy of Pneumo Abex or M & F Worldwide or ofcertain other events affecting the availability of coverage for suchclaims from third-party indemnitors and insurers. In the event ofcertain kinds of disputes with Pneumo Abex’s indemnitorsregarding their indemnities, the Transfer Agreement permits Pneumo Abexto require such subsidiary of MCG to fund 50% of the costs ofresolving the disputes.

Registration RightsAgreement

MCG and the Company are parties to aregistration rights agreement (as amended, the‘‘Company/MCG Registration Rights Agreement’’)providing MCG with the right to require the Company to use its bestefforts to register under the Securities Act, and the securities orblue sky laws of any jurisdiction designated by MCG, all or portion ofthe issued and outstanding shares of M & F Worldwidecommon stock owned by MCG (the ‘‘RegistrableShares’’). Such demand rights are subject to the conditionsthat the Company is not required to (1) effect a demand registrationmore than once in any 12-month period, (2) effect more than one demandregistration with respect to the Registrable Shares, or (3) file aregistration statement during periods (not to exceed three months) (a)when the Company is contemplating a public offering, (b) when theCompany is in possession of certain material non-public information, or(c) when audited financial statements are not available andtheir inclusion in a registration statement is required. In addition,and subject to certain conditions described in the Company/MCGRegistration Rights Agreement, if at any time the Company proposes toregister under the Securities Act an offering of common stock or anyother class of equity securities, then MCG will have the right torequire the Company to use its best efforts to effect the registrationunder the Securities Act and the securities or blue sky laws of anyjurisdiction designated by MCG of all or a portion of the RegistrableShares as designated by MCG. The Company is responsible for allexpenses relating to the performance of, or compliance with, theCompany/MCG Registration Rights Agreement except that MCG isresponsible for underwriters’ discounts and selling commissionswith respect to the Registrable Shares it sells.

AffiliatedPayments

During 2005, 2004, and 2003, three executiveofficers of the Company were executives of Holdings. The Company didnot compensate such executive officers, but, in 2005, 2004 and 2003,the 

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Company paid to Holdings $1.5  millionfor the value of the services provided by such officers to the Companyand charged that amount to compensation expense. None of the executiveofficers received any payment from the Company or additional paymentfrom Holdings in connection with such compensation expense. TheManagement Services Agreement, pursuant to which Holdings provides theservices of the three executive officers to the Company in exchange fora management service fee of $1.5  million annually, expires onDecember  31,  2005; provided that the term automaticallyextends for successive one year periods unless either party providesnotice prior to the end of the term. Neither party provided such noticein 2005, therefore Holdings will continue to provide these services in2006 under the terms of the existing agreement.

The Companyparticipates in Holdings’ directors and officers insuranceprogram, which covers the Company as well as Holdings and certain ofits other affiliates. The limits of coverage are available on aggregatelosses to any or all of the participating companies and theirrespective directors and officers. The Company bears an appropriateallocation for premiums for such coverage, which the Company believesis more favorable than the premiums it could secure under stand-alonecoverage. At December  31,  2005, the Company has recordedprepaid expenses and other assets of $1.2  million and $3.6million, respectively, relating to the directors and officers insuranceprogram.

Allied Security Holdings LLC (‘‘AlliedSecurity’’), an affiliate of Holdings, provided contractsecurity officer services to Mafco Worldwide and Clarke American. MafcoWorldwide and Clarke American made aggregate payments to AlliedSecurity for such services of approximately $0.2  million and$0.4  million, respectively, for the full fiscal year 2005, whichthe Company believes is competitive with industry rates for similarlysituated security firms and as favorable as terms that could have beenobtained from an unrelated party in an arms-length transaction.

James B. Alcott, President of the Alcott Routon division of ClarkeAmerican, owns 20% of the outstanding shares of, and serves as adirector for, Altair Data Resources LLC, a Tennessee limited liabilitycompany controlled by several of Clarke American’s employees,including James B. Alcott. Altair provides list and data services.Alcott Routon (which Clarke American acquired in 2004) made purchasesfor such services from Altair totaling $0.4  million for the fullfiscal year 2005. Alcott Routon continues to purchase list and dataservices from Altair.

Tax Sharing Agreement

OnDecember  15,  2005, the Company and each of the directparent companies of Clarke American and Mafco Worldwide entered into atax sharing agreement (the ‘‘Tax SharingAgreement’’) whereby the Company will elect to fileconsolidated federal income tax returns on behalf of Clarke American,Mafco Worldwide and their respective affiliated subsidiaries as well ascertain other subsidiaries of the Company. Under the Tax SharingAgreement, each of Clarke American and Mafco Worldwide will makequarterly payments to the Company. These payments generally are basedon the applicable federal income tax liability that Clarke American andMafco Worldwide and their respective affiliated subsidiaries would havehad for each taxable period if Clarke American or Mafco Worldwide, asthe case may be, had not been included in the Company’sconsolidated group. Similar provisions apply with respect to anyforeign, state or local income or franchise tax returns filed by anyCompany consolidated, combined or unitary group for each year thatClarke American, Mafco Worldwide or any of their respectivesubsidiaries, as the case may be, is included in any such group forforeign, state or local tax purposes.

Liquidity and CapitalResources

The Company’s Consolidated LiquidityPosition

Net cash provided by operating activities was$42.0  million, $23.8  million and $35.5  million forthe years ended December  31,  2005, 2004 and 2003,respectively. The increase in net cash provided by operating activitiesof $18.2  million in 2005 as compared to 2004 was primarily causedby the changes in the components of working capital, primarily adecrease in accounts receivable and inventories, the recording ofhigher current and deferred income taxes which did not affect cashflows. The decrease in 

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net cash provided by operating activities of$11.7  million between the 2004 period and the 2003 period wascaused by the changes in the components of working capital, primarilyan increase in trade receivables and inventories and a decrease inpayables and accrued expenses related in part to the payment in 2004 inthe settlement of the Federal-Mogul Recoupment/Setoff claim (see Note19 to the Company’s consolidated financial statements). As ofDecember  31,  2005, the Company had approximately$11.8  million of U.S. federal net operating loss carryforwards.The Company expects to utilize the balance of these tax benefits in2006 and become a regular taxpayer.

Net cash used in investingactivities in 2005 was $802.9  million and results primarily fromthe Acquisition on December  15,  2005. In addition, duringpart of 2005, the Company invested available cash in high qualitymarketable securities to enhance its income. Net cash used in investingactivities in 2004 was comprised of contributions of $4.2  millionfor the investment in a Chinese joint venture and $1.6  millionfor capital expenditures. Net cash used in investing activities in 2003was for capital expenditures of $2.1  million, of whichapproximately $1.2  million was for the replacement of MafcoWorldwide’s oil-fired boilers in its Camden, New Jersey facilitywith a new gas-fired boiler.

Net cash provided by financingactivities in 2005 was $710.1  million which primarily representsthe incurrence of debt to finance the Acquisition. Net cash used infinancing activities in 2004 totaled $29.7  million as a result ofscheduled debt repayments of $15.6  million, including an excesscash flow payment of $8.3  million, and an early repayment ofMafco Worldwide’s remaining outstanding debt of $19.0million, partially offset by cash provided from the exercise of stockoptions of $4.1  million and a capital contribution of $0.8million. Net cash used in financing activities in 2003 primarilyreflects the repayment of debt under Mafco Worldwide’s formercredit agreement, which was partially offset in 2003 by cash providedfrom stock option exercises of $1.9  million.

Althoughthere can be no assurance, the Company believes that its cash and cashequivalents, borrowings available under the Clarke American and MafcoWorldwide credit agreements (as further discussed below) andanticipated cash flow from operating activities will be sufficient tomeet the Company’s expected operating needs, investment andcapital spending requirements and debt service requirements for theforeseeable future.

M & F Worldwide is a holding companywhose only material assets are its ownership interest in itssubsidiaries and approximately $36.2  million in cash and cashequivalents as of December  31,  2005. M & F Worldwide isconsidering various alternatives for the application of its cash andcash equivalents on hand. On December  15,  2005, M & FWorldwide acquired Novar, the former parent company of Clarke American,for $800.0  million in cash (subject to a post-closing workingcapital adjustment), financed with cash on hand and new borrowings. M& F Worldwide's principal business operations are conductedby its subsidiaries, and M & F Worldwide has no operations of itsown. Accordingly, M & F Worldwide's only source of cash topay its obligations, other than cash and cash equivalents on hand, isexpected to be distributions with respect to its ownership interests inits subsidiaries. M & F Worldwide's subsidiaries may notgenerate sufficient cash flow to pay dividends or distribute funds to M& F Worldwide and applicable state law and contractualrestrictions, including negative covenants contained in the debtinstruments of such subsidiaries, may not permit such dividends ordistributions, as further discussed below. Under both ClarkeAmerican’s and Mafco Worldwide’s respective creditagreements and under Clarke American’s indenture, neither MafcoWorldwide nor Clarke American may: (a) pay a dividend on, make apayment on account of the purchase, redemption or retirement of, ormake any other distribution on any share of any class of theirrespective capital stock; (b) loan or advance funds to M & FWorldwide except for a maximum amount (as set forth in each creditagreement and indenture) necessary to maintain M & FWorldwide's corporate existence and other out-of-pocket expensesin the ordinary course of business resulting from the Company’sstatus as a public company; or (c) pay any management oradministrative fee to M & F Worldwide or pay a salary, bonus orother form of compensation to any person who is a significantstockholder or executive officer of M & F Worldwide, unless itcomplies with restrictions set forth in its respective debtagreements.

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The Company’s ConsolidatedContractual Obligations

The Company has certain cashobligations and other commercial commitments which will affect itsshort-term liquidity. At December  31,  2005, suchobligations and commitments which do not include options for renewalwere as follows:

|                                                         |  |                       |         |                  |  |          |        |          |  |               |        |        |  |        |        |        |  |        |         |        |  |  |
|---------------------------------------------------------|--|-----------------------|---------|------------------|--|----------|--------|----------|--|---------------|--------|--------|--|--------|--------|--------|--|--------|---------|--------|--|--|
|                                                    |  | PaymentsDue by Period |
|                                                    |  | Total                 |         | Less than 1 year |  | 1-3years |        | 4-5years |  | After 5 years |
|                                                    |  | (in millions)         |
| ContractualObligations                                  |  |                  |    |             |  |     |   |     |  |          |   |   |  |   |   |   |  |   |    |   |
| Long term debtobligations, including current portion(a) |  | $                     | 729.3   |             |  |     | 16.1   |     |  |          | 52.2   |   |  |   | 77.2   |   |  |   | 583.8   |   |
| Interest on long termdebt(a)                            |  |                  | 367.1   |             |  |     | 62.8   |     |  |          | 120.7  |   |  |   | 107.1  |   |  |   | 76.5    |   |
| Operating leases                                        |  |                  | 50.4    |             |  |     | 8.9    |     |  |          | 15.5   |   |  |   | 13.2   |   |  |   | 12.8    |   |
| Capital lease obligations                               |  |                  | 7.0     |             |  |     | 1.9    |     |  |          | 3.2    |   |  |   | 1.9    |   |  |   | — |   |
| Purchase obligations(b)                                 |  |                  | 155.9   |             |  |     | 63.8   |     |  |          | 66.8   |   |  |   | 19.5   |   |  |   | 5.8     |   |
| Other long-termliabilities(c)                           |  |                  | 8.7     |             |  |     | 2.7    |     |  |          | 3.9    |   |  |   | 0.6    |   |  |   | 1.5     |   |
|                                                    |  | $                     | 1,318.4 |             |  |     | 156.2  |     |  |          | 262.3  |   |  |   | 219.5  |   |  |   | 680.4   |   |
|                                                         |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Consistsof principal and interest payments on the Mafco Worldwide creditagreement, the Clarke American credit agreement, and the ClarkeAmerican senior notes through the respective maturity fates based uponassumptions regarding the amount of debt outstanding and assumedinterest rates. The payments by year in the above table do not reflectthe impact of mandatory repayments on the term loans required in eachyear based upon prior year excess cash flow (as defined in therespective credit agreements). |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Purchase obligations includeamounts due under contracts with third party service providers. Thesecontracts are primarily for information technology services related tonetwork servers, personal computers, telecommunications, softwaredevelopment and support and help desk services. Additionally,obligations include amounts due under Direct Checks direct mailadvertising agreements and royalty agreements as well as raw materialpurchase obligations and rebates. |

|     |                                                                                                                                              |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|
| (c) | Other long-term liabilitiesconsist primarily of amounts due for supplemental retirement benefit,restructuring reserves, and management fees. |

MafcoWorldwide currently expects to contribute approximately $0.7million to its pension plans in 2006 based on current legalrequirements.

Mafco Worldwide Credit Agreement

On December  8,  2005, Mafco Worldwide entered into acredit agreement governing its $125.0  million senior securedcredit facility with Bear Stearns Corporate Lending Inc., assyndication agent, JPMorgan Chase Bank, N.A., as administrative agent,and Natexis Banques Populaires and National City Bank, asco-documentation agents. The Mafco Worldwide credit facility replacedMafco Worldwide's previously existing senior secured creditfacility. The Mafco Worldwide credit facility consists of a$110.0  million term loan which was drawn on December8,  2005 and matures in six years and a five year $15.0million revolving credit facility. The indebtedness under the MafcoWorldwide credit facility is guaranteed by Mafco Worldwide'sdomestic subsidiaries and its parent corporation, Flavors Holdings Inc.(collectively, the ‘‘Mafco WorldwideGuarantors’’). Mafco Worldwide's obligations under thecredit facility and the guarantees of the Guarantors are secured by afirst-priority security interest in substantially all of MafcoWorldwide's and the Mafco Worldwide Guarantors' assets.Borrowings under the Mafco Worldwide credit facility bear interest, atMafco Worldwide's option, at either an adjusted Eurodollar rateplus an applicable margin of 2.00% in the case of revolvingloans or 2.25% in the case of term loans, or an alternative baserate, plus an applicable margin of 1.00% in the case ofrevolving loans or 1.25% in the case of term loans.

TheMafco Worldwide credit facility contains affirmative and negativecovenants customary for such financings. The Mafco Worldwide creditfacility also requires Mafco Worldwide to maintain a minimum ratio oftotal consolidated EBITDA, as defined in the Mafco Worldwide creditagreement, less capital expenditures to consolidated interest expenseand a maximum ratio of consolidated total debt outstanding toconsolidated EBITDA as of the last day of each fiscal quartercommencing with the fiscal quarter ending March  31,  2006.As of December 31, 2005, Mafco Worldwide was in compliance withall of these covenants. The Mafco Worldwide credit facility containsevents of default 

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customary for such financings, including butnot limited to nonpayment of principal, interest, fees or other amountswhen due; violation of covenants; failure of any representation orwarranty to be true in all material respects when made or deemed made;cross default and cross acceleration to certain indebtedness; certainERISA events; change of control; dissolution, insolvency and bankruptcyevents; material judgments; actual or asserted invalidity of theguarantees or security documents; and violation of limitations on theactivities of Flavors Holdings Inc. and Mafco Shanghai Corporation, asubsidiary of Mafco Worldwide. Some of these events of default allowfor grace periods and materiality concepts.

The Mafco Worldwideterm loan is repayable in quarterly installments of $275,000 commencingon March  31,  2006. In addition, a mandatory repayment isrequired in each year based upon prior year excess cash flow (asdefined in the Mafco Worldwide credit agreement). In connection withthe sale of marketable securities during 2005, Mafco Worldwide made amandatory $3.0  million prepayment on its term loan.

AtDecember  31,  2005, $1.7  million of the MafcoWorldwide revolving loan facility was reserved for lender guarantees onoutstanding letters of credit and $13.3  million was available forborrowings.

Mafco Worldwide’s French subsidiary hascredit agreements renewable annually with two banks whereby it mayborrow up to 2.9  million Euros (approximately $3.4  millionat December  31,  2005) for working capital purposes. TheFrench subsidiary had no borrowings at December  31,2005.

Clarke American Credit Agreement

Concurrently with the completion of the Acquisition, ClarkeAmerican, as borrower, entered into senior secured credit facilities,which provided for a revolving credit facility in an amount of$40.0  million maturing on December  15,  2010 and a$440.0  million term loan maturing on December  15,2011. Portions of its revolving credit facility are available for theissuance of letters of credit and swing line loans.

Allobligations under the credit facilities are guaranteed by ClarkeAmerican’s direct parent  (a subsidiary of the Company) andby each of Clarke American’s direct and indirect presentdomestic subsidiaries and future wholly owned domestic subsidiaries.The credit facilities are secured by a perfected first prioritysecurity interest in substantially all of Clarke American’s andthe guarantors’ assets, other than voting stock in excess of65.0% of the outstanding voting stock of each direct foreignsubsidiary and certain other excluded property.

The term loanfacility has an aggregate principal amount at maturity of $440.0million. Clarke American received $437.8  million of proceeds fromits issuance, net of original discount of 0.5%. The originaldiscount will be amortized as non-cash interest expense over the termof the term loan. The term loan facility is required to be repaid inquarterly installments commencing on March  31,  2006 inannual amounts: $15.0  million for 2006, $20.0  million for2007, $30.0  million for 2008, $35.0  million for 2009 and$40.0  million for 2010. The term loan facility requires that aportion of Clarke American’s excess cash flow be applied toprepay amounts borrowed thereunder. The balance of the term loanfacility will be repaid in full in 2011.

Loans under the creditfacilities bear, at Clarke American’s option, interest at:

|  |              |                                                                                                                                                                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | a rate per annum equal to thehigher of (a) the prime rate announced from time to time by The Bank ofNew York and (b) the Federal Funds rate plus 0.50%, in each caseplus an applicable margin of 2.0% per annum for revolving loans,or 2.25% per annum for term loans; or |

|  |              |                                                                                                                                                                |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | a rate per annum equal to areserve adjusted eurodollar rate, plus an applicable margin of3.0% per annum for revolving loans, or 3.25% per annumfor term loans. |

The credit facilities contain representationsand warranties customary for a senior secured credit facility. Theyalso contain affirmative and negative covenants customary for a seniorsecured credit facility, including, among other things, restrictions onindebtedness, liens, mergers and consolidations, sales of assets,loans, acquisitions, restricted payments, transactions with affiliates,dividends and other 

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payment restrictions affecting subsidiariesand sale leaseback transactions. The credit facilities also requireClarke American to maintain certain financial covenants, includingmaximum consolidated secured leverage, maximum total consolidatedleverage and minimum consolidated fixed charge coverage ratios. As ofDecember  31,  2005, Clarke American was in compliance withall of these covenants.

As of December  31,  2005,$440.0  million principal amount at maturity was outstanding underthe term loan facility. As of December  31,  2005, $7.2million was drawn under the $40.0  million revolving creditfacility, and Clarke American had $27.0  million available forborrowing (giving effect to the issuance of $5.8  million ofletters of credit).

Clarke American Senior Notes

The Senior Notes issued by Clarke American to fund the Acquisitionwill mature in 2013 and bear interest at a rate per annum of113⁄4%. The indenture governing the Senior Notescontains customary restrictive covenants, including, among otherthings, restrictions on Clarke American’s ability to incuradditional debt, pay dividends and make distributions, make certaininvestments, repurchase stock, incur liens, enter into transactionswith affiliates, enter into sale and lease back transactions, merge orconsolidate and transfer or sell assets. Clarke American will berequired to offer to repurchase all of the notes upon the occurrence ofa ‘‘change of control,’’ as defined in theindenture, at a purchase price equal to 101% of their aggregateprincipal amount, plus accrued and unpaid interest. Clarke Americanwill also be required to offer to repurchase the Senior Notes with theproceeds of certain sales of assets, if it does not apply thoseproceeds within a specified time period after the sale, at a purchaseprice equal to 100% of their aggregate principal amount, plusaccrued and unpaid interest.

A registration rights agreementrelating to the Senior Notes requires Clarke American to complete anoffer to exchange the Senior Notes originally issued by it inDecember  2005 for new Senior Notes (with substantially similarterms) whose issuance is registered under the Securities Act of 1933.Clarke American is required to file a registration statement withrespect to the exchange offer within 150 days after December 15, 2005and to use all commercially reasonable efforts to have the registrationstatement declared effective within 240 days after December15,  2005. Clarke American is also required to use allcommercially reasonable efforts to complete the exchange offer within45 business days (or longer if required by the federal securities laws)after the effective date of the registration statement. Failure tocomply with the terms of the registration rights agreement could resultin Clarke American paying liquidated damages to holders of thenotes.

New Accounting Pronouncements

In December2004, the FASB issued SFAS No. 123 (revised 2004),‘‘Share-Based Payment,’’ an amendment to FASBStatements Nos. 123 and 95 (‘‘SFAS No.123(R)’’), which replaces SFAS No. 123, and supersedes APBOpinion No. 25, ‘‘Accounting for Stock Issued toEmployees.’’ SFAS No. 123(R) requires all share-basedpayments to employees, including grants of employee stock options, tobe recognized in the financial statements based on their fair values.In April  2005, the U.S. Securities and Exchange Commissionadopted a rule allowing companies to implement SFAS No. 123(R) at thebeginning of their next fiscal year that begins after June15,  2005, which for the Company will be the fiscal year beginningJanuary  1,  2006. The Company has adopted SFAS No. 123(R)effective January  1,  2006. The pro forma disclosurespreviously permitted under SFAS No. 123 no longer will be analternative to financial statement recognition. Under SFAS No. 123(R),the Company must determine the appropriate fair value model to be usedfor valuing share-based payments, the amortization method forcompensation cost and the transition method to be used at the date ofadoption. The transition methods are either a modified prospectivemethod or a modified retroactive method. The Company currently expectsto use the modified prospective method of adoption. The modifiedprospective method requires that compensation expense be recorded forall unvested stock options and restricted stock at the beginning of thefirst quarter of adoption of SFAS No. 123(R). Adoption of SFAS No.123(R) will not have an immediate impact on the Company’sfinancial 

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statements because all outstanding optionsare vested. However, the Company will incur incremental expenses in thefuture if additional options are granted and such expense may not besimilar to the amounts in the Company’s current pro formadisclosures under SFAS No. 123 and could be material to theCompany’s financial statements.

Impact of Inflation

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

TaxMatters

At December  31,  2005, the Company hadavailable net operating loss carryforwards of approximately $11.8million, which expire in 2012. In connection with the Acquisition,Honeywell has agreed to indemnify the Company for certain income taxliabilities that arose prior to the Acquisition and therefore, noliability has been reflected for these pre-Acquisition taxes.

Liquidity Assessment

M & F Worldwide is a holdingcompany whose only material assets are the stock of its subsidiariesand approximately $36.2  million in cash and cash equivalents asof December  31,  2005. Accordingly, M & F Worldwideconducts all of its operations through its subsidiaries, MafcoWorldwide and Clarke American. M & F Worldwide's ability topay its expenses and dividends on its common stock depends on thebalance of its own cash and cash equivalents and the payment ofdividends to it by Mafco Worldwide and Clarke American. Payments to M& F Worldwide by those subsidiaries, in turn, depend upon theirconsolidated results of operations and cash flows and whether they meetthe criteria to make dividend payments under the instruments governingtheir indebtedness. See ‘‘Risk Factors  — M& F Worldwide's holding company structure could limit itsability to pay its expenses and dividends on its commonstock.’’ Because Mafco Worldwide and Clarke American eachhave separate debt facilities, M & F Worldwide evaluates eachcompany’s liquidity and capital resources separately. Inaddition, M & F Worldwide is considering various alternatives forthe application of its cash and cash equivalents.

MafcoWorldwide

In addition to Mafco Worldwide’s normaloperating cash and working capital requirements and service of itsindebtedness, it also requires cash to fund capital expenditures,periodically build raw materials inventories and fund administrativeand other expenses regarding indemnified liabilities.

CapitalExpenditures. Capital expenditures for 2005, 2004 and 2003were $1.1  million, $1.6  million and $2.1  million,respectively. While expenditures for future years are expected to bewithin this general range, future changes in governmental regulationscould require the Company to substantially increase capitalexpenditures in order to comply with these regulations.

Inventories. Mafco Worldwide’s licorice rawmaterials are subject to a variety of agricultural risks. Additionally,most of the licorice root Mafco Worldwide purchases originates incountries and regions that have, from time to time, been subject topolitical instability. Accordingly, Mafco Worldwide must periodicallybuild its raw materials supply in order avoid material shortages orsignificant raw material price increases. Shortages of licorice rawmaterials could have a material adverse effect on MafcoWorldwide’s business, results of operations and financialcondition.

Mafco Worldwide believes that, based on currentlevels of operations and anticipated growth, cash flow from operations,together with other available sources of funds, including borrowingsunder its revolving credit facility, will be adequate to make requiredpayments on its indebtedness, to fund anticipated capital expendituresand to satisfy its working capital requirements for at least the next 12 months.

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Clarke American

Inaddition to Clarke American’s normal operating cash and workingcapital requirements and service of its indebtedness, it also requirescash to fund capital expenditures, enable cost reductions throughrestructuring projects and make contract acquisition payments tofinancial institution clients.

CapitalExpenditures. Clarke American’s total capitalexpenditures (which includes capitalized leases of $6.8  million)for the full 2005 fiscal year were $25.3  million. Theseexpenditures primarily related to maintenance of existing assets, costreduction initiatives and other projects which support future revenuegrowth.

Prepaid Rebates. During the full 2005fiscal year, Clarke American made approximately $24.6  million ofcontract acquisition payments to financial institution clients.

Clarke American believes that, based on current levels of operationsand anticipated growth, cash flow from operations, together with otheravailable sources of funds, including borrowings under its revolvingcredit facility, will be adequate to make required payments on itsindebtedness, to fund anticipated capital expenditures and to satisfyits working capital requirements for at least the next 12 months.

Cash Flow Risks

Each of Clarke American’sand Mafco Worldwide’s ability to meet their respective debtservice obligations and reduce their total debt will depend upon theirrespective ability to generate cash in the future which, in turn, willbe subject to general economic, financial, business, competitive,legislative, regulatory and other conditions, many of which are beyondeach’s respective control. Each of Clarke American and MafcoWorldwide may not be able to generate sufficient cash flow fromoperations and future borrowings may not be available to it under itscredit facilities in an amount sufficient to enable it to repay itsdebt or to fund its other liquidity needs. If future cash flow fromoperations and other capital resources are insufficient to payeach’s respective obligations as they mature or to fund itsliquidity needs, Clarke American or Mafco Worldwide, as the case maybe, may be forced to reduce or delay business activities and capitalexpenditures, sell assets, obtain additional debt or equity capital orrestructure or refinance all or a portion of its debt on or beforematurity. Mafco Worldwide or Clarke American, as the case may be, maynot be able to accomplish any of these alternatives on a timely basisor on satisfactory terms, if at all. In addition, the terms of theirrespective existing and future indebtedness may limit their ability topursue any of these alternatives.

Risks that could adverselyaffect Clarke American’s ability to meet its debt serviceobligations include, but are not limited to, decreases in check usage,increases in competitive activity and pricing pressures, additionaladverse legislative changes, or adverse changes among ClarkeAmerican’s highly-concentrated clients. In 2005, ClarkeAmerican’s top 20 clients accounted for approximately 47%of Clarke American’s full fiscal year 2005 net revenues. If Bankof America, which is Clarke American’s largest customer, were toterminate its contract with Clarke American, it would have a materialadverse effect on the financial results of Clarke American and theCompany, which would also create severe liquidity problems for ClarkeAmerican and the Company. In addition, the maturity of the principalindustry in which Clarke American operates and trends in the papercheck industry, including a faster than anticipated decline in checkusage due to increasing use of alternative payment methods and otherfactors, could materially and adversely affect Clarke American’sand the Company’s liquidity position.

Mafco Worldwide mayencounter liquidity risks arising from its supply of licorice root rawmaterial. Mafco Worldwide tries to maintain a sufficient licorice rootraw material inventory and open purchase contracts to meet normalproduction needs for three years. At December  31,  2005,Mafco Worldwide had on hand a supply of licorice root raw materialapproaching three years. Licorice root has an indefinite retentionperiod as long as it is kept dry, and therefore has experienced little,if any, material spoilage. Although Mafco Worldwide has been able toobtain licorice root raw materials without interruption since World WarII, since there has been periodic instability in the areas of the worldwhere licorice root raw materials are obtained, Mafco Worldwide may inthe future experience 

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a short supply of licorice root rawmaterials due to these or other instabilities. If Mafco Worldwide isunable to obtain licorice root raw materials, or is unable to obtainthem in a cost-effective manner, Mafco Worldwide’s business willbe severely hampered and Mafco Worldwide will experience severeliquidity difficulties.

In 2005, Mafco Worldwide’s tenlargest customers, eight of which are manufacturers of tobaccoproducts, accounted for approximately 56% of theCompany’s net revenues (and 69% of MafcoWorldwide’s net revenues). One customer, Altria Group Inc.,accounted for approximately 36% of Mafco Worldwide’s 2005net revenues. If Altria Group Inc. were to stop purchasing licoricefrom Mafco Worldwide, it would have a material adverse effect on thefinancial results of Mafco Worldwide and the Company, which would alsocreate severe liquidity problems for Mafco Worldwide and theCompany.

Non-Operating Contingent Liability,Indemnification and Insurance Matters 

Prior to 1988, aformer subsidiary of Pneumo Abex manufactured certainasbestos-containing friction products. Pneumo Abex has been named,typically along with 10 to as many as 100 or more other companies, as adefendant in various personal injury lawsuits claiming damages relatingto exposure to asbestos. Pursuant to indemnification agreements, theOriginal Indemnitor has ultimate responsibility for all the remainingasbestos-related claims asserted against Pneumo Abex throughAugust  1998 and for certain asbestos-related claims assertedthereafter. In connection with the sale by Pneumo Abex inDecember  1994 of its Friction Products Division, the SecondIndemnitor assumed responsibility for substantially allasbestos-related claims asserted against Pneumo Abex after August1998 and not indemnified by the Original Indemnitor. Federal-MogulCorporation purchased the Second Indemnitor in October  1998. InOctober  2001, the Second Indemnitor filed a petition underChapter 11 of the U.S. Bankruptcy Code and stopped performing itsindemnity obligations to the Company. Performance of the SecondIndemnitor's indemnity obligation is guaranteed by the IndemnityGuarantor. Following the bankruptcy filing of the Second Indemnitor,the Company confirmed that the Indemnity Guarantor would fulfill theSecond Indemnitor's indemnity obligations to the extent that theyare no longer being performed by the Second Indemnitor.

PneumoAbex’s former subsidiary maintained product liability insurancecovering substantially all of the period during whichasbestos-containing products were manufactured. The subsidiarycommenced litigation in 1982 against a portion of these insurers inorder to confirm the availability of this coverage. As a result ofsettlements in that litigation, other coverage agreements with othercarriers and payments by the Original Indemnitor, the Second Indemnitorand the Indemnity Guarantor pursuant to their indemnities, the Companyhas been receiving reimbursement each month for substantially all ofits monthly expenditures for asbestos-related claims. As ofDecember  31,  2005, the Company incurred or expected toincur approximately $952,000 of unindemnified costs, as to which iteither has received or expects to receive approximately $739,000 ininsurance reimbursements for matters pending or settled throughDecember  31,  2005. Management does not expect theseunindemnified matters to have a material adverse effect on theCompany’s financial position or results of operations, but theCompany is unable to forecast either the number of futureasbestos-related claimants or the amount of future defense andsettlement costs associated with present or future asbestos-relatedclaims.

The Transfer Agreement further provides that thesubsidiary of MCG will indemnify Pneumo Abex with respect to allenvironmental matters associated with Pneumo Abex’s and itspredecessor’s operations to the extent not paid by third-partyindemnitors or insurers, other than the operations relating to PneumoAbex’s Aerospace business, which Pneumo Abex sold to ParkerHannifin Corporation in April  1996. Accordingly, environmentalliabilities arising after the 1988 transaction with the OriginalIndemnitor that relate to Pneumo Abex’s former Aerospacefacilities are Company’s responsibility. The Original Indemnitoris obligated to indemnify Pneumo Abex for costs, expenses andliabilities relating to environmental and natural resource matters tothe extent attributable to the pre-1988 operation of the businessesacquired from the Original Indemnitor, subject to certain conditionsand limitations principally relating to compliance with notice,cooperation and other 

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procedural requirements. The OriginalIndemnitor is generally discharging its environmental indemnificationliabilities in the ordinary course.

It is generally not possibleto predict the ultimate total costs relating to any remediation thatmay be demanded at any environmental site due to, among other factors,uncertainty regarding the extent of prior pollution, the complexity ofapplicable environmental laws and regulations and theirinterpretations, uncertainty regarding future changes to such laws andregulations or their enforcement, the varying costs and effectivenessof alternative cleanup technologies and methods, and the questionableand varying degrees of responsibility and/or involvement by PneumoAbex. However, the aggregate cost of cleanup and related expenses withrespect to matters for which Pneumo Abex, together with numerous otherthird parties, have been named potentially responsible parties shouldbe substantially less than $100.0  million.

OnFebruary  5,  1996, the Company, through Pneumo Abex, enteredinto a reimbursement agreement with Chemical Bank and MCG (the‘‘Reimbursement Agreement’’). The ReimbursementAgreement provided for letters of credit covering certain environmentalissues relating to a former Pneumo Abex site. During 2000, theEnvironmental Protection Agency reduced the letter of creditrequirements to $2.2  million. During 2005, the OriginalIndemnitor assumed this obligation and Mafco Worldwide was releasedfrom these letters of credit.

The Company has not recognized aliability in its financial statements for matters covered byindemnification agreements from the Original Indemnitor or theIndemnity Guarantor. The Company considers these obligations to bethose of third-party indemnitors and monitors their financial positionsto determine the level of uncertainty associated with their ability tosatisfy their obligations. Based upon the indemnitors’ activemanagement of indemnifiable matters, discharging of the relatedliabilities when required, and financial positions based upon publiclyfiled financial statements, as well as the history of insurancerecovery set forth above, the Company believes that the likelihood offailing to obtain reimbursement of amounts covered by insurance andindemnification is remote.

Pneumo Abex’s former Aerospacebusiness sold certain of its aerospace products to the U.S. Governmentor to private contractors for the U.S. Government. Pneumo Abex retainedin the Aerospace sale certain claims for allegedly defective pricingthat the U.S. Government made with respect to certain of theseproducts. In the remaining unindemnified matter, Pneumo Abex conteststhe Government’s allegations and has been attempting to resolvethe matter without litigation.

In addition, various other legalproceedings, claims and investigations are pending against the Company,including those relating to commercial transactions, product liability,environmental, safety and health matters and other matters. Most ofthese matters are covered by insurance, subject to deductibles andmaximum limits, and by third-party indemnities. In the opinion ofmanagement, based upon the information available at this time, theoutcome of these matters will not have a material adverse effect on theCompany’s financial position or results of operations.

Forward-Looking Statements

This Annual Report on Form 10-Kfor the year ended December  31,  2005, as well as certain ofthe Company’s other public documents and statements and oralstatements, contains forward-looking statements that reflectmanagement’s current assumptions and estimates of futureperformance and economic conditions. When used in this Annual Report,the words ‘‘believes,’’‘‘anticipates,’’‘‘plans,’’ ‘‘expects,’’‘‘intends,’’‘‘estimates’’ or similar expressions areintended to identify forward-looking statements, although not allforward-looking statements contain such identifying words. Allforward-looking statements speak only as of the date of this AnnualReport. Although the Company believes that its plans, intentions andexpectations reflected in or suggested by the forward-lookingstatements are reasonable, such plans, intentions or expectations maynot be achieved. Such forward-looking statements are made in relianceupon the safe harbor provisions of the Private Securities LitigationReform Act of 1995. The Company cautions investors that anyforward-looking statements are subject to risks and uncertainties thatmay cause actual results and future trends to differ materially fromthose projected stated or implied by the forward-looking statements. Inaddition, the Company encourages investors to read the summary of theCompany’s critical accounting 

47

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policies under the heading‘‘Management’s Discussion and Analysis of FinancialCondition and Results of Operations — Critical AccountingPolicies and Estimates.’’

In addition to factorsdescribed in the Company’s Securities and Exchange Commissionfilings and others, the following factors could cause theCompany’s actual results to differ materially from thoseexpressed in any forward-looking statements made by the Company:

|  |              |                                                                              |
|--|--------------|------------------------------------------------------------------------------|
|  | •  | Clarke American’s andMafco Worldwide’s substantial indebtedness; |

|  |              |                                                                                                                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | covenant restrictions underClarke American’s and Mafco Worldwide’s indebtedness thatmay limit the Company’s and their ability to operate theirrespective businesses and react to market changes; |

|  |              |                                                                                                                               |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------|
|  | •  | lack of access to cash flow orother assets of the Company’s subsidiaries, including ClarkeAmerican and Mafco Worldwide; |

|  |              |                              |
|--|--------------|------------------------------|
|  | •  | increases in interest rates; |

|  |              |                                                                                                                                                                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the maturity of the principalindustry in which Clarke American operates and trends in the papercheck industry, including a faster than anticipated decline in checkusage due to increasing use of alternative payment methods and otherfactors; |

|  |              |                                                                                                                                                              |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | consolidation amongfinancial institutions and other adverse changes among the largeclients on which Clarke American depends, resulting in decreasedrevenues; |

|  |              |                                                                    |
|--|--------------|--------------------------------------------------------------------|
|  | •  | intensecompetition in all areas of the Company’s businesses; |

|  |              |                                                                                |
|--|--------------|--------------------------------------------------------------------------------|
|  | •  | interruptions or adverse changesin the Company’s supplier relationships; |

|  |              |                                                                   |
|--|--------------|-------------------------------------------------------------------|
|  | •  | increased production anddelivery costs applicable to the Company; |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | fluctuations in the costs of theCompany’s raw materials; |

|  |              |                                                                             |
|--|--------------|-----------------------------------------------------------------------------|
|  | •  | the Company’s ability toattract, hire and retain qualified personnel; |

|  |              |                                                                                                                  |
|--|--------------|------------------------------------------------------------------------------------------------------------------|
|  | •  | technological improvements thatmay reduce the Company’s competitive advantage over some of itscompetitors; |

|  |              |                                                                                             |
|--|--------------|---------------------------------------------------------------------------------------------|
|  | •  | ClarkeAmerican’s ability to protect customer data from account datasecurity breaches; |

|  |              |                                                                                                                 |
|--|--------------|-----------------------------------------------------------------------------------------------------------------|
|  | •  | changesin legislation relating to consumer privacy protection which could harmClarke American’s business; |

|  |              |                                                                                                                 |
|--|--------------|-----------------------------------------------------------------------------------------------------------------|
|  | •  | contracts with Clarke Americanclients relating to consumer privacy protection which could restrictits business; |

|  |              |                                                                        |
|--|--------------|------------------------------------------------------------------------|
|  | •  | theCompany’s ability to protect its intellectual propertyrights; |

|  |              |                                                                                                           |
|--|--------------|-----------------------------------------------------------------------------------------------------------|
|  | •  | the Company’sreliance on third-party providers for certain significant informationtechnology needs; |

|  |              |                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------|
|  | •  | softwaredefects that could harm Clarke American’s businesses andreputation; |

|  |              |                                                                       |
|--|--------------|-----------------------------------------------------------------------|
|  | •  | theCompany’s ability to successfully manage futureacquisitions; |

|  |              |                                                                                         |
|--|--------------|-----------------------------------------------------------------------------------------|
|  | •  | sales andother taxes which could have adverse effects on the Company’sbusinesses; |

|  |              |                     |
|--|--------------|---------------------|
|  | •  | environmentalrisks; |

|  |              |                                                                                                       |
|--|--------------|-------------------------------------------------------------------------------------------------------|
|  | •  | economic, climatic orpolitical conditions in countries in which Mafco Worldwide sourceslicorice root; |

|  |              |                                                                                                                                                                              |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | economic,climatic or political conditions that have an impact on the worldwidetobacco industry or on the consumption of tobacco products in whichlicorice products are used; |

|  |              |                                                                                                                                                                                                                                                                                                            |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | additional government regulationof tobacco products, tobacco industry litigation or enactment of new orincreased taxes on cigarettes or other tobacco products, to the extentany of the foregoing curtail growth in or actually reduce consumptionof tobacco products in which licorice products are used; |

48

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|  |              |                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------|
|  | •  | additionalgovernment regulation relating to non-tobacco uses of MafcoWorldwide’s products; |

|  |              |                                                                                                                                                                                                        |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the failure of third parties tomake full and timely payment to the Company for environmental,asbestos, tax, Acquisition-related and other matters for which theCompany is entitled to indemnification; |

|  |              |                                                                                                                         |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------|
|  | •  | any inability to obtainindemnification for any significant group of asbestos-related claimspending against the Company; |

|  |              |                                               |
|--|--------------|-----------------------------------------------|
|  | •  | lower than expected cash flowfrom operations; |

|  |              |                                           |
|--|--------------|-------------------------------------------|
|  | •  | unfavorableforeign currency fluctuations; |

|  |              |                                                              |
|--|--------------|--------------------------------------------------------------|
|  | •  | the loss of one of theCompany’s significant customers; |

|  |              |                                                 |
|--|--------------|-------------------------------------------------|
|  | •  | work stoppages and other labordisturbances; and |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | unanticipated internal controldeficiencies or weaknesses. |

You should read carefully thefactors described in the section entitled ‘‘RiskFactors’’ of this Annual Report on Form 10-K for adescription of certain risks that could, among other things, causeactual results to differ from these forward-looking statements. TheCompany assumes no responsibility to update the forward-lookingstatements contained in this Annual Report on Form 10-K.

Item7A.    Quantitative and Qualitative Disclosures about MarketRisks

The Company is exposed to market risk from changes inforeign currency exchange rates and interest rates, which could affectits business, results of operations and financial condition. TheCompany manages its exposure to these market risks through its regularoperating and financing activities.

As of December31,  2005 and 2004, the Company’s net foreign currencymarket exposures of $1.2  million and $0.4  million,respectively, are primarily the Euro. Most of the Company’sexport sales and purchases of licorice raw materials are made in U.S.dollars. The Company’s French subsidiary sells in severalforeign currencies as well as the U.S. dollar and purchases rawmaterials principally in U.S. dollars. Since the exposures are notmaterial, the Company does not generally hedge against foreign currencyfluctuations. In addition, management does not foresee nor expect anysignificant changes in foreign currency exposure in the nearfuture.

A 10% appreciation in foreign currency exchangerates from the prevailing market rates would result in a $0.1million increase to the related net unrealized gain for December31,  2005 and a $0.1  million increase for December31,  2004. Conversely, a 10% depreciation in thesecurrencies from the prevailing market rates would result in a$0.1  million decrease to the related net unrealized gain forDecember  31,  2005 and December  31,  2004.

At December  31,  2005, Mafco Worldwide had $107.0million of term loans outstanding under the Mafco Worldwide creditagreement and $1.7  million outstanding under the Mafco Worldwiderevolving credit facility, including letters of credit. AtDecember  31,  2005, Clarke American had $440.0  millionof term loans outstanding under the Clarke American credit agreementand $13.0  million outstanding under the Clarke American revolvingcredit facility, including letters of credit. All of these outstandingloans are either ABR Loans or may be converted into Eurodollar Loansbut in either case, bear interest at variable rates. Accordingly, theCompany is subject to risk due to changes in interest rates. TheCompany believes that a hypothetical 10% increase or decrease ininterest rates applicable to its floating rate debt outstanding as ofDecember  31,  2005 would result in an increase or decreasein its annual interest expense of approximately $2.6  million peryear.

Neither the Company nor its subsidiaries had any interestrate derivative agreements in effect at December  31,  2005.During February  2006, Mafco Worldwide and Clarke American eachentered into interest rate derivative transactions. Mafco Worldwideentered into a two-year interest rate collar with a notional amount of$50.0  million. Clarke American entered into a three-year interestrate swap with 

49

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a notional amount of $150.0  million.The purpose of these derivative transactions was to limit therespective company’s risk on a portion of the variable ratesenior secured credit facilities and each transaction will be accountedfor as a cash flow hedge.

Item 8.    Financial Statementsand Supplementary Data

See the financial statements andsupplementary data listed in the accompanying Index to ConsolidatedFinancial Statements and Financial Statement Schedules on page F-1herein. Information required by other schedules called for underRegulation S-X is either not applicable or is included in the financialstatements or notes thereto.

Item 9.    Changes in andDisagreements with Accountants on Accounting and FinancialDisclosure

None.

Item 9A.    Controls andProcedures

The Company's management, with theparticipation of M & F Worldwide's Chief Executive Officerand the Chief Financial Officer, has evaluated the effectiveness of theCompany's disclosure controls and procedures (as such term isdefined in Rules 13(a)-15(e) and 15d−(e) under the SecuritiesExchange Act of 1934, as amended (the ‘‘ExchangeAct’’)) as of December  31,  2005. Based on thatevaluation, M & F Worldwide's Chief Executive Officer andChief Financial Officer concluded that the Company's disclosurecontrols and procedures were effective as of December  31,2005. Other than changes related to the acquisition of Clarke Americanon December  15,  2005, there were no material changes in theCompany's internal control over financial reporting (as such termis defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)during the fourth quarter of 2005.

Management’s Reporton Internal Control over Financial Reporting

TheCompany's management is responsible for establishing andmaintaining adequate internal control over financial reporting for theCompany. The Company's internal control over financial reportingis designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accountingprinciples.

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

|  |              |                                                                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; |

|  |              |                                                                                                                                                                                                                                                                                                                                        |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Provide reasonable assurancethat transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the Company are beingmade only in accordance with authorizations of management and directorsof the Company; and |

|  |              |                                                                                                                                                                                                          |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Providereasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use or disposition of the Company'sassets that could have a material effect on the financialstatements. |

Because of its inherent limitations, internalcontrol over financial reporting may not prevent or detectmisstatements. Projections of any evaluation of effectiveness to futureperiods are subject to the risks that controls may become inadequatebecause of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.

Subject to theexceptions described below, management assessed the effectiveness ofthe Company's internal control over financial reporting as ofDecember  31,  2005. In making this assessment, managementused the criteria set forth by the Committee of SponsoringOrganizations of the Treadway Commission (COSO) in InternalControl-Integrated Framework. Management has 

50

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excluded Clarke American and itssubsidiaries from its evaluation of internal control over financialreporting because M & F Worldwide acquired Clarke American and itssubsidiaries in the Acquisition, which was accounted for as a purchaseand closed on December  15,  2005. As of December31,  2005, Clarke American and its subsidiaries had total assetsand total revenues representing approximately 79% and20%, respectively, of the Company's consolidated assetsand revenues as of and for the year ended December 31, 2005.

Based on its assessment, management believes that, subject to theexceptions described above, as of December  31,  2005, theCompany's internal control over financial reporting waseffective.

The Company's independent registered publicaccounting firm has issued an audit report on management’sassessment of the Company's internal control over financialreporting, which appears below.

51

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Report of Independent Registered PublicAccounting Firm

The Board of Directors andShareholders of M & F Worldwide Corp.

We haveaudited management’s assessment, included in the accompanyingManagement’s Report on Internal Control over FinancialReporting, that M & F Worldwide Corp. maintained effective internalcontrol over financial reporting as of December  31,  2005,based on criteria established in Internal Control — IntegratedFramework issued by the Committee of Sponsoring Organizations of theTreadway Commission (the COSO criteria). M & F WorldwideCorp.’s management is responsible for maintaining effectiveinternal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting. Ourresponsibility is to express an opinion on management’sassessment and an opinion on the effectiveness of the company’sinternal control over financial reporting based on our audit.

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether effective internal controlover financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control overfinancial reporting, evaluating management’s assessment, testingand evaluating the design and operating effectiveness of internalcontrol, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides areasonable basis for our opinion.

Acompany’s internal control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain tothe maintenance of records that, in reasonable detail, accurately andfairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition ofthe company’s assets that could have a material effect on thefinancial statements.

Because of its inherentlimitations, internal control over financial reporting may not preventor detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controlsmay become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures maydeteriorate.

As indicated in the accompanyingManagement’s Report on Internal Control over FinancialReporting, management’s assessment of and conclusion on theeffectiveness of internal control over financial reporting did notinclude the internal controls of Clarke American Corp., which wasacquired on December  15,  2005, which is included in the2005 consolidated financial statements of M & F Worldwide Corp. andconstituted 79% of total assets as of December  31,2005 and 20% of total revenues for the year then ended. Ouraudit of internal control over financial reporting of M & FWorldwide Corp. also did not include an evaluation of the internalcontrol over financial reporting of Clarke American Corp.

In our opinion, management’s assessment that M& F Worldwide Corp. maintained effective internal control overfinancial reporting as of December  31,  2005, is fairlystated, in all material respects, based on the COSO criteria. Also, inour opinion, M & F Worldwide Corp. maintained, in all materialrespects, effective internal control over financial reporting as ofDecember  31,  2005, based on the COSO criteria.

52

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We have also audited, inaccordance with the standards of the Public Company AccountingOversight Board (United States), the 2005 consolidated financialstatements of M & F Worldwide Corp. and our report dated March 14,2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

New York, New YorkMarch 14, 2006

53

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PART III

The Companywill provide the information otherwise set forth in Part III, Items 10through 14, of Form 10-K in its definitive proxy statement for its 2006annual meeting of stockholders, which is to be filed pursuant toRegulation 14A not later than April  30,2006.

54

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PART IV

Item 15.    Exhibits and Financial Statement Schedules

|           |                                                                 |
|-----------|-----------------------------------------------------------------|
| (a)  | (1 and 2) Financial statements andfinancial statement schedule. |

See Index to ConsolidatedFinancial Statements and Financial Statement Schedules, which appearson page F-1 herein. All other schedules for which provision is made inthe applicable accounting regulations of the Securities & ExchangeCommission are not required under the related instructions or areinapplicable and therefore have been omitted.

|  |           |          |
|--|-----------|----------|
|  | (3)  | Exhibits |

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  |
|------------|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 2.1        |  | Stock Purchase Agreement, dated as of April  19,  2001 byand between PX Holding Corporation and M & F Worldwide Corp.(incorporated by reference to Exhibit 2.1 to M & F WorldwideCorp.’s Current Report on Form 8-K dated April  20,2001).                                                                                                                                                                                                                                                           |
| 2.2        |  | Stock Purchase Agreement, datedApril  28,  1988, between Pneumo Abex and Whitman Corporation(incorporated by reference to Exhibit 2.1 to Pneumo Abex’sRegistration Statement on Form S-1, Commission File No. 33-22725) asamended by an Amendment, dated as of August  29,  1988, and aSecond Amendment and related Settlement Agreement, datedSeptember  23,  1991 (incorporated by reference to Exhibit10.4 to Abex Inc.’s Annual Report on Form 10-K for the fiscalyear ended December  31,  1992). |
| 2.3        |  | Stock Purchase Agreement by and between M & F Worldwide Corp.and Honeywell International Inc., dated October 31, 2005(incorporated by reference to Exhibit 2.1 of M & F WorldwideCorp.’s Current Report on Form 8-K, dated October31,  2006).                                                                                                                                                                                                                                                   |
| 3.1        |  | Restated Certificateof Incorporation of the Company (incorporated by reference to Exhibit3.1 to M & F Worldwide Corp.’s Current Report on Form 8-Kdated April  30,  1996).                                                                                                                                                                                                                                                                                                                               |
| 3.2        |  | Certificate of Designation, Powers, Preferences and Rights ofSeries B Non-Cumulative Perpetual Participating Preferred Stock of M& F Worldwide Corp. (incorporated by reference to Exhibit 4.2 to M& F Worldwide Corp.’s Current Report on Form 8-K datedApril  20,  2001).                                                                                                                                                                                                                          |
| 3.3        |  | By-lawsof the Company as currently in effect (incorporated by reference toExhibit 3.2 to M & F Worldwide Corp.’s Annual Report on Form10-K for the fiscal year ended December  31,1995).                                                                                                                                                                                                                                                                                                                 |
| 3.4        |  | Amendment to theCompany’s By-laws concerning the advance notice provision(incorporated by reference to Exhibit 10.23 to M & F WorldwideCorp.’s Quarterly Report on Form 10-Q for the fiscal quarterended June  30,  2001).                                                                                                                                                                                                                                                                         |
| 4.1        |  | Registration Rights Agreement between Holdings and the Company(incorporated by reference to Exhibit 2 to the Schedule 13D datedJune  26,  1995 filed by Holdings Inc., MCG Holdings Inc. andHoldings in connection with the Company’s capitalstock).                                                                                                                                                                                                                                                         |
| 4.2*       |  | Indenture dated as ofDecember 15, 2005 among Clarke American Corp., a Delawarecorporation, the Guarantors (as named therein) and The Bank of NewYork, a New  York banking corporation, as trustee.                                                                                                                                                                                                                                                                                                            |
| 4.3*       |  | Registration Rights Agreement dated as ofDecember 15, 2005 by and among Clarke American Corp., theGuarantors (listed therein), Bear, Stearns & Co. Inc. andJ.P.  Morgan Securities Inc.                                                                                                                                                                                                                                                                                                                   |
|            |

55

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|            |  |                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |
|------------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                 |
| 4.4*       |  | Credit Agreement datedas of December  8,  2005 among Flavors Holdings Inc., MafcoWorldwide Corporation, the lenders party thereto, JPMorgan Chase Bank,N.A., as administrative agent, Bear Stearns Corporate Lending Inc., assyndication agent, and Natexis Banques Populaires and National CityBank, as co-documentation agents.                           |
| 4.5*       |  | Guarantee and Collateral Agreement dated as of December8,  2005 made by Flavors Holdings Inc., Mafco WorldwideCorporation and certain of its subsidiaries in favor of JPMorgan ChaseBank, N.A., as administrative agent.                                                                                                                                    |
| 4.6*       |  | Mortgage, Security Agreement, Assignment of Leases and Rents, andFixture Filings, dated as of December  15,  2005, made byMafco Worldwide Corporation to JPMorgan Chase Bank, N.A., asAdministrative Agent, relating to property located in Camden County,New Jersey.                                                                                       |
| 4.7*       |  | Credit Line Deed ofTrust, Security Agreement, Assignment of Leases and Rents, and FixtureFiling, dated as of December  15,  2005, made by MafcoWorldwide Corporation in favor of Kanawha Land Title Services, LLC, asTrustee, relating to property located in the City of Richmond,Virginia.                                                                |
| 4.8*       |  | Notice of Grant of SecurityInterest in Trademarks, dated as of January  30,  2006, madeby Mafco Worldwide Corporation in favor of JPMorgan Chase Bank, N.A.,as Administrative Agent.                                                                                                                                                                        |
| 4.9*       |  | CreditAgreement, dated as of December 15, 2005 among CA AcquisitionHoldings, Inc., Clarke American Corp., several lenders party thereto,Bear Stearns Corporate Lending Inc., as administrative agent andJPMorgan Chase Bank, N.A., as syndication agent.                                                                                               |
| 4.10*      |  | Guarantee and Collateral Agreement, dated as ofDecember 15, 2005, by and among Clarke American Corp., CAAcquisition Holdings, Inc., Core Skills Inc., Clarke American Checks,Inc., Checks in the Mail, Inc. and B2Direct, Inc.                                                                                                                         |
| 4.11*      |  | Intellectual Property Security Agreement, datedas of December 15, 2005, by and among Clarke American Corp., CAAcquisition Holdings, Inc., Core Skills Inc., Clarke American Checks,Inc., Checks in the Mail, Inc. and B2Direct, Inc.                                                                                                                   |
| 4.12*      |  | Mortgage, Assignment of Leases and Rents,Security Agreement and Fixture Filing for Commercial Purposes dated asof December  15,  2005 from Clarke American Checks, Inc. tothe Administrative Agent with respect to property located at 124Metropolitan Avenue, Salina, New York.                                                                            |
| 4.13*      |  | Deed of Trust, Assignment of Leases and Rents, Security Agreementand Fixture Filing for Commercial Purposes dated as of December15,  2005 from Clarke American Checks, Inc. to W.Z. Fairbanks Jr.as Trustee for the benefit of Bear Stearns Corporate Lending Inc. asBeneficiary with respect to property located at 5734 Farinon Drive, SanAntonio, Texas. |
| 4.14*      |  | Deed of Trust,Assignment of Leases and Rents, Security Agreement and Fixture Filingfor Commercial Purposes dated as of December  15,  2005 fromChecks in the Mail, Inc. to W.Z. Fairbanks Jr. as Trustee for thebenefit of Bear Stearns Corporate Lending Inc. as Beneficiary withrespect to property located at 2435 Goodwin Lane, New Braunfels,Texas.    |
|            |

56

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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  |
|------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.15*      |  | Deed of Trust,Assignment of Leases and Rents, Security Agreement and Fixture Filingfor Commercial Purposes dated as of December  15,  2005 fromB2Direct, Inc. to Mid-South Title Corporation as Trustee for thebenefit of Bear Stearns Corporate Lending Inc. as Beneficiary withrespect to property located at 5205 North National Drive, Knoxville,Tennessee.                                                                                                                              |
| 10.1       |  | Transfer Agreement amongthe Company, MCG Intermediate Holdings Inc., Pneumo Abex and PCTInternational Holdings Inc. (incorporated by reference to Exhibit 10.1to PCT’s Current Report on Form 8-K dated June  28,1995).                                                                                                                                                                                                                                                                |
| 10.2       |  | Letter Agreement, dated as ofJune  26,  1995, between the Company and Mafco (incorporatedby reference to Exhibit 10.2 to M & F Worldwide Corp.’sCurrent Report on Form 8-K dated June  28,  1995).                                                                                                                                                                                                                                                                                 |
| 10.3       |  | Letter Agreement, dated as of February5,  1996, between the Company and Mafco (incorporated by referenceto Exhibit 6 to Amendment No. 2 to Schedule 13D dated February8,  1996 filed by MacAndrews & Forbes, Inc., MCG Holdings Inc.and Holdings in connection with the Company’s capitalstock).                                                                                                                                                                                   |
| 10.4+      |  | M & F Worldwide 1995Stock Plan (the ‘‘1995 Stock Plan’’) foremployees of the Company and employees of affiliated corporations(incorporated by reference to Annex C to the Proxy Statement/Prospectusincluded in the Company’s Registration Statement on Form S-1(File No. 33-92186)), as amended (incorporated by reference to Exhibit10.19 to M & F Worldwide Corp.’s Annual Report on Form 10-Kfor the fiscal year ended December  31,  1996). |
| 10.5+      |  | The Company’s 1997 Stock Option Plan(incorporated by reference to Exhibit 10.25 to M & F WorldwideCorp.’s Annual Report on Form 10-K for the fiscal year endedDecember  31,  1996).                                                                                                                                                                                                                                                                                          |
| 10.6       |  | Contract dated as of May  31,  1997 between MafcoWorldwide and Licorice and Paper Employees Association of Camden, NewJersey AFL-CIO (incorporated by reference to Exhibit 10.28 to M & FWorldwide Corp.’s Annual Report on Form 10-K for the fiscal yearended December  31,  1997).                                                                                                                                                                                               |
| 10.7+      |  | Employment agreement, dated August  1,  2000, between theRegistrant and Pramathesh S. Vora (incorporated by reference to M &F Worldwide Corp.’s Annual Report on Form 10-K for the fiscalyear ended December  31,  2000).                                                                                                                                                                                                                                                          |
| 10.8+      |  | The Company’s 2000 Stock Option Plan foremployees of the Registrant and employees of affiliated corporations(incorporated by reference to Exhibit 99.1 to M & F WorldwideCorp.’s Registration Statement on Form S-8, Commission FileNo.  333-9162).                                                                                                                                                                                                                          |
| 10.9+      |  | Employmentagreement dated August  1,  2001, between the Registrant andStephen G. Taub. (incorporated by reference to Exhibit 10.29 to M &F Worldwide Corp.’s Annual Report on Form 10-K for the fiscalyear ended December  31,  2001).                                                                                                                                                                                                                                             |
| 10.10      |  | Amendment No. 1 to the Instrument of Assignmentand Assumption, dated as of December  3,  2002, by andbetween Holdings Inc., M & F Worldwide Corp. and Panavision Inc.(incorporated by reference to M & F Worldwide Corp.’sCurrent Report on Form 8-K dated December  18,2002).                                                                                                                                                                                                 |
| 10.11      |  | Mafco-Pneumo Abex CorporationLetter Agreement, dated as of December  3,  2002, by andbetween Holdings, M & F Worldwide Corp. and Pneumo Abex Corporation(incorporated by reference to M & F Worldwide Corp.’sCurrent Report on Form 8-K dated December  18,2002).                                                                                                                                                                                                              |
|            |

57

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|            |  |                                                                                                                                                                                                                                                                                                          |  |  |  |  |
|------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                              |
| 10.12      |  | Management ServicesAgreement, dated as of October  29,  2003, by and betweenMacAndrews & Forbes Holdings Inc. and M & F Worldwide Corp.(incorporated by reference to Exhibit 10.37 to M & F WorldwideCorp.’s Annual Report on Form 10-K for the fiscal year endedDecember  31,  2004). |
| 10.13+     |  | M& F Worldwide Corp. 2003 Outside Directors Deferred CompensationPlan (incorporated by reference to Exhibit 10.38 to M & F WorldwideCorp.’s Annual Report on Form 10-K for the fiscal year endedDecember  31,  2004).                                                                      |
| 10.14+     |  | TheCompany’s 2003 Stock Option Plan for employees of the Registrantand employees of affiliated corporations (incorporated by reference toM & F Worldwide Corp.’s Definitive Proxy Statement onSchedule 14A dated April  2,  2004).                                                       |
| 10.15*     |  | Tax Sharing Agreement, dated as ofDecember 15, 2005, by and among M & F Worldwide Corp.,Clarke American Corp. and PCT International Holdings Inc.                                                                                                                                               |
| 10.16*+    |  | Employment Agreement by and between ClarkeAmerican Corp. and Charles  T.  Dawson, dated as ofOctober  31,  2005.                                                                                                                                                                                         |
| 21.1*      |  | Listof subsidiaries                                                                                                                                                                                                                                                                                      |
| 23.1*      |  | Consent ofIndependent Registered Public Accounting Firm                                                                                                                                                                                                                                                  |
| 24.1*      |  | Powers of attorney executed by Messrs.Perelman, Beekman, Coppola, Durnan, Folz, Gittis, Meister, Slovin, andTaub.                                                                                                                                                                                        |
| 31.1*      |  | Certification of HowardGittis, Chief Executive Officer, dated March  15,2006.                                                                                                                                                                                                                            |
| 31.2*      |  | Certification of Todd J.Slotkin, Chief Financial Officer, dated March  15,2006.                                                                                                                                                                                                                          |
| 32.1*      |  | Certification of HowardGittis, Chief Executive Officer, dated March  15,  2006,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002 (furnished herewith).                                                                                             |
| 32.2*      |  | Certification of Todd J. Slotkin, ChiefFinancial Officer, dated March  15,  2006, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (furnishedherewith).                                                                                            |
|            |

|  |
|--|
|  |  |
|  |

|   |               |
|---|---------------|
| * | Filedherewith |

|   |                                                                                                          |
|---|----------------------------------------------------------------------------------------------------------|
| + | Denotes management contract orcompensatory plan or arrangement required to be filed as an exhibithereto. |

58

----

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of theSecurities Exchange Act of 1934, the Registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereto dulyauthorized.

|                         |  |                           |  |                                                                                               |  |  |  |  |  |  |
|-------------------------|--|---------------------------|--|-----------------------------------------------------------------------------------------------|--|--|--|--|--|--|
|                    |  | M & F WORLDWIDE CORP. |
| Dated: March  15,  2006 |  | By:                       |  | /s/Howard Gittis                                                                              |
|                    |  |                      |  | Howard GittisChairman of the Board,Presidentand Chief Executive Officer                       |
| Dated: March  15,  2006 |  | By:                       |  | /s/Todd J. Slotkin                                                                            |
|                    |  |                      |  | Todd J. SlotkinExecutive Vice PresidentandChief Financial Officer(Principal FinancialOfficer) |
| Dated: March15,  2006   |  | By:                       |  | /s/LaurenceWinoker                                                                            |
|                    |  |                      |  | Laurence WinokerSenior VicePresident,Treasurer and Controller(Principal AccountingOfficer)    |
|                         |

59

----

Pursuant to the requirements of theSecurities Exchange Act of 1934, the following persons have signed thisreport on behalf of the Registrant and in the capacities and on thedates indicated.

|                      |  |          |  |                |
|----------------------|--|----------|--|----------------|
| Signature            |  | Title    |  | Date           |
|                      |
| Ronald O. Perelman * |  | Director |  | March 15,2006  |
|                      |
| Ronald O.Perelman    |
|                      |
| Philip E. Beekman *  |  | Director |  | March 15,2006  |
|                      |
| PhilipE. Beekman     |
|                      |
| Rosanne F. Coppola*  |  | Director |  | March 15, 2006 |
|                      |
| Rosanne F. Coppola   |
|                      |
| Jaymie A. Durnan*    |  | Director |  | March 15, 2006 |
|                      |
| Jaymie A. Durnan     |
|                      |
| Theo W. Folz*        |  | Director |  | March 15, 2006 |
|                      |
| Theo W. Folz         |
|                      |
| Howard Gittis*       |  | Director |  | March 15, 2006 |
|                      |
| Howard Gittis        |
|                      |
| Paul M.  Meister*    |  | Director |  | March 15, 2006 |
|                      |
| Paul M.  Meister     |
|                      |
| Bruce Slovin *       |  | Director |  | March 15, 2006 |
|                      |
| Bruce Slovin         |
|                      |
| Stephen G. Taub *    |  | Director |  | March 15, 2006 |
|                      |
| Stephen G. Taub      |
|                      |

|   |                                                                                                                                                 |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------|
| * | The undersigned by signing his name heretodoes hereby execute this Form 10-K pursuant to powers of attorney filedas exhibits to this Form 10-K. |

|                         |  |        |  |                                                                                                                                                                   |  |  |  |  |  |  |
|-------------------------|--|--------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|--|--|
| Dated: March  15,  2006 |  | By:    |  | /s/Todd J.Slotkin                         |
|                    |  |   |  | Todd J.SlotkinAttorney-in-Fact                                                                                                                                    |
|                         |

60

----

Item8, Item 15 (a) (1) and (2)

INDEX TO CONSOLIDATED FINANCIALSTATEMENTS AND FINANCIAL STATEMENT SCHEDULESYEAR ENDEDDECEMBER 31, 2005

The following consolidatedfinancial statements of M & F Worldwide Corp. and Subsidiaries areincluded in Item 8:

As of December31,  2005 and 2004 and for the years ended December31,  2005, 2004 and 2003.

|                                                                                                                    |  |        |        |        |  |  |
|--------------------------------------------------------------------------------------------------------------------|--|--------|--------|--------|--|--|
|                                                                                                               |  | Pages  |
| Report of Independent RegisteredPublic Accounting Firm                                                             |  |   | F-2    |   |
| ConsolidatedBalance Sheets                                                                                         |  |   | F-3    |   |
| Consolidated Statementsof Income                                                                                   |  |   | F-4    |   |
| Consolidated Statements ofStockholders’ Equity                                                               |  |   | F-5    |   |
| Consolidated Statements of Cash Flows                                                                              |  |   | F-6    |   |
| Notes to Consolidated Financial Statements                                                                         |  |   | F-7    |   |
| Thefollowing financial statement schedules of M & F Worldwide Corp.and Subsidiaries are included in Item15(a): |  |   |   |   |
| Schedule I – Condensed FinancialInformation of Registrant                                                    |  |   | F-32   |   |
| Schedule II– Valuation and Qualifying Accounts and Reserves                                                  |  |   | F-35   |   |
|                                                                                                                    |

All other schedules for which provisionis made in the applicable accounting regulation of the Securities andExchange Commission are not required under the related instructions orare inapplicable and, therefore, have beenomitted.

F-1

----

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TheBoard of Directors and StockholdersM & F Worldwide Corp.

We have audited the accompanying consolidated balance sheetsof M & F Worldwide Corp. and subsidiaries as of December31,  2005 and 2004, and the related consolidated statements ofincome, stockholders’ equity and cash flows for each of thethree years in the period ended December  31,  2005. Ouraudits also included the financial statement schedules listed in theIndex at Item 15(a). These financial statements and schedules are theresponsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements and schedulesbased on our audits.

We conducted our audits inaccordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we planand perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis forour opinion.

In our opinion, the consolidated financialstatements referred to above present fairly, in all material respects,the consolidated financial position of M & F Worldwide Corp. andsubsidiaries at December  31,  2005 and 2004, and theconsolidated results of their operations and cash flows for each of thethree years in the period ended December  31,  2005, inconformity with U.S. generally accepted accounting principles. Also, inour opinion, the related financial statement schedules, when consideredin relation to the basic financial statements taken as a whole, presentfairly in all material respects the information set forth therein.

We have also audited, in accordance with the standards of thePublic Company Accounting Oversight Board (United States), theeffectiveness of M & F Worldwide Corp. and subsidiaries internalcontrol over financial reporting as of December  31,  2005,based on criteria established in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the TreadwayCommission and our report dated March 14, 2006 expressed an unqualifiedopinion thereon.

/s/ Ernst & Young LLP

New York, New YorkMarch 14, 2006

F-2

----

M & F Worldwide Corp. andSubsidiaries Consolidated Balance Sheets (in millions, exceptshare and per share data)

|                                                                                                                                                           |  |             |         |         |  |        |         |         |  |  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--|-------------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                                                                      |  | December31, |
|                                                                                                                                                      |  | 2005        |         | 2004    |
| ASSETS                                                                                                                                                    |  |        |    |    |  |   |    |    |
| Currentassets:                                                                                                                                            |  |        |    |    |  |   |    |    |
| Cash and cashequivalents                                                                                                                                  |  | $           | 52.4    |    |  | $      | 103.6   |    |
| Accountsreceivable (net of allowances of $0.1 and$0.1)                                                                                                    |  |        | 34.1    |    |  |   | 11.0    |    |
| Inventories                                                                                                                                               |  |        | 68.1    |    |  |   | 59.9    |    |
| Prepaidexpenses andother                                                                                                                                  |  |        | 26.3    |    |  |   | 3.5     |    |
| Totalcurrent assets                                                                                                                                       |  |        | 180.9   |    |  |   | 178.0   |    |
| Property,plant and equipment,net                                                                                                                          |  |        | 118.4   |    |  |   | 18.0    |    |
| Goodwill                                                                                                                                                  |  |        | 388.5   |    |  |   | 41.2    |    |
| Otherintangible assets,net                                                                                                                                |  |        | 686.8   |    |  |   | 109.7   |    |
| Pensionasset                                                                                                                                              |  |        | 16.5    |    |  |   | 15.4    |    |
| Otherassets                                                                                                                                               |  |        | 71.0    |    |  |   | 14.2    |    |
| Totalassets                                                                                                                                               |  | $           | 1,462.1 |    |  | $      | 376.5   |    |
| LIABILITIESAND STOCKHOLDERS'EQUITY                                                                                                                        |  |        |    |    |  |   |    |    |
| Currentliabilities:                                                                                                                                       |  |        |    |    |  |   |    |    |
| Accountspayable                                                                                                                                           |  | $           | 37.1    |    |  | $      | 6.5     |    |
| Accruedliabilities                                                                                                                                        |  |        | 48.8    |    |  |   | 6.1     |    |
| Currentmaturities of long-termdebt                                                                                                                        |  |        | 17.6    |    |  |   | — |    |
| Totalcurrentliabilities                                                                                                                                   |  |        | 103.5   |    |  |   | 12.6    |    |
| Long-termdebt                                                                                                                                             |  |        | 715.6   |    |  |   | — |    |
| Deferred taxliabilities                                                                                                                                   |  |        | 264.7   |    |  |   | 15.4    |    |
| Otherliabilities                                                                                                                                          |  |        | 16.9    |    |  |   | 8.3     |    |
| Commitmentsandcontingencies                                                                                                                               |  |        | — |    |  |   | — |    |
| Stockholders'equity:                                                                                                                                      |  |        |    |    |  |   |    |    |
| Common stock, parvalue $.01; 250,000,000 shares authorized; 21,881,170 shares issued atDecember 31, 2005 and 21,641,370 shares issued at December 31,2004 |  |        | 0.2     |    |  |   | 0.2     |    |
| Additionalpaid-incapital                                                                                                                                  |  |        | 41.5    |    |  |   | 39.2    |    |
| Treasurystock at cost 2,541,900 shares at December 31, 2005 and2004                                                                                       |  |        | (14.8   | )  |  |   | (14.8   | )  |
| Retainedearnings                                                                                                                                          |  |        | 337.5   |    |  |   | 313.5   |    |
| Accumulatedother comprehensive (loss)income                                                                                                               |  |        | (3.0    | )  |  |   | 2.1     |    |
| Totalstockholders'equity                                                                                                                                  |  |        | 361.4   |    |  |   | 340.2   |    |
| Totalliabilities and stockholders'equity                                                                                                                  |  | $           | 1,462.1 |    |  | $      | 376.5   |    |
|                                                                                                                                                           |

SeeNotes to Consolidated Financial Statements

F-3

----

M & F Worldwide Corp. andSubsidiaries Consolidated Statements of Income (in millions,except per share data)

|                                                                           |  |                       |         |         |  |        |         |         |  |        |        |         |  |  |
|---------------------------------------------------------------------------|--|-----------------------|---------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                                                      |  | YearEnded December31, |
|                                                                      |  | 2005                  |         | 2004    |  | 2003   |
| Netrevenues                                                               |  | $                     | 121.4   |    |  | $      | 93.4    |    |  | $      | 95.7   |    |
| Costofrevenues                                                            |  |                  | 66.5    |    |  |   | 45.1    |    |  |   | 46.3   |    |
| Grossprofit                                                               |  |                  | 54.9    |    |  |   | 48.3    |    |  |   | 49.4   |    |
| Selling,general and administrativeexpenses                                |  |                  | 21.4    |    |  |   | 17.2    |    |  |   | 16.3   |    |
| Operatingincome                                                           |  |                  | 33.5    |    |  |   | 31.1    |    |  |   | 33.1   |    |
| Interestincome                                                            |  |                  | 3.5     |    |  |   | 1.3     |    |  |   | 1.2    |    |
| Interestexpense                                                           |  |                  | (4.8    | )  |  |   | (1.2    | )  |  |   | (2.9   | )  |
| Otherincome (expense),net                                                 |  |                  | 3.7     |    |  |   | (2.4    | )  |  |   | 1.7    |    |
| Incomefrom continuing operations before incometaxes                       |  |                  | 35.9    |    |  |   | 28.8    |    |  |   | 33.1   |    |
| Provisionfor incometaxes                                                  |  |                  | (11.9   | )  |  |   | (3.6    | )  |  |   | (10.5  | )  |
| Incomefrom continuingoperations                                           |  |                  | 24.0    |    |  |   | 25.2    |    |  |   | 22.6   |    |
| Discontinuedoperations                                                    |  |                  |    |    |  |   |    |    |  |   |   |    |
| Gainfrom operations of discontinued business, net of taxes of $0.6 in2003 |  |                  | — |    |  |   | — |    |  |   | 0.6    |    |
| Netincome                                                                 |  | $                     | 24.0    |    |  | $      | 25.2    |    |  | $      | 23.2   |    |
| Basicearnings per commonshare:                                            |  |                  |    |    |  |   |    |    |  |   |   |    |
| Undistributedearnings from continuingoperations                           |  | $                     | 1.25    |    |  | $      | 1.35    |    |  | $      | 1.23   |    |
| Undistributedearnings from discontinuedoperations                         |  |                  | — |    |  |   | — |    |  |   | 0.04   |    |
|                                                                      |  | $                     | 1.25    |    |  | $      | 1.35    |    |  | $      | 1.27   |    |
| Dilutedearnings per commonshare:                                          |  |                  |    |    |  |   |    |    |  |   |   |    |
| Undistributedearnings from continuingoperations                           |  | $                     | 1.21    |    |  | $      | 1.26    |    |  | $      | 1.18   |    |
| Undistributedearnings from discontinuedoperations                         |  |                  | — |    |  |   | — |    |  |   | 0.03   |    |
|                                                                      |  | $                     | 1.21    |    |  | $      | 1.26    |    |  | $      | 1.21   |    |
|                                                                           |

SeeNotes to Consolidated Financial Statements

F-4

----

M & F Workwide Corp. andSubsidiaries Consolidated Statements of Stockholders'Equity (in millions, except per sharedata)

|                                                      |  |             |        |                           |  |                |        |                  |  |                                |        |                          |  |                                             |        |        |  |        |        |         |  |        |        |        |  |        |        |         |  |        |        |         |  |        |       |         |  |  |
|------------------------------------------------------|--|-------------|--------|---------------------------|--|----------------|--------|------------------|--|--------------------------------|--------|--------------------------|--|---------------------------------------------|--------|--------|--|--------|--------|---------|--|--------|--------|--------|--|--------|--------|---------|--|--------|--------|---------|--|--------|-------|---------|--|--|
|                                                 |  |        |        |                      |  |           |        |             |  |                           |        |                     |  | AccumulatedOther Comprehensive Income(Loss) |        |   |
|                                                 |  | CommonStock |        | Additional Paid-inCapital |  | Treasury Stock |        | RetainedEarnings |  | Currency TranslationAdjustment |        | Minimum PensionLiability |  |                                        |
|                                                 |  | Shares      |        | Amount                    |  | Shares         |        | Amount           |  | Total                          |
| Balance, December 31,2002                            |  |        | 20.6   |                      |  | $              | 0.2    |             |  | $                              | 29.4   |                     |  |                                        | 2.5    |   |  | $      | (14.8  | )  |  | $      | 265.1  |   |  | $      | (5.0   | )  |  | $      | (0.8   | )  |  | $      | 274.1 |    |
| Netincome                                            |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   | 23.2   |   |  |   |   |    |  |   |   |    |  |   | 23.2  |    |
| Currencytranslation adjustment, net of taxes of$0    |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   | 5.5    |    |  |   |   |    |  |   | 5.5   |    |
| Mininumpension liability, net of taxes of$0.1        |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   | (0.2   | )  |  |   | (0.2  | )  |
| Comprehensiveincome                                  |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 28.5  |    |
| Stockoptions exercised, including tax benefit of$0.2 |  |        | 0.3    |                      |  |           |   |             |  |                           | 2.1    |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 2.1   |    |
| Balance,December 31,2003                             |  |        | 20.9   |                      |  |           | 0.2    |             |  |                           | 31.5   |                     |  |                                        | 2.5    |   |  |   | (14.8  | )  |  |   | 288.3  |   |  |   | 0.5    |    |  |   | (1.0   | )  |  |   | 304.7 |    |
| Netincome                                            |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   | 25.2   |   |  |   |   |    |  |   |   |    |  |   | 25.2  |    |
| Currencytranslation adjustment, net of taxes of$0    |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   | 2.7    |    |  |   |   |    |  |   | 2.7   |    |
| Mininumpension liability, net of taxes of$0.1        |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   | (0.1   | )  |  |   | (0.1  | )  |
| Comprehensiveincome                                  |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 27.8  |    |
| Capitalcontribution                                  |  |        |   |                      |  |           |   |             |  |                           | 1.5    |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 1.5   |    |
| Stockoptions exercised, including tax benefit of$2.1 |  |        | 0.7    |                      |  |           |   |             |  |                           | 6.2    |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 6.2   |    |
| Balance,December 31,2004                             |  |        | 21.6   |                      |  | $              | 0.2    |             |  | $                              | 39.2   |                     |  |                                        | 2.5    |   |  | $      | (14.8  | )  |  | $      | 313.5  |   |  | $      | 3.2    |    |  | $      | (1.1   | )  |  |   | 340.2 |    |
| Netincome                                            |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   | 24.0   |   |  |   |   |    |  |   |   |    |  |   | 24.0  |    |
| Currencytranslation adjustment, net of taxes of$0    |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   | (4.7   | )  |  |   |   |    |  |   | (4.7  | )  |
| Mininumpension liability, net of taxes of$0.2        |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   | (0.4   | )  |  |   | (0.4  | )  |
| Comprehensiveincome                                  |  |        |   |                      |  |           |   |             |  |                           |   |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 18.9  |    |
| Stockoptions exercised, including tax benefit of$0.9 |  |        | 0.2    |                      |  |           |   |             |  |                           | 2.3    |                     |  |                                        |   |   |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 2.3   |    |
| Balance,December 31,2005                             |  |        | 21.8   |                      |  | $              | 0.2    |             |  | $                              | 41.5   |                     |  |                                        | 2.5    |   |  | $      | (14.8  | )  |  | $      | 337.5  |   |  | $      | (1.5   | )  |  | $      | (1.5   | )  |  | $      | 361.4 |    |
|                                                      |

SeeNotes to Consolidated Financial Statements

F-5

----

M & F Worldwide Corp. andSubsidiaries Consolidated Statements of Cash Flows (inmillions, except per share data)

|                                                                   |  |                       |         |         |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------------------------|--|-----------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                              |  | YearEnded December31, |
|                                                              |  | 2005                  |         | 2004    |  | 2003   |
| Operatingactivities                                               |  |                  |    |    |  |   |    |    |  |   |    |    |
| Netincome                                                         |  | $                     | 24.0    |    |  | $      | 25.2    |    |  | $      | 23.2    |    |
| Adjustmentsto derive net cash provided by operatingactivities:    |  |                  |    |    |  |   |    |    |  |   |    |    |
| Gainfrom operations of discontinued business, net oftaxes         |  |                  | — |    |  |   | — |    |  |   | (0.6    | )  |
| Gainon sale of marketablesecurities                               |  |                  | (3.0    | )  |  |   | — |    |  |   | — |    |
| Depreciationandamortization                                       |  |                  | 5.2     |    |  |   | 5.4     |    |  |   | 3.9     |    |
| Deferredincome taxes and taxreserves                              |  |                  | 11.0    |    |  |   | 2.5     |    |  |   | 6.0     |    |
| Changesin operating assets and liabilities, net of assetsacquired |  |                  |    |    |  |   |    |    |  |   |    |    |
| Decrease(increase) in accountsreceivable                          |  |                  | 1.1     |    |  |   | (1.6    | )  |  |   | 4.6     |    |
| Decrease(increase) ininventories                                  |  |                  | 6.0     |    |  |   | (1.8    | )  |  |   | (0.9    | )  |
| (Increase)decrease in prepaid expense and other currentassets     |  |                  | (2.3    | )  |  |   | 1.4     |    |  |   | (0.1    | )  |
| Increasein pensionasset                                           |  |                  | (1.1    | )  |  |   | (0.9    | )  |  |   | (0.4    | )  |
| Decreasein accounts payable and accruedexpenses                   |  |                  | (1.8    | )  |  |   | (4.7    | )  |  |   | (1.0    | )  |
| Other,net                                                         |  |                  | 2.9     |    |  |   | (1.7    | )  |  |   | 0.8     |    |
| Netcash provided by operatingactivities                           |  |                  | 42.0    |    |  |   | 23.8    |    |  |   | 35.5    |    |
| Investingactivities                                               |  |                  |    |    |  |   |    |    |  |   |    |    |
| Investmentsin marketablesecurities                                |  |                  | (172.2  | )  |  |   | — |    |  |   | — |    |
| Proceedsfrom sale of marketablesecurities                         |  |                  | 175.2   |    |  |   | — |    |  |   | — |    |
| Purchaseof Clarke American, net of cashacquired                   |  |                  | (803.5  | )  |  |   | — |    |  |   | — |    |
| Netinvestment in jointventures                                    |  |                  | (0.2    | )  |  |   | (4.2    | )  |  |   | — |    |
| Capitalexpenditures                                               |  |                  | (2.2    | )  |  |   | (1.6    | )  |  |   | (2.1    | )  |
| Netcash used in investingactivities                               |  |                  | (802.9  | )  |  |   | (5.8    | )  |  |   | (2.1    | )  |
| Financingactivities                                               |  |                  |    |    |  |   |    |    |  |   |    |    |
| Proceedsfromborrowings                                            |  |                  | 732.6   |    |  |   | — |    |  |   | — |    |
| Repaymentsofborrowings                                            |  |                  | (5.5    | )  |  |   | (34.6   | )  |  |   | (25.9   | )  |
| Proceedsfrom stock optionsexercised                               |  |                  | 1.3     |    |  |   | 4.1     |    |  |   | 1.9     |    |
| Capitalcontribution                                               |  |                  | — |    |  |   | 0.8     |    |  |   | — |    |
| Debtissuancecosts                                                 |  |                  | (18.3   | )  |  |   | — |    |  |   | — |    |
| Netcash provided by (used in) financingactivities                 |  |                  | 710.1   |    |  |   | (29.7   | )  |  |   | (24.0   | )  |
| Effectof exchange rate changes oncash                             |  |                  | (0.4    | )  |  |   | — |    |  |   | 0.2     |    |
| Net(decrease) increase in cash and cashequivalents                |  |                  | (51.2   | )  |  |   | (11.7   | )  |  |   | 9.6     |    |
| Cashand cash equivalents at beginning ofperiod                    |  |                  | 103.6   |    |  |   | 115.3   |    |  |   | 105.7   |    |
| Cashand cash equivalents at end ofperiod                          |  | $                     | 52.4    |    |  | $      | 103.6   |    |  | $      | 115.3   |    |
| Supplementaldisclosure of cash paidfor:                           |  |                  |    |    |  |   |    |    |  |   |    |    |
| Interest                                                          |  | $                     | 1.9     |    |  | $      | 1.3     |    |  | $      | 2.9     |    |
| Taxespaid, net ofrefunds                                          |  |                  | 1.8     |    |  |   | 0.9     |    |  |   | 2.1     |    |
|                                                                   |

SeeNotes to Consolidated Financial Statements

F-6

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements

(dollars in millions,except per sharedata)

1.    Description ofBusiness and Basis of Presentation

M & F WorldwideCorp. (‘‘M & F Worldwide’’ and, togetherwith its subsidiaries, the ‘‘Company’’) wasincorporated in Delaware on June  1,  1988 and is a holdingcompany. M & F Worldwide conducts certain operations through itsindirect wholly owned subsidiaries Mafco Worldwide Corporation(‘‘Mafco Worldwide’’) and, since December15,  2005, Clarke American Corp. (‘‘ClarkeAmerican’’) (see Note 3). At December  31, 2005,MacAndrews & Forbes Holdings Inc.(‘‘Holdings’’), through its wholly ownedsubsidiary Mafco Consolidated Group Inc.(‘‘MCG’’), beneficially owned 37.7% ofthe outstanding  M & F Worldwide Common Stock.

Theconsolidated financial statements include the accounts of the Companyand its subsidiaries after elimination of all material intercompanyaccounts and transactions. The results of Clarke American have beenincluded from December  15,  2005, the date of acquisition.The Company accounts for its investment in 50% or less ownedaffiliates on the equity method.

Mafco Worldwide (the‘‘Licorice Products’’ segment) produces avariety of licorice products from licorice root, intermediary licoriceextracts and derivatives produced by others and certain otheringredients at its facilities in Camden, New Jersey, Richmond,Virginia, Gardanne, France and at the facilities of its joint venturesin Zhangjiagang, Jainsu and Weihai, Shandong, People’s Republicof China. Approximately 73% of Mafco Worldwide’s licoricesales are to the worldwide tobacco industry for use as tobacco flavorenhancing and moistening agents in the manufacture of American blendcigarettes, moist snuff, chewing tobacco and pipe tobacco. Whilelicorice represents a small percentage of the total cost ofmanufacturing American blend cigarettes and the other tobacco products,the particular formulation and quantity used by each brand is animportant element in the brand’s quality. Mafco Worldwide alsosells licorice to confectioners, food processors, cosmetic companiesand pharmaceutical manufacturers for use as flavoring or maskingagents. These sales include Mafco Worldwide’s Magnasweetbrand flavor enhancer, which is used in various brands of chewing gum,energy bars, non-carbonated beverages, lip balm, chewable vitamins andaspirin. In addition, Mafco Worldwide sells licorice root residue asgarden mulch under the name Right Dress. Mafco Worldwide alsomanufactures and sells natural products for use in the tobaccoindustry.

Clarke American is one of the largest providers ofchecks and check-related products and services in the United Statesbased on revenues, and it is a leading provider of direct marketingservices to financial institutions. Clarke American has an industryleading reputation for quality and has won several third party andcustomer awards. Clarke American serves financial institutions throughthe Clarke American and Alcott Routon brands (the‘‘Financial Institution’’ segment) andconsumers and businesses directly through the Checks In The Mail(‘‘CITM’’) and B2Direct brands (the‘‘Direct-to-Consumer’’ segment). The FinancialInstitution segment’s products primarily consist of checks andcheck-related products, such as deposit tickets, checkbook covers, andrelated delivery services, and also offers specialized direct marketingservices to its financial institution partners. Financial institutionsrecognize consumer checking accounts as one of the primaryrelationships with their customers, which they use to sell servicessuch as credit cards, financing and investment services, and to improvecustomer retention. Clarke American has developed an expertise inpartnering with financial institutions to add value to the customerchecking account relationship by delivering high quality check-relatedand direct marketing services. The Direct-to-Consumer segment’sproducts primarily consist of checks and check related products,customized business kits, and treasury management supplies.

F-7

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

2.    Summary of Significant AccountingPolicies

Use of Estimates

The preparation ofthe financial statements in conformity with accounting principlesgenerally accepted in the United States requires management to makeestimates and assumptions that affect the amounts reported in thefinancial statements and accompanying notes. Actual results coulddiffer from those estimates.

Revenue Recognition

The Company records revenues for product sales when title passes tocustomers. Title may pass to customers upon leaving the Company’sfacilities, upon receipt at a specific destination (such as a shippingport) or upon arrival at the customer’s facilities, depending onthe terms of the contractual agreements for each customer. Title forsales to domestic customers typically passes when the product leavesthe Company’s facilities. Title for sales to internationalcustomers typically passes either when the product is delivered to ashipping port or when the product is delivered to the customer’sfacilities. Revenues are recorded net of any applicable discounts,rebates and allowances for sales returns. Revenues related to servicesare recorded when the services are performed. Delivery revenues arepresented gross within revenues and delivery expenses presented grosswithin cost of revenues.

Clarke American’s contracts withits customers generally specify that certain amounts be repaid toClarke American upon early termination of the contract. When such atermination occurs, the amounts repaid are offset against anyoutstanding prepaid rebate balance related to the terminating customer,with any resulting excess reported as a gain in revenue. There havebeen no significant early terminations since the Company acquiredClarke American. Revenues for direct response marketing services arerecognized from its fixed price direct mail and marketing contractsbased on the proportional performance method. Deferred revenue,representing amounts billed to the customer in excess of amountsearned, is classified as accrued expenses.

Freight andDelivery Costs

Freight and delivery costs incurred by theCompany are included in cost of revenues in the accompanyingconsolidated statements of income.

CashEquivalents

Cash equivalents primarily consist ofsecurities with maturities of 90 days or less when purchased(short-term money market funds and commercial paper) and variable ratedemand notes, which are puttable to the issuers.

MarketableSecurities

During 2005, the Company held marketablesecurities which consisted of auction rate debt securities and commonstock. The Company sold all of the marketable securities prior toDecember  31,  2005.

Available-for-sale securities arecarried at fair value, which is based on quoted market values, with theunrealized gains and losses reported net of tax in other comprehensiveincome (loss). Realized gains and losses and declines in value judgedto be other-than-temporary on available-for-sale securities areincluded in other income (expense), net. The cost of securities sold isbased on the specific identification method.

The Companycontinually evaluates its investments in marketable securities forimpairment due to declines in market value considered to be other thantemporary. That evaluation includes, in 

F-8

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

addition to persistent declining stock prices,general economic and company-specific evaluations. In the event of adetermination that a decline in market value is other than temporary, acharge to earnings is recorded for the loss and a new cost basis in theinvestment is established.

Receivables and Allowance forDoubtful Accounts

Trade accounts receivable are recordedat the invoiced amount and do not bear interest. The allowance fordoubtful accounts is the Company’s best estimate of the amount ofprobable losses in its existing accounts receivable. Account balancesare charged off against the allowance when the Company believes it isprobable the receivable will not be recovered. The Company does nothave any off-balance-sheet credit exposure related to itscustomers.

Inventories

The Company statesinventories at the lower of cost or market value. The Companydetermines cost principally by the first-in, first-out method, with theexception of Clarke American’s finished goods inventoriespurchased from external suppliers, which are stated at moving averagecost.

Prepaid Rebates

Clarke American hascontracts with certain customers that require prepayment of rebates.The prepaid rebates (see Notes 6 and 9) are amortized on astraight-line basis over the terms of the respective contracts as areduction of revenue. The contracts allow for Clarke American torecoup, at a minimum, the unamortized prepayment in the event that acontract is terminated early. The unamortized prepaid rebates balanceis included in other assets.

Advertising

Direct-response advertising is capitalized and amortized over itsexpected period of future benefits, and consists primarily of insertsthat include order coupons for the Company’s products and customadvertising pieces. These capitalized costs are amortized up to 18months following their distribution, and is charged to match theadvertising expense with the related revenue streams. Other advertisingactivities include product catalogs and price sheets, which areexpensed when issued to Clarke American’s financial institutionpartners for use. Clarke American’s advertising expense was $0.5for the period from December  15,  2005 to December31,  2005. Advertising expense was not significant for the otherperiods.

Property, Plant and Equipment

TheCompany states property, plant and equipment at cost and chargesmaintenance and repairs to expense as incurred. Additions, improvementsand replacements that extend asset life are capitalized. Depreciationis provided on a straight-line basis over the estimated useful lives ofsuch assets. The Company amortizes leasehold improvements over theshorter of the useful life of the related asset or the remaining leaseterm. Certain leases also contain tenant improvement allowances, whichare recorded as a leasehold improvement and deferred rent and amortizedover the lease term. The Company eliminates cost and accumulateddepreciation applicable to assets retired or otherwise disposed of fromthe accounts and reflects any gain or loss on such disposition inoperating results.

F-9

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

The useful lives for computingdepreciation are as follows:

|                                                 |  |                    |  |  |  |  |
|-------------------------------------------------|--|--------------------|--|--|--|--|
| Buildings                                       |  | 10 – 40years |
| Machinery and equipment                         |  | 3 – 15years  |
| Leasehold improvements                          |  | 1 – 15years  |
| Computer software                               |  | 3 – 5years   |
| Furniture, fixtures and transportationequipment |  | 3 – 10years  |
|                                                 |

Goodwill and Acquired IntangibleAssets

Goodwill represents the excess of cost (purchaseprice) over the fair value of net assets acquired. Acquired intangiblesare recorded at fair value as of the date acquired. Goodwill and otherintangibles determined to have an indefinite life are not amortized,but are tested for impairment at least annually or when events orchanges in circumstances indicate that the assets might beimpaired.

The goodwill impairment test is a two-step process,which requires management to make judgments in determining whatassumptions to use in the calculation. The first step of the processconsists of estimating the fair value of the Company’s reportingunits based on discounted cash flow models using revenue and profitforecasts and comparing the estimated fair values with the carryingvalues of the Company’s reporting units, which include thegoodwill. If the estimated fair values are less than the carryingvalues, a second step is performed to compute the amount of theimpairment by determining an ‘‘implied fairvalue’’ of goodwill. The determination of theCompany’s ‘‘implied fair value’’ requiresthe Company to allocate the estimated fair value to the assets andliabilities of the reporting unit. Any unallocated fair valuerepresents the ‘‘implied fair value’’ ofgoodwill, which is compared to the corresponding carrying value.

The Company measures impairment of its indefinite lived intangibleassets, which consist of product formulations and certain tradenamesand trademarks, based on projected discounted cash flows. The Companyalso reevaluates the useful life of these assets annually to determinewhether events and circumstances continue to support an indefiniteuseful life.

Accounting for Long-Lived Assets

The Company assesses on an ongoing basis the recoverability oflong-lived assets other than goodwill and indefinite lived intangibleassets based on estimates of future undiscounted cash flows compared tonet book value. If the future undiscounted cash flow estimates wereless than net book value, net book value would then be reduced toestimated fair value, which generally approximates discounted cashflows. The Company also evaluates the amortization periods of assets todetermine whether events or circumstances warrant revised estimates ofuseful lives.

Income Taxes

The Companycomputes income taxes under the liability method. Under the liabilitymethod, the Company generally determines deferred income taxes based onthe differences between the financial statement and tax bases of assetsand liabilities using enacted tax rates in effect in the years in whichthe differences are expected to reverse. The Company records netdeferred tax assets when it is more likely than not that it willrealize the tax benefits.

Pension Plans

TheCompany has defined benefit pension plans and defined contribution401(k) plans, which cover certain current and former employees of theCompany who meet eligibility requirements. Benefits for defined benefitpension plans are based on years of service and, in some cases, theemployee’s compensation. The Company’s policy is tocontribute annually the minimum amount required pursuant to theEmployee Retirement Income Security Act. Subsidiaries of the Companyoutside the United States have retirement plans that provide certainpayments upon retirement.

F-10

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Research and Development

The Company expenses research and development expenditures asincurred. The amounts charged against income were not significant in2005, 2004 and 2003.

Translation of ForeignCurrencies

The functional currency for the Company’sforeign subsidiaries is their local currency. The Company translatesall assets and liabilities denominated in foreign functional currenciesinto U.S. dollars at rates of exchange in effect at the balance sheetdate and statement of income items at the average rates of exchangeprevailing during the period. The Company records translation gains andlosses as a component of accumulated other comprehensive income (loss)in the Company’s statements of stockholders’ equity. Gainsand losses resulting from transactions in other than functionalcurrencies are reflected in operating results.

Stock-BasedCompensation

The Company has stock-based employeecompensation plans, which are described more fully in Note 13. TheCompany accounts for stock-based compensation plans using the intrinsicvalue method prescribed in Accounting Principles Board(‘‘APB’’) Opinion No. 25,‘‘Accounting for Stock Issued to Employees,’’and related interpretations. Accordingly, the Company measurescompensation cost for stock options as the excess, if any, of thequoted market price of the Company’s stock at the date of thegrant over the amount an employee must pay to acquire the stock.

The Company did not grant any options in 2005 and 2004. The exerciseprice of the stock options granted in 2003 were equal to the marketvalue of the Company’s stock on the dates of grant andaccordingly, the Company recognized no compensation cost for stockoptions issued in 2003.

The following table illustrates theeffect on net income and earnings per share if the Company had appliedthe fair value recognition provisions of Statement of FinancialAccounting Standards (‘‘SFAS’’) Statement No.123, ‘‘Accounting for Stock-BasedCompensation,’’ as amended, to stock-based employeecompensation. All outstanding stock options were fully vested as ofDecember  31,  2004, resulting in no pro forma effect for2005.

|                                                                                                                                     |  |                        |         |        |  |        |        |         |  |        |        |         |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------|--|------------------------|---------|--------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                                                                                                                |  | YearEnded December 31, |
|                                                                                                                                |  | 2005                   |         | 2004   |  | 2003   |
| Net income as reported                                                                                                              |  | $                      | 24.0    |   |  | $      | 25.2   |    |  | $      | 23.2   |    |
| Deduct: total stock-basedemployee compensation expense determined under fair value method forall awards, net of related tax effects |  |                   | — |   |  |   | (0.2   | )  |  |   | (0.2   | )  |
| Pro forma net income                                                                                                                |  | $                      | 24.0    |   |  | $      | 25.0   |    |  | $      | 23.0   |    |
| Earnings per share:                                                                                                                 |  |                   |    |   |  |   |   |    |  |   |   |    |
| Basicundistributed income per share − as reported                                                                             |  | $                      | 1.25    |   |  | $      | 1.35   |    |  | $      | 1.27   |    |
| Basic undistributed incomeper share − pro forma                                                                               |  | $                      | 1.25    |   |  | $      | 1.34   |    |  | $      | 1.26   |    |
| Diluted undistributed income per share− as reported                                                                           |  | $                      | 1.21    |   |  | $      | 1.26   |    |  | $      | 1.21   |    |
| Diluted undistributed income per share− pro forma                                                                             |  | $                      | 1.21    |   |  | $      | 1.25   |    |  | $      | 1.20   |    |
|                                                                                                                                     |

New AccountingPronouncements

In December  2004, the FinancialAccounting Standards Board (‘‘FASB’’) issuedSFAS No. 123 (revised 2004), ‘‘Share-BasedPayment,’’ (‘‘SFAS No. 123(R)’’),which replaces SFAS No. 123, and supersedes APB Opinion No. 25. SFASNo. 123(R) requires all share-based payments to employees, includinggrants of employee stock options, to be recognized in the financialstatements based on their fair values. In April  2005, the U.S.Securities and Exchange Commission adopted a rule allowing companies toimplement SFAS No. 123(R) at the beginning of their next fiscal yearthat begins after 

F-11

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

June  15,  2005, which for theCompany will be the fiscal year beginning January  1,  2006.The Company currently plans to adopt SFAS No. 123(R) effectiveJanuary  1,  2006. The pro forma disclosures previouslypermitted under SFAS No. 123 no longer will be an alternative tofinancial statement recognition. Under SFAS No. 123(R), the Companymust determine the appropriate fair value model to be used for valuingshare-based payments, the amortization method for compensation cost andthe transition method to be used at the date of adoption. Thetransition methods are either a modified prospective method or amodified retroactive method. The Company currently expects to use themodified prospective method of adoption. The modified prospectivemethod requires that compensation expense be recorded for all unvestedstock options and restricted stock at the beginning of the firstquarter of adoption of SFAS No. 123(R). Adoption of SFAS No. 123(R)will not have an immediate impact on the Company’s financialstatements because all outstanding options are vested. However, theCompany will incur incremental expenses in the future if additionalshare-based payments are granted and such expense may not be similar tothe amounts in the Company’s current pro forma disclosures underSFAS No. 123 and could be material to the Company’s financialstatements.

In November  2004, FASB issued SFAS No. 151,‘‘Inventory Costs, an amendment of ARB No. 43, Chapter4.’’ Among other things, SFAS No. 151 clarifies thatcertain operating costs should be recognized as current period chargesand requires the allocation of fixed production overheads to inventory.The Company is required to adopt the provisions of SFAS No. 151 duringthe first fiscal year beginning after June  15,  2005.Adoption of Standard No. 151 is not expected to have a material impacton the Company’s financial statements.

3.    Acquisition of Clarke American

On December15,  2005, the Company purchased 100% of the outstandingshares of Novar USA Inc. (‘‘Novar’’) fromHoneywell International, Inc., for $800.0 in cash (the‘‘Acquisition’’), subject to a post-closingworking capital adjustment. Clarke American is the successor by mergerto Novar. Fees and expenses related to the Acquisition that have beencapitalized in the purchase price are $3.5. The Company also incurreddebt fees of $18.8 to finance the Acquisition.

The Companyfinanced the Acquisition as follows:

|                                                      |  |        |       |        |  |  |
|------------------------------------------------------|--|--------|-------|--------|--|--|
| ClarkeAmerican $480.0 Senior Secured Credit Facility |  | $      | 442.0 |   |
| Mafco Worldwide $125.0 Senior SecuredCredit Facility |  |   | 110.0 |   |
| Clarke American113⁄4% Senior Notes              |  |   | 175.0 |   |
| Cash on hand                                         |  |   | 95.3  |   |
|                                                 |  | $      | 822.3 |   |
|                                                      |

Thefollowing table summarizes the estimated fair values of the assetsacquired and liabilities assumed at the Acquisition date:

|                              |  |        |         |        |  |  |
|------------------------------|--|--------|---------|--------|--|--|
| Accountsreceivable           |  | $      | 24.6    |   |
| Property, plant andequipment |  |   | 103.1   |   |
| Other assets                 |  |   | 79.9    |   |
| Goodwill                     |  |   | 349.0   |   |
| Intangible assets (Note 8)   |  |   | 578.6   |   |
| Total assetsacquired         |  |   | 1,135.2 |   |
| Deferred taxliabilities      |  |   | 239.3   |   |
| Other liabilities            |  |   | 92.4    |   |
| Net assetsacquired           |  | $      | 803.5   |   |
|                              |

F-12

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

The above purchase price allocation ispreliminary and the amount allocated to goodwill is subject to change,including as a result of the working capital adjustment (if any)pursuant to the terms of the Acquisition agreement. The goodwillrelated to Clarke American is not deductible for tax purposes.

The unaudited financial information in the table below summarizesthe results of operations of the Company, on a pro forma basis, asthough the Acquisition had occurred as of the beginning of each of theperiods presented. The unaudited pro forma financial information ispresented for informational purposes only and is not indicative of theresults of operations that would have been achieved if the Acquisitionand related financings had taken place at the beginning of each of theperiods presented.

|                                  |  |                        |       |        |  |        |       |        |  |  |
|----------------------------------|--|------------------------|-------|--------|--|--------|-------|--------|--|--|
|                             |  | Year Ended December31, |
|                             |  | 2005                   |       | 2004   |
| Net revenues                     |  | $                      | 715.8 |   |  | $      | 701.0 |   |
| Operating income                 |  |                   | 110.7 |   |  |   | 107.1 |   |
| Income before income taxes       |  |                   | 49.7  |   |  |   | 38.6  |   |
| Net income                       |  |                   | 31.9  |   |  |   | 42.0  |   |
| Basic earnings per commonshare   |  |                   | 1.67  |   |  |   | 2.26  |   |
| Diluted earningsper common share |  |                   | 1.61  |   |  |   | 2.10  |   |
|                                  |

Inthe pro forma information above, income before income taxes reflects again on the sale of marketable securities of $3.0 and settlement incomeof $0.9 from litigation in 2005 and the write off of unamortizeddeferred financing costs of $1.5 in 2004. The income taxes benefit in2004 differs from the statutory tax rate primarily due to changes inreserves related to uncertain tax positions and the resolution ofcertain tax audits.

4.    Equity Method Investments

On March  31,  2004, Mafco Worldwide entered into a jointventure with one of its primary suppliers of licorice derivatives and,in conjunction with the formation of this joint venture, acquired a50% interest in the outstanding common stock of Wei FengEnterprises Limited, a British Virgin Islands company(‘‘Wei Feng’’). Wei Feng was formed by thecontribution of cash, business assets and active businesses to thejoint venture by the joint venture partners. In consideration for itsinterest, Mafco Worldwide contributed to Wei Feng 100% of thecapital stock of a subsidiary with a book value of $0.6 and cash of$0.1; paid $2.4 of cash to the selling shareholder; agreed to pay up to$1.2 to the selling shareholder over a five year period based upon thefinancial performance of Wei Feng; and committed to fund certainadditional cash requirements for working capital and other needs. Thetransaction agreements also grant Mafco Worldwide the option ofpurchasing the remaining 50% of the outstanding common stock ofWei Feng after five years, or earlier in certain circumstances, at aprice that is based on a formula specified in the agreements.

The investment in Wei Feng was approximately $6.2 and $5.3 atDecember  31,  2005 and 2004, respectively, and is includedin other assets in the accompanying consolidated balance sheets. TheCompany accounts for this investment under the equity method and itsshare of earnings, which was $0.7 and $0.2 in 2005 and 2004,respectively, is included in other (expense) income, net in theaccompanying consolidated statements of income.

F-13

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

5.    Inventories

Inventoriesconsisted of the following:

|                  |  |              |      |        |  |        |      |        |  |  |
|------------------|--|--------------|------|--------|--|--------|------|--------|--|--|
|             |  | December 31, |
|             |  | 2005         |      | 2004   |
| Raw materials    |  | $            | 41.8 |   |  | $      | 44.7 |   |
| Finished goods   |  |         | 19.5 |   |  |   | 14.7 |   |
| Work-in-progress |  |         | 6.8  |   |  |   | 0.5  |   |
|             |  | $            | 68.1 |   |  | $      | 59.9 |   |
|                  |

6.    Prepaid Expenses andOther

Prepaid expenses and other consisted of thefollowing:

|                     |  |              |      |        |  |        |         |        |  |  |
|---------------------|--|--------------|------|--------|--|--------|---------|--------|--|--|
|                |  | December 31, |
|                |  | 2005         |      | 2004   |
| Prepaid maintenance |  | $            | 11.0 |   |  | $      | 2.2     |   |
| Deferred tax asset  |  |         | 6.4  |   |  |   | — |   |
| Prepaid advertising |  |         | 4.2  |   |  |   | — |   |
| Prepaid rebates     |  |         | 1.1  |   |  |   | — |   |
| Other               |  |         | 3.6  |   |  |   | 1.3     |   |
|                |  | $            | 26.3 |   |  | $      | 3.5     |   |
|                     |

7.    Property, Plant andEquipment

Property, plant and equipment consisted of thefollowing:

|                                                |  |              |       |         |  |        |         |         |  |  |
|------------------------------------------------|--|--------------|-------|---------|--|--------|---------|---------|--|--|
|                                           |  | December 31, |
|                                           |  | 2005         |       | 2004    |
| Machinery and equipment                        |  | $            | 80.6  |    |  | $      | 22.4    |    |
| Buildings                                      |  |         | 16.1  |    |  |   | 11.1    |    |
| Leasehold improvements                         |  |         | 11.4  |    |  |   | — |    |
| Computer software and hardware                 |  |         | 10.3  |    |  |   | — |    |
| Furniture, fixture andtransportation equipment |  |         | 6.6   |    |  |   | 2.0     |    |
| Land                                           |  |         | 4.1   |    |  |   | 1.7     |    |
| Construction-in-progress                       |  |         | 12.3  |    |  |   | 0.3     |    |
|                                           |  |         | 141.4 |    |  |   | 37.5    |    |
| Accumulateddepreciation                        |  |         | (23.0 | )  |  |   | (19.5   | )  |
|                                           |  | $            | 118.4 |    |  | $      | 18.0    |    |
|                                                |

Depreciation expense was $3.9, $2.9 and$2.9 in 2005, 2004 and 2003, respectively.

Construction-in-progress mainly consists of investments in ClarkeAmerican’s migration platform, contact center, production binderyand delivery systems.

8.    Goodwill and Other IntangibleAssets

Goodwill is deemed to have an indefinite life and is notamortized, but is subject to annual impairment tests. The Companycompleted its annual impairment assessment for the Licorice Productssegment in the fourth quarter of fiscal 2005 using discounted cashflows and concluded that there is no impairment of goodwill.

F-14

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

The change in carrying amount of goodwillfor the year ended December  31,  2005 is as follows:

|                                   |  |        |       |         |  |  |
|-----------------------------------|--|--------|-------|---------|--|--|
| Balance as of December  31,  2004 |  | $      | 41.2  |    |
| Clarke American acquisition       |  |   | 349.0 |    |
| Foreign currency changes          |  |   | (1.7  | )  |
| Balance as ofDecember  31,  2005  |  | $      | 388.5 |    |
|                                   |

Useful lives, grosscarrying amounts and accumulated amortization for other intangibleassets as of December  31,  2005 and 2004 are as follows:

|                                   |  |                       |        |                      |        |                          |        |                  |                                 |                  |        |        |         |        |        |        |                                 |        |        |        |  |  |
|-----------------------------------|--|-----------------------|--------|----------------------|--------|--------------------------|--------|------------------|---------------------------------|------------------|--------|--------|---------|--------|--------|--------|---------------------------------|--------|--------|--------|--|--|
|                              |  |                  |        | Gross CarryingAmount |        | Accumulated Amortization |
|                              |  | Useful Life(in years) |        | December 31,2005     |        | December 31,2004         |        | December 31,2005 |                                 | December 31,2004 |
| Amortized intangibleassets:       |  |                  |   |                 |        |                     |   |             |                                 |             |   |   |         |   |   |   |                                 |   |   |   |
| Customerrelationships             |  | 10−30           |        | $                    | 480.6  |                     |        | $                |     — |             |        | $      | 1.2     |   |        | $      |     — |   |
| Trademarks andtradenames          |  | 15                    |        |                 | 11.5   |                     |        |             | —                         |             |        |   | — |   |        |   | —                         |   |
| Software andOther                 |  | 2−3             |        |                 | 2.4    |                     |        |             | —                         |             |        |   | 0.1     |   |        |   | —                         |   |
|                              |  |                  |        |                 | 494.5  |                     |        |             | —                         |             |        |   | 1.3     |   |        |   | —                         |   |
| Indefinite livedintangibleassets: |  |                  |        |                 |   |                     |        |             |                            |             |        |   |    |   |        |   |                            |   |
| Productformulations               |  |                  |        |                 | 109.5  |                     |        |             | 109.7                           |             |        |   | — |   |        |   | —                         |   |
| Trademarks and tradenames         |  |                  |        |                 | 84.1   |                     |        |             | —                         |             |        |   | — |   |        |   | —                         |   |
|                              |  |                  |        |                 | 193.6  |                     |        |             | 109.7                           |             |        |   | — |   |        |   | —                         |   |
| Totalother intangibles            |  |                  |        | $                    | 688.1  |                     |        | $                | 109.7                           |             |        | $      | 1.3     |   |        | $      | —                         |   |
|                                   |

Thecustomer relationships assets are being amortized using an acceleratedcash flow method over their estimated useful lives. Trademarks andtradenames and software are being amortized ratably over the expectedcash flows. The weighted average amortization period for the amortizedintangible assets is 26 years as of December  31,  2005.Except for the product formulations, all other intangible assets wererecorded in connection with the Acquisition.

Amortizationexpense for the year ended December  31,  2005 was $1.3.There was no amortization expense for the years ended December31,  2004 and 2003.

Estimated annual aggregate amortizationexpense for each of the next five years is as follows:

|      |  |        |      |        |  |  |
|------|--|--------|------|--------|--|--|
| 2006 |  | $      | 28.2 |   |
| 2007 |  |   | 30.1 |   |
| 2008 |  |   | 28.4 |   |
| 2009 |  |   | 26.5 |   |
| 2010 |  |   | 25.1 |   |
|      |

9.    Other Assets

Otherassets consisted of the following:

|                         |  |              |      |        |  |        |         |        |  |  |
|-------------------------|--|--------------|------|--------|--|--------|---------|--------|--|--|
|                    |  | December 31, |
|                    |  | 2005         |      | 2004   |
| Prepaid rebates         |  | $            | 37.5 |   |  | $      | — |   |
| Deferred financing fees |  |         | 19.1 |   |  |   | — |   |
| Other                   |  |         | 14.4 |   |  |   | 14.2    |   |
|                    |  | $            | 71.0 |   |  | $      | 14.2    |   |
|                         |

F-15

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Deferred financing fees are amortizedusing the effective interest method.

10.    AccruedLiabilities

Accrued liabilities consisted of the following:

|                                    |  |              |      |        |  |        |         |        |  |  |
|------------------------------------|--|--------------|------|--------|--|--------|---------|--------|--|--|
|                               |  | December 31, |
|                               |  | 2005         |      | 2004   |
| Payroll, bonuses and related costs |  | $            | 22.0 |   |  | $      | 3.2     |   |
| Rebates and royalties              |  |         | 7.0  |   |  |   | — |   |
| Sales and other taxes              |  |         | 5.5  |   |  |   | — |   |
| Accrued interest                   |  |         | 2.9  |   |  |   | — |   |
| Other                              |  |         | 11.4 |   |  |   | 2.9     |   |
|                               |  | $            | 48.8 |   |  | $      | 6.1     |   |
|                                    |

11.    Income Taxes

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

|                                                     |  |                        |        |         |  |        |        |         |  |        |        |         |  |  |
|-----------------------------------------------------|--|------------------------|--------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                                |  | Year ended December31, |
|                                                |  | 2005                   |        | 2004    |  | 2003   |
| Income fromcontinuing operations before incometaxes |  |                   |   |    |  |   |   |    |
| Domestic                                            |  | $                      | 34.5   |    |  | $      | 27.1   |    |  | $      | 31.7   |    |
| Foreign                                             |  |                   | 1.4    |    |  |   | 1.7    |    |  |   | 1.4    |    |
| Total income from continuing operations beforetaxes |  | $                      | 35.9   |    |  | $      | 28.8   |    |  | $      | 33.1   |    |
| Provision (benefit) for incometaxes:                |  |                   |   |    |  |   |   |    |  |   |   |    |
| Current:                                            |  |                   |   |    |  |   |   |    |  |   |   |    |
| Federal                                             |  | $                      | (0.5   | )  |  | $      | (5.9   | )  |  | $      | (0.1   | )  |
| State and local                                     |  |                   | 0.8    |    |  |   | (0.6   | )  |  |   | (0.1   | )  |
| Foreign                                             |  |                   | 0.6    |    |  |   | 0.6    |    |  |   | 0.5    |    |
|                                                |  |                   | 0.9    |    |  |   | (5.9   | )  |  |   | 0.3    |    |
| Deferred:                                           |  |                   |   |    |  |   |   |    |  |   |   |    |
| Federal                                             |  |                   | 10.5   |    |  |   | 9.4    |    |  |   | 10.3   |    |
| Foreign                                             |  |                   | 0.5    |    |  |   | 0.1    |    |  |   | (0.1   | )  |
| Total provision for incometaxes                     |  | $                      | 11.9   |    |  | $      | 3.6    |    |  | $      | 10.5   |    |
|                                                     |

The Company recorded a tax provision of$11.9 (an effective tax rate of 33.2%), $3.6 (an effective taxrate of 12.4%) and $10.5 (an effective tax rate of 31.7%)for the years ended December  31,  2005, 2004 and 2003,respectively. The Company also recorded net deferred tax liabilities of$235.2 in 2005 in the purchase accounting for Clarke American.

In October  2004, the American Jobs Creation Act of 2004 (the‘‘Act’’) became effective. The Act makeschanges to the income tax laws that will affect the Company in futureyears, the most significant of which is a new deduction relating toqualifying domestic production activities. The deduction is equal to3% of qualifying income for 2005 and 2006, 6% in 2007through 2009, and by 2010, 9% of such income. Due to limitationsassociated with claiming the benefits of this deduction, the Companydid not derive any benefits in 2005, however the Company anticipatesderiving benefits beginning in 2006.

From April  19,2001 through December  3,  2002, Panavision Inc.(‘‘Panavision’’) was a subsidiary of theCompany and was part of the affiliated group with the Company thatfiled consolidated federal 

F-16

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

income tax returns. The Company alsoincluded Panavision in certain state and local tax returns for thatperiod. The Company indemnifies Panavision only as to matters such asaudit adjustments for federal, state or local income tax liabilitiesfor the taxable periods during which Panavision or a subsidiary ofPanavision filed with the Company.

Deferred income taxes reflectthe net tax effects of temporary differences between the carryingamounts of assets and liabilities for financial reporting purposes andincome tax purposes. Significant components of the Company’sdeferred tax assets and liabilities are as follows:

|                                                             |  |              |        |         |  |        |        |         |  |  |
|-------------------------------------------------------------|--|--------------|--------|---------|--|--------|--------|---------|--|--|
|                                                        |  | December 31, |
|                                                        |  | 2005         |        | 2004    |
| Deferred taxassets:                                         |  |         |   |    |  |   |   |    |
| Current:                                                    |  |         |   |    |  |   |   |    |
| Inventory                                                   |  | $            | 0.7    |    |  | $      | 1.0    |    |
| Accrued expenses andother liabilities                       |  |         | 5.6    |    |  |   | 0.3    |    |
| Long-term                                                   |  |         |   |    |  |   |   |    |
| Otherliabilities                                            |  |         | 3.1    |    |  |   | 2.7    |    |
| Property, plant and equipment                               |  |         | 2.3    |    |  |   | 2.1    |    |
| Net operating loss carryforwards                            |  |         | 4.1    |    |  |   | 9.5    |    |
| Net capital losscarryforwards                               |  |         | 3.1    |    |  |   | 4.1    |    |
| Taxcredit carryforwards (primarily alternative minimum tax) |  |         | 1.6    |    |  |   | 1.2    |    |
| Total deferred tax asset                                    |  |         | 20.5   |    |  |   | 20.9   |    |
| Valuation allowance                                         |  |         | (3.1   | )  |  |   | (4.1   | )  |
| Total deferred tax asset net of valuation allowance         |  |         | 17.4   |    |  |   | 16.8   |    |
| Deferred taxliabilities:                                    |  |         |   |    |  |   |   |    |
| Long-term:                                                  |  |         |   |    |  |   |   |    |
| Property,plant and equipment                                |  |         | 19.2   |    |  |   | 0.9    |    |
| Pension asset                                               |  |         | 5.2    |    |  |   | 5.9    |    |
| Intangibles                                                 |  |         | 252.7  |    |  |   | 23.1   |    |
| Other                                                       |  |         | (1.3   | )  |  |   | 0.2    |    |
| Total deferred tax liability                                |  |         | 275.8  |    |  |   | 30.1   |    |
| Netdeferred tax liabilities                                 |  | $            | (258.4 | )  |  | $      | (13.3  | )  |
|                                                             |

The effective tax rate before incometaxes varies from the current statutory federal income tax rate asfollows:

|                                                     |  |                        |         |         |  |        |         |         |  |        |         |         |  |  |
|-----------------------------------------------------|--|------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                |  | Year ended December31, |
|                                                |  | 2005                   |         | 2004    |  | 2003   |
| Statutory rate                                      |  |                   | 35.0    | %  |  |   | 35.0    | %  |  |   | 35.0    | %  |
| State and local taxes                               |  |                   | 3.3     |    |  |   | 3.4     |    |  |   | 2.8     |    |
| Foreign tax rates (higher) lower than U.S.tax rates |  |                   | 0.3     |    |  |   | (0.3    | )  |  |   | (0.1    | )  |
| Reversal of reserves                                |  |                   | (4.0    | )  |  |   | (23.5   | )  |  |   | (4.0    | )  |
| Change in valuation allowance                       |  |                   | (2.9    | )  |  |   | — |    |  |   | — |    |
| Changein deferred rate                              |  |                   | — |    |  |   | (1.8    | )  |  |   | — |    |
| Other                                               |  |                   | 1.5     |    |  |   | (0.4    | )  |  |   | (2.0    | )  |
|                                                |  |                   | 33.2    | %  |  |   | 12.4    | %  |  |   | 31.7    | %  |
|                                                     |

AtDecember  31,  2005, the Company had federal net operatingloss carryforwards of approximately $11.8, which expire in 2012. AtDecember  31,  2005, the Company had alternative minimum taxcredit carryforwards of $1.6 which may be carried forward indefinitelyand a capital loss 

F-17

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

carryforward of $8.9, which expires in 2007.The Company has recorded a valuation allowance related to the capitalloss carryforward as it is not assured that it will realize suchbenefit in the future. During 2005, the valuation allowance decreasedby approximately $1.0 due to the utilization of the capital losscarryforward in connection with the sale of marketable securities.

In connection with the Acquisition, Honeywell has agreed toindemnify the Company for certain income tax liabilities that aroseprior to the Acquisition and therefore, no liability has been reflectedfor any of these pre-acquisition taxes.

In addition, certain taxattributes or assets may exist related to the pre-acquisition period ofClarke American. Pursuant to the IRS Consolidated Return Regulations, aportion of such tax attributes may be allocated to Clarke American.Clarke American is unable to determine the amount, if any, of the taxattributes that would be available in the post-acquisition period untilthe appropriate Honeywell tax filings have been made. Accordingly, theCompany has not recorded an asset for any of these attributes in theaccompanying financial statements.

12.    Authorized CapitalStock

M & F Worldwide’s authorized capital stockconsists of 250,000,000 shares of common stock, par value $0.01 pershare, and 250,020,000 shares of preferred stock, par value $0.01 pershare. The preferred stock is issuable in one or more series orclasses, any or all of which may have such voting powers, full orlimited, or no voting powers, and such designations, preferences andrelated participating, optional or other special rights andqualifications, limitations or restrictions thereof, are set forth inthe Company’s Certificate of Incorporation or any amendmentthereto, or in the resolution providing for the issuance of such stockadopted by the Company’s Board of Directors, which is expresslyauthorized to set such terms for any such issue.

AtDecember  31,  2005 and 2004, there were shares of commonstock outstanding of 21,881,170 and 21,641,370, respectively, of which2,541,900 shares were held in treasury in 2005 and 2004. There were20,000 shares of Series A Preferred Stock outstanding at December31,  2005 and 2004, all of which were held in treasury.

13.    Stock Option Plans

The Company established fourstock plans, one in 1995, one in 1997, one in 2000 and one in 2003 (the‘‘Stock Plans’’), which provide for the grantof awards covering up to 5.5  million shares of M & FWorldwide common stock.

A summary of the Company’s stockoption activity for the Stock Plans and related information for theyears ended December  31 follows:

|                                            |  |             |       |                |  |                    |                                         |        |  |        |      |        |  |  |
|--------------------------------------------|--|-------------|-------|----------------|--|--------------------|-----------------------------------------|--------|--|--------|------|--------|--|--|
|                                       |  |        |       | Exercise Price |
|                                       |  | Shares(000) |       | Range          |  | WeightedAvg. Price |
| Options outstanding atDecember  31,  2003  |  |        | 2,773 |           |  | $                  | 2.85 − 9.74   |   |  | $      | 6.06 |   |
| Options exercised                          |  |        | (713  | )         |  |               | 2.85 − 9.74   |   |  |   | 5.72 |   |
| Options forfeited                          |  |        | (28   | )         |  |               | 2.85 − 9.74   |   |  |   | 6.90 |   |
| Options outstanding at December  31,  2004 |  |        | 2,032 |           |  |               | 2.85 − 7.625            |   |  |   | 6.17 |   |
| Options exercised                          |  |        | (240  | )         |  |               | 5.50 − 7.375            |   |  |   | 5.65 |   |
| Options outstanding at December  31,  2005 |  |        | 1,792 |           |  |               | 2.88 − 7.625            |   |  |   | 6.23 |   |
|                                            |

The weighted-average remainingcontractual life of options outstanding under the Stock Plans atDecember  31,  2005 is 2.8 years.

F-18

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Information regarding stock optionsexercisable under the Stock Plans is as follows:

|                                 |  |               |        |        |  |        |        |        |  |        |        |        |  |  |
|---------------------------------|--|---------------|--------|--------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                            |  | December  31, |
|                            |  | 2005          |        | 2004   |  | 2003   |
| OptionsExercisable:             |  |          |   |   |  |   |   |   |  |   |   |   |
| Number of shares (000)          |  |          | 1,792  |   |  |   | 2,032  |   |  |   | 2,593  |   |
| Weighted average exercise price |  | $             | 6.23   |   |  | $      | 6.17   |   |  | $      | 6.21   |   |
|                                 |

The Company’s options generallyhave a 10 year term. The fair value of each option grant is estimatedon the date of grant using the Black-Scholes option-pricing model. Thefollowing weighted-average assumptions were used for grants under theStock Plans in 2003: dividend yield of 0.0%; expected stockprice volatility of 62%; risk-free interest rate of3.96%; and expected life of 10 years. The Company did not grantany options in 2004 and 2005.

14.    Defined Benefit PensionPlans

Certain current and former employees of Mafco Worldwideare covered under various defined benefit retirement plans. Planscovering Mafco Worldwide’s salaried employees generally providepension benefits based on years of service and compensation. Planscovering Mafco Worldwide’s hourly employees and union membersgenerally provide stated benefits for each year of credited service.The Company’s funding policy is to contribute annually thestatutory required minimum amount as actuarially determined.

Thefollowing table reconciles the funded status of Mafco Worldwide’sdefined benefit pension plans as of December  31. The Company usesDecember  31 as a measurement date for all plans.

|                                                       |  |             |        |         |  |        |         |         |  |  |
|-------------------------------------------------------|--|-------------|--------|---------|--|--------|---------|---------|--|--|
|                                                  |  | December31, |
|                                                  |  | 2005        |        | 2004    |
| Accumulated BenefitObligation                         |  | $           | 7.9    |    |  | $      | 6.2     |    |
| Change in Projected BenefitObligation                 |  |        |   |    |  |   |    |    |
| Projected benefit obligation atbeginning of year      |  | $           | 7.8    |    |  | $      | 7.1     |    |
| Service cost                                          |  |        | 0.3    |    |  |   | 0.2     |    |
| Interest cost                                         |  |        | 0.4    |    |  |   | 0.4     |    |
| Plan amendments                                       |  |        | 0.3    |    |  |   | — |    |
| Assumption changes                                    |  |        | 1.1    |    |  |   | 0.4     |    |
| Actuarial loss                                        |  |        | (0.1   | )  |  |   | (0.1    | )  |
| Benefits paid                                         |  |        | (0.2   | )  |  |   | (0.2    | )  |
| Projected benefit obligation at end of year           |  |        | 9.6    |    |  |   | 7.8     |    |
| Change in Plan Assets                                 |  |        |   |    |  |   |    |    |
| Fairvalue of assets at beginning of year              |  |        | 19.8   |    |  |   | 18.1    |    |
| Actual returns on plan assets                         |  |        | 2.8    |    |  |   | 1.9     |    |
| Benefits paid                                         |  |        | (0.2   | )  |  |   | (0.2    | )  |
| Fair value of assets at end of year                   |  |        | 22.4   |    |  |   | 19.8    |    |
| Planassets in excess of projected benefit obligations |  |        | 12.8   |    |  |   | 12.1    |    |
| Unrecognized prior servicecost                        |  |        | 0.8    |    |  |   | 0.6     |    |
| Unrecognizednet loss                                  |  |        | 2.7    |    |  |   | 2.9     |    |
| Net pension asset                                     |  | $           | 16.3   |    |  | $      | 15.6    |    |
| Amounts recognized in thebalance sheets consist of:   |  |        |   |    |  |   |    |    |
| Prepaid benefitcost                                   |  | $           | 16.5   |    |  | $      | 15.4    |    |
| Accruedbenefit liability                              |  |        | (2.0   | )  |  |   | (1.2    | )  |
| Intangible assets                                     |  |        | 0.5    |    |  |   | 0.3     |    |
| Accumulated other comprehensive income                |  |        | 1.3    |    |  |   | 1.1     |    |
|                                                  |  | $           | 16.3   |    |  | $      | 15.6    |    |
|                                                       |

F-19

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

In addition to the amounts shown above,Mafco Worldwide has an unfunded supplemental benefit plan to providesalaried employees with additional retirement benefits due tolimitations established by U.S. income tax regulation. In addition,Mafco Worldwide has an unfunded benefit plan, which provides benefitsto certain former employees. The projected benefit obligations, afteradjusting for prior service costs, minimum pension liabilities, andunrecognized actuarial gains and losses for the plans, were $3.4 and$3.0 at December  31,  2005 and 2004, respectively, areincluded in other liabilities.

Net periodic pension income forMafco Worldwide’s is due to the overfunded status of the plansand consisted of the following components:

|                                                       |  |                        |      |         |  |        |      |         |  |        |      |         |  |  |
|-------------------------------------------------------|--|------------------------|------|---------|--|--------|------|---------|--|--------|------|---------|--|--|
|                                                  |  | Year ended December31, |
|                                                  |  | 2005                   |      | 2004    |  | 2003   |
| Service cost −benefits earned during the period |  | $                      | (0.3 | )  |  | $      | (0.2 | )  |  | $      | (0.2 | )  |
| Interest cost on projected benefitobligations         |  |                   | (0.4 | )  |  |   | (0.4 | )  |  |   | (0.4 | )  |
| Expected return on plan assets                        |  |                   | 1.7  |    |  |   | 1.5  |    |  |   | 1.2  |    |
| Amortization of prior servicecosts                    |  |                   | (0.1 | )  |  |   | (0.1 | )  |  |   | (0.1 | )  |
| Amortization of netloss                               |  |                   | (0.1 | )  |  |   | (0.1 | )  |  |   | (0.3 | )  |
| Net pensionincome                                     |  | $                      | 0.8  |    |  | $      | 0.7  |    |  | $      | 0.2  |    |
|                                                       |

Assumptions

|                                                                              |  |               |        |         |  |        |        |         |  |  |
|------------------------------------------------------------------------------|--|---------------|--------|---------|--|--------|--------|---------|--|--|
|                                                                         |  | December  31, |
|                                                                         |  | 2005          |        | 2004    |
| Weighted-average assumptions used to determinebenefit obligation at yearend: |  |          |   |    |  |   |   |    |
| Discount rate                                                                |  |          | 5.50   | %  |  |   | 5.75   | %  |
| Rateof compensation increase                                                 |  |          | 3.50   | %  |  |   | 3.50   | %  |
|                                                                              |

|                                                                         |  |                        |        |         |  |        |        |         |  |        |        |         |  |  |
|-------------------------------------------------------------------------|--|------------------------|--------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                                                    |  | Year ended December31, |
|                                                                    |  | 2005                   |        | 2004    |  | 2003   |
| Weighted-averageassumptions used to determine net periodic benefitcost: |  |                   |   |    |  |   |   |    |  |   |   |    |
| Discount rate                                                           |  |                   | 5.75   | %  |  |   | 6.00   | %  |  |   | 6.75   | %  |
| Expected long term rate of return on plan assets                        |  |                   | 8.50   | %  |  |   | 8.50   | %  |  |   | 8.50   | %  |
| Rate of compensation increase                                           |  |                   | 3.50   | %  |  |   | 3.50   | %  |  |   | 4.25   | %  |
|                                                                         |

Discussionof Expected Long Term Rate of Return

In determining itsexpected rate of return on the plans’ assets, the Companyconsidered the investment style of the fund in which it currentlyinvests. In 2004, the plans’ assets were reinvested in globalasset allocation funds from a U.S. asset allocation fund. The simulatedperformance of the global asset allocation funds based upon theanticipated allocation of the plans’ assets to each fund, duringthe 16-year period from 1989 through 2004 exceeded the assumed8.50% rate of return. Since the completion of the reinvestmentaction, the plans' investments earned 11.8% in 2004and 15.2% in 2005.  In addition, based upon theinvestment models developed for the global asset allocation funds, the10-year return for the plans’ assets is also expected to exceed8.50%.

F-20

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Plan Assets

MafcoWorldwide’s pension plan asset allocations at December31,  2005 and 2004 by asset category are as follows:

|                        |  |              |        |         |  |        |        |         |  |  |
|------------------------|--|--------------|--------|---------|--|--------|--------|---------|--|--|
|                   |  | December 31, |
|                   |  | 2005         |        | 2004    |
| Assetcategory:         |  |         |   |    |  |   |   |    |
| Equity securities      |  |         | 65     | %  |  |   | 60     | %  |
| Fixedincome securities |  |         | 7      | %  |  |   | 11     | %  |
| Cash and other         |  |         | 28     | %  |  |   | 29     | %  |
| Total                  |  |         | 100    | %  |  |   | 100    | %  |
|                        |

Investment Policy Discussion

The Investment Committee has retained a professional investmentconsultant as an advisor. Based upon that advice, the plans’assets are invested in asset allocation funds which are comprised ofglobal equities, global fixed income securities and cash.

Contributions

Mafco Worldwide currently expects tocontribute approximately $0.7 to its pension plans in 2006 based oncurrent legal requirements.

Other

Clarke American has asupplemental retirement benefit for its former chief executive officer.At December  31,  2005, the projected benefit obligation ofthis benefit was $2.2, determined using a 5.5% discount rate.Clarke American has established a rabbi trust to fund the benefit. AtDecember  31, 2005, the value of the trust assets was $1.7 and isincluded in other assets in the consolidated balance sheet.

15.    Defined Contribution Pension Plans

MafcoWorldwide has a defined contribution 401(k) plan covering its domesticsalaried employees. Mafco Worldwide contributes up to 2% of anemployees’ salary to this plan. Clarke American, through itssubsidiaries, sponsors two defined contribution 401(k) plans. Under theprovisions of the plans, employees contributing a minimum of 2%of their annual income to the plans are awarded a 3% match and a4% match for those employees contributing at least 3% oftheir annual income. The aggregate contributions to the three planswere approximately $0.1, $0.1 and $0.1 in 2005, 2004 and 2003,respectively.

F-21

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

16.    Long-Term Debt

|                                                       |  |              |       |         |  |        |         |        |  |  |
|-------------------------------------------------------|--|--------------|-------|---------|--|--------|---------|--------|--|--|
|                                                  |  | December 31, |
|                                                  |  | 2005         |       | 2004    |
| Clarke American $480.0 Senior Secured Credit Facility |  | $            | 445.1 |    |  | $      | — |   |
| Mafco Worldwide $125.0Senior Secured Credit Facility  |  |         | 107.0 |    |  |   | — |   |
| Clarke American113⁄4% Senior Notes               |  |         | 175.0 |    |  |   | — |   |
| Capital lease obligations                             |  |         | 6.1   |    |  |   | — |   |
|                                                  |  |         | 733.2 |    |  |   | — |   |
| Less: currentmaturities                               |  |         | (17.6 | )  |  |   | — |   |
| Long-term debt, net of currentmaturities              |  | $            | 715.6 |    |  | $      | — |   |
|                                                       |

Clarke American $480.0 SeniorSecured Credit Facility

On December  15,  2005,Clarke American entered into a credit agreement governing its $480.0senior secured credit facility with Bear Stearns Corporate LendingInc., as administrative agent, JPMorgan Chase Bank, N.A., assyndication agent, and Amegy Bank N.A. and Natexis Banques Populaires,as co-documentation agents. The Clarke American credit facilityconsists of a $440.0 term loan which was drawn on December15,  2005 and matures in six years and a five year $40.0 revolvingcredit facility. The revolving credit facility includes a $20.0 subfacility for letters of credit. The interest rate on Clarke Americanterm loan ranged from 7.75% to 7.92% at December31,  2005. The interest rate on Clarke American revolving creditfacility was 7.37% at December  31,  2005.

Theindebtedness under the credit facility is guaranteed by ClarkeAmerican's domestic subsidiaries and its parent corporation, CAAcquisition Holdings Inc. (collectively, the "ClarkeAmerican Guarantors"). Clarke American’s obligationsunder the Clarke American credit facility and the guarantees of theClarke American Guarantors are secured by a first-priority securityinterest in substantially all of Clarke American's and ClarkeAmerican Guarantors' assets other than leased real property.Borrowings under the Clarke American credit facility bear interest, atClarke American's option, at either an adjusted Eurodollar rateplus an applicable margin of 3.00% in the case of revolvingloans or 3.25% in the case of term loans, or an alternative baserate, plus an applicable margin of 2.00% in the case ofrevolving loans or 2.25% in the case of term loans. The ClarkeAmerican term loans were issued with original discount of 0.5%and are subject to a prepayment premium of 1.0% if they areprepaid within 18 months of the closing with the proceeds ofindebtedness which bears a lower interest rate.

The ClarkeAmerican credit agreement contains affirmative and negative covenantscustomary for such financings. The Clarke American credit agreementalso requires Clarke American to maintain a minimum ratio ofconsolidated EBITDA, as defined in the Clarke American creditagreement, to consolidated fixed charges and to not exceed a maximumratio of total consolidated debt outstanding to consolidated EBITDA anda maximum ratio of senior secured debt to consolidated EBITDA as of thelast day of each fiscal quarter commencing with the fiscal quarterending March  31,  2006. As of December 31, 2005,Clarke American was in compliance with all of these covenants.

The Clarke American credit agreement contains events of defaultcustomary for such financings, including but not limited to nonpaymentof principal, interest, fees or other amounts when due; violation ofcovenants; failure of any representation or warranty to be true in allmaterial respects when made or deemed made; cross default and crossacceleration to certain indebtedness; certain ERISA events; change ofcontrol; dissolution, insolvency and bankruptcy events; materialjudgments; and actual or asserted invalidity of the guarantees orsecurity documents. Some of these events of default allow for graceperiods and materiality concepts.

F-22

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Clarke American is required to repay theClarke American credit agreement in quarterly installments commencingon March 31, 2006 in annual amounts of $15.0 for 2006, $20.0 for2007, $30.0 for 2008, $35.0 for 2009, $40.0 for 2010 and$300.0 for 2011. In addition, a mandatory repayment is required in eachyear based upon prior year excess cash flow (as defined in the ClarkeAmerican credit agreement). As of December 31, 2005, $440.0principal amount at maturity was outstanding under the Clarke Americanterm loan facility. As of December 31, 2005, $7.2  wasdrawn under the Clarke American $40.0 revolving credit facility, andthere was $27.0 available for borrowing (giving effect to the issuanceof $5.8 of letters of credit).

Mafco Worldwide $125.0Senior Secured Credit Facility

On December  8,  2005,Mafco Worldwide entered into a credit agreement governing its $125.0senior secured credit facility with Bear Stearns Corporate LendingInc., as syndication agent, JPMorgan Chase Bank, N.A., asadministrative agent, and Natexis Banques Populaires and National CityBank, as co-documentation agents. The Mafco Worldwide credit facilityreplaced Mafco Worldwide’s previously existing senior securedcredit facility. The Mafco Worldwide credit facility consists of $110.0of term loan which was drawn on December  8,  2005 andmatures in six years and a five year $15.0 revolving credit facility.The indebtedness under the Mafco Worldwide credit facility isguaranteed by Mafco Worldwide's domestic subsidiaries and itsparent corporation, Flavors Holdings Inc. (collectively, the"Mafco Worldwide Guarantors"). MafcoWorldwide's obligations under the Mafco Worldwide credit facilityand the guarantees of the Guarantors are secured by a first-prioritysecurity interest in substantially all of Mafco Worldwide's andthe Mafco Worldwide Guarantors' assets. Borrowings under the MafcoWorldwide credit facility bear interest, at Mafco Worldwide'soption, at either an adjusted Eurodollar rate plus an applicable marginof 2.00% in the case of revolving loans or 2.25% in thecase of term loans, or an alternative base rate, plus an applicablemargin of 1.00% in the case of revolving loans or 1.25%in the case of term loans. The interest rate on Mafco Worldwide creditfacility was 6.5% at December  31,  2005.

TheMafco Worldwide credit facility contains affirmative and negativecovenants customary for such financings. The Mafco Worldwide creditfacility also requires Mafco Worldwide to maintain a minimum ratio oftotal consolidated EBITDA, as defined in the Mafco Worldwide creditagreement, less capital expenditures to consolidated interest expenseand a maximum ratio of consolidated total debt outstanding toconsolidated EBITDA as of the last day of each fiscal quartercommencing with the fiscal quarter ending March  31,  2006.As of December 31, 2005, Mafco Worldwide was in compliance withall of these covenants. The Mafco Worldwide credit facility containsevents of default customary for such financings, including but notlimited to nonpayment of principal, interest, fees or other amountswhen due; violation of covenants; failure of any representation orwarranty to be true in all material respects when made or deemed made;cross default and cross acceleration to certain indebtedness; certainERISA events; change of control; dissolution, insolvency and bankruptcyevents; material judgments; actual or asserted invalidity of theguarantees or security documents; and violation of limitations on theactivities of Flavors Holdings Inc. and Mafco Shanghai Corporation, asubsidiary of Mafco Worldwide. Some of these events of default allowfor grace periods and materiality concepts.

The Mafco Worldwideterm loan is repayable in quarterly installments of approximately $0.3commencing on March  31,  2006. In addition, a mandatoryrepayment is required in each year based upon prior year excess cashflow (as defined in the Mafco Worldwide credit agreement). Inconnection with the sale of marketable securities during 2005, MafcoWorldwide made a mandatory $3.0 prepayment on its term loan. As ofDecember 31, 2005, there were no borrowings under the MafcoWorldwide $15.0 revolving credit facility, and there was $13.3available for borrowing (giving effect to the issuance of $1.7 ofletters of credit).

F-23

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Clarke American113⁄4% Senior Notes

On December15,  2005, Clarke American completed an offering of $175.0 inaggregate principal amount of 113⁄4% seniornotes due 2013 (the "Senior Notes") tocertain initial purchasers pursuant to a Purchase Agreement, dated asof December  8,  2005, as amended, among Clarke American, theguarantors party thereto and the initial purchasers party thereto. TheSenior Notes were issued pursuant to an Indenture, dated as ofDecember  15,  2005, by and among Clarke American, theguarantors party thereto and The Bank of New York, as Trustee (the"Indenture"). The holders of the Senior Noteshave certain registration rights pursuant to the Registration RightsAgreement (as defined below). The Senior Notes will mature onDecember  15,  2013. Interest on the Senior Notes will accrueat 113⁄4% per annum and will be payable onJune  15 and December  15 of each year, commencing June15,  2006.

Clarke American’s obligations under theSenior Notes are jointly and severally and fully and unconditionallyguaranteed (the "Senior Notes Guarantees") ona senior unsecured basis by each of its current and future domesticsubsidiaries (other than immaterial subsidiaries) that guarantee theClarke American credit agreement.

The Senior Notes and theSenior Notes Guarantees are Clarke American's and itsguarantors' unsecured senior obligations. Such obligations willrank equally with all of Clarke American's and theguarantors' existing and future senior unsecured indebtedness, andwill rank senior to all of Clarke American's and theguarantors' future subordinated indebtedness. The Senior Noteswill be effectively subordinated to all of Clarke American's andthe guarantors' existing and future secured indebtedness, to theextent of the collateral securing such indebtedness, includingindebtedness under the Clarke American credit agreement, which will besecured by substantially all of Clarke American assets.

ClarkeAmerican may, at its option, redeem some or all of the Senior Notes atany time on or after December  15,  2009, at decliningredemption prices set forth in the Indenture, plus, in each case,accrued and unpaid interest and Liquidated Damages (as defined below),if any, to the redemption date. At any time prior to December15,  2009, Clarke American may, at its option, redeem all or apart of the Senior Notes at a redemption price equal to 100% ofthe principal amount, plus an applicable make-whole premium as of thedate of the redemption, plus accrued and unpaid interest and LiquidatedDamages, if any, to the redemption date.

In addition, at anytime prior to December  15,  2008, Clarke American may redeemup to 35% of the outstanding principal amount of the SeniorNotes, with the net cash proceeds from certain equity offerings at aredemption price equal to 111.75% of the principal amount of theSenior Notes redeemed plus accrued and unpaid interest and LiquidatedDamages, if any, to the redemption date. Clarke American may make theredemption only if, after the redemption, at least 65% of theaggregate principal amount of notes issued under the Indenture remainsoutstanding.

Upon the occurrence of specified change of controlevents, Clarke American will be required to make an offer to repurchaseall of the Senior Notes. The purchase price will be 101% of theaggregate principal amount of the Senior Notes repurchased, plusaccrued and unpaid interest and Liquidated Damages, if any, on theSenior Notes repurchased to the date of repurchase.

TheIndenture limits Clarke American's ability and the ability of itsrestricted subsidiaries to, among other things: incur additionalindebtedness; pay dividends and make distributions; repurchase stock;incur liens; enter into transactions with affiliates; enter into saleand leaseback transactions; merge or consolidate; or transfer or sellassets, in each case subject to important exceptions andqualifications. The Indenture also requires Clarke American to maintaincertain excess cash flow covenants in its senior secured creditfacility if it does not maintain a certain debt to cash flow ratio.

In connection with the issuance of the Senior Notes, a RegistrationRights Agreement was entered into on December  15,  2005, byand among Clarke American, the guarantors party thereto, 

F-24

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Bear, Stearns and Co. Inc. and J.P. MorganSecurities Inc. (the "Registration RightsAgreement"), pursuant to which Clarke American and theguarantors agreed, among other things, to file a registration statementwithin 150 days after the issue date of the Senior Notes, enablingholders to exchange the Senior Notes for publicly registered exchangenotes with substantially identical terms; use all commerciallyreasonable efforts to cause the registration statement to becomeeffective within 240 days after the issue date of the Senior Notes; anduse all commercially reasonable efforts to complete an exchange offerwithin 45 business days, or longer if required by the federalsecurities laws, after the effective date of the registrationstatement. In addition, under certain circumstances, Clarke Americanand the guarantors may be required to file a shelf registrationstatement to cover resales of the notes. If Clarke American does notcomply with these obligations, Clarke American and the guarantors willbe required to pay liquidated damages ("LiquidatedDamages") to holders of the Senior Notes under certaincircumstances.

Other

Mafco Worldwide’s Frenchsubsidiary has credit agreements renewable annually with two bankswhereby it may borrow up to 2.9  million Euros (approximately $3.4at December  31,  2005) for working capital purposes. Thesubsidiary had no borrowings at December  31,  2005.

17.    Financial Instruments

Most of the Company’scustomers are in the worldwide tobacco and financial servicesindustries. The Company performs ongoing credit evaluations of itscustomers and maintains allowances for potential credit losses. TheCompany does not generally require collateral. Actual losses andallowances have been within management’s expectations.

Thecarrying amounts for cash and cash equivalents, trade accountsreceivable, accounts payable, accrued liabilities and debt approximatefair value.

18.    Pre-Acquisition Restructuring

Clarke American established reserves for the reorganization of itssales processes, the closure of two production related facilities andthe realignment of production requirements to enhance the use oftechnology investments.

All projects are evaluated annually andcosts are re-aligned within projects and within spend categories basedon current expectations. While many projects have performed better thanplan, the closure of the facilities has resulted in increased exposureto workers compensation claims, where no opportunity to offer a lightduty or alternative work environment exists.

The majority ofprojects are completed within one year, excluding facility and workerscompensation related expenditures. Restructuring accruals of $0.9 as ofDecember  31,  2005 are reflected in accrued expenses in theaccompanying consolidated balance sheet. As of the Acquisition date andDecember  31,  2005, Clarke American had restructuringreserves for leases on vacated facilities of $0.2 and personnel costsof $0.7.

19.    Commitments and Contingencies

Lease and Purchase Commitments

Rental expense,which includes rent for facilities, property and equipment andvehicles, under operating leases amounted to $0.8, $0.3 and $0.3 forthe years ended December  31,  2005, 2004 and 2003,respectively. Certain leases contain renewal options for one- tofive-year periods. Rental 

F-25

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

payments are typically fixed over theinitial term of the lease and usually contain escalation factors forthe renewal term. Future minimum rental commitments, which do notreflect renewal options, for operating leases with noncancelable termsin excess of one year from December  31,  2005 are asfollows:

|            |  |        |      |        |  |  |
|------------|--|--------|------|--------|--|--|
| 2006       |  | $      | 8.9  |   |
| 2007       |  |   | 7.8  |   |
| 2008       |  |   | 7.7  |   |
| 2009       |  |   | 7.2  |   |
| 2010       |  |   | 6.0  |   |
| Thereafter |  |   | 12.8 |   |
|            |

The Company had outstanding letters ofcredit totaling $7.5 and $4.4 at December  31,  2005 and2004, respectively.

At December  31,  2005, theCompany had obligations to purchase approximately $21.0 of rawmaterials.

Corporate Indemnification Matters

The Company is indemnified by third parties with respect to certainof its contingent liabilities, such as certain environmental andasbestos matters, as well as certain tax and other matters. In 1995, asubsidiary of MCG, M & F Worldwide and two subsidiaries of M &F Worldwide entered into a transfer agreement (the‘‘Transfer Agreement’’). Under the TransferAgreement, Pneumo Abex Corporation (together with its successor ininterest Pneumo Abex LLC, ‘‘Pneumo Abex’’),then a subsidiary of M & F Worldwide, retained theassets and liabilities relating to the Company’s former Abex NWLAerospace Division (‘‘Aerospace’’), as well ascertain contingent liabilities and the related assets, including itshistorical insurance and indemnification arrangements. Pneumo Abextransferred substantially all of its other assets and liabilities to asubsidiary of MCG. The Transfer Agreement provides for appropriatetransfer, indemnification and tax sharing arrangements, in a mannerconsistent with applicable law and existing contractualarrangements.

The Transfer Agreement requires such subsidiary ofMCG to undertake certain administrative and funding obligations withrespect to certain categories of asbestos-related claims and otherliabilities, including environmental claims, retained by Pneumo Abex.The Company will be obligated to make reimbursement for the amounts sofunded only when the Company receives amounts under relatedindemnification and insurance agreements. Such administrative andfunding obligations would be terminated as to these categories ofasbestos-related claims in the case of a bankruptcy of Pneumo Abex or M& F Worldwide or of certain other events affecting the availabilityof coverage for such claims from third-party indemnitors and insurers.In the event of certain kinds of disputes with Pneumo Abex’sindemnitors regarding their indemnities, the Transfer Agreement permitsthe Company to require such subsidiary to fund 50% of the costsof resolving the disputes.

Prior to 1988, a former subsidiary ofPneumo Abex manufactured certain asbestos-containing friction products.Pneumo Abex has been named, typically along with 10 to as many as 100or more other companies, as a defendant in various personal injurylawsuits claiming damages relating to exposure to asbestos. Pursuant toindemnification agreements, PepsiAmericas, Inc., formerly known asWhitman Corporation (the ‘‘OriginalIndemnitor’’), has ultimate responsibility for all theremaining asbestos-related claims asserted against Pneumo Abex throughAugust  1998 and for certain asbestos-related claims assertedthereafter. In connection with the sale by Abex in December  1994of its Friction Products Division, a subsidiary (the‘‘Second Indemnitor’’) of Cooper Industries,Inc. (now Cooper Industries, LLC, the ‘‘IndemnityGuarantor’’) assumed responsibility for substantially allasbestos-related claims asserted against Pneumo Abex after August1998 and not indemnified by the 

F-26

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

Original Indemnitor. Federal-MogulCorporation purchased the Second Indemnitor in October  1998. InOctober  2001, the Second Indemnitor filed a petition underChapter 11 of the U.S. Bankruptcy Code and stopped performing itsindemnity obligations to the Company. Performance of the SecondIndemnitor's indemnity obligation is guaranteed by the IndemnityGuarantor. Following the bankruptcy filing of the Second Indemnitor,the Company confirmed that the Indemnity Guarantor would fulfill theSecond Indemnitor's indemnity obligations to the extent that theyare no longer being performed by the Second Indemnitor.

PneumoAbex’s former subsidiary maintained product liability insurancecovering substantially all of the period during whichasbestos-containing products were manufactured. The subsidiarycommenced litigation in 1982 against a portion of these insurers inorder to confirm the availability of this coverage. As a result ofsettlements in that litigation, other coverage agreements with othercarriers and payments by the Original Indemnitor, the Second Indemnitorand the Indemnity Guarantor pursuant to their indemnities, Pneumo Abexis receiving reimbursement each month for substantially all of itsmonthly expenditures for asbestos-related claims. As of December31,  2005, the Company incurred or expected to incur approximately$1.0 of unindemnified costs, as to which it either has received orexpects to receive approximately $0.7 in insurance reimbursements.Management does not expect these unindemnified matters to have amaterial adverse effect on the Company’s financial position orresults of operations, but Pneumo Abex is unable to forecast either thenumber of future asbestos-related claimants or the amount of futuredefense and settlement costs associated with present or futureasbestos-related claims.

The Transfer Agreement further providesthat the subsidiary of MCG will indemnify Pneumo Abex with respect toall environmental matters associated with Pneumo Abex’s and itspredecessor’s operations to the extent not paid by third-partyindemnitors or insurers, other than the operations relating to PneumoAbex’s Aerospace business, which Pneumo Abex sold to ParkerHannifin Corporation in April  1996. Accordingly, environmentalliabilities arising after the 1988 transaction with the OriginalIndemnitor that relate to the Company’s former Aerospacefacilities are the responsibility of Pneumo Abex. The OriginalIndemnitor is obligated to indemnify Pneumo Abex for costs, expensesand liabilities relating to environmental and natural resource mattersto the extent attributable to the pre-1988 operation of the businessesacquired from the Original Indemnitor, subject to certain conditionsand limitations principally relating to compliance with notice,cooperation and other procedural requirements. The Original Indemnitoris generally discharging its environmental indemnification liabilitiesin the ordinary course.

It is generally not possible to predictthe ultimate total costs relating to any remediation that may bedemanded at any environmental site due to, among other factors,uncertainty regarding the extent of prior pollution, the complexity ofapplicable environmental laws and regulations and theirinterpretations, uncertainty regarding future changes to such laws andregulations or their enforcement, the varying costs and effectivenessof alternative cleanup technologies and methods, and the questionableand varying degrees of responsibility and/or involvement by PneumoAbex. However, the aggregate cost of cleanup and related expenses withrespect to matters for which Pneumo Abex, together with numerous otherthird parties, have been named potentially responsible parties shouldbe substantially less than $100.0.

On February  5,1996, the Company, through Pneumo Abex, entered into a reimbursementagreement with Chemical Bank and MCG (the ‘‘ReimbursementAgreement’’). The Reimbursement Agreement provides forletters of credit totaling $20.8 covering certain environmental issuesrelating to one site not part of the current business of Pneumo Abex.During 2000, the Environmental Protection Agency reduced the letter ofcredit requirements to $2.2. During 2005, the company was released fromthese Letters of Credit.

The Company has not recognized aliability in its financial statements for matters covered byindemnification agreements. The Company considers these obligations tobe those of third-party 

F-27

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

indemnitors and monitors their financialpositions to determine the level of uncertainty associated with theirability to satisfy their obligations. Based upon the indemnitors’active management of indemnifiable matters, discharging of the relatedliabilities when required, and financial positions based upon publiclyfiled financial statements, as well as the history of insurancerecovery set forth above, the Company believes that the likelihood offailing to obtain reimbursement of amounts covered by insurance andindemnification is remote.

The former Aerospace business of theCompany formerly sold certain of its aerospace products to the U.S.Government or to private contractors for the U.S. Government. TheCompany retained in the Aerospace sale certain claims for allegedlydefective pricing that the Government made with respect to certain ofthese products. During 2003, the Company resolved one of those mattersat a cost of $0.4. In the remaining matter, the Company contests theGovernment’s allegations and has been attempting to resolve thematter without litigation.

In addition, various other legalproceedings, claims and investigations are pending against the Company,including those relating to commercial transactions, product liability,environmental, safety and health matters and other matters. Most ofthese matters are covered by insurance, subject to deductibles andmaximum limits, and by third-party indemnities. In the opinion ofmanagement, based upon the information available at this time, theoutcome of these matters will not have a material adverse effect on theCompany’s financial position or results of operations.

Federal-Mogul Bankruptcy

As noted above in‘‘— Corporate Indemnification Matters,’’the Second Indemnitor ceased performing, upon filing its Chapter 11petition, the indemnity and other obligations that it owed to PneumoAbex under the 1994 agreements entered into in connection with the saleof Pneumo Abex’s Friction Products Division (the‘‘1994 Sale Agreements’’). As a result, PneumoAbex asserted claims for breach of such indemnity and otherobligations, and, in connection with such breaches, Pneumo Abexasserted its rights of recoupment and setoff (the‘‘Recoupment/Setoff Claim’’), recognized underbankruptcy law, against $5.6 in insurance reimbursements that came intoPneumo Abex’s possession but that Pneumo Abex would otherwisehave been obliged to turn over to the Second Indemnitor under the 1994Sale Agreements had the Second Indemnitor continued to perform. Pendingthe resolution of the Recoupment/Setoff Claim, Pneumo Abex recorded inaccounts payable an amount equal to the full value of the claim.

During December  2003, Pneumo Abex reached an agreement withthe Second Indemnitor and certain other parties, subsequently confirmedby the bankruptcy court, pursuant to which Pneumo Abex paid to theSecond Indemnitor $3.0 in 2004. Of the remainder it retained, PneumoAbex paid $0.7 in 2004 to a subsidiary of MCG in accordance with theTransfer Agreement to reimburse expenses that the subsidiary incurredon Pneumo Abex’s behalf, while procuring the insurancereimbursements. Pneumo Abex recorded a gain of $1.9 in 2003 for amountit retained.

Honeywell Indemnification

Certainof the intermediate holding companies of Novar had issued guarantees onbehalf of operating companies formerly owned by these intermediateholding companies, which operating companies are not part of the ClarkeAmerican business. Honeywell had undertaken to use its commerciallyreasonable efforts to assume, replace or terminate such guarantees andindemnify  M & F Worldwide and its affiliates, including Novarand its subsidiaries, with respect to all liabilities arising undersuch guarantees. To the extent such guarantees were not so assumed,replaced or terminated at the closing, at December  31,2005, Honeywell had posted a letter of credit for the benefit of M& F Worldwide in an amount of $60.0 expiring onDecember  15,  2007 to secure its indemnification obligationscovering the guarantees. The face amount of the letter of credit issubject to adjustment 

F-28

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M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

based on the agreement of the parties. (Seenote 11 for certain tax matters indemnified by Honeywell).Since theCompany believes it is remote that it will have to pay any amountsunder such guarantees it has not recorded any liability in itsfinancial statements.

Other Litigation Matters

During 2002, the French tax administration notified theCompany’s indirect wholly owned French subsidiary (the‘‘Indirect Subsidiary’’) that it intended todisallow a deduction relating to French income taxes for 1996, 1997 and1998 arising out of certain interest payments made on a note payable tothe Company. The French tax administration assessed the IndirectSubsidiary approximately 1.8  million euros for the taxes,interest and penalties. The Indirect Subsidiary appealed the assessmentand, in order to be able to pursue its appeal, obtained bank guaranteesin favor of the French tax administration in the amount of 1.4million euros ($1.9 as of December  31,  2004). Based on arecent decision of the Supreme Court of France resolving a similarissue in favor of the taxpayer, the French tax administration abandonedits assessment. Furthermore, the French tax administration hasdetermined that it will not require any adjustment with respect to thisissue in future tax years. As a result of these developments, theCompany reversed the $5.0 reserve that had been established related tothis assessment in 2004 and has caused the release of the bankguarantees of 1.4  million euros.

20.    Related PartyTransactions

During 2005, 2004, and 2003, three executiveofficers of the Company were executives of Holdings. The Company didnot compensate such executive officers, but, in 2005, 2004 and 2003,the Company paid to Holdings $1.5 for the value of the servicesprovided by such officers to the Company and charged that amount tocompensation expense. The Management Services Agreement, pursuant towhich Holdings provides the services of the three executive officers tothe Company in exchange for a management service fee of $1.5 annually,expires on December  31,  2005; provided that the termautomatically extends for successive one year periods unless eitherparty provides notice prior to the term. Neither party provided noticein 2005, therefore Holdings will continue to provide these services in2006 under the terms of the existing agreement.

The Companyparticipates in Holdings’ directors and officer’s insuranceprogram, which covers the Company as well as Holdings and its otheraffiliates. The limits of coverage are available on aggregate losses toany or all of the participating companies and their respectivedirectors and officers. The Company reimburses Holdings for itsallocable portion of the premiums for such coverage, which the Companybelieves is more favorable than the premiums the Company could securewere it to secure its own coverage. At December  31,  2005,the Company has recorded prepaid expenses and other assets of $1.3 and$3.6 relating to the directors and officers insurance program. AtDecember  31,  2004, the Company had recorded prepaidexpenses, other assets, and accrued liabilities of $1.2, $4.8, and $2.6relating to the directors and officers insurance program.

Sincethe end of 2003, Allied Security Holdings LLC (‘‘AlliedSecurity’’), an affiliate of Holdings, has providedcontract security officer services to the Company. For 2005 and 2004,the Company made aggregate payments to Allied Security for suchservices of approximately $0.2 and $0.3, respectively.

21.    Significant Customers

The Company has asignificant customer in the tobacco industry, Altria Group Inc., whichaccounted for approximately 29%, 34% and 35% ofthe Company’s net revenues in 2005, 2004 and 2003 respectively.In addition, Clarke American’s top 20 clients accounted forapproximately 10% of the Company’s net revenues in 2005,with sales to Bank of America representing a significant portion ofsuch revenues.

F-29

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

22.    Geographic and BusinessSegment Information

The Company has three reportable segments.Management measures and evaluates the reportable segments based onoperating income. The segments and their principal activities consistof the following:

|              |                                                                                                                                                                                                                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Licorice Products segment– Produces licorice products used primarily by the tobacco andfood industries. This segment operates in Camden, New Jersey, Richmond,Virginia and Gardanne, France as well through its joint ventures inXianyang Shaanxi and Weihai, Shandong, People’s Republic ofChina. |

|              |                                                                                                                                                                                                                                                                                                                                                 |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Financial Institution segment– Provides checks, check-related products and services, anddirect marketing services to financial institutions and to the accountholders of such financial institutions. Clarke American serves thissegment through its Clarke American and Alcott Routon brands. Thissegment operates in the United States. |

|              |                                                                                                                                                                                                                                                                        |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Direct-to-Consumer segment – Provideschecks, check-related products and services, customized business kits,and treasury management supplies directly to consumers and businessesthrough its CITM and B2Direct brands. This segment operatesin the United States. |

|                                  |  |        |      |                  |  |                         |       |                       |  |           |         |        |  |        |         |        |  |        |         |         |  |        |         |        |  |  |
|----------------------------------|--|--------|------|------------------|--|-------------------------|-------|-----------------------|--|-----------|---------|--------|--|--------|---------|--------|--|--------|---------|---------|--|--------|---------|--------|--|--|
|                             |  |   |      | LicoriceProducts |  | FinancialInstitution(1) |       | Direct-to-Consumer(1) |  | Corporate |         | Total  |
| Revenues:                        |  |   | 2005 |             |  | $                       | 97.3  |                  |  | $         | 20.3    |   |  | $      | 3.8     |   |  | $      | — |    |  | $      | 121.4   |   |
|                             |  |   | 2004 |             |  |                    | 93.4  |                  |  |      | — |   |  |   | — |   |  |   | — |    |  |   | 93.4    |   |
|                             |  |   | 2003 |             |  |                    | 95.7  |                  |  |      | — |   |  |   | — |   |  |   | — |    |  |   | 95.7    |   |
| Operating income:                |  |   | 2005 |             |  | $                       | 36.7  |                  |  | $         | 0.5     |   |  | $      | 0.2     |   |  | $      | (3.9    | )  |  | $      | 33.5    |   |
|                             |  |   | 2004 |             |  |                    | 35.6  |                  |  |      | — |   |  |   | — |   |  |   | (4.5    | )  |  |   | 31.1    |   |
|                             |  |   | 2003 |             |  |                    | 36.6  |                  |  |      | — |   |  |   | — |   |  |   | (3.5    | )  |  |   | 33.1    |   |
| Depreciation & amortization: |  |   | 2005 |             |  | $                       | 3.0   |                  |  | $         | 1.7     |   |  | $      | 0.5     |   |  | $      | — |    |  | $      | 5.2     |   |
|                             |  |   | 2004 |             |  |                    | 5.4   |                  |  |      | — |   |  |   | — |   |  |   | — |    |  |   | 5.4     |   |
|                             |  |   | 2003 |             |  |                    | 3.9   |                  |  |      | — |   |  |   | — |   |  |   | — |    |  |   | 3.9     |   |
| Capital expenditures:            |  |   | 2005 |             |  | $                       | 1.1   |                  |  | $         | 0.9     |   |  | $      | 0.2     |   |  | $      | — |    |  | $      | 2.2     |   |
|                             |  |   | 2004 |             |  |                    | 1.6   |                  |  |      | — |   |  |   | — |   |  |   | — |    |  |   | 1.6     |   |
|                             |  |   | 2003 |             |  |                    | 2.1   |                  |  |      | — |   |  |   | — |   |  |   | — |    |  |   | 2.1     |   |
| Total assets:                    |  |   | 2005 |             |  | $                       | 271.9 |                  |  | $         | 1,032.7 |   |  | $      | 117.2   |   |  | $      | 40.3    |    |  | $      | 1,462.1 |   |
|                             |  |   | 2004 |             |  |                    | 275.5 |                  |  |      | — |   |  |   | — |   |  |   | 101.0   |    |  |   | 376.5   |   |
|                                  |

|  |
|--|
|  |  |
|  |

|     |                                                   |
|-----|---------------------------------------------------|
| (1) | Includesresults from the date of the Acquisition. |

|                  |  |                        |         |        |  |        |        |        |  |  |
|------------------|--|------------------------|---------|--------|--|--------|--------|--------|--|--|
|             |  | Year ended December31, |
|             |  | 2005                   |         | 2004   |
| Long livedassets |  |                   |    |   |  |   |   |   |
| North America    |  | $                      | 1,251.7 |   |  | $      | 163.4  |   |
| Foreign          |  |                   | 25.8    |   |  |   | 29.6   |   |
| Corporate        |  |                   | 3.1     |   |  |   | 4.9    |   |
| Total            |  | $                      | 1,280.6 |   |  | $      | 197.9  |   |
|                  |

F-30

----

M& F Worldwide Corp. and SubsidiariesNotes to ConsolidatedFinancial Statements (Continued)

(dollars in millions,except per sharedata)

23.    Unaudited Quarterly FinancialInformation

The following is a summary of unaudited quarterlyfinancial information for 2005 and 2004:

|                         |  |        |        |        |  |        |        |        |  |        |        |        |  |        |        |        |  |  |
|-------------------------|--|--------|--------|--------|--|--------|--------|--------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                    |  | 2005   |
|                    |  | First  |        | Second |  | Third  |        | Fourth |
| Net revenues            |  | $      | 24.1   |   |  | $      | 25.3   |   |  | $      | 24.6   |   |  | $      | 47.4   |   |
| Gross profit            |  |   | 12.6   |   |  |   | 12.9   |   |  |   | 11.6   |   |  |   | 17.8   |   |
| Net income              |  |   | 6.3    |   |  |   | 6.0    |   |  |   | 6.0    |   |  |   | 5.7    |   |
| Income per commonshare: |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |
| Basic                   |  | $      | 0.33   |   |  | $      | 0.31   |   |  | $      | 0.32   |   |  | $      | 0.30   |   |
| Diluted                 |  | $      | 0.31   |   |  | $      | 0.30   |   |  | $      | 0.31   |   |  | $      | 0.28   |   |
|                         |

|                         |  |        |        |        |  |        |        |        |  |        |        |        |  |        |        |        |  |  |
|-------------------------|--|--------|--------|--------|--|--------|--------|--------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                    |  | 2004   |
|                    |  | First  |        | Second |  | Third  |        | Fourth |
| Net revenues            |  | $      | 25.7   |   |  | $      | 24.3   |   |  | $      | 21.7   |   |  | $      | 21.7   |   |
| Gross profit            |  |   | 13.3   |   |  |   | 13.2   |   |  |   | 10.9   |   |  |   | 10.9   |   |
| Net income              |  |   | 5.3    |   |  |   | 4.9    |   |  |   | 6.4    |   |  |   | 8.6    |   |
| Income per commonshare: |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |
| Basic                   |  | $      | 0.29   |   |  | $      | 0.27   |   |  | $      | 0.34   |   |  | $      | 0.46   |   |
| Diluted                 |  | $      | 0.27   |   |  | $      | 0.25   |   |  | $      | 0.32   |   |  | $      | 0.43   |   |
|                         |

24.    Earnings PerShare

The following table sets forth the computation of basicand diluted earnings per share:

|                                                    |  |                        |         |        |  |        |         |        |  |        |        |        |  |  |
|----------------------------------------------------|--|------------------------|---------|--------|--|--------|---------|--------|--|--------|--------|--------|--|--|
|                                               |  | Yearended December 31, |
|                                               |  | 2005                   |         | 2004   |  | 2003   |
| Numerator:                                         |  |                   |    |   |  |   |    |   |  |   |   |   |
| Incomefrom continuing operations                   |  | $                      | 24.0    |   |  | $      | 25.2    |   |  | $      | 22.6   |   |
| Gain from discontinued operations,net of taxes     |  |                   | — |   |  |   | — |   |  |   | 0.6    |   |
| Net income                                         |  |                   | 24.0    |   |  |   | 25.2    |   |  |   | 23.2   |   |
| Numerator forbasic earnings pershare:              |  |                   |    |   |  |   |    |   |  |   |   |   |
| Income available tocommon stockholders             |  | $                      | 24.0    |   |  | $      | 25.2    |   |  | $      | 23.2   |   |
| Numerator fordiluted earning per share:            |  |                   |    |   |  |   |    |   |  |   |   |   |
| Netincome                                          |  | $                      | 24.0    |   |  | $      | 25.2    |   |  | $      | 23.2   |   |
| Denominator (shares inmillions):                   |  |                   |    |   |  |   |    |   |  |   |   |   |
| Basicearnings per share-weighted averageshares     |  |                   |    |   |  |   |    |   |  |   |   |   |
| Common                                             |  |                   | 19.1    |   |  |   | 18.6    |   |  |   | 18.2   |   |
| Denominator for basicearnings per share            |  |                   | 19.1    |   |  |   | 18.6    |   |  |   | 18.2   |   |
| Effect of dilutivesecurities:                      |  |                   |    |   |  |   |    |   |  |   |   |   |
| Employee stockoptions                              |  |                   | 0.7     |   |  |   | 1.4     |   |  |   | 0.9    |   |
| Denominator for diluted earnings pershare          |  |                   | 19.8    |   |  |   | 20.0    |   |  |   | 19.1   |   |
| Basic earnings per commonshare:                    |  |                   |    |   |  |   |    |   |  |   |   |   |
| Undistributed earningsfrom continuing operations   |  | $                      | 1.25    |   |  | $      | 1.35    |   |  | $      | 1.23   |   |
| Undistributed earnings fromdiscontinued operations |  |                   | — |   |  |   | — |   |  |   | 0.04   |   |
| Total commonstock                                  |  | $                      | 1.25    |   |  | $      | 1.35    |   |  | $      | 1.27   |   |
| Diluted earnings per commonshare:                  |  |                   |    |   |  |   |    |   |  |   |   |   |
| Undistributed earningsfrom continuing operations   |  | $                      | 1.21    |   |  | $      | 1.26    |   |  | $      | 1.18   |   |
| Undistributed earnings fromdiscontinued operations |  |                   | — |   |  |   | — |   |  |   | 0.03   |   |
| Total commonstock                                  |  | $                      | 1.21    |   |  | $      | 1.26    |   |  | $      | 1.21   |   |
|                                                    |

F-31

----

Schedule I– Condensed Financial Information of Registrant BalanceSheets (Parent Only) (in millions, except share and per sharedata)

|                                                                                                                                             |  |             |         |         |  |        |         |         |  |  |
|---------------------------------------------------------------------------------------------------------------------------------------------|--|-------------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                                                        |  | December31, |
|                                                                                                                                        |  | 2005        |         | 2004    |
| ASSETS                                                                                                                                      |  |        |    |    |  |   |    |    |
| Currentassets:                                                                                                                              |  |        |    |    |  |   |    |    |
| Cash and cashequivalents                                                                                                                    |  | $           | 36.2    |    |  | $      | 92.4    |    |
| Prepaidexpenses and other currentassets                                                                                                     |  |        | 0.9     |    |  |   | 1.0     |    |
| Totalcurrent assets                                                                                                                         |  |        | 37.1    |    |  |   | 93.4    |    |
| Investmentinsubsidiaries                                                                                                                    |  |        | 316.2   |    |  |   | 248.9   |    |
| Receivablefrom subsidiaries                                                                                                                 |  |        | 0.8     |    |  |   | — |    |
| Otherassets                                                                                                                                 |  |        | 7.9     |    |  |   | 7.6     |    |
|                                                                                                                                        |  | $           | 362.0   |    |  | $      | 349.9   |    |
| LIABILITIESAND STOCKHOLDERS'EQUITY                                                                                                          |  |        |    |    |  |   |    |    |
| Currentliabilities:                                                                                                                         |  |        |    |    |  |   |    |    |
| Accountspayable                                                                                                                             |  | $           | 0.4     |    |  | $      | 1.8     |    |
| Accruedexpenses                                                                                                                             |  |        | 0.2     |    |  |   | 0.3     |    |
| Payable tosubsidiaries                                                                                                                      |  |        | — |    |  |   | 7.6     |    |
| Totalcurrentliabilities                                                                                                                     |  |        | 0.6     |    |  |   | 9.7     |    |
| Stockholders'equity:                                                                                                                        |  |        |    |    |  |   |    |    |
| Common stock, parvalue $.01; 250,000,000 shares authorized;21,881,170 and21,641,370 shares issued at December 31, 2005and 2004,respectively |  |        | 0.2     |    |  |   | 0.2     |    |
| Additionalpaid-incapital                                                                                                                    |  |        | 41.5    |    |  |   | 39.2    |    |
| Treasurystock at cost 2,541,900 shares at December 31, 2005 and2004                                                                         |  |        | (14.8   | )  |  |   | (14.8   | )  |
| Retainedearnings                                                                                                                            |  |        | 337.5   |    |  |   | 313.5   |    |
| Accumulatedother comprehensive (loss)income                                                                                                 |  |        | (3.0    | )  |  |   | 2.1     |    |
| Totalstockholders'equity                                                                                                                    |  |        | 361.4   |    |  |   | 340.2   |    |
|                                                                                                                                        |  | $           | 362.0   |    |  | $      | 349.9   |    |
|                                                                                                                                             |

F-32

----

Schedule I – Condensed FinancialInformation of Registrant Statements of Income (Parent Only)(inmillions)

|                                             |  |                       |         |         |  |        |         |         |  |        |       |         |  |  |
|---------------------------------------------|--|-----------------------|---------|---------|--|--------|---------|---------|--|--------|-------|---------|--|--|
|                                        |  | YearEnded December31, |
|                                        |  | 2005                  |         | 2004    |  | 2003   |
| Generaland administrativeexpenses           |  | $                     | 3.9     |    |  | $      | 4.4     |    |  | $      | 3.3   |    |
| Operatingloss                               |  |                  | 3.9     |    |  |   | 4.4     |    |  |   | 3.3   |    |
| Interest,investment and other income,net    |  |                  | (2.2    | )  |  |   | (1.0    | )  |  |   | (0.8  | )  |
| Lossfrom continuing operations beforetaxes  |  |                  | 1.7     |    |  |   | 3.4     |    |  |   | 2.5   |    |
| Benefitfrom incometaxes                     |  |                  | (1.6    | )  |  |   | (1.2    | )  |  |   | (0.9  | )  |
| Lossfrom continuingoperations               |  |                  | 0.1     |    |  |   | 2.2     |    |  |   | 1.6   |    |
| Gainfrom discontinued business, net oftaxes |  |                  | — |    |  |   | — |    |  |   | (0.6  | )  |
| Equityin income ofsubsidiaries              |  |                  | (24.1   | )  |  |   | (27.4   | )  |  |   | (24.2 | )  |
| Netincome                                   |  | $                     | 24.0    |    |  | $      | 25.2    |    |  | $      | 23.2  |    |
|                                             |

F-33

----

Schedule I – Condensed FinancialInformation of Registrant Statements of Cash Flows (ParentOnly) (inmillions)

|                                                                                             |  |                       |         |         |  |        |         |         |  |        |         |         |  |  |
|---------------------------------------------------------------------------------------------|--|-----------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                        |  | YearEnded December31, |
|                                                                                        |  | 2005                  |         | 2004    |  | 2003   |
| Operatingactivities                                                                         |  |                  |    |    |  |   |    |    |  |   |    |    |
| Netincome                                                                                   |  | $                     | 24.0    |    |  | $      | 25.2    |    |  | $      | 23.2    |    |
| Adjustmentsto reconcile net income to total cash (used in) provided by operatingactivities: |  |                  |    |    |  |   |    |    |  |   |    |    |
| Equityin income ofsubsidiaries                                                              |  |                  | (24.1   | )  |  |   | (27.4   | )  |  |   | (24.2   | )  |
| Changesin assets andliabilities:                                                            |  |                  |    |    |  |   |    |    |  |   |    |    |
| Receivablefrom/payables tosubsidiaries                                                      |  |                  | 1.5     |    |  |   | 2.4     |    |  |   | 2.8     |    |
| Other,net                                                                                   |  |                  | (1.4    | )  |  |   | (1.9    | )  |  |   | (2.6    | )  |
| Cashused in operatingactivities                                                             |  |                  | — |    |  |   | (1.7    | )  |  |   | (0.8    | )  |
| Investingactivities                                                                         |  |                  |    |    |  |   |    |    |  |   |    |    |
| Purchaseof ClarkAmerican                                                                    |  |                  | (202.5  | )  |  |   | — |    |  |   | — |    |
| Dividendfrom MafcoWorldwide                                                                 |  |                  | 145.0   |    |  |   | — |    |  |   | — |    |
| Cashused in investingactivities                                                             |  |                  | (57.5   | )  |  |   | — |    |  |   | — |    |
| Financingactivities                                                                         |  |                  |    |    |  |   |    |    |  |   |    |    |
| Proceedsfrom stock optionsexercised                                                         |  |                  | 1.3     |    |  |   | 4.1     |    |  |   | 1.9     |    |
| Cashprovided by financingactivities                                                         |  |                  | 1.3     |    |  |   | 4.1     |    |  |   | 1.9     |    |
| Net(decrease) increase in cash and cashequivalents                                          |  |                  | (56.2   | )  |  |   | 2.4     |    |  |   | 1.1     |    |
| Cashand cash equivalents at beginning ofperiod                                              |  |                  | 92.4    |    |  |   | 90.0    |    |  |   | 88.9    |    |
| Cashand cash equivalents at end ofperiod                                                    |  | $                     | 36.2    |    |  | $      | 92.4    |    |  | $      | 90.0    |    |
| Non-cashfinancingactivity:                                                                  |  |                  |    |    |  |   |    |    |  |   |    |    |
| Non-cashdividend from MafcoWorldwide                                                        |  | $                     | 10.7    |    |  | $      | — |    |  | $      | — |    |
|                                                                                             |

F-34

----

Schedule II – Valuation andQualifying Accounts and Reserves(in millions)

The followingis a summary of the valuation and qualifying accounts and reserves forthe years ended December  31,  2005, 2004 and 2003.

|                               |  |                  |        |                 |  |                    |         |               |  |        |         |        |  |        |        |        |  |  |
|-------------------------------|--|------------------|--------|-----------------|--|--------------------|---------|---------------|--|--------|---------|--------|--|--------|--------|--------|--|--|
|                          |  | BeginningBalance |        | AmountsReserved |  | BalanceWritten Off |         | EndingBalance |
| Allowance forDoubtfulAccounts |  |             |   |            |  |               |    |          |  |   |    |   |  |   |   |   |
| December31,  2005             |  | $                | 0.1    |            |  | $                  | — |          |  | $      | — |   |  | $      | 0.1    |   |
| December  31,  2004           |  | $                | 0.2    |            |  | $                  | — |          |  | $      | 0.1     |   |  | $      | 0.1    |   |
| December  31,  2003           |  | $                | 0.1    |            |  | $                  | 0.1     |          |  | $      | — |   |  | $      | 0.2    |   |
|                               |

F-35

----