<PAGE>
EXHIBIT 2.4

                      IN THE UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE

----------------------------------------------------
In re:                                             :    Chapter 11
                                                   :
AMERICAN BANKNOTE CORPORATION,                     :    Case No.: 05-10174 (PJW)
                                                   :
                           Debtor.                 :
                                                   :
----------------------------------------------------



          AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
         PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
         --------------------------------------------------------------


                           ANDREWS KURTH LLP
                           Paul Silverstein, Esq.
                           Richard Baumfield, Esq.
                           450 Lexington Avenue, 15th Floor
                           New York, NY 10017
                           Tel:  (212) 850-2800
                           Fax: (212) 850-2929

                                      -and-

                           COOCH AND TAYLOR Adam Singer, Esq.
                           824 Market Street Mall, 10th Floor
                           Wilmington, DE 19801
                           Tel: (302) 652-3641
                           Fax: (302) 652-5379

                           CO-COUNSEL FOR AMERICAN BANKNOTE
                           CORPORATION, DEBTOR AND DEBTOR-IN-
                           POSSESSION



Dated:            Wilmington, Delaware
                  February 22, 2005

<PAGE>

                                   DISCLAIMER

         ALL CREDITORS AND EQUITY INTEREST HOLDERS ARE ADVISED AND ENCOURAGED TO
READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO
ACCEPT OR REJECT THE PLAN. PLAN SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE
STATEMENT, INCLUDING THE FOLLOWING SUMMARY, ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO THE PLAN AND OTHER EXHIBITS ANNEXED TO THE PLAN AND THE DISCLOSURE
STATEMENT. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY
AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS
CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF.

         THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION
1125 OF THE BANKRUPTCY CODE AND RULE 3016 OF THE FEDERAL RULES OF BANKRUPTCY
PROCEDURE AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES
LAWS OR OTHER APPLICABLE LAW. THIS DISCLOSURE STATEMENT HAS NEITHER BEEN
APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED
HEREIN. PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING, OR
TRANSFERRING SECURITIES OF THE DEBTOR SHOULD EVALUATE THIS DISCLOSURE STATEMENT
AND THE PLAN IN LIGHT OF THE PURPOSES FOR WHICH THEY WERE PREPARED.

         AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER ACTIONS OR
THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE
CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION, OR WAIVER, BUT
RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS.

         THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS INCLUDED
HEREIN FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN AND MAY NOT BE RELIED
UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. THE
DESCRIPTIONS SET FORTH HEREIN OF THE ACTIONS, CONCLUSIONS OR RECOMMENDATIONS OF
THE DEBTOR OR ANY OTHER PARTY IN INTEREST HAVE BEEN SUBMITTED TO OR APPROVED BY
SUCH PARTY, BUT NO SUCH PARTY MAKES ANY REPRESENTATION REGARDING SUCH
DESCRIPTIONS.

         THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NONBANKRUPTCY
PROCEEDING INVOLVING THE DEBTOR OR ANY OTHER PARTY, NOR SHALL IT BE CONSTRUED TO
BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES, OR OTHER LEGAL EFFECTS OF THE
REORGANIZATION AS TO HOLDERS OF CLAIMS AGAINST OR EQUITY INTERESTS IN THE
DEBTOR.

                                       ii
<PAGE>

                                TABLE OF CONTENTS

         A.       Plan Overview..............................................vii

         B.       Plan Negotiation and Implementation.........................xi

         C.       Hypothetical Distributions................................xiii

         D.       Summary of Post-Confirmation Operations...................xiii

I. INTRODUCTION................................................................1

         A.       Holders of Claims and Equity Interests Entitled to Vote......2

         B.       Voting Procedures............................................3

         C.       Special Note for Holders of Notes or Equity Interests
                  Entitled to Vote on the Plan.................................4

         D.       Procedures for Holders of Class 4 (Note Convenience Claim)
                  Distribution Election........................................6

         E.       Confirmation Hearing.........................................6

II. THE DEBTOR'S HISTORY AND REASONS FOR ITS CHAPTER 11 FILING.................7

         A.       Introduction.................................................7

         B.       The Debtor's Business and Organizational Structure...........8

         C.       The Prior Chapter 11 Case...................................13

         D.       Outstanding Securities......................................14

         E.       Events Leading to the Filing of this Chapter 11 Case........15

         F.       Purposes and Effects of the Plan............................16

III. SIGNIFICANT EVENTS DURING THE CHAPTER 11 CASE............................16

         A.       Continuation of Business....................................16

         B.       First Day Orders............................................16

         C.       Retention of Professionals..................................17

         D.       Claims Bar Date.............................................17

         E.       Statutory Committee.........................................17

IV. THE PLAN OF REORGANIZATION................................................17

         A.       Classification and Treatment of Claims and Equity
                  Interests...........................18

         B.       Securities to be Issued Under the Plan......................21

         C.       Means of Implementation.....................................22

         D.       Provisions Governing Distributions..........................24

                                      iii
<PAGE>

         E.       Procedures for Treating Disputed Claims Under the Plan......29

         F.       Provisions Governing Executory Contracts And
                  Unexpired Leases............................................29

         G.       Conditions Precedent to Effective Date......................31

         H.       Effect of Confirmation......................................31

         I.       Retention of Jurisdiction...................................33

         J.       Miscellaneous Provisions....................................35

V. CONFIRMATION AND CONSUMMATION PROCEDURE....................................37

         A.       Solicitation of Votes.......................................37

         B.       The Confirmation Hearing....................................37

         C.       Confirmation................................................38

         D.       Valuation of Reorganized Debtor.............................41

         E.       Consummation................................................43

VI. MISCELLANEOUS DISCLOSURE ITEMS............................................43

         A.       Executive Health Benefit Plan Settlement....................43

         B.       Supplemental Executive Retirement Plan......................45

         C.       Cantor Consulting Agreement.................................46

         D.       Assumption of Weissman Consulting, Non-Competition, and
                  Termination Agreement.......................................46

         E.       Assumption of Executives' Contracts.........................46

         F.       USDA Claim..................................................46

         G.       Brazilian Tax Claims........................................47

         H.       Lithuania Claim.............................................47

         I.       Anatel Fine.................................................47

VII. MANAGEMENT OF REORGANIZED DEBTOR.........................................48

         A.       Board of Directors and Management...........................48

         B.       Stock Incentive Plan........................................49

VIII. THE EXIT FINANCING AGREEMENT............................................50

IX. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN.................51

         A.       Continuation of the Chapter 11 Case.........................51

         B.       Liquidation.................................................51

         C.       Alternative Plan of Reorganization..........................51

                                       iv
<PAGE>

X. APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS TO THE NEW ISSUED
   COMMON STOCK AND NEW NOTES TO BE DISTRIBUTED UNDER THE PLAN................52

         A.       New Issued Common Stock to be Issued to Holders of Claims
                  and Equity Interests Under the Plan.........................52

         B.       New Issued Common Stock to be Distributed in Accordance
                  with the Exit Financing Agreement...........................53

         C.       Reorganized Debtor Will No Longer be a Public Company.......55

         D.       New Notes to be Issued to Holders of Note Convenience
                  Claims Under the Plan.......................................55

         E.       Stockholders' Agreement.....................................56

         F.       Reorganization Values.......................................56

XI. RISK FACTORS TO BE CONSIDERED.............................................57

         A.       Significant Holders.........................................57

         B.       Lack of Established Market for New Common Stock.............57

         C.       Dividend Policies...........................................58

         D.       Projected Financial Information.............................58

         E.       Competitive Conditions and Technological Change.............59

         F.       Maintenance of Operations and Post-Petition Financing.......59

         G.       Reorganized Debtor will be a Private Company................59

         H.       Certain Bankruptcy Considerations...........................59

XII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN......................60

         A.       Federal Income Tax Consequences to the Debtor...............61

         B.       Federal Income Tax Consequences to Holders of Claims
                  and Equity Interests........................................62

XIII. CONCLUSION AND RECOMMENDATION...........................................69

                                       v
<PAGE>

                        EXHIBITS TO DISCLOSURE STATEMENT

     EXHIBIT A             Debtor's Amended Plan of Reorganization Under Chapter
                           11 of the Bankruptcy Code

     EXHIBIT B             Order of the Bankruptcy Court dated February 24,
                           2005 approving, among other things, the Amended
                           Disclosure Statement and establishing certain
                           procedures with respect to the solicitation and
                           tabulation of votes to accept or reject the Plan.

     EXHIBIT C             Form 10-K for the Debtor for Fiscal Year Ended
                           December 31, 2003

     EXHIBIT D             Form 10-Q for the Debtor for Fiscal Quarter Ended
                           September 30, 2004

     EXHIBIT E             Liquidation Analysis

     EXHIBIT F             Projected Financial Information

     EXHIBIT G             Assumed Employment Contracts

                                       vi

<PAGE>

                                EXECUTIVE SUMMARY

         American Banknote Corporation ("ABN" or the "Debtor") filed a petition
for relief under Chapter 11 of the United States Bankruptcy Code ("Bankruptcy
Code") on January 19, 2005. On February 22, 2005, the Debtor filed its amended
plan of reorganization (the "Plan"), which sets forth the manner in which Claims
against and Equity Interests in the Debtor will be treated following the
Debtor's emergence from Chapter 11. This Disclosure Statement describes certain
aspects of the Plan, the Debtor's business operations, significant events
occurring in its Chapter 11 case, and related matters.

         This Executive Summary is intended solely as a summary of the
distribution provisions of the Plan and certain matters related to the Debtor's
business. FOR A COMPLETE UNDERSTANDING OF THE PLAN, YOU SHOULD READ THE
DISCLOSURE STATEMENT, THE PLAN, AND THE EXHIBITS THERETO IN THEIR ENTIRETY.
Capitalized terms used in the Disclosure Statement and not otherwise defined
herein have the meanings ascribed to them in the Disclosure Statement and the
Plan.

A.       PLAN OVERVIEW.

         A Claim or Equity Interest is placed in a particular class for the
purposes of voting on the Plan and for receiving distributions pursuant to the
Plan only to the extent that such Claim or Equity Interest is an Allowed Claim
or an Allowed Equity Interest in that Class and such Claim or Equity Interest
has not been paid, released or otherwise settled prior to the Distribution Date.
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims and Priority Tax Claims of the kinds specified in sections 507(a)(1) and
507(a)(8) of the Bankruptcy Code, respectively, have not been classified. Under
the Plan, all other Claims against and Equity Interests in the Debtor have been
placed into nine (9) Classes and will receive the distributions and recoveries
(if any) described in the table below. The estimated recoveries assume that
10,000,000 shares of New Issued Common Stock, having an approximate initial
aggregate value of $114,000,000.00 (after receipt of the Exit Financing and
deducting long term indebtedness of the Reorganized Debtor and Cash payments to
be made under the Plan), will be issued under the Plan. The estimated recoveries
set forth below give effect to any dilution resulting from all of the New Issued
Common Stock issuances contemplated in the Plan. As indicated above, there can
be no assurance that such estimated values and recoveries for the New Issued
Common Stock is accurate or reliable. SEE Section X, "Applicability Of Federal
And Other Securities Laws To The New Issued Common Stock And New Notes To Be
Distributed Under The Plan."

                                      vii

<PAGE>

Summary Of Anticipated Distributions Under The Plan

-------------------------------------- -----------------------------------------
          CLASS DESCRIPTION                     TREATMENT UNDER THE PLAN
-------------------------------------- -----------------------------------------
Administrative Claims                  UNIMPAIRED - On the Distribution Date,
ESTIMATED AMOUNT: $3,500,000           except as otherwise provided in the Plan,
                                       each holder of an Allowed Administrative
                                       Claim will receive, in full satisfaction,
                                       settlement, release, and discharge of and
                                       in exchange for such Allowed
                                       Administrative Claim (a) Cash equal to
                                       the unpaid portion of such Allowed
                                       Administrative Claim or (b) such other
                                       treatment as to which the Debtor and such
                                       holder have agreed upon in writing;
                                       PROVIDED, HOWEVER, that Allowed
                                       Administrative Claims with respect to
                                       liabilities incurred by the Debtor in the
                                       ordinary course of business during the
                                       Chapter 11 Case will be paid in the
                                       ordinary course of business in accordance
                                       with the terms and conditions of any
                                       agreements relating thereto.

                                       ESTIMATED RECOVERY - 100%
-------------------------------------- -----------------------------------------
Priority Tax Claims                    UNIMPAIRED - Each holder of an Allowed
ESTIMATED AMOUNT:  NONE                Priority Tax Claim will receive, at the
                                       sole discretion of the Debtor and in full
                                       satisfaction, settlement, release, and
                                       discharge of and in exchange for such
                                       Allowed Priority Tax Claim, in the sole
                                       discretion of the Debtor (a) Cash equal
                                       to the unpaid portion of such Allowed
                                       Priority Tax Claim on the Distribution
                                       Date, (b) deferred Cash payments over a
                                       period not exceeding six (6) years after
                                       the date of assessment of such Allowed
                                       Priority Tax Claim in an aggregate
                                       principal amount equal to the amount of
                                       such Allowed Priority Tax Claim, plus
                                       interest on the unpaid portion thereof,
                                       as provided in section 1129(a)(9)(C) of
                                       the Bankruptcy Code, or (c) such other
                                       treatment as to which the Debtor and such
                                       holder have agreed upon in writing.

                                       ESTIMATED RECOVERY - 100%
-------------------------------------- -----------------------------------------
Class 1 - Other Priority Claims        UNIMPAIRED - On the Distribution Date,
ESTIMATED AMOUNT: NONE                 each holder of an Allowed Class 1 Other
                                       Priority Claim will receive, in full
                                       satisfaction, settlement, release, and
                                       discharge of and in exchange for such
                                       Allowed Class 1 Other Priority Claim, in
                                       the sole discretion of the Debtor, either
                                       (a) Cash equal to the unpaid portion of
                                       such Allowed Class 1 Other Priority Claim
                                       or (b) such other treatment as to which
                                       Debtor and such holder will have agreed
                                       upon in writing.

                                       ESTIMATED RECOVERY - 100%
-------------------------------------- -----------------------------------------

                                      viii

<PAGE>

-------------------------------------- -----------------------------------------
          CLASS DESCRIPTION                     TREATMENT UNDER THE PLAN
-------------------------------------- -----------------------------------------
Class 2 - Miscellaneous Secured        UNIMPAIRED - On the Distribution Date,
Claims                                 or as soon thereafter as is practicable,
ESTIMATED AMOUNT: DE MINIMIS           with respect to each Allowed Class 2
                                       Miscellaneous Secured Claim, (i) the
                                       Debtor or Reorganized Debtor shall Cure
                                       any default with respect to such Claim
                                       that occurred before or after the
                                       Petition Date, (ii) the maturity of such
                                       Claim shall be Reinstated as such
                                       maturity existed before any such
                                       default, (iii) the holder of such Claim
                                       shall be compensated for any damages
                                       incurred as a result of any reasonable
                                       reliance by the holder on any right to
                                       accelerate its Claim, and (iv) the
                                       legal, equitable and contractual rights
                                       of such holder will not otherwise be
                                       altered.

                                       ESTIMATED RECOVERY - 100%
-------------------------------------- -----------------------------------------
Class 3 - Note Claims                  IMPAIRED - On the Distribution Date,
ESTIMATED AMOUNT (PRINCIPAL AND        each holder of an Allowed Class 3 Note
INTEREST AS OF DECEMBER 31, 2004):     Claim will receive, in full
$95,477,500                            satisfaction, settlement, release, and
                                       discharge of and in exchange of such
                                       Allowed Note Claim its Ratable Portion
                                       of 7,920,884 shares of the New Issued
                                       Common Stock.

                                       ESTIMATED RECOVERY - Approximately 95%
-------------------------------------- -----------------------------------------
Class 4 - Note Convenience Claims      IMPAIRED - On the Distribution Date,
ESTIMATED AMOUNT (PRINCIPAL AND        each holder of an Allowed Class 4 Note
INTEREST AS OF DECEMBER 31, 2004):     Convenience Claim will receive, in full
$10,022,500                            satisfaction, settlement, release and
                                       discharge of and in exchange for such
                                       Allowed Note Convenience Claim, at such
                                       holders' election: (a) Cash in an amount
                                       equal to sixty percent (60%) of such
                                       holder's Allowed Class 4 Note
                                       Convenience Claim, or (b) New Notes
                                       equal to one hundred percent (100%) of
                                       the holder's Claim.

                                       If a holder of an Allowed Class 4 Note
                                       Convenience Claim fails to make an
                                       election in accordance with the
                                       foregoing paragraph, such holder shall
                                       be deemed to have elected to receive the
                                       treatment set forth in section 4.4(a) of
                                       the Plan, which provides that holders of
                                       Allowed Class 4 Note Convenience Claims
                                       will reserve Cash in an amount equal to
                                       sixty percent (60%) of such holder's
                                       Allowed Class 4 Note Convenience Claim.

                                       ESTIMATED RECOVERY - 60% UNDER CASH
                                       ELECTION OR 100% UNDER THE NOTE ELECTION
-------------------------------------- -----------------------------------------
Class 5 - Miscellaneous Unsecured      UNIMPAIRED - On the Distribution Date,
Claims                                 each holder of an Allowed Miscellaneous
ESTIMATED AMOUNT: NONE                 Class 5 Unsecured Claim will be paid in
                                       full in Cash; PROVIDED HOWEVER, that
                                       Allowed Miscellaneous Class 5 Unsecured
                                       Claims with respect to liabilities
                                       incurred by the Debtor in the ordinary
                                       course of business will be paid in the
                                       ordinary course of business in
                                       accordance with the terms and conditions
                                       of any agreements relating thereto.

                                       ESTIMATED RECOVERY - 100%
-------------------------------------- -----------------------------------------
Class 6 - SERP Claims                  IMPAIRED - On the Distribution Date,
ESTIMATED AMOUNT: UNKNOWN              each holder of an Allowed Class 6 SERP
                                       Claim will receive in full satisfaction,
                                       settlement, release and discharge of and
                                       in exchange for such Allowed SERP Claim
                                       the Class 6 Distribution.

                                        ESTIMATED RECOVERY - UNDETERMINED
-------------------------------------- -----------------------------------------
Class 7 - Equity  Interests            IMPAIRED - All Equity Interests will be
                                       cancelled on the Effective Date, and on
                                       the Distribution Date, each holder of
                                       Allowed Class 7 Equity Interests, other
                                       than DE MINIMIS Equity Holders, will
                                       receive, in full satisfaction,
                                       settlement, release, and discharge of
                                       and in exchange for its Allowed Class 7
                                       Equity Interests, its Ratable Portion of
                                       approximately 207,402 shares of New
                                       Issued Common Stock and approximately $4
                                       million in Cash.

                                       ESTIMATED RECOVERY - 207,402 SHARES OF
                                       NEW ISSUED COMMON STOCK AND
                                       APPROXIMATELY $4 MILLION IN CASH
-------------------------------------- -----------------------------------------
Class 8 - DE MINIMIS Equity Holders    IMPAIRED - All Equity Interests held by
                                       DE MINIMIS Equity Holders will be
                                       cancelled on the Effective Date, and on
                                       the Distribution Date, each DE MINIMIS
                                       Equity Holder will receive, in full
                                       satisfaction, settlement, release, and
                                       discharge of and in exchange for its
                                       Allowed Equity Interests its Ratable
                                       Portion of approximately $1 million in
                                       Cash.

                                       THE DISTRIBUTIONS TO HOLDERS OF CLASS 8
                                       INTERESTS (DE MINIMIS EQUITY HOLDERS)
                                       WILL BE OF AN EQUIVALENT VALUE TO THE
                                       DISTRIBUTIONS RECEIVED BY HOLDERS OF
                                       CLASS 7 INTERESTS (EQUITY INTEREST),
                                       EXCEPT THAT SUCH DISTRIBUTIONS WILL BE
                                       SOLELY IN CASH.

                                        ESTIMATED RECOVERY - APPROXIMATELY $1
                                        MILLION IN CASH
-------------------------------------- -----------------------------------------
Class 9 - Other Equity Interests       IMPAIRED - Other Equity Interests will be
                                       cancelled on the Effective Date and
                                       holders of Other Equity Interests will
                                       receive no distribution under the Plan.

                                       ESTIMATED RECOVERY - 0%
-------------------------------------- -----------------------------------------
                                       x
<PAGE>

         After careful review of the Debtor's current business operations,
estimated recoveries in a liquidation scenario, and prospects as an ongoing
business, the Debtor has concluded that the recovery to creditors and Equity
Interest holders will be maximized by the Debtor's continued operation as a
going concern. The Debtor believes that its business and assets have significant
value that would not be realized in the liquidation of the Debtor, either in
whole or in substantial part. According to the liquidation analysis prepared by
the Debtor, the Debtor is worth considerably more to its creditors in general as
a going concern.

B.       PLAN NEGOTIATION AND IMPLEMENTATION.

         1.       NEGOTIATIONS.

         The terms of the Plan were negotiated between the Debtor and the
largest holders of the Notes and Old Common Stock (i.e. the AD HOC Committee).
All of the members of the AD HOC Committee are affiliated with certain of the
Debtor's Directors. These negotiations with the AD HOC Committee took place over
several months prior to the Petition Date.

         The following table lists the AD HOC Committee members (grouped by
affiliated entities), their respective holdings of the Debtor's Notes and Old
Common Stock, which director they are affiliated with and the amount of money
each is contributing under the Exit Financing Agreement.

<TABLE>
--------------------------------------- --------------------------------- ---------------------- -------------------
AD HOC COMMITTEE MEMBER                  AMOUNT OF NOTES AND OLD COMMON    AFFILIATED DIRECTOR     EXIT FINANCING
                                                  STOCK OWNED                                       CONTRIBUTION
--------------------------------------- --------------------------------- ---------------------- -------------------
<S>                                     <C>                               <C>                     <C>
Bay Harbour 90-1 Ltd.                   NOTES:  $40.4 million             Steven Van Dyke         $2,000,000
Bay Harbour Partners, Ltd.
Trophy Hunter Investments, Ltd.         OLD COMMON STOCK: 5,187,253
D Quant Fund LLC                        (42.2%)
Ann Van Dyke
Steven Van Dyke
--------------------------------------- --------------------------------- ---------------------- -------------------
Lloyd I. Miller                         NOTES:  $21.8 million             Lloyd I. Miller, III    $2,000,000
Lloyd I. Miller Pension Plan
Lloyd I. Miller IRA                     OLD COMMON STOCK:  837,205
Dail E. Miller IRA                      (6.8%)
Milfam II, L.P.
Milfam LLC
Dorothy Miller
Kimberley S. Miller Trust
--------------------------------------- --------------------------------- ---------------------- -------------------
Remus Holdings LLC                      NOTES:  $12.1 million             Steven Singer           $2,000,000
Castor Investments L.L.C.
Pollux Investments LLC                  OLD COMMON STOCK:  2,263,690
Singer Children's Management Trust      (18.4%)
--------------------------------------- --------------------------------- ---------------------- -------------------
Highland Capital Management             NOTES:  $2.5 million              James Dondero           $10,000,000

                                        OLD COMMON STOCK:  2,012,576
                                        (16.4%)
--------------------------------------- --------------------------------- ---------------------- -------------------
</TABLE>
                                       xi
<PAGE>

         2.       PLAN TERMS.

         The purpose of the Plan is to restructure the existing debt obligations
of the Debtor by converting the majority of the Notes to New Issued Common Stock
in the Reorganized Debtor. After such conversion, it is anticipated that the
Reorganized Debtor will have less than 300 holders of the New Issued Common
Stock, thereby allowing the Reorganized Debtor to elect to become a private
company. As a result, the Reorganized Debtor will have no public financial
reporting requirements.

         Pursuant to the Plan, the following entities are contributing
additional capital ($16 million) under the Exit Financing Agreement to the
Debtor to facilitate its reorganization: Bay Harbour Partners, Ltd. ($2
million), Lloyd I. Miller, III ($2 million), Pollux Investments LLC ($2 million)
and Highland Capital Management L.P. ($10 million). This infusion of capital
will give the Debtor the liquidity it needs to accomplish its reorganization.

         3.       ANTICIPATED OWNERSHIP OF REORGANIZED DEBTOR.

         On the Effective Date, the Reorganized Debtor will have up to
approximately $10 million of New Notes outstanding(1) and 10 million shares of
New Issued Common Stock outstanding. The following amounts of New Issued Common
Stock will be held by members of the AD HOC Committee after the Effective
Date:(2)

--------------------------------------- ------------------------------------
AD HOC COMMITTEE MEMBER                  AMOUNT OF NEW ISSUED COMMON STOCK

--------------------------------------- ------------------------------------
Bay Harbour Partners, Ltd.              3,688,735 (36.8%)
(and affiliates)
--------------------------------------- ------------------------------------
Lloyd I. Miller (and affiliates)        2,058,859 (20.6%)
--------------------------------------- ------------------------------------
Remus Holdings LLC                      1,282,913 (12.8%)
(and affiliates)
--------------------------------------- ------------------------------------
Highland Capital Management             1,417,503 (14.2%)
--------------------------------------- ------------------------------------


----------------

1   This is based on the assumption that 9.55% of the Notes are held by entities
    who will fall into Class 4 (Note Convenience Claims). The amount of New
    Notes will be reduced to the extent that Class 4 Note Convenience Claim
    holders make the Cash election under section 4.4(a) of the Plan.

2   The amount of New Issued Common Stock reflected in the table is from
    distributions the parties will receive under the Plan (including
    distributions resulting from participation in the Exit Financing Agreement).
    The amounts set forth in the table are based upon a number of assumptions
    including (i) 9.55% of the holders of the Notes fall into Class 4 (Note
    Convenience Claims) and (ii) 87.5% of the holders of Old Common Stock fall
    into Class 7 (Equity Interests). These assumptions were estimated by the
    Debtor and actual numbers may vary significantly.

                                      xii
<PAGE>

C.       HYPOTHETICAL DISTRIBUTIONS

         Assuming that (i) 87.5% of the holders of Old Common Stock fall into
Class 7 (Equity Interests) and (ii) 9.55% of the holders of the Notes fall into
Class 4 (Note Convenience Claims), the following distributions will be made
under the Plan:

                  a.       Class 3 - Note Claims: For every $1,000 of Allowed
                           Claim, Claimants in this Class will receive
                           approximately 83 shares of New Issued Common Stock;

                  b.       Class 4 - Note Convenience Claims: Holders of Notes
                           in this Class will receive either (at their
                           election): (i) a New Note for the full amount of
                           their Claim or (ii) Cash equal to 60% of their
                           Allowed Claim;

                  c.       Class 5 - Miscellaneous Unsecured Claims: Claimants
                           in this Class will receive Cash equal to 100% of
                           their Allowed Claim;

                  d.       Class 6 - SERP Claims: Each Claimant in this Class
                           will receive Cash equal to the value of any amounts
                           which such holder was entitled to receive in the
                           calendar year prior to the Petition Date pursuant to
                           any non-qualified supplemental executive retirement
                           plan that was outstanding as of the Petition Date.
                           The total entitlements under the Debtor's SERP in the
                           year prior to the Petition Date was approximately
                           $25,000;

                  e.       Class 7 - Equity Interests: For every 1,000 shares,
                           holders of Old Common Stock who are in Class 7 -
                           Equity Interests, will receive approximately (i) 20
                           shares of New Issued Common Stock; plus (ii) $394.52
                           in Cash;

                  f.       Class 8 - De Minimis Equity Holders: For every 1,000
                           shares, holders of Old Common Stock who are in Class
                           8 - DE MINIMIS Equity Holders will receive
                           approximately $622.43 in Cash;

                  g.       Class 9 - Other Equity Interests: No distribution.

D.       SUMMARY OF POST-CONFIRMATION OPERATIONS.

         Attached hereto as EXHIBIT F are financial statements that project the
financial performance of the Reorganized Debtor, on a consolidated basis with
its subsidiaries, through December 31, 2007. These projections are based on the
current business plan for the Reorganized Debtor. These projections were based
upon information available as of December 31, 2004, and reflect the subsequent
operating performance of the subsidiaries. For context, copies of the Form 10-K
for the Debtor for Fiscal Year Ended December 31, 2003 and the Form 10-Q for the
Debtor for Fiscal Quarter Ended September 30, 2004 are annexed hereto as EXHIBIT
C and EXHIBIT D, respectively.

                                      xiii
<PAGE>

                                I. INTRODUCTION

         ABN submits this Disclosure Statement, dated February 22, 2005 (the
"Disclosure Statement") pursuant to section 1125 of title 11 of the United
States Code (the "Bankruptcy Code") to holders of Claims against and Equity
Interest in the Debtor in connection with (i) the solicitation of acceptances by
ABN of its Amended Plan of Reorganization under Chapter 11 of the Bankruptcy
Code dated February 22, 2005 (the "Plan"), and (ii) the hearing to consider
confirmation of the Plan (the "Confirmation Hearing") scheduled for April 8,
2005 at 10:30 a.m. Delaware time before the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court"). Unless otherwise defined
herein, all capitalized terms contained herein have the meanings ascribed to
them in the Plan.

         A BALLOT IS ENCLOSED, FOR THE ACCEPTANCE OR REJECTION OF THE PLAN, WITH
THE DISCLOSURE STATEMENT SUBMITTED TO HOLDERS OF CLAIMS AND EQUITY INTERESTS IN
CLASS 3 (NOTE CLAIMS), CLASS 4 (NOTE CONVENIENCE CLAIMS), CLASS 6 (SERP CLAIMS),
CLASS 7 (EQUITY INTERESTS), AND CLASS 8 (DE MINIMIS EQUITY HOLDERS) WHO ARE
ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN.

         THE BALLOT CONTAINS PROVISIONS:

         (1) ENABLING HOLDERS OF CLAIMS AND EQUITY INTERESTS IN CLASS 3 (NOTE
CLAIMS), CLASS 4 (NOTE CONVENIENCE CLAIMS), CLASS 6 (SERP CLAIMS), CLASS 7
(EQUITY INTERESTS), AND CLASS 8 (DE MINIMIS EQUITY HOLDERS) TO VOTE ON
ACCEPTANCE OR REJECTION OF THE PLAN; AND

         (2) ENABLING HOLDERS OF CLASS 4 (NOTE CONVENIENCE CLAIMS) TO ELECT TO
RECEIVE (A) CASH IN AN AMOUNT EQUAL TO SIXTY PERCENT (60%) OF SUCH HOLDER'S
ALLOWED CLASS 4 NOTE CONVENIENCE CLAIM, OR (B) NEW NOTES EQUAL TO ONE HUNDRED
PERCENT (100%) OF THE HOLDER'S CLAIM.

         IF A HOLDER OF AN ALLOWED CLASS 4 NOTE CONVENIENCE CLAIM FAILS TO MAKE
AN ELECTION IN ACCORDANCE WITH THE FOREGOING SENTENCE, SUCH HOLDER SHALL BE
DEEMED TO HAVE ELECTED TO RECEIVE THE TREATMENT SET FORTH IN SECTION 4.4(a) OF
THE PLAN.

         HOLDERS OF OTHER PRIORITY CLAIMS, MISCELLANEOUS SECURED CLAIMS, AND
MISCELLANEOUS UNSECURED CLAIMS ARE UNIMPAIRED BY THE PLAN, ARE CONCLUSIVELY
PRESUMED TO HAVE ACCEPTED THE PLAN, ARE NOT ENTITLED TO VOTE TO ACCEPT OR REJECT
THE PLAN, AND ARE THUS NOT RECEIVING BALLOTS.

         HOLDERS OF OTHER EQUITY INTERESTS IN THE DEBTOR ARE RECEIVING NO
DISTRIBUTIONS UNDER THE PLAN, ARE DEEMED TO HAVE REJECTED THE PLAN, AND ARE
THEREFORE NOT RECEIVING BALLOTS.

         On February 24, 2005, after notice and a hearing, the Bankruptcy Court
approved this Disclosure Statement as containing adequate information of a kind
and in sufficient detail to enable hypothetical, reasonable investors typical of


                                       1
<PAGE>

the Debtor's creditors and Equity Interest holders to make an informed judgment
whether to accept or reject the Plan. APPROVAL OF THIS DISCLOSURE STATEMENT DOES
NOT, HOWEVER, CONSTITUTE A DETERMINATION BY THE BANKRUPTCY COURT AS TO THE
FAIRNESS OR MERITS OF THE PLAN.

         The order approving the Disclosure Statement, a copy of which is
annexed hereto as EXHIBIT B, sets forth in detail the deadlines, procedures and
instructions for voting to accept or reject the Plan and for filing objections
to confirmation of the Plan, the record date for voting purposes, and the
applicable standards for tabulating Ballots. In addition, detailed voting
instructions accompany each Ballot. Each holder of a Claim or Equity Interest
entitled to vote on the Plan should read the Disclosure Statement, the Plan, the
order approving the Disclosure Statement and the instructions accompanying the
Ballot in their entirety before voting on the Plan. These documents contain,
among other things, important information concerning the classification of
Claims and Equity Interests for voting purposes and the tabulation of votes. No
solicitation of votes to accept the Plan may be made except pursuant to section
1125 of the Bankruptcy Code.

A.       HOLDERS OF CLAIMS AND EQUITY INTERESTS ENTITLED TO VOTE.

         Pursuant to the provisions of the Bankruptcy Code, only holders of
allowed claims or equity interests in classes of claims or equity interests that
are impaired under the terms and provisions of a Chapter 11 plan and that will
receive distributions under the Chapter 11 plan are entitled to vote to accept
or reject the plan. Classes of claims or equity interests in which the holders
of claims or interests will not receive or retain any property under a Chapter
11 plan are deemed to have rejected the plan and are not entitled to vote to
accept or reject the plan. Classes of claims or equity interests in which the
holders of claims or interests are unimpaired under a Chapter 11 plan are deemed
to have accepted the plan and are not entitled to vote to accept or reject the
plan.

         Each of Class 1 (Other Priority Claims), Class 2 (Miscellaneous Secured
Claims) and Class 5 (Miscellaneous Unsecured Claims) are unimpaired by the Plan
and the holders of Claims in each of such Classes are conclusively presumed to
have accepted the Plan and are not entitled to vote to accept or reject the
Plan.

         Class 3 (Note Claims), Class 4 (Note Convenience Claims), Class 6 (SERP
Claims), Class 7 (Equity Interests) and Class 8 (DE MINIMIS Equity Holders) are
entitled to vote to accept or reject the Plan.

         Because holders of Claims in Class 9 (Other Equity Interests) are not
entitled to receive or retain any property under the Plan, they are presumed to
have rejected the Plan, and therefore, are not entitled to vote on the Plan.

         The Bankruptcy Code defines "acceptance" of a plan (i) by a class of
claims as acceptance by creditors in that class that hold at least two-thirds in
dollar amount and more than one-half in number of the claims that cast ballots
for acceptance or rejection of the plan, and (ii) by a class of interests as
acceptance by interest holders in that class that hold at least two-thirds in


                                       2
<PAGE>

amount of interests in such class that cast ballots for acceptance or rejection
of the Plan. For a complete description of the requirements for confirmation of
the Plan, SEE Section V, "Confirmation and Consummation Procedure."

         UNDER SECTION 1129 OF THE BANKRUPTCY CODE, A PLAN CAN BE CONFIRMED ONLY
IF AT LEAST ONE IMPAIRED CLASS ACCEPTS THE PLAN. THEREFORE, THE PLAN CAN BE
CONFIRMED ONLY IF CLASS 3 (NOTE CLAIMS), CLASS 4 (NOTE CONVENIENCE CLAIMS),
CLASS 6 (SERP CLAIMS), CLASS 7 (EQUITY INTERESTS) OR CLASS 8 (DE MINIMIS EQUITY
HOLDERS) ACCEPTS THE PLAN AND IF THE OTHER REQUIREMENTS FOR CONFIRMATION ARE MET
AS DESCRIBED BELOW. IF AT LEAST ONE IMPAIRED CLASS ACCEPTS THE PLAN, BUT ONE OR
MORE OTHER CLASSES OF CLAIMS REJECT THE PLAN OR ARE DEEMED TO HAVE REJECTED THE
PLAN, THE DEBTOR HAS THE RIGHT TO REQUEST CONFIRMATION OF THE PLAN PURSUANT TO
SECTION 1129(b) OF THE BANKRUPTCY CODE. SECTION 1129(b) PERMITS THE CONFIRMATION
OF A PLAN NOTWITHSTANDING THE NON-ACCEPTANCE OF SUCH PLAN BY ONE OR MORE
IMPAIRED CLASSES OF CLAIMS OR EQUITY INTERESTS. UNDER THAT SECTION, A PLAN MAY
BE CONFIRMED BY A BANKRUPTCY COURT IF IT DOES NOT "DISCRIMINATE UNFAIRLY" AND IS
"FAIR AND EQUITABLE" WITH RESPECT TO EACH NON-ACCEPTING CLASS. FOR A MORE
DETAILED DESCRIPTION OF THE REQUIREMENTS FOR CONFIRMATION OF A NONCONSENSUAL
PLAN, SEE SECTION V, "CONFIRMATION AND CONSUMMATION PROCEDURE."

         If Class 3, Class 4, Class 6, Class 7, and Class 8, the only Classes
entitled to vote on the Plan, vote to accept the Plan, the Debtor will request
confirmation of the Plan over the deemed rejection of the Plan by Class 9. If
Class 3, Class 4, Class 6, Class 7, or Class 8 votes to reject the Plan, the
determination as to whether to seek confirmation of the Plan under such
circumstances will be announced before or at the Confirmation Hearing.

B.       VOTING PROCEDURES.

         If you are entitled to vote to accept or reject the Plan, a Ballot is
enclosed for the purpose of voting on the Plan. Please vote and return your
Ballot(s) to--

                                    MacKenzie Partners, Inc.
                                    105 Madison Avenue, 14th Floor
                                    New York, New York 10016
                                    Att'n:  Jeanne M. Carr
                                    Telephone:  (212) 929-5500
                                    Telephone:  (800) 322-2885
                                    American Banknote Corporation

         DO NOT RETURN ANY NOTE, STOCK CERTIFICATE OR OTHER SECURITY INSTRUMENT
WITH YOUR BALLOT.

                                       3
<PAGE>

         TO BE COUNTED, YOUR BALLOT INDICATING ACCEPTANCE OR REJECTION OF THE
PLAN MUST BE RECEIVED NO LATER THAN 4:00 P.M., DELAWARE TIME, ON MARCH 24, 2005.

         Any Claim in an impaired Class as to which an objection or request for
estimation is pending or which is scheduled by the Debtor as unliquidated,
disputed or contingent is not entitled to vote unless the holder of such Claim
has obtained an order of the Bankruptcy Court temporarily allowing such Claim
for the purpose of voting on the Plan.

         Pursuant to the order approving the Disclosure Statement, the
Bankruptcy Court set February 24, 2005 as the record date for voting on the
Plan. Accordingly, only holders of record as of February 24, 2005 that are
otherwise entitled to vote under the Plan will receive a Ballot and may vote on
the Plan.

         If you are a holder of a Claim or Equity Interest entitled to vote on
the Plan and did not receive a Ballot, received a damaged Ballot or lost your
Ballot, or if you have any questions concerning the Disclosure Statement, the
Plan, or the procedures for voting on the Plan, please contact:

                                    MacKenzie Partners, Inc.
                                    105 Madison Avenue, 14th Floor
                                    New York, New York 10016
                                    Attn:  Jeanne M. Carr
                                    Telephone:  (212) 929-5500
                                    Telephone:  (800) 322-2885
                                    American Banknote Corporation

C.       SPECIAL NOTE FOR HOLDERS OF NOTES OR EQUITY INTERESTS ENTITLED TO VOTE
         ON THE PLAN.

         The date for determining which holders of the Debtor's publicly traded
Notes or Equity Interests (the "Securities") are entitled to vote on the Plan is
February 24, 2005. The Notes Indenture Trustee, agents, or servicers, as the
case may be, for the Securities will NOT vote on behalf of the holders of such
Securities. Such holders must submit their own Ballots.

         1.       BENEFICIAL OWNERS.

                  a. Any beneficial owner holding Securities as record holder in
its own name that is entitled to vote on the Plan should vote on the Plan by
completing the enclosed Ballot and returning it directly to the Balloting Agent
on or before the voting deadline using the enclosed self-addressed, stamped
envelope.

                  b. Any beneficial owner holding Securities in "street name"
through a brokerage firm, bank, trust company, or other nominee that is entitled
to vote on the Plan should vote on the Plan through such nominee by following
these instructions:

                           (i) Complete and sign the Ballot.

                                       4
<PAGE>

                           (ii) Return the Ballot to your nominee as promptly as
possible and in sufficient time to allow such nominee to process the Ballot and
return it to the Balloting Agent by the voting deadline. If no self-addressed,
stamped envelope was enclosed for this purpose, contact your nominee for
instructions.

         Any Ballot returned to a nominee by a beneficial owner will not be
counted for purposes of acceptance or rejection of the Plan until such nominee
properly completes and delivers to the Balloting Agent a master ballot (the
"Master Ballot") that reflects the vote of such beneficial owner.

         If any beneficial owner owns Securities through more than one broker,
bank, or other nominee, such beneficial owner may receive multiple mailings
containing a Ballot. Each such beneficial owner should execute a separate Ballot
for each block of Securities that it holds through any particular nominee and
return each Ballot to the respective nominee in the return envelope provided
therewith.

         Beneficial owners who execute multiple Ballots with respect to
Securities held through more than one nominee must indicate on each Ballot the
names of ALL such other nominees and the additional amounts of such Securities
so held and voted.

         If a beneficial owner holds a portion of the Securities through a
nominee and another portion as a record holder, such owner should follow the
procedures described in (a) above to vote the portion held of record and the
procedures described in (b) above to vote the portion held through a nominee or
nominees

         BALLOTS MUST BE RETURNED TO THE BALLOTING AGENT PRIOR TO THE VOTING
DEADLINE TOGETHER WITH ANY OTHER DOCUMENTS REQUIRED BY SUCH BALLOT. THE
BALLOTING AGENT WILL NOT ACCEPT BALLOTS THAT HAVE BEEN DELIVERED BY FACSIMILE
TRANSMISSION OR OTHER ELECTRONIC MEANS, INCLUDING E-MAIL.

         2.       BROKERAGE FIRMS, BANKS, AND OTHER NOMINEES.

         An entity (other than a beneficial owner) which is the registered
holder of Securities should vote on behalf of the beneficial owners of such
Securities by (i) immediately distributing a copy of this Disclosure Statement
and accompanying materials including, all appropriate Ballots, and
self-addressed return envelopes to all beneficial owners for whom it holds such
Securities, (ii) collecting all such Ballots, and (iii) completing a Master
Ballot compiling the votes and other information from the Ballots collected, and
transmitting such Master Ballot to the Balloting Agent on or before the voting
deadline. A proxy intermediary acting on behalf of a brokerage firm or bank may
follow the procedures outlined in the preceding sentence to vote on behalf of
such party.

         UNLESS THE MASTER BALLOT BEING FURNISHED IS SUBMITTED TO THE BALLOTING
AGENT ON OR PRIOR TO THE VOTING DEADLINE TOGETHER WITH ANY OTHER DOCUMENTS
REQUIRED BY SUCH BALLOT, THE DEBTOR MAY, IN ITS SOLE DISCRETION, REJECT SUCH
BALLOT AS INVALID AND, THEREFORE, DECLINE TO COUNT IT AS AN ACCEPTANCE OR
REJECTION OF THE PLAN.

                                       5
<PAGE>

         MASTER BALLOTS MAY BE RETURNED TO THE BALLOTING AGENT VIA FACSIMILE TO
(212) 929-0308, BUT MUST IMMEDIATELY BE FOLLOWED BY A HARD COPY MAILED TO THE
BALLOTING AGENT. THE BALLOTING AGENT WILL NOT ACCEPT MASTER BALLOTS DELIVERED BY
ELECTRONIC MEANS, INCLUDING E-MAIL.

         3.       FIDUCIARY AND OTHER REPRESENTATIVES.

         If a Ballot is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation, or another acting in a fiduciary or
representative capacity, such person should indicate such capacity when signing
and, unless otherwise determined by the Debtor, must submit proper evidence
satisfactory to the Debtor of authority to so act. Authorized signatories should
submit separate Ballots for each beneficial owner for whom they are voting.

D.       PROCEDURES FOR HOLDERS OF CLASS 4 (NOTE CONVENIENCE CLAIM) DISTRIBUTION
         ELECTION.

         Holders of Allowed Class 4 Note Convenience Claims will receive, in
full satisfaction, settlement, release and discharge of and in exchange for such
Allowed Note Convenience Claim, at such holders' election: (a) Cash in an amount
equal to sixty percent (60%) of such holder's Allowed Class 4 Note Convenience
Claim ("Cash Option"), or (b) New Notes equal to one hundred percent (100%) of
the holder's Claim.

         TO MAKE THE DISTRIBUTION ELECTION, HOLDERS OF CLAIMS IN CLASS 4 (NOTE
CONVENIENCE CLAIMS) ARE REQUIRED TO CHECK THE BOX WHERE INDICATED ON THE BALLOT.
IF NO ELECTION IS MADE, THE NOTE CONVENIENCE CLAIM HOLDER IS DEEMED TO HAVE
ELECTED THE CASH OPTION.

E.       CONFIRMATION HEARING.

         Pursuant to section 1128 of the Bankruptcy Code, the Confirmation
Hearing will be held on April 8, 2005 at 10:30 a.m. Delaware time, before the
Honorable Peter J. Walsh, United States Bankruptcy Judge, at the United States
Bankruptcy Court, 824 Market Street, 5th Floor, Wilmington, Delaware 19801. The
Bankruptcy Court has directed that objections, if any, to confirmation of the
Plan be served and filed so that they are received on or before March 30, 2005
at 4:00 p.m. Delaware time, in the manner described below in Section V,
"Confirmation and Consummation Procedure." The Confirmation Hearing may be
adjourned from time to time by the Bankruptcy Court without further notice
except for the announcement of the adjournment date made at the Confirmation
Hearing or at any subsequent adjourned Confirmation Hearing.

         FOR THE CONVENIENCE OF HOLDERS OF CLAIMS AND EQUITY INTERESTS, THIS
DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN, BUT THE PLAN ITSELF
QUALIFIES ALL SUMMARIES. IF ANY INCONSISTENCY EXISTS BETWEEN THE PLAN AND THE
DISCLOSURE STATEMENT, THE TERMS OF THE PLAN ARE CONTROLLING. THE DISCLOSURE
STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER
TO VOTE TO ACCEPT OR REJECT THE PLAN, AND NOTHING STATED HEREIN SHALL CONSTITUTE
AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY, OR BE ADMISSIBLE IN ANY


                                       6
<PAGE>

PROCEEDING INVOLVING THE DEBTOR OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE
EVIDENCE OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN ON THE DEBTOR, OR HOLDERS
OF CLAIMS OR EQUITY INTERESTS. CERTAIN OF THE STATEMENTS CONTAINED IN THIS
DISCLOSURE STATEMENT, BY NATURE, ARE FORWARD-LOOKING AND CONTAIN ESTIMATES AND
ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE REFLECTIVE
OF ACTUAL OUTCOMES. ALL HOLDERS OF CLAIMS OR EQUITY INTEREST ENTITLED TO VOTE TO
ACCEPT OR REJECT THE PLAN SHOULD CAREFULLY READ AND CONSIDER FULLY SECTION XI OF
THIS DISCLOSURE STATEMENT, "RISK FACTORS TO BE CONSIDERED," BEFORE VOTING TO
ACCEPT OR REJECT THE PLAN.

         SUMMARIES OF CERTAIN PROVISIONS OF AGREEMENTS REFERRED TO IN THIS
DISCLOSURE STATEMENT DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, THE FULL TEXT OF THE APPLICABLE
AGREEMENT, INCLUDING THE DEFINITIONS OF TERMS CONTAINED IN SUCH AGREEMENT.

         THE DEBTOR BELIEVES THAT THE PLAN WILL ENABLE IT TO SUCCESSFULLY
REORGANIZE AND ACCOMPLISH THE OBJECTIVES OF CHAPTER 11 AND THAT ACCEPTANCE OF
THE PLAN IS IN THE BEST INTERESTS OF THE DEBTOR AND ITS CREDITORS AND EQUITY
INTEREST HOLDERS. THE DEBTOR URGES THAT CREDITORS ENTITLED TO VOTE ACCEPT THE
PLAN.

         AFTER CAREFULLY REVIEWING THIS DISCLOSURE STATEMENT, INCLUDING THE
EXHIBITS, EACH HOLDER OF AN ALLOWED CLAIM OR EQUITY INTEREST IN CLASS 3 (NOTE
CLAIMS), CLASS 4 (NOTE CONVENIENCE CLAIMS), CLASS 6 (SERP CLAIMS), CLASS 7
(EQUITY INTERESTS), AND CLASS 8 (DE MINIMIS EQUITY HOLDERS) SHOULD VOTE TO
ACCEPT THE PLAN.

         II. THE DEBTOR'S HISTORY AND REASONS FOR ITS CHAPTER 11 FILING

A.       INTRODUCTION.

         Over the past two years since the consummation of its first plan of
reorganization (as discussed in further detail below), the Debtor's financial
position continues to be adversely affected by a combination of: (i) the high
degree of dependence on its Brazilian subsidiary, which operates in a highly
volatile economic environment that has caused significant foreign currency
exchange rate variations which directly impact the dividends available to be
repatriated to the Debtor, (ii) declining markets and competitive pricing in the
United States and France, and (iii) the political and economic instability that
has occurred in Argentina, which has directly impacted the Debtor's Argentine
operations. As a result, the Debtor has been unable to generate sufficient
excess cash flow to satisfy the Notes when they mature on January 31, 2005.
These factors combined with the Debtor's inability to access capital and
financial markets for the purpose of obtaining new financing or raising new
equity to refinance the Notes has required the Debtor to seek this further
restructuring.

                                       7
<PAGE>

         Confirmation of the Plan would significantly reduce the principal
amount of the Debtor's outstanding indebtedness and leave only a relatively
small amount of debt in place, which the Reorganized Debtor will be able to
service from operational cash flow. By offering the holders of the Note Claims a
substantial portion of the New Issued Common Stock of the Debtor on a
post-restructuring basis, these holders will participate in the long term growth
and appreciation of the Debtor's business, which is expected to be enhanced by
the significant reduction of its debt service obligations and the business plan
described in more detail below.

B.       THE DEBTOR'S BUSINESS AND ORGANIZATIONAL STRUCTURE.

         1.       HOLDING COMPANY STRUCTURE.

         The Debtor is a holding company which, through its subsidiaries in the
United States, Brazil, France, and Argentina, is a trusted provider of secure
printed documents, printed and personalized secure and non-secure transaction
and identification cards and systems, and a wide array of document management
and transaction services and solutions. The Debtor provides its customers in the
private and public sectors with products and services that incorporate
anti-fraud and counterfeit resistant facilities, processes and technologies. The
Debtor operates and manages its business based on geographic location in a
single industry along three principal product lines: Transaction Cards and
Systems; Printing Services and Document Management; and Security Printing
Solutions.

         The Debtor's principal subsidiaries are: American Bank Note Company
("ABNCO") a New York Corporation (and the Debtor's domestic operating
subsidiary), American Bank Note Ltd. ("ABNB"), a 77.5% owned Brazilian company,
CPS Technologies, S.A. ("CPS"), a French company, and Transtex S.A.
("Transtex"), an Argentine company.

         The Debtor was incorporated in 1993 in Delaware as United States
Banknote Corporation and changed its name on July 1, 1995 to American Banknote
Corporation. ABNCo, the Debtor's wholly-owned domestic subsidiary, and ABNCo's
predecessors have been in the business of providing security documents for more
than 200 years.

         ONLY THE DEBTOR IS THE SUBJECT OF THIS CHAPTER 11 CASE. NONE OF THE
DEBTOR'S SUBSIDIARIES IS A DEBTOR UNDER THE BANKRUPTCY CODE. THE FINANCIAL
VIABILITY AND BUSINESS OF THE DEBTOR IS WHOLLY DEPENDENT UPON THE BUSINESSES OF
ITS SUBSIDIARIES. THE FOLLOWING DISCUSSION OF THE DEBTOR'S OPERATIONS REFERS TO
THE OPERATIONS OF ITS NON-DEBTOR SUBSIDIARIES.

         2.       REALIGNMENT OF OPERATIONS.

         During the past several years, the Debtor has undergone several major
restructurings of its operations and has made strategic decisions to (i)
restructure, consolidate, and reduce its manufacturing costs, (ii) diversify and
expand its products and services in the major geographic regions where it
conducts business, (iii) package complete "end-to-end" transaction, printing
fulfillment and distribution solutions, products and services to retain and grow
market share, and (iv) create strategic joint ventures and alliances with
partners who provide strong technology and/or value added products that are
complementary to its business. These restructurings and strategic decisions were
directed at reducing the Debtor's reliance on maturing product lines which have
been declining, in favor of new products and services with growth potential
albeit at significantly lower gross margins.

                                       8
<PAGE>

         3.       REGIONAL OPERATIONS.

                  a.       United States.

         A provider of secure documents and transaction services of value, ABNCo
operates principally within the Debtor's security printing solutions product
line. ABNCo offers a full range of security printing solutions to a wide array
of government, corporate, and commercial accounts. In addition to secure base
printing, ABNCo offers its customers a wide variety of core competencies,
including but not limited to secure storage, direct fulfillment, distribution,
personalization, accountability, and inventory and database management. ABNCo
principally sells its products in the U.S. markets, but from time to time sells
into foreign markets particularly in parts of Latin America, Eastern Europe, and
certain developing countries. Over the past several years ABNCo has restructured
and streamlined its operations in an attempt to discontinue negative margin
product lines and to reduce its cost structure to a level more appropriate to
its remaining business. Over the past three years, however, ABNCo has
experienced a significant decline in demand for its mature high margin product
lines (particularly stock and bond certificates and food coupons) and has been
unable, thus far, to find a sufficient number of opportunities in lower margin
product lines to fully offset the significant decline.

                  b.       Brazil.

         In 1993, the Debtor acquired ABNB, currently the largest private-sector
security printer and manufacturer of transaction cards in Brazil. ABNB is also
one of the main providers of stored-value telephone cards to many telephone
companies in Brazil. ABNB provides a wide variety of document management systems
and solutions, and related services, to many of the largest corporate,
financial, and government institutions in Brazil. Over 95% of ABNB's sales are
in Brazil. The Debtor owns 77.5% of ABNB, with the balance owned by a subsidiary
of the Bradesco Group, Brazil's largest privately owned commercial bank. ABNB is
the Debtor's largest subsidiary, contributing more than half of the revenues,
operating profit and cash flow of the consolidated group. Currency devaluation
has severely impacted ABNB's cash flow in U.S. Dollar terms, and has therefore
threatened and continues to be a threat to its ability to send dividends to the
Debtor at the same levels as in the past. ABNB produces products in all three of
the Debtor's product lines.

                  c.       France.

         In March 1998, the Debtor acquired CPS, a secure card personalization
facility. CPS operates within the Debtor's Transaction Cards and Systems product
line. All sales are generated locally in France. CPS is one of the largest
personalizers of prepaid telephone, bank and other financial cards.

         Through 2003, CPS had supplied prepaid phone cards under a supply
agreement with a local telephone company which was completed in 2003. In 2003,
the local telephone company requested a tender for a global supply agreement
from qualified bidders. CPS was not one of the awarded bidders in this tender.


                                       9
<PAGE>

Simultaneous with the phone company's decision, CPS determined to suspend its
activities in prepaid phone cards, due to exceptionally low margins in that
product line. While sales and gross margins on these phone cards are not
material on a consolidated basis, they represent a significant component of the
operating income of CPS.

         In April 2003, CPS entered into a joint venture with a local partner in
Morocco to establish a card personalization bureau. CPS has a fifty percent
controlling interest in the joint venture and is providing technical expertise
with a small capital contribution. There have been no significant operating
activities from the joint venture in 2003.

                  d.       Argentina.

         In April 1999, the Debtor acquired Transtex, Argentina's leading
manufacturer of transaction cards including debit, credit, telephone and smart
cards for a total cash purchase price of approximately $15.5 million. Transtex
maintains a sales office in Chile, where the Debtor is also the leading supplier
of secure transaction cards. It also maintains a representative sales office in
Peru. Transtex operates within the Debtor's Transaction Card and Systems product
line. Transtex principally sells its products within the three countries
mentioned above but also services several other countries in South America.

         4.       PRODUCT LINES.

         Through its subsidiaries, the Debtor serves its customers in the
regions where it does business through three principal product lines:
Transaction Cards and Systems, Printing Services and Document Management, and
Security Printing Solutions. The Debtor manages and oversees these product lines
on a country-by-country basis.

                  a.       Transaction Cards and Systems.

         The Debtor is a leading supplier of a wide range of transaction cards,
products, and systems in the Brazilian and Argentine markets. In France, CPS is
one of the largest personalizers of bank and other financial cards. The Debtor
continues to expand and improve its production and service capabilities to
capitalize on the trend toward cashless financial transactions. These products
primarily include: (i) stored-value and prepaid cards, (ii) transaction cards
and personalization services, (iii) licenses and issuance systems, and (iv)
micro-chip imbedded "smart-card" applications.

                  b.       Printing Services and Document Management.

         In Brazil, the Debtor's Printing Services and Document Management
business allows public and private sector institutions to outsource their
printing, personalization and document processing operations. Utilizing advanced
inventory control systems, e-commerce solutions and "just-in-time" distribution
capabilities, the Debtor helps businesses and governmental institutions
effectively lower costs by supplying all of their printing, storage, processing,
system, and distribution needs.

                                       10
<PAGE>

         The Debtor is a full service provider of electronic printing
applications to a number of its corporate and government customers. Electronic
printing applications encompass the secure data handling, electronic printing,
personalization and mailing of documents for large-scale essential mail document
cycles. This process involves the computerized printing of an array of variable
data onto pre-printed base stock. Some of the primary applications are billing
and fund collection systems, check and credit card statements, letter checks and
invoices. In Brazil, the Debtor provides electronic printing application
services for institutions in the banking, insurance, utilities and
telecommunication industries, as well as for a number of state and federal
government agencies.

         The Debtor prints products such as business forms and checks and
provides storage and distribution services to the end user on behalf of its
customers. In Brazil, ABNB performs print and document management and
distribution services for leading financial institutions.

         In December 2005, ABNB became a member of a consortium (which includes
eight other companies) which was contracted by Empresa Brasilera de Correios e
Telegrafos (the Brazilian Post Office) initially to develop, and later to
provide products and services related to an integrated solution for the
decentralized production, processing and delivery of documents. This project,
commonly known as the Hybrid Mail, is intended to change the way time-sensitive
documents (such as invoices and statements) are printed and distributed
throughout Brazil. Through the creation of a network of multiple printing sites
across the country, the Hybrid Mail is meant to permit banks, utilities, and
credit card companies to print documents close to their final destination in
order to reduce delivery times and postal fees.

                  c.       Security Printing Solutions.

         The Debtor supplies counterfeit-resistant documents of value in the
United States and Brazil. Such documents include checks, money orders,
passports, stock and bond certificates, and other commercial documents of value
such as gift certificates. The Debtor utilizes a variety of anti-counterfeiting
features such as special inks and papers, computer generated bar and micro
encoding, elaborate steel-engraved designs, and distinctive lithographic
printing techniques, all of which enable the Debtor to manufacture products
containing state-of-the-art security features. As an additional security
feature, many of the Debtor's manufacturing, storage and distribution facilities
employ high levels of plant security, including guards, alarms, video
monitoring, and extensive accountability controls.

         Government products manufacturing by the Debtor include a variety of
security documents printed for federal, state and local governments throughout
the world. The Debtor manufactures food coupons, passports, visas, tax revenue
stamps, property tax vouchers, postal panels, gas coupons, and similar products
for federal governments. The Debtor also supplies secure documents such as motor
vehicle registrations, title certificates and licenses, birth certificates,
identity cards, and transportation passes for its government customers. The
Debtor, through ABNCo, also acts as the secure distribution and accountability
agent for the United States Postal Service ("USPS") for its Stamps on
Consignment Program, delivering stamps to private retailers throughout the
United States. In 2002, the USPS replaced the United States Department of
Agriculture ("USDA") as the Debtor's and ABNCo's largest single domestic
customer, pursuant to a three-year requirements contract with two additional
option years.

                                       11
<PAGE>

         Until 2002, the USDA was the Debtor's and ABNCo's largest single
domestic customer, for which ABNCo has printed, stored and distributed food
coupon requirements for more than twenty years. Food coupons are engraved
printed documents accepted by grocery stores in lieu of cash. ABNCo was orally
notified by the USDA, during the third quarter of 2002, that it did not
anticipate the need to place any further purchase orders for the production of
food coupons for the remainder of the term of its requirements contract with
ABNCo, which expired on September 30, 2003. In the third quarter of 2003, the
USDA gave ABNCo final notification and delivery instructions for the remaining
food coupons held in secure storage by ABNCo pursuant to its distribution
contract with the USDA which expired on September 30, 2003. The reduction in
operating margins from the loss of food coupon sales has had a direct and
significant effect on the cash flow of ABNCo as well as the level of dividends
that are available to the Debtor.

         5.       MAJOR CUSTOMERS.

         The Debtor derived $18.2 million for 2003, $17.6 million for 2002 (both
successor and predecessor companies combined) and $24.5 million for 2001, or
approximately 8.2%, 8.7% and 11.1%, respectively, of total consolidated revenue
from the Bradesco Group under a supply contract, which was recently renewed.
Bradesco Vida e Previdencia S.A. ("Bradesco"), a subsidiary of the Bradesco
Group, owns a 22.5% minority shareholder interest in ABNB. The Debtor has
supplied products to Bradesco under multi-year supply arrangements since 1995.

         6.       PATENTS.

         The Debtor may presently hold, or is licensed under, United States and
foreign patents, trademarks and copyrights and continues to pursue protection
when available in strategic markets. However, the Debtor believes that no one
patent, license, trademark, or copyright is critical to its business, and that
if one expired or became unavailable there would be no material adverse effect
to the Debtor's financial position, results of operation, or cash flow.

         7.       EMPLOYEES.

         As of December 31, 2003, the Debtor and its subsidiaries had
approximately 2,950 employees consisting of 2,590 manufacturing employees, 220
plant administration and sales personnel and 140 executive, corporate and
administrative personnel. Approximately 59% of Transtex's employees and all of
ABNB's employees are represented by labor unions. None of the Debtor's or CPS'
employees are represented by labor unions. The Debtor's future profitability
will depend, in part, on its ability to maintain satisfactory relationships with
labor unions and employees and in avoiding strikes and work stoppages. The
Debtor considers its employee relations to be good.

         The Debtor employs 8 people directly. None of the Debtor's employees
are represented by labor unions.

         8.       MANAGEMENT.

         The following is a list of the Debtor's executive officers who are
expected to continue in their positions with the Reorganized Debtor:

                                       12
<PAGE>

     NAME                                           POSITION
     ----                                           --------
Steven G. Singer                       Chairman of the Board and Chief Executive
                                       Officer

Patrick J. Gentile                     Executive Vice President and Chief
                                       Financial Officer

David M. Kober                         Vice President and General Counsel

Craig Weiner                           Acting Treasurer

Elaine Lazaridis                       Corporate Secretary and Chief
                                       Administrative Officer

         As of the Petition Date, the Debtor's Board of Directors was composed
of:

     NAME                                         POSITION
     ----                                         --------
Steven G. Singer                       Chairman of the Board of Directors

C. Gerald Goldsmith                    Chairman Emeritus and Director

Sidney Levy                            Director

Raymond L. Steele                      Director

Lloyd I. Miller, III                   Director

James Dondero                          Director

Steven Van Dyke                        Director

         9.       ENVIRONMENTAL MATTERS.

         The Debtor uses and disposes of substances that may be toxic or
hazardous substances under applicable environmental laws. Management believes
that its compliance with such laws has not had, and will not have, a material
effect on its capital expenditures, earnings, financial, or competitive
position. The Debtor and its subsidiaries were involved in several civil and
Environmental Protection Agency claims as one of many co-defendants arising in
the ordinary course of business. Each of these disputes has been settled.

C.       THE PRIOR CHAPTER 11 CASE.

         On December 8, 1999, the Debtor filed its first Chapter 11 petition
(the "First Bankruptcy"), case number 99-11577-pcb, in the Bankruptcy Court for
Southern District of New York (the "NY Bankruptcy Court"). The reason given by
the Debtor for its First Bankruptcy filing was that its "funds [were]
insufficient to meet all of its debt servicing requirements." On December 8,
1999, the Debtor filed a plan of reorganization and disclosure statement in the
First Bankruptcy. None of the Debtor's affiliates or subsidiaries filed
bankruptcy petitions in the First Bankruptcy. On April 12, 2002, an Official
Committee of Equity Security Holders was appointed in the Debtor's First
Bankruptcy.

                                       13
<PAGE>

         On September 12, 2000, the Debtor's amended disclosure statement with
respect to its fourth amended plan of reorganization was approved by the NY
Bankruptcy Court. On August 22, 2002, the NY Bankruptcy Court entered an order
confirming ABN's Fourth Amended Plan of Reorganization (the "2002 Plan"). The
New York Bankruptcy Court entered an order closing the Debtor's First Bankruptcy
on January 12, 2005.

D.       OUTSTANDING SECURITIES.

         1.       10 3/8% SENIOR NOTES.

         The Debtor presently has approximately $108 million outstanding under
the Notes,(3) which mature on January 31, 2005. These Notes are secured by a
pledge of the equity in certain of the Debtor's subsidiaries. These Notes were
restructured pursuant to the Debtor's 2002 Plan, under which $56.5 million
principal amount of Notes due June 1, 2002 were reinstated at par value, with
accrued interest and a two percent consent fee paid in the form of additional
Notes, which in total aggregated approximately $79.0 million of such Notes.
Under the 2002 Plan, the Debtor also agreed to exchange approximately $8.0
million principal amount of its 11 5/8% Notes due August 1, 2002, which with
accrued interest and consent fees aggregated approximately $12.6 million. As a
result, on the effective date of the 2002 Plan, the total amount of Notes was
$91.6 million. Interest payments on the Notes after the effective date of the
2002 Plan, which occurred semi-annually on December 1, 2002, June 1, 2003,
December 1, 2003, June 1, 2004 and December 1, 2004 have been paid in kind at
the Debtor's option in accordance with its rights under the Notes Indenture.

         Pursuant to the Debtor's announcement in its 8-K filed October 16,
2002, the Debtor's Board of Directors authorized the Debtor to repurchase up to
$15 million face amount of the Notes from time to time at a discount to par
value following the effective date of the 2002 Plan. The Notes were repurchased
at management's discretion, either in the open market or in privately negotiated
block transactions. The decision to buy back any Notes was dependent upon the
availability of cash at the Debtor and other corporate developments. On June 26,
2003, management made a determination to terminate the repurchase program as a
result of its current cash flow concerns.

         On July 15, 2004, the Debtor's Board of Directors approved a resolution
to authorize the Debtor to repurchase from time to time, at the discretion of
management, directly or through one or more of its subsidiaries up to $5 million
face amount of its outstanding Notes at a discount to par value in either open
market or privately negotiated transactions.

         In 2003, the Debtor in total purchased through privately negotiated
transactions, approximately $6.3 million face amount of Notes for an aggregate
purchase price of approximately $2.9 million. The Debtor recorded a gain of
approximately $3.4 million on the repurchase of the Notes reflecting the
difference between the face amount and the purchase price.


---------------

3   The actual amount outstanding is approximately $118 million, but of that
    amount $10.1 million is held by ABN. Accordingly, the amount held by third
    party creditors is approximately $108 million.

                                       14
<PAGE>

         In the third quarter of 2004, the Debtor in total purchased through
privately negotiated transactions, approximately $0.9 million face amount of
Notes for an aggregate purchase price of approximately $0.6 million. The Debtor
recorded a gain of approximately $0.3 million on the repurchase of these bonds
reflecting the difference between the face amount and the purchase price.

         2.       OLD COMMON STOCK.

         Pursuant to the 2002 Plan, 11,828,571 shares of Old Common Stock were
issued, which included 1,428 shares of Old Common Stock issued pursuant to a
rights offering. Each share of Common Stock represents one voting right and the
Old Common Stock does not have any pre-emptive rights. Dividends on the Old
Common Stock are payable solely at the discretion of the Board of Directors and
are restricted pursuant to the terms of the Notes Indenture.

E.       EVENTS LEADING TO THE FILING OF THIS CHAPTER 11 CASE.

         1.       PRE-PETITION DEVELOPMENTS.

         Over the past two (2) years since the consummation of the 2002 Plan,
the Debtor has been unable to generate sufficient cash flow from operations to
either amortize or service its Notes due January 31, 2005. This factor combined
with the Debtor's limited access to capital and financial markets for the
purpose of obtaining new financing or raising equity to refinance these Notes
has required the Debtor to seek this current restructuring. The Debtor has been
plagued by several unfavorable economic factors most notable of which are: (i)
the high degree of dependence on its Brazilian operations, which operates in a
highly volatile economic environment that has caused significant foreign
currency exchange rate variations and thereby directly impacted cash dividends
available to be repatriated to the Debtor, (ii) declining markets at ABNCo in
the United States as a result of diminishing overall demand for secure
paper-based documents of value and ABNCo's inability to find sufficient new
opportunities to completely offset this decline, (iii) competitive pricing and
the loss of market share in France, and (iii) the political and economic
instability that has occurred in Argentina which has resulted in tight credit
markets and left uncertainty as to the ongoing stability of the Debtor's
Argentine operations.

         2.       NEGOTIATIONS WITH THE AD HOC COMMITTEE.

         Prior to the filing of the Chapter 11 Case, the Debtor concluded that a
financial restructuring of its business through the Chapter 11 process was
necessary. Over several months prior to the Petition's Date, the Debtor engaged
in intensive discussions with an AD HOC prepetition committee of holders of the
Notes. The members of the AD HOC Committee are Bay Harbour 90-1 Ltd., Highland
Capital Management L.P., Bay Harbour Partners, Ltd., D Quant Fund LLC, Trophy
Hunter Investments, Ltd., Steven Van Dyke, Ann Van Kyke, Lloyd I. Miller, Lloyd
I. Miller Pension Plan, Lloyd I. Miller IRA, Milfam II, L.P., Milfam LLC, Dail
E. Miller IRA, Dorothy Miller, Kimberley S. Miller Trust, Remus Holdings LLC,


                                       15
<PAGE>

Castor Investment, LLC, Pollux Investments LLC and Singer Children's Management
Trust. The AD HOC Committee has advised the Debtor that such members
collectively hold in excess of 70% of the Notes and substantial portion of the
Old Common Stock of the Debtor. As a result of these discussions between the
Debtor and the AD HOC Committee, the Debtor and the AD HOC Committee have agreed
to the terms of a pre-arranged plan of reorganization for the Debtor attached
hereto as EXHIBIT A.

         Prior to the Petition Date, the AD HOC Committee worked with the Debtor
in preparing the Plan and Disclosure Statement. The AD HOC Committee has
indicated that it supports the Plan.

         Affiliates of the members of the AD HOC Committee, are members of ABN's
Board of Directors, including: Steven Singer, Lloyd Miller III, James Dondero
and Steven Van Dyke.

F.       PURPOSES AND EFFECTS OF THE PLAN.

         The primary purposes of the Plan are to reduce the Debtor's debt
service requirements and overall level of indebtedness, to realign its capital
structure, and to provide it with the flexibility to amortize a portion of its
new indebtedness while continuing to provide the necessary capital to reinvest
and grow its business. If consummated, the Plan would exchange the principal
amount of the Debtor's indebtedness for New Issued Common Stock. In addition,
the Debtor would exchange a smaller amount of the Notes for New Notes. An
ancillary purpose of the Plan is to reduce the number of holders of New Issued
Common Stock below 300 so that the Reorganized Debtor can elect to become a
private company. The Reorganized Debtor will benefit from being a private
company as its costs will be significantly reduced. In particular, the
Reorganized Debtor's will be able to reduce the costs associated with financial
reporting, audits, directors' and officers' insurance, compliance with federal
securities laws, etc.

         As stated above, the Debtor does not have access to sufficient cash to
repay the Notes on January 31, 2005. The current Plan addresses this problem,
and, provides for adequate debt servicing of the New Notes. As a result, the
Debtor will have adequate future liquidity and the long term relief it requires
to reinvest back into its business.

               III. SIGNIFICANT EVENTS DURING THE CHAPTER 11 CASE

A.       CONTINUATION OF BUSINESS.

         The Debtor filed its petitions for relief on January 19, 2005.
Subsequent to the Petition Date, the Debtor has continued to operate as a debtor
in possession subject to the supervisions of the Bankruptcy Court.

B.       FIRST DAY ORDERS.

         On or about the Petition Date, the Debtor submitted to the Bankruptcy
Court, a number of "first day orders," along with supporting applications and
affidavits. On January 21, 2005, the Bankruptcy Court entered the following
orders:

         1.       Debtor's Motion for an Order Pursuant to ss.ss. 327 and 328 of
                  the Bankruptcy Code and Federal Rule of Bankruptcy Procedure
                  2014 Appointing MacKenzie Partners, Inc. as Balloting Agent to
                  the Debtor and Debtor in Possession.

                                       16
<PAGE>

         2.       Debtor's Motion for an Order Pursuant to 28 U.S.C. ss. 156(c)
                  Authorizing the Retention of BMC Group, Inc. as Claims and
                  Noticing Agent of the Bankruptcy Court.

         3.       Debtor's Motion for an Order Pursuant to 11 U.S.C. ss.ss.
                  105(a), 345, 363, 1007 and 1108 Authorizing Maintenance of
                  Existing Bank Accounts, Business Forms and Cash Management
                  System and Interim Order Waiving the Deposit and Investment
                  Requirements Under 11 U.S.C. ss. 345.

         4.       Debtor's Motion for an Order Pursuant to 11 U.S.C. ss.ss.
                  105(a), 363(b), 507(a)(3) and 507(a)(4), Authorizing the
                  Debtor to Pay and Honor in the Ordinary Course of Business
                  Pre-Petition Wages, Compensation and Employee Benefits and
                  Deductions.

         5.       Debtor's Motion for an Order Pursuant to Federal Rule of
                  Bankruptcy Procedure 3003(c)(3) Fixing a Deadline for the
                  Filing of Proofs of Claim and Approving the Form and Manner of
                  Notice Thereof.

C.       RETENTION OF PROFESSIONALS.

         The Debtor requested that the Bankruptcy Court enter, among others, the
following: (i) Order Authorizing the Retention of Andrews Kurth LLP as
Co-Counsel to Debtor-in-Possession, (ii) Order Authorizing the Retention of
Cooch and Taylor as Co-Counsel to Debtor-in-Possession, and (iii) Order
Authorizing the Retention of Friedman LLP as Auditors to the Debtor and
Debtor-in-Possession. The Bankruptcy Court subsequently approved those requests.

D.       CLAIMS BAR DATE.

         On January 24, 2005, the Bankruptcy Court entered an order (the "Bar
Date Order") requiring any person or entity, with certain limited exceptions,
holding or asserting a claim against the Debtor to file a written proof of claim
on or before 4:00 p.m. Delaware time on March 21, 2005 (the "Bar Date"). The Bar
Date Order provides that any person or entity which fails to timely file a proof
of claim will be forever barred, estopped and enjoined from voting on, or
receiving a distribution under the Plan and will be forever barred, estopped and
enjoined from asserting a claim against the Debtor or its estates.

E.       STATUTORY COMMITTEE.

         The United States Trustee has not appointed a Committee of Unsecured
Creditors in this Chapter 11 Case.

                         IV. THE PLAN OF REORGANIZATION

         The Debtor believes that (i) through the Plan, holders of Claims and
Equity Interests will obtain a greater recovery from the Debtor's estate than
the recovery which would be available if the Debtor's assets were liquidated
under Chapter 7 of the Bankruptcy Code, and (ii) the Plan will afford the Debtor
the opportunity and ability to continue in business as a viable going concern.

                                       17
<PAGE>

         The Plan is annexed hereto as EXHIBIT A and forms a part of this
Disclosure Statement. The summary of the Plan set forth below is qualified in
its entirety by reference to the more detailed provisions set forth in the Plan.

         THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT INCLUDE SUMMARIES
OF THE PROVISIONS CONTAINED IN THE PLAN AND IN DOCUMENTS REFERRED TO THEREIN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE
PRECISE OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE PLAN OR
DOCUMENTS REFERRED TO THEREIN, AND REFERENCE IS MADE TO THE PLAN AND TO SUCH
DOCUMENTS FOR THE FULL AND COMPLETE STATEMENTS OF SUCH TERMS AND PROVISIONS.

         THE PLAN ITSELF AND THE DOCUMENTS REFERRED TO THEREIN CONTROL THE
ACTUAL TREATMENT OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR UNDER THE
PLAN AND WILL, UPON OCCURRENCE OF THE EFFECTIVE DATE, BE BINDING UPON ALL
HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR, ITS ESTATE, THE
REORGANIZED DEBTOR ALL PARTIES RECEIVING PROPERTY UNDER THE PLAN, AND OTHER
PARTIES IN INTEREST. IN THE EVENT OF ANY CONFLICT BETWEEN THIS DISCLOSURE
STATEMENT, ON THE ONE HAND, AND THE PLAN OR ANY OTHER OPERATIVE DOCUMENT, ON THE
OTHER HAND, THE TERMS OF THE PLAN AND/OR SUCH OTHER OPERATIVE DOCUMENT WILL
CONTROL.

A.       CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS.

         Under the Plan, Claims against and Equity Interests in the Debtor are
divided into different Classes. Only certain Allowed Claims and Allowed Equity
Interests are entitled to receive distributions under the Plan. The following is
a description of the Plan's treatment of Claims against and Equity Interests in
the Debtor.

         1.       UNCLASSIFIED CLAIMS.

                  a.       Administrative Expense Claims.

         Administrative Expense Claims are Claims constituting any right to
payment of a cost or expense of administration of the Chapter 11 Case allowed
under sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without
limitation, (a) any actual and necessary costs and expenses of preserving the
Debtor's estate, (b) any actual and necessary costs and expenses of operating
the Debtor's business during the Chapter 11 Case in the ordinary course of
business, (c) any indebtedness or obligations incurred or assumed by the Debtor
in Possession during the Chapter 11 Case in the ordinary course of business, (d)
any allowances of compensation and reimbursement of expenses to the extent
allowed by Final Order under section 330 or 503 of the Bankruptcy Code, and (e)
any fees or charges assessed against the Debtor's estate under section 1930,
title 28, United States Code.

                                       18
<PAGE>

         On the Distribution Date, except as otherwise provided in the Plan,
each holder of an Allowed Administrative Claim will receive, in full
satisfaction, settlement, release, and discharge of and in exchange for such
Allowed Administrative Claim (a) Cash equal to the unpaid portion of such
Allowed Administrative Claim or (b) such other treatment as to which the Debtor
and such holder have agreed upon in writing; PROVIDED, HOWEVER, that Allowed
Administrative Claims with respect to liabilities incurred by the Debtor in the
ordinary course of business during the Chapter 11 Case will be paid in the
ordinary course of business in accordance with the terms and conditions of any
agreements relating thereto.

                  b.       Priority Tax Claims.

         Priority Tax Claims are those Claims of a governmental unit of the kind
entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of
the Bankruptcy Code.

         Each holder of an Allowed Priority Tax Claim will receive, at the sole
discretion of the Debtor and in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed Priority Tax Claim, in the sole
discretion of the Debtor, (a) Cash equal to the unpaid portion of such Allowed
Priority Tax Claim on the Distribution Date, (b) deferred Cash payments over a
period not exceeding six (6) years after the date of assessment of such Allowed
Priority Tax Claim in an aggregate principal amount equal to the amount of such
Allowed Priority Tax Claim, plus interest on the unpaid portion thereof, as
provided in section 1129(a)(9)(C) of the Bankruptcy Code, or (c) such other
treatment as to which the Debtor and such holder have agreed upon in writing.

         2.       CLASSES OF CLAIMS.

                  a.       Class 1 - Other Priority Claims.

         The Other Priority Claims are those Claims other than an Administrative
Claim or a Priority Tax Claim, entitled to priority in payment under section
507(a) of the Bankruptcy Code.

         On the Distribution Date, each holder of an Allowed Class 1 Other
Priority Claim will receive, in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed Class 1 Other Priority Claim, in
the sole discretion of the Debtor, either (a) Cash equal to the unpaid portion
of such Allowed Class 1 Other Priority Claim or (b) such other treatment as to
which Debtor and such holder will have agreed upon in writing.

                  b.       Class 2 - Miscellaneous Secured Claims.

         Class 2 consists of Claims, other than Class 3 (Note Claims) and Class
4 (Note Convenience Claims) secured by a Lien on Collateral but only to the
extent of the value of such Collateral (a) as set forth in the Plan, (b) as
agreed to by the holder of such Claim and the Debtor, or (c) as determined by a
Final Order in accordance with section 506(a) of the Bankruptcy Code or, in the
event that such Claim is subject to setoff under section 553 of the Bankruptcy
Code, to the extent of such setoff.

         On the Distribution Date, with respect to each Allowed Class 2
Miscellaneous Secured Claim, (i) the Debtor or Reorganized Debtor shall Cure any
default with respect to such Claim that occurred before or after the Petition
Date, (ii) the maturity of such Claim shall be Reinstated as such maturity


                                       19
<PAGE>

existed before any such default, (iii) the holder of such Claim shall be
compensated for any damages incurred as a result of any reasonable reliance by
the holder on any right to accelerate its Claim, and (iv) the legal, equitable
and contractual rights of such holder will not otherwise be altered.

                  c.       Class 3 - Note Claims.

         Class 3 consists of Claims, other than Note Convenience Class Claims,
by a holder of the Notes arising from or under the Notes.

         On the Distribution Date, each holder of an Allowed Class 3 Note Claim
will receive, in full satisfaction, settlement, release, and discharge of and in
exchange of such Allowed Note Claim its Ratable Portion of the Class 3
Distribution.

                  d.       Class 4 - Note Convenience Claim.

         Class 4 consists Claims arising from or under the Notes equal to or
less than $45,000.00.

         On the Distribution Date, each holder of an Allowed Class 4 Note
Convenience Claim will receive, in full satisfaction, settlement, release and
discharge of and in exchange for such Allowed Note Convenience Claim, at such
holders' election: (a) Cash in an amount equal to sixty percent (60%) of such
holder's Allowed Class 4 Note Convenience Claim, or (b) New Notes equal to one
hundred percent (100%) of the holder's Claim.

         IF A HOLDER OF AN ALLOWED CLASS 4 NOTE CONVENIENCE CLAIM FAILS TO MAKE
AN ELECTION IN ACCORDANCE WITH THE FOREGOING SENTENCE, SUCH HOLDER SHALL BE
DEEMED TO HAVE ELECTED TO RECEIVE THE TREATMENT SET FORTH IN SECTION 4.4(A) OF
THE PLAN.

                  e.       Class 5 - Miscellaneous Unsecured Claims.

         Class 5 consists of each Claim against the Debtor that is not an
Administrative Claim, Priority Tax Claim, Other Priority Claim, Miscellaneous
Secured Claim, Note Claim, Note Convenience Claim, or SERP Claim.

         On the Distribution Date, each holder of an Allowed Miscellaneous Class
5 Unsecured Claim will be paid in full in Cash; PROVIDED HOWEVER, that Allowed
Miscellaneous Class 5 Unsecured Claims with respect to liabilities incurred by
the Debtor in the ordinary course of business will be paid in the ordinary
course of business in accordance with the terms and conditions of any agreements
relating thereto.

                  f.       Class 6 - SERP Claims.

         Class 6 consists of the obligations arising from any non-qualified
supplemental executive retirement plan of the Debtor that remain outstanding as
of the filing of the Plan.

                                       20
<PAGE>

         On the Distribution Date, each holder of an Allowed Class 6 SERP Claim
will receive in full satisfaction, settlement, release and discharge of and in
exchange for such Allowed SERP Claim, the Class 6 Distribution.

                  g.       Class 7 - Equity Interests.

         Class 7 consists of the interests of any holder of equity securities of
the Debtor represented by any issued and outstanding shares of Old Common Stock.

         All Equity Interests will be cancelled on the Effective Date, and on
the Distribution Date, each holder of an Allowed Class 7 Equity Equity, other
than DE MINIMIS Interest Holders, will receive, in full satisfaction,
settlement, release, and discharge of and in exchange for its Allowed Class 7
Equity Interests, its Ratable Portion of the Class 7 Distribution.

                  h.       Class 8 - DE MINIMIS Equity Holders

         Class 8 consists of the Equity Interests of any person holding between
one and 500,000 shares of Old Common Stock.

         All Equity Interests held by DE MINIMIS Equity Holders will be
cancelled on the Effective Date, and on the Distribution Date, each DE MINIMIS
Equity Holder will receive, in full satisfaction, settlement, release, and
discharge of and in exchange for its Allowed Equity Interests, its Ratable
Portion of the Class 8 Distribution.

         THE DISTRIBUTIONS TO HOLDERS OF CLASS 8 INTERESTS (DE MINIMIS EQUITY
HOLDERS) WILL BE OF AN EQUIVALENT VALUE TO THE DISTRIBUTIONS RECEIVED BY HOLDERS
OF CLASS 7 (EQUITY INTERESTS), EXCEPT THAT SUCH DISTRIBUTIONS WILL BE SOLELY IN
CASH.

                  i.       Class 9 - Other Equity Interests.

         Class 9 consists of any equity security (as defined in section 101(16)
of the Bankruptcy Code) of the Debtor, except Equity Interests and includes, but
is not limited to, warrants, options or any right, contractual or otherwise, to
acquire any Equity Interest.

         The Other Equity Interests will be cancelled on the Effective Date and
holders of Other Equity Interests will receive no distribution under the Plan.

B.       SECURITIES TO BE ISSUED UNDER THE PLAN.

         The issuance of the following securities by the Reorganized Debtor is
authorized without further act or action under applicable law, regulation, order
or rule: 10,000,000 shares of New Issued Common Stock, and the New Notes in the
aggregate amount of up to $11,000,000.

                                       21
<PAGE>

C.       MEANS OF IMPLEMENTATION.

         1.       DISTRIBUTIONS.

         On the Distribution Date the Reorganized Debtor shall make or cause to
be made to the holders of Allowed Claims and Allowed Equity Interests the
distributions provided in section 4 of the Plan. Disputed Claims shall be
resolved in accordance with section 9 of the Plan and, if a Disputed Claim
becomes an Allowed Claim by Final Order, distributions shall be made on account
of such Claim in accordance with section 8 of the Plan.

         2.       AUTHORIZATION TO ISSUE NEW SECURITIES.

         The issuance of the following securities by the Reorganized Debtor is
authorized without further act or action under applicable law, regulation, order
or rule: 10,000,000 shares of New Issued Common Stock, and the New Notes in the
aggregate amount of up to $11,000,000.

         3.       ISSUANCE OF NEW SECURITIES.

         The Amended Certificate of Incorporation shall initially authorize the
Reorganized Debtor to issue a total of up to 35,000,000 shares of New Issued
Common Stock. Additionally, the Reorganized Debtor will issue the New Notes in
the aggregate amount of up to $11,000,000.

         4.       STOCKHOLDERS' AGREEMENT.

         The Reorganized Debtors and the Exit Financing Parties and certain of
their affiliates shall enter into the Stockholders' Agreement on or prior to the
Effective Date.

         5.       CANCELLATION OF EXISTING SECURITIES AND AGREEMENTS.

         On the Effective Date, the Notes, the Notes Indenture, the Equity
Interests and Other Equity Interests shall be automatically cancelled and shall
be of no further force and effect, without any further act or action under any
applicable agreement, and the obligations of the Debtor and the Notes Indenture
Trustee shall be discharged, provided, however, that the Notes Indenture shall
continue in effect solely for the purposes of (i) allowing the holders of
Allowed Note Claims and Allowed Note Convenience Claims to receive their
distributions under the Plan, (ii) allowing the Notes Indenture Trustee to make
the distributions to be made on account of the Notes, and (iii) permitting the
Notes Indenture Trustee to assert its Charging Lien against such distributions
for payment of the Indenture Trustee Fees. The holders of, or parties to, such
canceled Notes, and other agreements and instruments shall have no rights
arising from or relating to such Notes, and other agreements and instruments or
the cancellation thereof, except the rights provided pursuant to the Plan.
Notwithstanding any provision contained in the Plan to the contrary, the
distribution provisions contained in the Notes Indenture shall continue in
effect to the extent necessary to authorize the Notes Indenture Trustee to
receive and distribute to the holders of Allowed Note Claims and Allowed Note
Convenience Claims, as applicable, distributions pursuant to the Plan on account
of Allowed Note Claims and Allowed Note Convenience Claims and shall terminate
completely upon completion of all such distributions.

                                       22
<PAGE>

         6.       AMENDED CERTIFICATE OF INCORPORATION.

         On the Effective Date or as soon as practicable thereafter, the
Reorganized Debtor shall file with the Secretary of State of Delaware, in
accordance with the DGCL, the Amended Certificate of Incorporation. On the
Effective Date, the Amended Certificate of Incorporation shall automatically
become effective, and all other matters provided under this Plan involving the
corporate structure of the Reorganized Debtor, or corporate action by it, shall
be deemed to have occurred and shall be in effect from and after the Effective
Date pursuant to section 303 of the DGCL without any requirement of further
action by the stockholders or the directors of the Reorganized Debtor,
including, without limitation, the approval of Stock Incentive Plan.

         7.       STOCK INCENTIVE PLAN.

         On the Effective Date, the Stock Incentive Plan shall be deemed
approved by Reorganized Debtor pursuant to section 303 of the DGCL without any
requirement of further action by the stockholders or the directors of the
Reorganized Debtor.

         8.       CORPORATE ACTION.

                  a. Board of Directors of Reorganized Debtor. On the Effective
Date, the operation of Reorganized Debtor shall become the general
responsibility of the Board of Directors of Reorganized Debtor, subject to, and
in accordance with, the Amended Certificate of Incorporation and the Amended
By-laws. The term of the directors of the Debtor immediately prior to the
Effective Date shall expire on the Effective Date and shall be replaced by the
Board of Directors of Reorganized Debtor.

                  b. Officers of Reorganized Debtor. The initial officers of
Reorganized Debtor are or shall be disclosed in the Disclosure Statement or an
amendment or supplement to the Disclosure Statement or such other filing as may
be made with the Bankruptcy Court. The selection of officers of Reorganized
Debtor after the Effective Date shall be as provided in its Amended Certificate
of Incorporation and Amended By-laws.

         9.       CONTINUED CORPORATE EXISTENCE.

         The Debtor shall continue to exist after the Effective Date as a
corporate entity, in accordance with Delaware law and pursuant to the Amended
Certificate of Incorporation and Amended By-laws. The Amended Certificate of
Incorporation and Amended By-laws shall satisfy the requirements of the Plan and
the Bankruptcy Code and shall include, among other things, pursuant to section
1123(a)(6) of the Bankruptcy Code, a provision prohibiting the issuance of
non-voting equity securities.

         10.      EXIT FINANCING.

         On the Effective Date, in accordance with the terms of the Exit
Financing Agreement, the Exit Financing Parties shall transfer $16,000,000 to
the Debtor in return for the Exit Financing Securities in the following amounts:

                                       23
<PAGE>

                                               Exit Financing        New Issued
                                                  Amount            Common Stock

Bay Harbour Partners, Ltd.                      $2,000,000              233,964
Lloyd I. Miller, III                            $2,000,000              233,964
Pollux Investments, LLC                         $2,000,000              233,964
Highland Capital Management L.P.               $10,000,000            1,169,822
                                               -----------            ---------
         TOTAL                                 $16,000,000            1,871,714

D.       PROVISIONS GOVERNING DISTRIBUTIONS.

         1.       DATE OF DISTRIBUTIONS.

         Unless otherwise provided in the Plan, any distributions and deliveries
to be made under the Plan shall be made on the Distribution Date. In the event
that any payment or act under the Plan is required to be made or performed on a
date that is not a Business Day, then the making of such payment or the
performance of such act may be completed on the next succeeding Business Day,
but shall be deemed to have been completed as of the required date.

         2.       DISBURSING AGENT.

         All distributions under the Plan shall be made by Reorganized Debtor as
Disbursing Agent or such other entity designated by Reorganized Debtor as a
Disbursing Agent, or the Notes Indenture Trustee on behalf of the holders of the
Note Claims and the Note Convenience Claims, as applicable, on the Distribution
Date. The Disbursing Agent and the Notes Indenture Trustee shall not be required
to give any bond or surety or other security for the performance of its duties
unless otherwise ordered by the Bankruptcy Court, and, in the event that a
Disbursing Agent or Notes Indenture Trustee is so otherwise ordered, all costs
and expenses of procuring any such bond or surety shall be borne by Reorganized
Debtor.

         3.       COMPENSATION OF PROFESSIONALS.

                  a. Each Professional retained or requesting compensation in
the Chapter 11 Case pursuant to section 327, 328, 330, 331, 503(b), or 1103 of
the Bankruptcy Code shall be required to file and serve an application for
allowance of final compensation and reimbursement of expenses in the Chapter 11
Case on or before ten (10) days after the Effective Date. Objections to any
application made under section 8.3 of the Plan shall be filed on or before
twenty (20) days after the Effective Date and served on the Reorganized Debtor,
the United States Trustee and the requesting Professional.

                  b. If no objection is filed and served with respect to a
Professional's request for compensation and reimbursement of expenses, such
Professional Fee Claim shall be paid by the Reorganized Debtor on the
twenty-fourth (24th) day after the Effective Date. Otherwise, such Professional
Fee Claim shall be paid by the Reorganized Debtor at such time as the objection
is resolved or settled by Final Order of the Bankruptcy Court.

                                       24
<PAGE>

                  c. On or prior to the Confirmation Date, each Professional
seeking compensation or reimbursement under section 327, 328, 330, 331, 503(b),
or 1103 of the Bankruptcy Code shall provide the Debtor with a written estimate
of the amount of its requested compensation and reimbursement through the
Effective Date. On the Effective Date, the Debtor shall establish the
Professional Claims Reserve in an amount equal to the aggregate amount of such
estimated compensation or reimbursements, unless otherwise previously paid by
the Debtor. The funds in the Professional Claims Reserve shall be used solely
for the payment of Allowed Professional Fee Claims. If a Professional fails to
submit an estimate of its fees in accordance with section 8.3(C) of the Plan,
the Reorganized Debtor shall not pay such Professional's Allowed Professional
Fee Claim from the Professional Claims Reserve but rather shall pay such claim
from any other source available to the Reorganized Debtor.

         4.       SURRENDER AND EXCHANGE OF NOTES CLAIMS.

                  a. All payments to holders of physical certificates (excluding
Notes held by the Depository Trust Company) evidencing Note Claims or Note
Convenience Claims shall only be made to such holders after (i) the surrender by
each such holder of the physical certificate evidencing the Note Claim or the
Note Convenience Claims, or in the event that such certificate is lost, stolen,
mutilated or destroyed, upon the holder's compliance with the requirements set
forth in Section 8.6 of the Plan. Upon surrender of the physical certificate
evidencing the Notes, the Notes Indenture Trustee shall cancel and destroy the
pertinent Notes. The Notes Indenture Trustee shall cause an exchange for the
Notes held by the Depository Trust Company. Upon implementation of the exchange,
the pertinent Notes shall be deemed cancelled. As soon as practicable after such
surrender or exchange, as applicable, the Notes Indenture Trustee and/or the
Disbursing Agent, as applicable, shall distribute to the holder thereof such
holder's distribution which the holder is entitled to under the Plan, but
subject to the rights of the Notes Indenture Trustee to assert its Charging Lien
against such distribution. Upon full satisfaction of the Indenture Trustee Fees,
the Charging Lien shall be released. Nothing herein shall be deemed to impair,
waive or discharge the Charging Lien for any unpaid fees and expenses.

                  b. Except as provided in Section 8.6 of the Plan for lost,
stolen, mutilated or destroyed Notes, each holder of an Allowed Notes Claim or
Allowed Notes Convenience Claim evidenced by a physical certificate shall tender
such certificate to the Notes Indenture Trustee in accordance with written
instructions to be provided in a letter of transmittal to such holders by the
Debtor as promptly as practicable following the Effective Date. Such letter of
transmittal shall specify that delivery of such certificate will be effected,
and risk of loss and title thereto will pass, only upon the proper delivery of
such certificate with the letter of transmittal in accordance with such
instructions. Such letter of transmittal shall also include, among other
provisions, customary provisions with respect to the authority of the holder of
the applicable certificate to act and the authenticity of any signatures
required on the letter of transmittal.

         5.       FAILURE TO SURRENDER.

         Any holder of a physical certificate (excluding Notes held by the
Depository Trust Company) evidencing Note Claims or Note Convenience Claims that
fails to surrender or be deemed to have surrendered such Note within 365 days of
the Effective Date, shall have its claim for a distribution on account of such


                                       25
<PAGE>

Notes discharged and shall be forever barred from asserting any such claim
against the Reorganized Debtor or its property or the Notes Indenture Trustee,
and shall not participate in any distribution hereunder, and the distribution
that would otherwise have been made to such holder shall be returned to the
Reorganized Debtor.

         6.       LOST, STOLEN, MUTILATED OR DESTROYED NOTES.

         Any holder of a physical certificate (excluding Notes held by the
Depository Trust Company) evidencing Note Claims or Note Convenience Claims that
claims its physical certificate has been lost, stolen, mutilated or destroyed
shall, in lieu of surrendering such Notes, deliver to the Notes Indenture
Trustee: (i) evidence satisfactory to the Notes Indenture Trustee of the loss,
theft, mutilation or destruction; and (ii) such reasonable indemnity as may be
required by the Notes Indenture Trustee to hold the Notes Indenture Trustee
harmless from any damages, liabilities or costs incurred in treating such
individual as a holder of Notes that has been lost, stolen, mutilated or
destroyed. Upon compliance with Section 8.6 of the Plan by a holder of a Notes
Claim evidenced by a physical certificate, such holder shall, for all purposes
under the Plan, be deemed to have surrendered its Notes.

         7.       DELIVERY OF DISTRIBUTIONS.

         All distributions to any holder of an Allowed Claim or Equity Interest
shall be made at the address of such holder as set forth on the Schedules filed
with the Bankruptcy Court or on the books and records of the Debtor or its
agents, unless the Debtor or Reorganized Debtor, as applicable, have been
notified in writing of a change of address, including, without limitation, by
the filing of a proof of claim or interest by such holder that contains an
address for such holder different from the address reflected on such Schedules
for such holder. In the event that any distribution to any holder is returned as
undeliverable, the Disbursing Agent and/or the Notes Indenture Trustee, as
applicable, shall use reasonable efforts to determine the current address of
such holder, but no distribution to such holder shall be made unless and until
the Disbursing Agent or the Notes Indenture Trustee, as applicable, has
determined the then current address of such holder, at which time such
distribution shall be made to such holder without interest; PROVIDED, HOWEVER,
that such distributions shall be deemed unclaimed property under section 347(b)
of the Bankruptcy Code at the expiration of ninety (90) days from the Effective
Date. After such date, all unclaimed property or interest in property shall
revert to Reorganized Debtor or the Notes Indenture Trustee, as applicable, and
the Claim of any other holder to such property or interest in property shall be
discharged and forever barred.

         As of the close of business on the Distribution Record Date, (i) the
transfer books and records of the Notes as maintained by the Notes Indenture
Trustee or its agent shall be closed, and (ii) any transfer of any Note after
the Distribution Record Date will not be recognized for purposes of
distributions under the Plan. The Reorganized Debtor and the Notes Indenture
Trustee shall have no obligation to recognize any transfer of any Note occurring
after the close of business on the Distribution Record Date, and shall instead
be entitled to recognize and deal for all purposes under this Plan with only
those holders of record as of the close of business on the Distribution Record
Date.

                                       26
<PAGE>

         8.       MANNER OF PAYMENT UNDER THE PLAN.

         At the option of the Disbursing Agent, any Cash payment to be made
hereunder may be made by a check or wire transfer or as otherwise required or
provided in applicable agreements.

         9.       FRACTIONAL SHARES.

         No fractional shares of New Issued Common Stock shall be distributed.
For purposes of distribution, fractional shares of New Issued Common Stock shall
be rounded down to the previous whole number.

         10.      SETOFFS AND RECOUPMENT.

         The Debtor may, but shall not be required to, setoff against, or recoup
from, any Claim or Equity Interest and the distributions to be made pursuant to
the Plan in respect of such Claim or Equity Interest, any claims of any nature
whatsoever that the Debtor may have against the claimant, but neither the
failure to do so nor the allowance of any Claim or Equity Interest hereunder
shall constitute a waiver or release by the Debtor of any such claim they may
have against such claimant.

         11.      DISTRIBUTIONS AFTER DISTRIBUTION DATE.

          Distributions made after the Date to holders of Disputed Claims that
are not Allowed Claims as of the Distribution Date but which later become
Allowed Claims shall be deemed to have been made on the Distribution Date.

         12.      RIGHTS AND POWErS OF DISBURSING AGENT.

                  a. Powers of the Disbursing Agent. The Disbursing Agent shall
be empowered to (i) effect all actions and execute all agreements, instruments,
and other documents necessary to perform its duties under the Plan, (ii) make
all distributions contemplated hereby, (iii) employ professionals to represent
it with respect to its responsibilities, and (iv) exercise such other powers as
may be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant
to the Plan, or as deemed by the Disbursing Agent to be necessary and proper to
implement the provisions hereof.

                  b. Expenses Incurred on or After the Effective Date. Except as
otherwise ordered by the Bankruptcy Court, the amount of any reasonable fees and
expenses incurred by the Disbursing Agent on or after the Effective Date
(including, without limitation, taxes) and any reasonable compensation and
expense reimbursement claims (including, without limitation, reasonable attorney
fees and expenses) made by the Disbursing Agent shall be paid in Cash by the
Reorganized Debtor in the ordinary course.

         13.      NOTES INDENTURE TRUSTEE'S FEES AND EXPENSES.

         The Notes Indenture Trustee shall be paid in Cash directly from the
Reorganized Debtor on the Distribution Date for the Indenture Trustee Fees
without the need for application to, or approval of, any court. The Notes
Indenture Trustee's Charging Lien will be discharged solely upon payment in full
of the Indenture Trustee Fees. Nothing herein shall be deemed to impair, waive


                                       27
<PAGE>

or discharge the Charging Lien, for any fees and expenses not paid by the
Reorganized Debtor. To the extent that the Notes Indenture Trustee provides
services related to distributions pursuant to the Plan, the Notes Indenture
Trustee will receive from the Reorganized Debtor, without further court
approval, reasonable compensation for such services and reimbursement of
reasonable expenses incurred (the "Disbursing Agent Fee") in connection with
such services. These payments will be made on terms agreed to between the Notes
Indenture Trustee and the Reorganized Debtor. The Disbursing Agent Fee will be
paid directly to the Notes Indenture Trustee by the Debtor or Reorganized Debtor
on the Distribution Date, or as soon as practicable thereafter, without the need
for application to, or approval of, any court. The aggregate fees and expenses
described in this paragraph and payable by the Reorganized Debtor shall not
exceed $80,000.

         14.      RECORD DATE FOR HOLDERS OF CLAIMS AND EQUITY INTERESTS.

         The record date for the initial distribution to holders of Claims and
Equity Interests under the Plan will be the Distribution Record Date. The record
date for all subsequent distributions, if any, to holders of Claims and Equity
Interests under the Plan will be the Subsequent Record Distribution Date(s).

         15.      RESERVES.

         Before making any distributions under the Plan, the Reorganized Debtor
shall hold in reserve the amount of Cash or New Issued Common Stock that would
be required to be distributed under the Plan on account of any Claim but for the
fact that such Claim is not Allowed, PROVIDED, HOWEVER, that at the time as such
Claim is disallowed in whole or in part by Final Order, settlement or otherwise,
the reserve on account of such Claim for the disallowed amount thereof, shall be
returned to the Reorganized Debtor. If a Claim as to which an objection has been
filed becomes, in whole or in part, an Allowed Claim, the Reorganized Debtor
shall distribute to the holder thereof the amount to which it is entitled from
the Disputed Claims Reserve in accordance with the terms of the Plan. Any
balance remaining in the Disputed Claims Reserve after all Claims have been
satisfied in accordance with the terms of this Plan and the Chapter 11 Case is
ready to be closed, shall be transferred to the Reorganized Debtor's operating
account to be used by the Reorganized Debtor at its discretion in the ordinary
course of business.

         16.      ALLOCATION RELATING TO NOTES.

All distributions to holders of Notes shall be allocated first to the portion of
each such Claim representing the principal amount of the Notes and then, to the
extent the consideration exceeds such amount, to the remainder of such Claim.

         17.      DISCHARGE OF NOTES INDENTURE TRUSTEE.

         Immediately following the Effective Date, the Notes Indenture Trustee
shall be discharged of all of its obligations under the terms of the Notes
Indenture, except for the obligation to act as Disbursing Agent, as applicable.
Following the Effective Date, the Notes Indenture Trustee shall have no other
duty or obligation to the holders of the Notes and, without limitation, shall


                                       28
<PAGE>

have no duty with respect to the Claims resolution process. The Notes Indenture
Trustee shall not be entitled to a fee for acting as indenture trustee after the
Effective Date unless it is asked to make a distribution or perform other
specific services.

E.       PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER THE PLAN.

         1.       DISPUTED CLAIMS.

         Except as to applications for allowances of compensation and
reimbursement of expenses under sections 330 and 503 of the Bankruptcy Code, the
Debtor or Reorganized Debtor shall have the exclusive right to make and file
objections to Claims subsequent to the Confirmation Date. All objections shall
be litigated to Final Order; PROVIDED, HOWEVER, that Reorganized Debtor shall
have the authority to compromise, settle, otherwise resolve, or withdraw any
objections, without approval of the Bankruptcy Court. Unless otherwise ordered
by the Bankruptcy Court, the Debtor or Reorganized Debtor shall file all
objections to Claims (other than applications for allowances of compensation and
reimbursement of expenses) and serve such objections upon the holders of such
Claims as to which the objection is made as soon as practicable, but in no event
later than the Objection Deadline.

         2.       NO DISTRIBUTIONS PENDING ALLOWANCE.

         Notwithstanding any other provision hereof, if any portion of a Claim
is a Disputed Claim, no payment or distribution provided hereunder shall be made
on account of such Claim unless and until such Disputed Claim becomes an Allowed
Claim.

         3.       DISTRIBUTIONS AFTER ALLOWANCE.

         To the extent that a Disputed Claim ultimately becomes an Allowed
Claim, a distribution shall be made to the holder of such Allowed Claim in
accordance with the provisions of the Plan. As soon as practicable after the
date that the order or judgment of the Bankruptcy Court allowing any Disputed
Claim becomes a Final Order, the Disbursing Agent shall provide to the holder of
such Allowed Claim the distribution to which such holder is entitled under the
Plan.

F.       PROVISIONS GOVERNING EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

         1.       ASSUMED CONTRACTS AND LEASES.

         Except as otherwise provided in the Plan or in any contract,
instrument, release, indenture, or other agreement or document entered into in
connection with the Plan, as of the Effective Date, the Debtor shall be deemed
to have rejected each executory contract and unexpired lease to which they were
a party, unless such contract or lease (i) was previously assumed or rejected by
the Debtor, (ii) previously expired or terminated pursuant to its own terms,
(iii) is the subject of a motion to reject filed on or before the Effective
Date, or (iv) is identified as an assumed executory contract or an assumed
unexpired lease, as applicable, in EXHIBIT E of the Plan as same may be amended
from time to time prior to the Confirmation Hearing. The Confirmation Order
shall constitute an order of the Bankruptcy Court under section 365 of the
Bankruptcy Code approving the contract and lease assumptions and rejections
described above, as of the Effective Date except for any contract or lease
assumed or rejected prior thereto.

                                       29
<PAGE>

         Each executory contract and unexpired lease that is assumed and relates
to the use, ability to acquire, or occupancy of real property shall include (i)
all modifications, amendments, supplements, restatements, or other agreements
made directly or indirectly by any agreement, instrument, or other document that
in any manner affects such executory contract or unexpired lease and (ii) all
executory contracts or unexpired leases appurtenant to the premises, including
all easements, licenses, permits, rights, privileges, immunities, options,
rights of first refusal, powers, uses, usufructs, reciprocal easement
agreements, vaults, tunnel or bridge agreements or franchises, and any other
interests in real estate or rights IN REM related to such premises, unless any
of the foregoing agreements has been rejected pursuant to an order of the
Bankruptcy Court.

         2.       PAYMENTS RELATED TO ASSUMPTION OF CONTRACTS AND LEASES.

         Any monetary amounts by which each executory contract and unexpired
lease to be assumed pursuant to the Plan is in default shall be satisfied, under
section 365(b)(1) of the Bankruptcy Code, by Cure. If there is a dispute
regarding (i) the nature or amount of any Cure, (ii) the ability of the
Reorganized Debtor or any assignee to provide "adequate assurance of future
performance" (within the meaning of section 365 of the Bankruptcy Code) under
the contract or lease to be assumed, or (iii) any other matter pertaining to
assumption, Cure shall occur following the entry of a Final Order resolving the
dispute and approving the assumption or assumption and assignment, as the case
may be.

         3.       REJECTED CONTRACTS AND LEASES.

         The Plan constitutes and incorporates a motion by the Debtor to reject,
and the Confirmation Order shall be deemed to be an Order authorizing the
rejection of those executory contracts and unexpired leases to which the Debtor
is a party, except for those executory contracts and unexpired leases listed on
EXHIBIT E to the Plan as the same may be amended from time to time prior to the
Confirmation Hearing.

         4.       BAR FOR REJECTION DAMAGES.

         If the rejection by the Debtor, pursuant to the Plan or otherwise, of
an executory contract or unexpired lease results in a Claim that is not
theretofore evidenced by a timely filed proof of Claim or a proof of Claim that
is deemed to be timely filed under applicable law, then such Claim shall be
forever barred and shall not be enforceable against the Debtor or Reorganized
Debtor, or the properties of the Debtor or Reorganized Debtor, unless a proof of
Claim is filed with the Claims Agent on or before the later to occur of the Bar
Date or thirty (30) days after entry of an order (which may be the Confirmation
Order) authorizing the rejection of the applicable unexpired lease or executory
contract.

         5.       TREATMENT UNDER PLAN OF REJECTION DAMAGES.

         Unless otherwise ordered by the Bankruptcy Court, all Allowed Claims
arising from the rejection of executory contracts or unexpired leases shall be
treated as Class 5 Miscellaneous Unsecured Claims.

                                       30
<PAGE>

         6.       CANTOR SETTLEMENT AGREEMENT.

         On the Effective Date of the Plan, the Reorganized Debtor and Sheldon
Cantor will enter into a consulting agreement (the "Cantor Consulting
Agreement"). The Cantor Consulting Agreement is attached as EXHIBIT H to the
Plan.

G.       CONDITIONS PRECEDENT TO EFFECTIVE DATE.

         1.       CONDITIONS PRECEDENT TO EFFECTIVE DATE OF THE PLAN.

         The occurrence of the Effective Date of the Plan is subject to
satisfaction of the following conditions precedent:

                  a. A Confirmation Order shall have been entered by the Clerk
of the Bankruptcy Court which is in form and substance reasonably acceptable to
the Debtor and there shall not be a stay or injunction in effect with respect
thereto.

                  b. The Exit Financing Parties shall have paid the Debtor
$16,000,000 under the Exit Financing Agreement in accordance with the terms of
the Plan and the Exit Financing Agreement.

                  c. The Debtor shall have purchased directors and officers
liability insurance for the Board of Directors of Reorganized Debtor in form,
substance and amount reasonably acceptable to the Debtor.

                  d. All other actions and all agreements, instruments or other
documents necessary to implement the terms and provisions hereof shall have been
effected.

                  e. The Debtor shall have created the Professional Fee Reserve
in accordance with section 8.3 of the Plan.

                  f. The Debtor and the Exit Financing Parties and certain of
their affiliates shall have entered into the Stockholders' Agreement.

         2.       WAIVER OF CONDITIONS PRECEDENT.

         Each of the conditions precedent in section 11.1, other than 11.1(A)
and 11.1(E) of the Plan may be waived, in whole or in part, by the Debtor in
writing. Any such waivers of a condition precedent in section 11.1 of the Plan
may be effected at any time, without notice, without leave or order of the
Bankruptcy Court and without any formal action.

H.       EFFECT OF CONFIRMATION.

         1.       VESTING OF ASSETS.

         On the Effective Date, the Debtor, its properties and interests in
property and its operations shall be released from the custody and jurisdiction
of the Bankruptcy Court, and the estate of the Debtor shall vest in Reorganized
Debtor free and clear of any and all Liens, except as otherwise provided in the
Plan. From and after the Effective Date, Reorganized Debtor may operate its


                                       31
<PAGE>

business and may use, acquire and dispose of property free of any restrictions
of the Bankruptcy Code or the Bankruptcy Rules, subject to the terms and
conditions of the Plan.

         2.       BINDING EFFECT.

         Except as otherwise provided in section 1141(d)(3) of the Bankruptcy
Code and subject to the occurrence of the Effective Date, on and after the
Effective Date, the provisions of the Plan shall bind any holder of a Claim
against or Equity Interest in the Debtor and such holder's respective successors
and assigns, whether or not the Claim or Equity Interest of such holder is
impaired under the Plan and whether or not such holder has accepted the Plan.

         3.       DISCHARGE OF DEBTOR.

         Except to the extent otherwise provided herein, the treatment of all
Claims against or Equity Interests in the Debtor hereunder shall be in exchange
for and in complete satisfaction, discharge and release of all Claims against or
Equity Interests in the Debtor of any nature whatsoever, known or unknown,
including, without limitation, any interest accrued or expenses incurred thereon
from and after the Petition Date, or against its estates or properties or
interests in property. Except as otherwise provided herein, upon the Effective
Date, all Claims against and Equity Interests in the Debtor will be satisfied,
discharged, and released in full exchange for the consideration provided under
the Plan. Except as otherwise provided in the Plan, all entities shall be
precluded from asserting against the Debtor or Reorganized Debtor or its
respective properties or interests in property, any other Claims based upon any
act or omission, transaction, or other activity of any kind or nature that
occurred prior to the Effective Date.

         4.       TERM OF INJUNCTIONS OR STAYS.

         Unless otherwise provided in the Plan, all injunctions or stays arising
under or entered during this Chapter 11 Case under section 105 or 362 of the
Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall
remain in full force and effect until the 30th day following the Effective Date.

         5.       EXCULPATION.

         THE RELEASED PARTIES SHALL NOT HAVE OR INCUR, AND ARE HEREBY RELEASED
FROM, ANY CLAIM, OBLIGATION, CAUSE OF ACTION OR LIABILITY TO ONE ANOTHER OR TO
ANY HOLDER OF A CLAIM OR AN EQUITY INTEREST, OR ANY OTHER PARTY IN INTEREST, OR
ANY OF THEIR RESPECTIVE AGENTS, EMPLOYEES, REPRESENTATIVES, FINANCIAL ADVISORS,
ATTORNEYS OR AFFILIATES, OR ANY OF THEIR SUCCESSORS AND ASSIGNS, FOR ANY ACT OR
OMISSION IN CONNECTION WITH, RELATING TO OR ARISING OUT OF THIS CHAPTER 11 CASE,
THE SOLICITATION OF VOTES AND PURSUIT OF CONFIRMATION OF THE PLAN, THE
CONSUMMATION OF THE PLAN, THE ADMINISTRATION OF THE PLAN OR THE PROPERTY TO BE
DISTRIBUTED UNDER THE PLAN, THE SOLICITATION AND ISSUANCE OF THE NEW ISSUED
COMMON STOCK, AND IN ALL RESPECTS SHALL BE ENTITLED TO RELY REASONABLY UPON THE
ADVICE OF COUNSEL WITH RESPECT TO ITS DUTIES AND RESPONSIBILITIES UNDER THE
PLAN, PROVIDED HOWEVER, THAT NOTHING IN THIS SECTION SHALL BE DEEMED TO RELEASE
ANY SUCH PERSON FROM LIABILITY FOR ACTS OR OMISSIONS THAT ARE THE RESULT OF
ACTUAL FRAUD, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR WILLFUL VIOLATION OF THE
SECURITIES LAWS OR THE INTERNAL REVENUE CODE.

                                       32
<PAGE>

         Section 12.5 of the Plan provides for the release of the Released
Parties for any act or omission in connection with, relating to or arising out
this Chapter 11 case, the solicitation of votes and pursuit of confirmation of
the Plan, the administration of the Plan or the property to be distributed under
the Plan, the solicitation and issuance of the New Issued Common Stock. The
Debtor believes that a release of each of the Released Parties is necessary.
Pursuant to standards set forth IN RE MASTER MORTGAGE INVESTMENT FUND, INC., 168
B.R. 930 (W.D. Mo. 1994), the Released Parties should be granted the releases
described in section 12.5 of the Plan for the following reasons: (i) the release
of the members of the AD HOC Committee is essential to the reorganization of the
Debtor. As set forth herein, the AD HOC Committee negotiated the Plan with the
Debtor. Without the support of the AD HOC Committee members, who are also the
largest Note and Equity Interest holders, the Debtor would be unable to
reorganize in the efficient and expeditious manner provided for by the Plan;
(ii) the Exit Financing Parties are all contributing substantial assets to the
reorganization; and (iii) the Notes Indenture Trustee, Claims Agent, Balloting
Agent and Disbursing Agent are critical to the successful reorganization of the
Debtor. Without their participation and cooperation, the Debtor's efficient and
expeditious reorganization would not be possible.

         6.       INDEMNIFICATION OBLIGATIONS.

         Subject to the occurrence of the Effective Date, the obligations of the
Debtor, to indemnify, defend, reimburse, make advances to or limit the liability
of directors or officers who were or are directors or officers of the Debtor
prior to and after the Petition Date, in respect of any claims or causes of
action, except for any claims or causes of action relating to acts or omissions
that are the result of actual fraud, gross negligence, willful misconduct, or
willful violation of the securities laws or the Internal Revenue Code, as
provided in the Debtor's certificate of incorporation, by-laws, applicable state
law or contract shall not be terminated and shall be in full force and effect in
all respects. This section is in addition to, but in no way in derogation of,
the exculpation provision set forth in section 12.5 of the Plan.

I.       RETENTION OF JURISDICTION.

         The Bankruptcy Court shall have exclusive jurisdiction of all matters
arising out of, or related to, the Chapter 11 Case, the Plan and the
Confirmation Order pursuant to, and for the purposes of, sections 105(a) and
1142 of the Bankruptcy Code and for, among other things, the following purposes:

         a.       To hear and determine pending applications for the assumption,
                  assumption and assignment, or rejection of executory contracts
                  or unexpired leases and the allowance of Claims resulting
                  therefrom.

         b.       To enforce all agreements, assumed, if any, and to recover all
                  property of the estate wherever located.

         c.       To determine any and all adversary proceedings, applications
                  and contested matters, including, without limitation, under
                  sections 544, 545, 548, 549, 550, 551, and 553 of the
                  Bankruptcy Code.

                                       33
<PAGE>

         d.       To ensure that distributions to holders of Allowed Claims and
                  Allowed Equity Interests are accomplished as provided herein.

         e.       To hear and determine any timely objections to Administrative
                  Claims or to proofs of Claim, including, without limitation,
                  any objections to the classification of any Claim, and to
                  allow or disallow any Disputed Claim in whole or in part.

         f.       To determine the validity, extent and priority of all Liens,
                  if any, against properties of the estates.

         g.       To determine all assertions of an ownership interest in, the
                  value of, or title to, any property of the estates.

         h.       To determine any tax liability of the estates in connection
                  with the Plan, actions taken, distributions or transfers made
                  thereunder.

         i.       To enter and implement such orders as may be appropriate in
                  the event the Confirmation Order is for any reason stayed,
                  revoked, modified, or vacated.

         j.       To issue such orders in aid of execution of the Plan, to the
                  extent authorized by section 1142 of the Bankruptcy Code.

         k.       To consider any amendments to or modifications of the Plan, or
                  to cure any defect or omission, or reconcile any
                  inconsistency, in any order of the Bankruptcy Court,
                  including, without limitation, the Confirmation Order.

         l.       To hear and determine all applications under sections 330,
                  331, and 503(b) of the Bankruptcy Code for awards of
                  compensation for services rendered and reimbursement of
                  expenses incurred prior to the Confirmation Date.

         m.       To hear and determine disputes arising in connection with the
                  interpretation, implementation, or enforcement of the Plan,
                  the Confirmation Order, any transactions or payments
                  contemplated hereby or any agreement, instrument or other
                  document governing or relating to any of the foregoing.

         n.       To hear and determine matters concerning state, local, and
                  federal taxes in accordance with sections 346, 505, and 1146
                  of the Bankruptcy Code.

         o.       To hear and determine any other matter not inconsistent with
                  the Bankruptcy Code.

         p.       To hear and determine all disputes involving the existence,
                  scope, and nature of the discharges granted under the Plan and
                  the Confirmation Order.

         q.       To issue injunctions and effect any other actions that may be
                  necessary or desirable to restrain interference by any entity
                  with the consummation or implementation of the Plan.

                                       34
<PAGE>

         r.       To determine such other matters as may be provided in the
                  Confirmation Order.

         s.       To enter a final decree closing the Chapter 11 Case.

J.                MISCELLANEOUS PROVISIONS.

         1.       PAYMENT OF STATUTORY FEES.

         All fees payable under section 1930, chapter 123, title 28, United
States Code, as determined by the Bankruptcy Court at the Confirmation Hearing,
shall be paid on the Effective Date. Any such fees accrued after the Effective
Date will be paid by the Reorganized Debtor in the ordinary course of business.

         2.       SECTION 1125(e) OF THE BANKRUPTCY CODE.

         As of the Confirmation Date, the Debtor shall be deemed to have
solicited acceptances of the Plan in good faith and in compliance with the
applicable provisions of the Bankruptcy Code. The Debtor (and each of their
respective affiliates, agents, directors, officers, employees, investment
bankers, financial advisors, attorneys and other professionals) have, and shall
be deemed to have, participated in good faith and in compliance with the
applicable provisions of the Bankruptcy Code in the offer and issuance of the
securities under the Plan, and therefore are not, and on account of such offer,
issuance and solicitation will not be, liable at any time for the violation of
any applicable law, rule or regulation governing the solicitation of acceptances
or rejections of the Plan or the offer and issuance of securities under the
Plan.

         3.       INDENTURE TRUSTEE AS CLAIM HOLDER.

         Consistent with Bankruptcy Rule 3003(c), the Reorganized Debtor shall
recognize a Proof of Claim filed by the Notes Indenture Trustee with respect to
any Claim arising from the Notes. Accordingly, any Claim, proof of which is
filed by the registered or beneficial holder of a Note, may be disallowed as
duplicative of the Claim of the Notes Indenture Trustee, without any further
action of the Bankruptcy Court.

         4.       EXEMPTION FROM CERTAIN TRANSFER TAXES.

         Pursuant to section 1146(c) of the Bankruptcy Code, any transfers from
the Debtor to any other person or entity pursuant to the Plan shall not be
subject to any document recording tax, stamp tax, conveyance fee, intangibles or
similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage
recording tax, or other similar tax or governmental assessment, and the
Confirmation Order shall direct the appropriate state or local governmental
officials or agents to forego the collection of any such tax or governmental
assessment.

         5.       MODIFICATIONS AND AMENDMENTS.

         The exhibits to both the Plan and Disclosure Statement can be amended
at any time prior to the Confirmation Date by the Debtor. In addition, the
Debtor may alter, amend, or modify the Plan under section 1127(a) of the
Bankruptcy Code at any time prior to the Confirmation Date. After the Effective
Date the Reorganized Debtor may, under section 1127(b) of the Bankruptcy Code,
institute proceedings in the Bankruptcy Court to remedy any defect or omission


                                       35
<PAGE>

or reconcile any inconsistencies in the Plan or the Confirmation Order, and to
accomplish such matters as may be necessary to carry out the purposes and
effects of the Plan so long as such proceedings do not materially adversely
affect the treatment of holders of Claims under the Plan, PROVIDED, HOWEVER,
that prior notice of such proceedings shall be served in accordance with the
Bankruptcy Rules or Order of the Bankruptcy Court.

         6.       COMPLIANCE WITH TAX REQUIREMENTS.

         In connection with the consummation of the Plan, the Reorganized Debtor
shall comply with all withholding and reporting requirements imposed by any
taxing authority, and all distributions hereunder shall be subject to such
withholding and reporting requirements.

         7.       PRESERVATION OF TRANSFERRED CLAIMS.

         All causes of action which are currently held by the Debtor will be
transferred to and prosecuted by the Reorganized Debtor at its sole and absolute
discretion. The failure of the Debtor specifically to list any claim, right of
action, suit, or proceeding herein or in the Plan does not, and will not be
deemed to, constitute a waiver or release by the Debtor of such claim, right of
action, suit, or proceeding, and Reorganized Debtor will retain the right to
pursue additional claims, rights of action, suits, or proceedings.

         8.       SEVERABILITY OF PLAN PROVISIONS.

         Except as otherwise provided herein, in the event that, prior to the
Effective Date, any term or provision of the Plan is held by the Bankruptcy
Court to be invalid, void or unenforceable, then if requested by the Debtor or
Reorganized Debtor the Bankruptcy Court shall have the power to alter and
interpret such term or provision to make it valid or enforceable to the maximum
extent practicable, consistent with the original purpose of the term or
provision held to be invalid, void or unenforceable, and such term or provision
shall then be applicable as altered or interpreted. Notwithstanding any such
holding, alteration or interpretation, the remainder of the terms and provisions
hereof shall remain in full force and effect and shall in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order shall constitute a judicial determination and shall provide
that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable in
accordance with its terms. Notwithstanding the foregoing or any other provision
of the Plan, to the extent section 4 of the Plan or any part thereof is held by
the Bankruptcy Court to be invalid, void or unenforceable, then the Plan shall
be deemed null and void for all purposes.

         9.       FILING OR EXECUTION OF ADDITIONAL DOCUMENTS.

         On or before the Effective Date, the Debtor or the Reorganized Debtor
will file with the Bankruptcy Court or execute, as appropriate, such agreements
and other documents as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of this Plan.

                                       36
<PAGE>

         10.      GOVERNING LAW.

         Except to the extent that the Bankruptcy Code or other federal law is
applicable, or to the extent an exhibit to the Plan provides otherwise, the
rights, duties and obligations arising under the Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
without giving effect to the principles of conflict of laws thereof.

                   V. CONFIRMATION AND CONSUMMATION PROCEDURE

         Under the Bankruptcy Code, the following steps must be taken to confirm
the Plan:

A.       SOLICITATION OF VOTES.

         In accordance with sections 1126 and 1129 of the Bankruptcy Code, the
Claims and Equity Interests in Class 3 (Note Claims), Class 4 (Note Convenience
Claims), Class 6 (SERP Claims), Class 7 (Equity Interests) and Class 8 (DE
MINIMIS Equity Holders) are impaired and the holders of Allowed Claims and
Equity Interests in Class 3, Class 4, Class 6, Class 7 and Class 8 are entitled
to vote to accept or reject the Plan.

         Claims in Class 1 (Other Priority Claims), Class 2 (Miscellaneous
Secured Claims) and Class 5 (Miscellaneous Unsecured Claims) are unimpaired and
the holders of Allowed Claims in each of such Classes are conclusively presumed
to have accepted the Plan and the solicitation of acceptances with respect to
such Classes is not required under section 1126(f) of the Bankruptcy Code.

         Because holders of Class 9 (Other Equity Interests) are presumed to
have rejected the Plan, they are not entitled to vote on the Plan.

         As to classes of claims entitled to vote on a plan, the Bankruptcy Code
defines acceptance of a plan by a class of creditors as acceptance by holders of
at least two-thirds in dollar amount and more than one-half in number of the
claims of that class that have timely voted to accept or reject a plan. As to
classes of equity interests entitled to vote on a plan, the Bankruptcy Code
defines acceptance of a plan by a class of equity interests as acceptance by at
least two-thirds of the allowed equity interests that have timely voted to
accept or reject a plan. A vote may be disregarded if the Bankruptcy Court
determines, after notice and a hearing, that such acceptance or rejection was
not solicited or procured in good faith or in accordance with the provisions of
the Bankruptcy Code.

B.       THE CONFIRMATION HEARING.

         The Bankruptcy Code requires the Bankruptcy Court, after notice, to
hold a confirmation hearing. The Confirmation Hearing in respect of the Plan has
been scheduled for April 8, 2005 at 10:30 a.m., Delaware time, before the
Honorable Peter J. Walsh, United States Bankruptcy Court Judge, at the United
States Bankruptcy Court, 824 Market Street, Wilmington, Delaware 19801. The
Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court
without further notice except for an announcement of the adjourned date made at
the Confirmation Hearing. Any objection to confirmation must be made in writing


                                       37
<PAGE>

and specify in detail the name and address of the objector, all grounds for the
objection and the amount of the Claim or number of shares of stock of the Debtor
held by the objector. Any such objection must be filed with the Bankruptcy Court
and served so that it is received by the Bankruptcy Court and the following
parties on or before March 30, 2005 at 4:00 p.m., Delaware time:

                    Richard Baumfield, Esq.
                    Andrews Kurth LLP
                    450 Lexington Avenue, 15th Floor
                    New York, NY 10017
                    Tel:  (212) 850-2800
                    Fax: (212) 850-2929

                    Adam Singer, Esq.
                    Cooch and Taylor
                    824 Market Street Mall, 10th Floor
                    Wilmington, DE 19801
                    Tel: (302) 652-3641
                    Fax: (302) 652-5379

                    David L. Buchbinder, Esq.
                    Office of the United States Trustee
                    844 King Street, Suite 2207
                    Lockbox 35
                    Wilmington, Delaware 19801

         Objections to confirmation of the Plan are governed by Bankruptcy Rule
9014.

C.       CONFIRMATION.

         At the Confirmation Hearing, the Bankruptcy Court will confirm the Plan
only if all of the requirements of section 1129 of the Bankruptcy Code are met.
Among the requirements for confirmation of a plan are that the plan is (i)
accepted by all impaired classes of claims and equity interests or, if rejected
by an impaired class, that the plan "does not discriminate unfairly" and is
"fair and equitable" as to such class, (ii) feasible, and (iii) in the "best
interests" of creditors and stockholders which are impaired under the plan.

         1.       ACCEPTANCE.

         Claimants and holders of Equity Interests in Class 3 (Note Claims),
Class 4 (Note Convenience Claims), Class 6 (SERP Claims), Class 7 (Equity
Interests) and Class 8 (DE MINIMIS Equity Holders) are impaired under the Plan
and are entitled to vote to accept or reject the Plan. Since the Plan
contemplates no distribution will be made to Class 9 (Other Equity Interests),
holders of Equity Interests in this Class are conclusively deemed to have
rejected the Plan and are not entitled to vote. The Debtor reserves the right to
seek nonconsensual confirmation of the Plan with respect to any Class(es) of
Claims or Equity Interests that is entitled to vote to accept or reject the Plan
if such Class(es) rejects the Plan.

                                       38
<PAGE>

2.       UNFAIR DISCRIMINATION AND FAIR AND EQUITABLE TESTS.

         To obtain nonconsensual confirmation of the Plan, it must be
demonstrated to the Bankruptcy Court that the Plan "does not discriminate
unfairly" and is "fair and equitable" with respect to each impaired,
nonaccepting Class. The Bankruptcy Code provides a non-exclusive definition of
the phrase "fair and equitable." The Bankruptcy Code establishes "cram down"
tests for secured creditors, unsecured creditors, and equity holders, as
follows:

         a.       Secured Creditors.

         Either (i) each impaired secured creditor retains its liens securing
its secured claim and receives on account of its secured claim deferred Cash
payments having a present value equal to the amount of its allowed secured
claim, (ii) each impaired secured creditor realizes the "indubitable equivalent"
of its allowed secured claim, or (iii) the property securing the claim is sold
free and clear of liens with such liens to attach to the proceeds of the sale
and the treatment of such liens on proceeds is provided in clause (i) or (ii) of
this subparagraph.

         b.       Unsecured Creditors.

         Either (i) each impaired unsecured creditor receives or retains under
the Plan property of a value equal to the amount of its allowed claim, or (ii)
the holders of claims and interests that are junior to the claims of the
dissenting class will not receive any property under the Plan.

         c.       Equity Interests.

         Either (i) each holder of an equity interest will receive or retain
under the Plan property of a value equal to the greatest of the fixed
liquidation preference to which such holder is entitled, the fixed redemption
price to which such holder is entitled or the value of the interest, or (ii) the
holder of an interest that is junior to the nonaccepting class will not receive
or retain any property under the Plan.

         The Debtor believes that the Plan and the treatment of all Classes of
Claims and Equity Interests under the Plan satisfy the foregoing requirements
for nonconsensual confirmation of the Plan.

         3.       FEASIBILITY.

         The Bankruptcy Code requires that confirmation of a plan is not likely
to be followed by liquidation or the need for further financial reorganization.
For purposes of determining whether the Plan meets this requirement, the Debtor
has analyzed the Debtor's ability to meet its obligations under the Plan. As
part of this analysis, the Debtor has prepared projections of financial
performance for each of the three (3) fiscal years ending December 31, 2005
through 2007 (the "Projection Period"). These projections, and the assumptions
on which they are based, are included in the Projected Financial Information
annexed hereto as EXHIBIT F. Based upon such projections, the Debtor believes
that it will be able to make all distribution and payments required pursuant to
the Plan and, therefore, confirmation of the Plan is not likely to be followed
by liquidation or the need for further reorganization.

                                       39
<PAGE>

         4.       PROJECTED FINANCIAL INFORMATION.

         The financial information appended to this Disclosure Statement as
EXHIBIT F includes certain financial projections for the Projection Period.

         THE FINANCIAL PROJECTIONS HAVE NOT BEEN EXAMINED OR COMPILED BY
INDEPENDENT ACCOUNTANTS. ACTUAL FINANCIAL RESULTS COULD DIFFER SIGNIFICANTLY
FROM THOSE INCLUDED IN THE PROJECTIONS. THE DEBTOR MAKES NO REPRESENTATION AS TO
THE ACCURACY OF THE PROJECTIONS OR THE DEBTOR'S ABILITY TO ACHIEVE THE PROJECTED
RESULTS. MANY OF THE ASSUMPTIONS ON WHICH THE PROJECTED FINANCIAL INFORMATION IS
BASED ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES. INEVITABLY, SOME ASSUMPTIONS
WILL NOT MATERIALIZE AND UNANTICIPATED EVENTS AND CIRCUMSTANCES MAY AFFECT THE
ACTUAL FINANCIAL RESULTS. THEREFORE, THE ACTUAL RESULTS ACHIEVED THROUGHOUT THE
PROJECTION PERIOD MAY VARY SIGNIFICANTLY FROM THE PROJECTED RESULTS. ALL HOLDERS
OF CLAIMS AND EQUITY INTERESTS THAT ARE ENTITLED TO VOTE TO ACCEPT OR REJECT THE
PLAN ARE URGED TO EXAMINE CAREFULLY ALL OF THE ASSUMPTIONS ON WHICH THE
PROJECTED FINANCIAL INFORMATION IS BASED IN EVALUATING THE PLAN.

         5.       BEST INTERESTS TEST AND LIQUIDATION ANALYSIS.

         With respect to each impaired Class of Claims and Equity Interests,
confirmation of the Plan requires that each holder of a Claim or Equity Interest
either (i) accept the Plan, or (ii) receive or retain under the Plan property of
a value, as of the Effective Date, that is not less than the value such holder
would receive or retain if the Debtor was liquidated under Chapter 7 of the
Bankruptcy Code.

         The Debtor believes that under the Plan all holders of impaired Claims
and Equity Interests will receive property with a value not less than the value
such holder would receive in a liquidation of the Debtor under Chapter 7 of the
Bankruptcy Code. To estimate the likely returns to holders of Claims and Equity
Interests in a Chapter 7 liquidation, the Debtor determined the amount of
liquidation proceeds that would be available for distribution to, and the
allocation of such proceeds among, the Classes of Claims and Equity Interests
based on their relative priority.

         The relative priority of distribution of liquidation proceeds with
respect to any Claim or Equity Interest depends on (i) its status as secured,
priority unsecured or nonpriority unsecured and (ii) its relative subordination
(including contractual subordination, structural subordination and statutory
subordination (E.G., as is required by section 510(b) of the Bankruptcy Code)).

         In general, liquidation proceeds would be allocated in the following
priority: (i) first, to the Claims of secured creditors to the extent of the
value of their Collateral; (ii) second, to the costs, fees and expenses of the
liquidation, as well as other administrative expenses of the Debtor's Chapter 7
case, including tax liabilities incurred in the Chapter 7 case; (iii) third, to
the unpaid Administrative Claims of the Debtor's Chapter 11 Case; (iv) fourth,
to Priority Tax Claims and other Claims entitled to priority in payment under
section 507 of the Bankruptcy Code; (v) fifth, to unsecured Claims; (vi) sixth,


                                       40
<PAGE>

to subordinated claims, if any, (vii) seventh, to Equity Interests. As described
more fully below, the Debtor's management believes that in a Chapter 7
liquidation, based on the priorities outlined above, the proceeds remaining
after satisfaction of all Administrative Claims, Priority Tax Claims, Other
Priority Claims, and Miscellaneous Secured Claims will not be sufficient to pay
one hundred percent (100%) of the Note Claims, including Note Convenience
Claims, or make any distribution to Miscellaneous Unsecured Claims, SERP Claims,
Equity Interests, DE MINIMIS Equity Interests and Other Equity Interests.

         In reaching this conclusion, the Debtor made a number of assumptions,
which are set forth below, and estimates regarding anticipated differences in
expenses, fees, asset recoveries, claims litigation and settlements, recoveries
on rates, deposits and escrows, and total claims filed that could occur if the
Debtor's Chapter 11 Case were converted to a Chapter 7 liquidation. The
liquidation analysis is annexed hereto as EXHIBIT E.

         These estimates and assumptions are inherently subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Debtor. Accordingly, there can be no assurance as to values that would actually
be realized in a Chapter 7 liquidation.

         The Debtor has made a number of assumptions in connection with its
liquidation analysis, which are set forth on EXHIBIT E.

         Under a Chapter 7 liquidation, all secured claims are required to be
satisfied from the proceeds of the collateral securing such claims before any
such proceeds would be distributed to any other creditors. The Debtor's
liquidation analysis assumes the application of the rule of absolute priority of
distributions with respect to the remaining proceeds of the Debtor, as well as
application of contractual and statutory subordination. Under that scenario, no
junior creditor receives any distribution until all senior creditors are paid in
full. To the extent that proceeds remain after satisfaction of all Miscellaneous
Secured Claims, the proceeds would first be distributed to the holders of
Administrative Claims, Priority Tax Claims and Other Priority Claims, with the
balance being made available to satisfy, first, other nonpriority, unsecured
Claims and, last, Equity Interests. Based on the liquidation assumptions of the
Debtor's management, the Debtor believes that the liquidation and distribution
of the Debtor's assets in a Chapter 7 case will not be sufficient to pay one
hundred percent (100%) of the Note Claims, including Note Convenience Claims, or
make any distribution to Miscellaneous Unsecured Claims, SERP Claims, Equity
Interests, DE MINIMIS Equity Interests and Other Equity Interests.

         In summary, the Debtor believes that a Chapter 7 liquidation of the
Debtor would result in a substantial diminution in the value to be realized by
the holders of certain Claims and delay in making distributions to all Classes
of Claims entitled to a distribution. Consequently, the Debtor believes that the
Plan satisfies the requirements of section 1129(a)(7) of the Bankruptcy Code.

D.       VALUATION OF REORGANIZED DEBTOR.

         THE ESTIMATES OF ENTERPRISE VALUE SET FORTH HEREIN REPRESENT
HYPOTHETICAL REORGANIZATION ENTERPRISE VALUES THAT WERE DEVELOPED SOLELY FOR THE
PURPOSE OF THE PLAN. SUCH ESTIMATES REFLECT COMPUTATIONS OF THE ESTIMATED
ENTERPRISE VALUE OF THE REORGANIZED DEBTOR THROUGH THE APPLICATION OF VARIOUS


                                       41
<PAGE>

GENERALLY ACCEPTED VALUATION TECHNIQUES AND DO NOT REFLECT OR CONSTITUTE
APPRAISALS OF THE ASSETS OF THE DEBTOR OR THE ACTUAL MARKET VALUE OF THE DEBTOR.
BECAUSE SUCH ESTIMATES ARE INHERENTLY UNCERTAIN, NEITHER THE DEBTOR NOR AMPER,
POLITZINER & MATTIA, P.C. ("AMPER"), THE DEBTOR'S VALUATION EXPERT, ASSUMES
RESPONSIBILITY FOR THEIR ACCURACY. IN ADDITION, AMPER DID NOT INDEPENDENTLY
VERIFY THE DEBTOR'S PROJECTIONS IN CONNECTION WITH THE VALUATION, AND NO
INDEPENDENT EVALUATIONS OR APPRAISALS OF THE DEBTOR'S ASSETS WERE SOUGHT OR
OBTAINED THEREWITH.

         In assisting management in preparing the valuation, Amper, among other
things: (i) reviewed certain financial statements of the Debtor for recent years
and interim periods, (ii) reviewed certain internal financial and operating data
prepared by the Debtor, (iii) discussed the current operations and prospects of
the business with the management of the Debtor, (iv) reviewed certain financial
and stock market information of certain publicly traded companies that Amper and
management of the Debtor believe are in businesses reasonably comparable to the
business of the Debtor, (v) considered the financial terms, to the extent
publicly available, of certain historical acquisitions of companies and systems
whose businesses are believed to be reasonably comparable to that of the Debtor,
(vi) considered certain economic and industry information relevant to the
business of the Debtor, (vii) reviewed various documents relating to the Plan,
including, but not limited to, this Disclosure Statement, and (viii) made such
other analyses and examinations as Amper deemed necessary or appropriate.

         Amper has advised the Debtor that for purposes of assisting the Debtor
in preparing the valuation expressed below, Amper assumed that, as of the
Effective Date: (i) the proposed capitalization of the Debtor will be as set
forth in the Plan and Disclosure Statement, (ii) market, business, and general
economic conditions will be similar to conditions assumed, (iii) the financial
and other information furnished to Amper by the Debtor and its professionals and
the publicly available information are accurate and complete, and (iv) the Plan
is confirmed without material changes. Based upon its analyses, the assumptions
made, matters considered and limits of review as set forth above, the Debtor has
concluded that an appropriate estimate for the post-confirmation going concern
enterprise value of the Debtor would be approximately $129 million (after
receipt of the funds from the Exit Financing). After deducting the estimated,
net long-term indebtedness of the Reorganized Debtor at the Effective Date of
approximately $10 million and cash payments to be made under the Plan, the
estimated total equity value is approximately $114 million (after the Exit
Financing). Therefore, assuming 10,000,000 shares of New Issued Common Stock
will be issued on the Distribution Date, the value of New Issued Common Stock is
estimated to be approximately $11.40 per share, before the impact, if any, on
the value of the stock from the issuance of any securities under the Stock
Incentive Plan.

         THE ESTIMATED ENTERPRISE VALUE IS HIGHLY DEPENDENT UPON ACHIEVING THE
FUTURE FINANCIAL RESULTS SET FORTH IN THE PROJECTIONS AS WELL AS THE REALIZATION
OF CERTAIN OTHER ASSUMPTIONS WHICH ARE NOT GUARANTEED.

                                       42
<PAGE>

         THE VALUATIONS SET FORTH HEREIN REPRESENT ESTIMATED REORGANIZATION
VALUES AND DO NOT NECESSARILY REFLECT VALUES THAT COULD BE ATTAINABLE IN PUBLIC
OR PRIVATE MARKETS. THE EQUITY VALUE ASCRIBED IN THE ANALYSIS DOES NOT PURPORT
TO BE AN ESTIMATE OF THE POST-REORGANIZATION MARKET VALUE. SUCH TRADING VALUE,
IF ANY, MAY BE AFFECTED BY SUCH THINGS AS THE CLOSELY HELD NATURE OF THE STOCK
AFTER THE EFFECTIVE DATE, THE LACK OF IMMEDIATELY AVAILABLE AUDITED FINANCIAL
STATEMENTS AND THE FACT THAT THE NEW ISSUED COMMON STOCK IS NOT TRADED ON A
MAJOR EXCHANGE. DUE TO THESE REASONS AND OTHERS, THE TRADING VALUE MAY BE
MATERIALLY DIFFERENT FROM THE REORGANIZATION EQUITY VALUE ASSOCIATED WITH THE
VALUATION ANALYSIS.

E.       CONSUMMATION.

         The Plan will be consummated on the Effective Date. The Effective Date
of the Plan is the first Business Day following the date on which the conditions
precedent to the effectiveness of the Plan, are satisfied or waived.

         The Plan is to be implemented pursuant to the provisions of the
Bankruptcy Code.

                       VI. MISCELLANEOUS DISCLOSURE ITEMS

A.        EXECUTIVE HEALTH BENEFIT PLAN SETTLEMENT.

         In 1989, ABN established a post-retirement welfare benefit trust
pursuant to that certain Trust Agreement dated December 29, 1989 between ABN (as
successor) and The Chase Manhattan Bank, NA ("Chase"), as successor trustee (the
"Trust") to pay the post-retirement medical benefits of certain of its former
employees. During the First Bankruptcy the Trust participants settled all of
their claims with ABN in connection with the Trust and the terms of that
settlement is reflected in paragraph 56 of the Findings of Fact and Conclusions
of Law Relating to, and Order under 11 U.S.C. ss. 1129(a) and (b) Confirming,
the Fourth Amended Reorganization Plan of American Banknote Corporation under
Chapter 11 of the Bankruptcy Code dated August 21, 2002 of the NY Bankruptcy
Court (the "2002 Confirmation Order"). The participants are Sussane Jonas,
Roslyn Weitzen, Gerhard Hennig, Tilling Henning, Marie Parente, Patricia Reddy
and Patrick Reddy (collectively, the "Participants").

         The settlement, as reflected in paragraph 56 of the 2002 Confirmation
Order (the "Health Benefits Settlement"), provides for the following:

                  (i) That upon reaching the age of 65, each of the
Participants, shall, to the extent they have not already, enroll in Medicare and
Blue Cross/Blue Shield as a Medicare supplement. Additionally, each of the
Participants shall, to the extent they have not already, enroll in health
insurance plans offered by ABN through CIGNA and The First Rehabilitation
Insurance Company of America (together with Blue Cross/Blue Shield and Medicare,
and as may be replaced in accordance with the terms of the 2002 Confirmation
Order, the "Medical Plans"). Subject to paragraph (v.) below, such Medical Plans
shall be continued without interruption for the benefit of the Participants
throughout their lifetime.

                                       43
<PAGE>

                  (ii) Each of the Participants shall timely submit any medical
claims which qualify as "medical care" under section 105(b) of the Internal
Revenue Code of 1986, as amended, notwithstanding the percentage limitations on
deductibility set forth therein (each, a "Covered Medical Claim") to each of the
Medical Plans and shall further cooperate in the coordination of benefits among
the Medical Plans and any other medical or benefit plans that each Participant
may have so as to maximize the likelihood that the Medical Plans reimburse such
claims.

                  (iii) If, after properly submitting a Covered Medical Claim to
each of the Medical Plans and cooperating in the coordination of benefits, any
portion of the Covered Medical Claims remains unreimbursed by each of the
Medical Plans (a "Deficiency Amount"), the Participants shall submit a
certification, with supporting documentation, as to the Deficiency Amount to ABN
or its successors. As promptly as is practicable, but no later than 30 days
thereafter, ABN shall reimburse or pay, as the case may be, each participant in
full for the Deficiency Amount or shall advise the participant that it questions
the Deficiency Amount.

                  (iv) Pursuant to the Findings of Fact and Conclusions of Law
Relating to, and Order under 11 U.S.C. ss. 1129(a) and (b) Confirming, the Third
Amended Reorganization Plan of American Banknote Corporation under Chapter 11 of
the Bankruptcy Code of the NY Bankruptcy Court dated November 3, 2000 (the
"November Confirmation Order") and in accordance with the order approving
requests by professionals for compensation and reimbursement entered December
28, 2000, ABN paid the reasonable fees and expenses of the counsel (subject to
the applicable cap set forth in the November Confirmation Order) to each of (i)
the Participants other than Marie Parente, and (ii) Marie Parente, in accordance
with section 1129(a)(4) of the Bankruptcy Code.

                  (v) In the event that ABN terminates any of the Medical Plans
(other than Blue Cross/Blue Shield) or ABNCo (as defined below) terminates the
CIGNA retiree plan described below, ABN shall replace any such terminated
Medical Plan with a health insurance plan which provides comparable benefits.

                  (vi) As long as the retired employees of American Banknote
Company, Inc. ("ABNCo") are covered by the CIGNA retiree plan maintained by
ABNCo, ABN shall continue to cover the Participants under such CIGNA retiree
plan. In the event that such CIGNA retiree plan is terminated by ABNCo, ABN
shall provide the Participants with comparable coverage in accordance with
paragraph (v.) above.

                  (vii) In the event that substantially all of the current
executive level employees of ABN shall cease to be employed by ABN and shall be
employed by an affiliate of ABN, ABN or its successor shall provide that the
Participants shall be entitled to participate in any health insurance plans in
which such executive level employees participate, and the current Medical Plans
shall be terminated and replaced accordingly.

                                       44
<PAGE>

                  (viii) The corpus of the Trust was turned over to ABN net of
all reasonable compensation, fees, and expenses Trustee allowed under the
agreement governing the Trust upon the entry of the 2002 Confirmation Order or
as soon thereafter as is reasonable practical (i) enjoining the Participants
(and their beneficiaries) from commencing a suit, action, demand, or proceeding
arising out of or in connection with the Trust against the Trustee and ABN and
(ii) releasing the Trustee from any claim whatsoever of each of the
Participants, ABN, or Reorganized ABN, relating to, connected with, or arising
from the Trust.

                  (ix) Each Participant and each former participant of the Trust
(and each of the respective heirs and successors of each of the foregoing) was
enjoined and barred from commencing a suit, action, demand, or proceeding
arising out of or in connection with the Trust of any kind whatsoever, arising
at any point in time.

                  (x) ABN and Reorganized ABN (and any of their respective
successors) must indemnify the Trustee solely for any and all costs and expenses
incurred by the Trustee in connection with the defense of any action, suit,
demand, or proceeding arising out of or in connection with or in violation of
the releases and injunction described above for a period of 10 years from the
date of entry of the 2002 Confirmation Order.

                  (xi) The Trust was terminated. Neither ABN, Reorganized ABN,
or the Trustee has any further duty under Trust, to the Trust, ABN (or any
successor), Reorganized ABN (or any successor), ABN's estate, the Trustee, the
Participants, or any other party, except as otherwise expressly provided for the
2002 Confirmation Order. None of the Participants or ABN or any of their
successors, heirs, or assigns, have any rights under the Trust, and any actions
brought by Participants or ABN or any of their successors, heirs, or assigns in
respect of the Trust would be an express violation of the releases and
injunctions provided herein.

         The Debtor believes it is beneficial to assume the terms of the
settlement as set forth in the 2002 Confirmation Order. If ABN were to terminate
or reject the Health Benefits Settlement, the Trust Participants may hold assert
Class 5 Miscellaneous Unsecured Claims which could require the Debtor to make
significant one time payments as opposed to smaller incremental payments under
the terms of the 2002 Confirmation Order.

B.       SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.

         The 2002 Plan assumed the Supplemental Executive Retirement Plan (the
"SERP") between ABN and certain plan participants dated April 1, 1994 as
amended. Pursuant to the SERP, ABN was required to pay retirement benefits to
plan participants calculated according to the provisions of the SERP. The only
SERP participant as of the Petition Date is Sheldon Cantor.

         Mr. Cantor has been placed into Class 6 SERP Claims under the Plan and
has agreed to treatment as set forth in section 4.6 of the Plan. Mr. Cantor has
indicated that he will vote in favor of the Plan.

                                       45
<PAGE>

C.       CANTOR CONSULTING AGREEMENT.

         On the Effective Date of the Plan, the Reorganized Debtor and Mr.
Cantor will enter into a consulting agreement (the "Cantor Consulting
Agreement"). The Cantor Consulting Agreement is attached as EXHIBIT H to the
Plan.

D.       ASSUMPTION OF WEISSMAN CONSULTING, NON-COMPETITION, AND TERMINATION
         AGREEMENT.

         The 2002 Plan assumed the Consulting, Non-Competition, and Termination
Agreement between ABN and Morris Weissman ("Weissman") dated March 13, 2000 as
amended by the Amendment to Consulting, Non-Competition and Termination
Agreement dated June 26, 2000 (the "Agreement"). Pursuant to the Agreement, ABN
was required to pay Weissman $300,000.00 per annum as a consulting fee for three
years, payable in monthly installments of $25,000 per month. The Agreement
further provides that Weissman will receive payments under ABN's SERP.

         In May 2004, ABN and Weissman entered into the Second Amendment to
Consulting, Non-Competition and Termination Agreement (the "Second Amendment").
The Second Amendment provides, INTER ALIA, that commencing in January 2005, and
continuing through 2011, the monthly payments to Weissman by ABN in connection
with the SERP will be $16,412 per month. The Second Amendment further provides
that commencing in July 2011, and continuing until Weissman's death (unless he
is survived by his current spouse, in which case the payments will continue to
her until her death), the monthly payments to be made by ABN to Wiessman in
connection with the SERP shall be $12,000 per month.

         The Debtor believes it is beneficial to assume the Agreement with
amendments thereto. If ABN were to reject the Agreement, Weissman may assert a
Class 5 Miscellaneous Unsecured Claim which could require the Debtor to make a
significant one time payment under the Agreement as opposed to smaller
incremental payments as called for by the Agreement.

E.       ASSUMPTION OF EXECUTIVES' CONTRACTS.

         The Debtor intends to assume employment agreements with Patrick J.
Gentile, the Debtor's Executive Vice President and Chief Financial Officer, and
Steven G. Singer, the Chairman of the Debtor's Board of Directors. Copies of
these employment agreements are attached hereto as EXHIBIT G.

F.       USDA CLAIM.

         In the third quarter of 2003, the USDA gave the Debtor final
notification and delivery instructions for the remaining food coupons held in
secure storage by the Debtor pursuant to its distribution contract with the USDA
which expired on September 30, 2003. The Debtor fully performed and completed
the remaining two months of service pursuant to the terms of this contract, and
in the normal course billed the USDA approximately $1.5 million in accordance
with the contract. The Debtor formally requested in writing that it be paid in


                                       46
<PAGE>

full pursuant to the terms of the contract and the USDA formally denied
approximately $1.4 million of the Debtor's claim. At a status conference on
April 13, 2004, before the USDA Board of Contract Appeals, the government
acknowledged that approximately $0.2 million of the claim was approved for
payment internally and should therefore be released to the Debtor. Payment was
received by the Debtor in the second quarter of 2004 and was appropriately
recognized as revenue in that period. On February 1, 2005, the case on the
balance of the claim (with accrued interest thereon) was found in favor of USDA
before the USDA Board of Contract Appeals. The Debtor is reviewing a possible
appeal of the case based upon the merits.

G.       BRAZILIAN TAX CLAIMS.

         Through December 31, 2003, ABNB had been assessed approximately $23
million in prior years from the Brazilian tax authorities relating to taxes
other than income taxes. The assessments are in various stages of administrative
process or in lower courts of the judicial system and are expected to take years
to resolve. It is the opinion of ABNB's Brazilian counsel that an unfavorable
outcome on these assessments is not probable. To date, the Debtor has received
favorable court decisions on matters similar to some of the ones included in the
above amount for, approximately, $5.6 million. Thus the Debtor believes that the
eventual outcomes of these assessments will not have a material impact on the
Debtor's consolidated financial position or results of operations. As a result
the Debtor has not made any significant provision for the assessments.

H.       LITHUANIA CLAIM.

         In October 2003, the Debtor notified the Bank of Lithuania,
("Lithuania"), that it would not make its scheduled installment settlement
payment of $0.5 million due October 1, 2003 due to its cash flow constraints.
The payment was part of a remaining $1.7 million settlement obligation between
the Debtor and Lithuania that was entered into the New York Bankruptcy Court and
became effective upon the October 1, 2002 consummation of the 2002 Plan. Both
parties initially entered into a discussion in an attempt to restructure the
balance of the obligation to avoid further litigation. Counsel for Lithuania
indicated, however, that the Debtor's initial proposal was unacceptable and
issued a notice of default. As a result of the default, the entire $1.7 million
obligation was recorded as a current liability in accounts payable and accrued
expenses at December 31, 2003 and continued to accrue default interest at the
prevailing rate. On May 21, 2004, the New York Bankruptcy Court granted summary
judgment in favor of Lithuania ordering the Debtor to pay $1.7 million, which
was the outstanding principal, plus the related interest thereon. On August 31,
2004, the Debtor paid the $1.7 million principal plus accrued interest to
Lithuania.

I.       ANATEL FINE.

         On September 22, 2004, the Brazilian Telecommunications Commission
("Anatel"), levied a $0.8 million fine against ABNB, citing ABNB's failure to
comply with new product material specifications in connection with inductive
phone cards that are sold to the local telephone company. ABNB has reviewed the
claim with legal counsel and believes that it has meritorious defenses against
the assessment.

                                       47
<PAGE>

                     VII. MANAGEMENT OF REORGANIZED DEBTOR

         As of the Effective Date, the management, control and operation of the
Reorganized Debtor will become the general responsibility of the Board of
Directors of Reorganized Debtor.

A.       BOARD OF DIRECTORS AND MANAGEMENT.

         1.       COMPOSITION OF THE BOARD OF DIRECTORS.

         The initial Board of Directors of Reorganized Debtor will consist of
six (6) members. Each of the members of the initial Board of Directors of
Reorganized Debtor shall serve until the first annual meeting of stockholders of
Reorganized Debtor or their earlier resignation or removal in accordance with
the Amended Certificate of Incorporation or Amended By-Laws, as the same may be
amended from time to time. Set forth below is the name of each such director,
together with a brief biography:

STEVEN G. SINGER has served as Chairman of the Board and Chief Executive Officer
and as a Director of the Debtor since November 2000. From 1995 through 2000, Mr.
Singer served as Executive Vice President and Chief Operating Officer of Romulus
Holdings, Inc., a family owned investment fund. Mr. Singer also serves as
Chairman and Chief Executive Officer of Pure 1 Systems, a manufacturer and
distributor of water treatment products. Mr. Singer is a Director and the
Non-Executive Chairman of the Board of Globix Corporation and of Motient
Corporation, both publicly traded companies. Steven Singer is an affiliate of
Castor Investments, LLC and certain other entities that hold Notes and Old
Common Stock.

SIDNEY LEVY has served as Director of the Debtor since June 1998 and has served
as President of ABNB since February 1994.

RAYMOND L. STEELE has served as a Director of the Debtor since March 2001. Mr.
Steele has served as a director of Modernfold, Inc. since 1991, I.C.H.
Corporation since 1998, DualStar Technologies Corporation since 1998 and Globix
Corporation since 2003.

STEVEN A. VAN DYKE has served as a Director of the Debtor since July 2001. He
has been a managing principal of Bay Harbour Management L.C. since 1987. Bay
Harbour is an investment advisor and manages private equity and debt funds. He
is a Chartered Financial Analyst and is a member of both the Financial Analysts
Society of Central Florida and the Association for Investment Management and
Research. Mr. Van Dyke has served on the board of directors of Barneys New York,
Inc. since 1999 and Buckhead America Corporation since 1997. Steven Van Dyke is
an affiliate of Bay Harbour Management L.C. and certain other entities that hold
Notes and Old Common Stock.

LLOYD I. MILLER has served as Director of the Debtor since October 2002. Mr.
Miller is an independent investor and currently serves as a director of Aldila,
Inc., Stamps.com, Celeritek Inc., and Dynabazaar. He is a member of the Chicago
Board of Trade and the Chicago Stock Exchange, and is a Registered Investment
Advisor. Lloyd Miller is an affiliate of Milfam II, L.P. and certain other
entities that hold Notes and Old Common Stock.

                                       48
<PAGE>

JAMES DONDERO has served as Director of the Debtor since October 2002. Mr.
Dondero has served as President of Highland Capital Management, L.P., a
registered investment advisor specializing in credit and special situation
investing, since 1993. Mr. Dondero currently serves as a director of
NeighborCare, Inc., Hedstrom, Audio Visual Corporation and Motient Corporation.
James Dondero is an affiliate of Highland Capital Management, L.P. that holds
Notes and Old Common Stock.

         2.       IDENTITY OF PRINCIPAL OFFICERS.

         Set forth below is the name of each of the persons who have been
proposed to serve as principal officers of the Reorganized Debtor as of the
Effective Date and their proposed positions:

         NAME                                     POSITION
         ----                                     --------
Steven G. Singer                Chairman of the Board and Chief Executive
                                Officer

Patrick J. Gentile              Executive Vice President and Chief Financial
                                Officer

David M. Kober                  Vice President and General Counsel

Craig Weiner                    Acting Treasurer

Elaine Lazaridis                Corporate Secretary and Chief Administrative
                                Officer

B.       STOCK INCENTIVE PLAN.

         In connection with the Plan, the Reorganized Debtor will adopt the
Stock Incentive Plan that is intended to provide incentives to attract, retain
and motivate highly competent persons as officers, non-employee directors and
key employees of the Reorganized Debtor by providing such persons with incentive
options to acquire shares of New Issued Common Stock of Reorganized Debtor. (A
copy of the Stock Incentive Plan is annexed to the Plan as EXHIBIT C).

         Additionally, the Stock Incentive Plan is intended to assist in further
aligning the interests of Reorganized Debtor's directors, officers, key
employees, and consultants to those of its stockholders.

         Under the Stock Incentive Plan 700,000 shares of New Issued Common
Stock of Reorganized Debtor will be reserved for issuance. Approval of the Plan
will also constitute approval of the Stock Incentive Plan. The Stock Incentive
Plan will be adopted as part of the Plan.

         Pursuant to the Stock Incentive Plan, all options issued are required
to have an exercise price no less than $85,483,125 divided by the total number
of New Issued Common Stock as of the Effective Date of the Plan (the "Bankruptcy


                                       49
<PAGE>

Stock Value"). Similarly, any Restricted Shares to be issued under the Stock
Incentive Plan are required to be issued at a price no less than the Bankruptcy
Stock Value.

                       VIII. THE EXIT FINANCING AGREEMENT

         On the Effective Date, in accordance with the Exit Financing Agreement
(attached to the Plan as EXHIBIT F), the Exit Financing Parties shall transfer
$16,000,000 to the Debtor in return for the Exit Financing Securities in the
following amounts:

                                           Exit Financing           New Issued
                                               Amount              Common Stock
Bay Harbour Partners, Ltd.                   $2,000,000                233,964
Lloyd I. Miller, III                         $2,000,000                233,964
Pollux Investments, LLC                      $2,000,000                233,964
Highland Capital Management L.P.            $10,000,000              1,169,822
                                            -----------              ---------
         TOTAL                              $16,000,000              1,871,714

         The Exit Financing will be used to make certain of the Cash
distributions provided for under the Plan, including the payments for certain
Administrative Claims, Priority Claims, Other Priority Claims, Miscellaneous
Secured Claims, Miscellaneous Unsecured Claims, SERP Claims, Equity Interests,
and interests of DE MINIMIS Equity Holders. Additionally, the Exit Financing
will be used to meet the Debtor's working capital needs, including funding
operations and paying employees during the months following the Effective Date
of the Plan.

         The Exit Financing Parties will receive New Issued Common Stock at 75
percent (75%) of the Debtor's equity value as of the Effective Date. The Debtor
explored the possibility of obtaining Exit Financing in return for a note or
other type of financial instrument, but was concerned about its ability to
service that note or instrument in addition to the New Notes. The Debtor turned
to certain insiders of the company to determine if they were willing to provide
the Exit Financing in exchange for New Issued Common Stock. After negotiating
with the Exit Financing Parties, the Exit Financing Agreement was agreed to.
While the Exit Financing Parties are receiving the New Issued Common Stock at a
discount, such funds are absolutely necessary for the Debtor's reorganization,
and because of the company's financial condition, it is unlikely that the Debtor
would be able to obtain financing on similar terms to that to be provided by the
Exit Financing Parties. Outside lenders are generally unwilling to take the risk
associated with lending cash in exchange for equity in a debtor and an exchange
of equity for the Exit Financing was vital to the Debtor's ability to emerge
from Chapter 11 with a serviceable debt load. Furthermore, the Exit Financing
Parties are not seeking fees or expense reimbursement.

         THE EXIT FINANCING PARTIES OR THEIR AFFILIATES ARE INSIDERS OF THE
DEBTOR AND PERSONS ASSOCIATED WITH THE EXIT FINANCING PARTIES SERVE ON THE BOARD
OF DIRECTORS OF THE DEBTOR.

                                       50
<PAGE>

                        IX. ALTERNATIVES TO CONFIRMATION
                          AND CONSUMMATION OF THE PLAN

         The Debtor believes that the Plan affords holders of Claims and Equity
Interests the potential for the greatest realization on Debtor's assets and,
therefore, is in the best interest of such holders.

         If the Plan is not confirmed, however, the theoretical alternatives
include (a) continuation of this Chapter 11 Case, (b) an alternative
reorganization plan or plans, or (c) liquidation of the Debtor under Chapter 7
or Chapter 11 of the Bankruptcy Code.

A.       CONTINUATION OF THE CHAPTER 11 CASE.

         If the Debtor remains in Chapter 11, the Debtor could continue to
operate its businesses and manage its properties as a debtor in possession, but
it would remain subject to the restrictions imposed by the Bankruptcy Code. The
Debtor could have difficulty retaining employees and maintaining vendor
relations, and will likely incur high costs and the erosion of market confidence
if the Debtor remains a Chapter 11 debtor in possession. Ultimately, the Debtor
(or other parties in interest) could propose another plan or liquidate under
Chapter 7.

B.       LIQUIDATION.

         If no Plan is confirmed, the Debtor's Chapter 11 Case may be converted
to a case under Chapter 7 of the Bankruptcy Code. In a Chapter 7 case, a trustee
or trustees would be appointed to liquidate the assets of the Debtor for
distribution in accordance with priorities established by Chapter 7. Although it
is impossible to predict precisely how the proceeds of the liquidation would be
distributed to the respective holders of Claims and Equity Interests, a
discussion of the effects that a Chapter 7 liquidation would have on the
recoveries of holders of Claims and Equity Interests and the Debtor's
liquidation analysis is set forth above.

         The Debtor believes that in a liquidation under Chapter 7, before
creditors receive any distribution, additional administrative expenses involved
in the appointment of a trustee or trustee and attorneys, accountants and other
professionals to assist such trustees would cause a substantial diminution in
the value of the estate. The Debtor believes that liquidation under Chapter 7
would result in smaller distributions being made to creditors and holders of
Equity Interests than those provided for in the Plan because (a) the Debtor's
assets would have to be sold or otherwise disposed of in a forced sale situation
over a comparatively short period of time, (b) additional administrative
expenses would be involved in the appointment of a trustee, and (c) additional
expenses and claims, some of which would be entitled to priority, would be
generated during the liquidation and from the rejection of leases and other
executory contracts in connection with a cessation of the Debtor's operations.

C.       ALTERNATIVE PLAN OF REORGANIZATION.

         If the Plan is not confirmed, the Debtor (or if the Debtor's exclusive
period in which to file a plan of reorganization has expired, any other party in
interest) could attempt to formulate a different plan. Such a plan might involve
an orderly liquidation of the Debtor's assets. The Debtor has explored various


                                       51
<PAGE>

alternatives in connection with the formulation and development of the Plan. The
Debtor believes that the Plan, as described herein, enables creditors and
holders of Equity Interests to realize the most value under the circumstances.
In a liquidation under Chapter 11, the Debtor's assets would be sold in an
orderly fashion over a more extended period of time than in a liquidation under
Chapter 7, possibly resulting in a somewhat greater (but indeterminate) recovery
than would be obtained in a Chapter 7 case, and the expenses for professional
fees would most likely be lower than those incurred in a Chapter 7 case.
Although preferable to a Chapter 7 liquidation, the Debtor believes that a
liquidation under Chapter 11 is a much less attractive alternative to creditors
and holders of Equity Interests than the Plan offers because of the greater
returns provided by the Plan.

         The likely form of any liquidation would be the sale of individual
assets. Based on this analysis, it is likely that a liquidation of the Debtor's
assets would produce less value for distribution to creditors than that
recoverable in each instance under the Plan. In the opinion of the Debtor, the
recoveries projected to be available in a liquidation are not likely to afford
holders of Claims and Equity Interests as great a realization potential as does
the Plan.

                     X. APPLICABILITY OF FEDERAL AND OTHER
               SECURITIES LAWS TO THE NEW ISSUED COMMON STOCK AND
                   NEW NOTES TO BE DISTRIBUTED UNDER THE PLAN

A.       NEW ISSUED COMMON STOCK TO BE ISSUED TO HOLDERS OF CLAIMS AND EQUITY
         INTERESTS UNDER THE PLAN.

         In reliance upon an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and state securities and
"blue sky" laws afforded by section 1145 of the Bankruptcy Code, the New Issued
Common Stock to be issued on the Distribution Date to holders of Class 3 Note
Claims and Class 7 Equity Interests pursuant to the Plan, will not need to be
registered under the 1933 Act or any state securities or "blue sky" laws.
Accordingly, shares of New Issued Common Stock issued pursuant to the Plan may
be resold by any holder without registration under the 1933 Act or other Federal
securities laws pursuant to the exemption provided by section 4(l) of the 1933
Act, unless the holder is an "underwriter" with respect to such securities, as
that term is defined in the Bankruptcy Code (a "Statutory Underwriter"). In
addition, such securities generally may be resold by the recipients thereof
without registration on the state level pursuant to various exemptions provided
by the respective laws of the several states. Recipients of securities issued to
holders of Allowed Claims and Equity Interests under the Plan, however, are
advised to consult with their own counsel as to the availability of any such
exemption from registration under Federal or state law in any given instance and
as to any applicable requirements or conditions to the availability thereof.

         Section 1145(b) of the Bankruptcy Code defines a Statutory Underwriter
for purposes of the 1933 Act as one who (i) purchases a claim with a view to
distribution of any security to be received in exchange for the claim, (ii)
offers to sell securities issued under a plan for the holders of such
securities, (iii) offers to buy securities issued under a plan from persons
receiving such securities, if the offer to buy is made with a view to
distribution of such securities or (iv) is a controlling person of the issuer of
the securities, in this case, the Reorganized Debtor.

                                       52
<PAGE>

         Pursuant to the Plan, certificates evidencing shares of New Issued
Common Stock received by holders who may be "affiliates" or "underwriters" under
the 1933 Act (as determined in the reasonable discretion of the Board of
Directors of the Reorganized Debtor) will bear a legend substantially in the
form below:

         THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AMERICAN BANKNOTE CORPORATION
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

B.       NEW ISSUED COMMON STOCK TO BE DISTRIBUTED IN ACCORDANCE WITH THE EXIT
         FINANCING AGREEMENT.

         An aggregate of 1,871,714 shares of the New Issued Common Stock will be
issued to the Exit Financing Parties on the Effective Date pursuant to section
7.10 of the Plan. These Exit Financing Parties have previously entered into an
Exit Financing Agreement, which Exit Financing Agreement will remain in full
force and effect after confirmation of the Plan. Unlike the New Issued Common
Stock to be issued to holders of Claims and Equity Interests under the Plan,
these shares of New Issued Common Stock being issued to the Exit Financing
Parties are not subject to the exemption under section 1145 of the Bankruptcy
Code. The offer and sale of these shares of New Issued Common Stock will not be
registered under the 1933 Act or under any state securities laws.

         THE OFFER AND ISSUANCE OF THE NEW ISSUED COMMON STOCK IS BEING MADE IN
RELIANCE UPON EXEMPTIONS FROM REGISTRATION PROVIDED BY SECTION 4(2) OF THE
SECURITIES ACT OF 1933 AND REGULATION D PROMULGATED THEREUNDER AND SIMILAR
EXEMPTIONS FROM REGISTRATION PROVIDED BY CERTAIN STATE SECURITIES LAWS. THE NEW
ISSUED COMMON STOCK IS BEING OFFERED ONLY TO "ACCREDITED INVESTORS" WHO HAVE THE
QUALIFICATIONS NECESSARY TO PERMIT THE NEW ISSUED COMMON STOCK TO BE OFFERED AND
SOLD IN RELIANCE UPON SUCH EXEMPTIONS AND WHO MEET THE SUITABILITY STANDARDS SET
FORTH IN THE PLAN.

         THIS OFFERING OF NEW ISSUED COMMON STOCK SHALL NOT CONSTITUTE AN OFFER
TO SELL TO OR A SOLICITATION OF AN OFFER TO BUY FROM ANYONE IN ANY STATE OR
OTHER JURISDICTIONS IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.

         AN INVESTMENT IN THE NEW ISSUED COMMON STOCK IS SPECULATIVE AND
INVOLVES A HIGH DEGREE OF RISK. SEE SECTION XI, "RISK FACTORS TO BE CONSIDERED."
INVESTORS MUST BE PREPARED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN
INDEFINITE PERIOD AND BE ABLE TO WITHSTAND A TOTAL LOSS OF THEIR INVESTMENT.

                                       53
<PAGE>

         NEITHER THE SEC NOR ANY STATE REGULATORY AUTHORITY HAS APPROVED THE
SECURITIES OFFERED HEREBY OR THE TERMS OF THIS OFFERING, PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS DISCLOSURE STATEMENT OR ENDORSED THE MERITS OF THE
OFFERING.

         The Debtor has made and will make available to the Exit Financing
Parties purchasing the shares of New Issued Common Stock, prior to any closing
of the sale of the New Issued Common Stock, the opportunity to ask questions of
and to receive answers from representatives of the Debtor concerning the Debtor
and the terms and conditions of the offering and to obtain any additional
relevant information to the extent the Debtor possesses such information or can
obtain it without unreasonable effort or expense.

         THE EXIT FINANCING PARTIES MUST BE AWARE OF THE POTENTIALLY LONG-TERM
NATURE OF THEIR INVESTMENT IN THE NEW ISSUED COMMON STOCK. THE EXIT FINANCING
PARTIES WILL NOT BE ABLE TO TRANSFER THEIR NEW ISSUED COMMON STOCK (I) UNLESS
SUCH EXIT FINANCING PARTY COMPLIES WITH THE REGISTRATION REQUIREMENTS UNDER THE
1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) SUCH EXIT FINANCING PARTY
CAN DEMONSTRATE THAT THERE IS AN EXEMPTION AVAILABLE FROM SUCH REGISTRATION
REQUIREMENTS. IN CONNECTION WITH ANY TRANSFER OF THE NEW ISSUED COMMON STOCK,
THE REORGANIZED DEBTOR MAY REQUIRE THAT AN EXIT FINANCING PARTY PROVIDE IT WITH
A LEGAL OPINION STATING THAT THE TRANSFER COMPLIES WITH APPLICABLE SECURITIES
LAWS. THE REORGANIZED DEBTOR MAY REQUIRE AN EXIT FINANCING PARTY TO PAY ANY
COSTS THEY INCUR AS A RESULT OF A TRANSFER AS A CONDITION TO SUCH TRANSFER.
THERE IS NO PUBLIC TRADING MARKET FOR THE NEW ISSUED COMMON STOCK AND IT IS
UNLIKELY THAT A TRADING MARKET WILL DEVELOP IN THE FUTURE. THE DEBTOR IS UNDER
NO OBLIGATION TO FACILITATE ANY TRANSFER OF THE NEW ISSUED COMMON STOCK.
THEREFORE, AN EXIT FINANCING PARTY MAY BE REQUIRED TO BEAR THE ECONOMIC RISKS OF
ITS INVESTMENT IN THE NEW ISSUED COMMON STOCK FOR AN INDEFINITE PERIOD OF TIME.

         Pursuant to the Plan, certificates evidencing the New Issued Common
Stock issued to Exit Financing Parties for cash will bear a legend substantially
in the form below:

         THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AMERICAN BANKNOTE CORPORATION
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

                                       54
<PAGE>

C.       REORGANIZED DEBTOR WILL NO LONGER BE A PUBLIC COMPANY.

         The New Issued Common Stock issued to holders of certain Claims and
Equity Interests under the Plan and sold to new the Exit Financings Parties for
cash under the Plan will be issued to fewer than 300 holders of record. As a
result, the Reorganized Debtor will deregister and will no longer be required to
file periodic reports (such as Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q) with the SEC.

         Class 4 (Note Convenience Claims) and Class 8 (DE MINIMIS Equity
Holders) are not receiving distributions of New Issued Common Stock so as to
keep the number of holders of New Issued Common Stock below three hundred (300).
Creditors in Class 4 (Note Convenience Claims) and holders of interests in Class
8 (DE MINIMIS Equity Holders) will, however, receive a distribution at least
equal in value to distributions to be made to creditors and holders of interests
in Class 3 (Note Claims) and Class 7 (Equity Interests), respectively.

D.       NEW NOTES TO BE ISSUED TO HOLDERS OF NOTE CONVENIENCE CLAIMS UNDER THE
         PLAN.

         In reliance upon an exemption from the registration requirements of the
1933 Act, and state securities and "blue sky" laws afforded by section 1145 of
the Bankruptcy Code, the New Notes to be issued on the Effective Date to certain
holders of Allowed Class 4 Note Convenience Claims pursuant to the Plan, will
not need to be registered under the 1933 Act or any state securities or "blue
sky" laws. Accordingly, the New Notes issued to holders of Allowed Class 4 Note
Convenience Claims pursuant to the Plan may be resold by any holder without
registration under the 1933 Act or other Federal securities laws pursuant to the
exemption provided by section 4(l) of the 1933 Act, unless the holder is a
Statutory Underwriter with respect to such securities. In addition, such
securities generally may be resold by the recipients thereof without
registration on the state level pursuant to various exemptions provided by the
respective laws of the several states. However, recipients of securities issued
to holders of Allowed Claims under the Plan are advised to consult with their
own counsel as to the availability of any such exemption from registration under
Federal or state law in any given instance and as to any applicable requirements
or conditions to the availability thereof.

         Section 1145(b) of the Bankruptcy Code defines a Statutory Underwriter
for purposes of the 1933 Act as one who (i) purchases a claim with a view to
distribution of any security to be received in exchange for the claim, (ii)
offers to sell securities issued under a plan for the holders of such
securities, (iii) offers to buy securities issued under a plan from persons
receiving such securities, if the offer to buy is made with a view to
distribution of such securities or (iv) is a controlling person of the issuer of
the securities, in this case, the Reorganized Debtor.

         Entities deemed to be Statutory Underwriters may be able to sell
securities without registration pursuant to the provisions of Rule 144 under the
1933 Act which, in effect, permits the public sale of securities received
pursuant to the Plan by Statutory Underwriters subject to the availability of
public information concerning Reorganized Debtor's volume limitations, holding
periods and certain other conditions. Entities who believe they may be Statutory
Underwriters under the definition contained in section 1145 of the Bankruptcy
Code are advised to consult their own counsel with respect to the availability
of the exemption provided by such Rule.

                                       55
<PAGE>

         Pursuant to the Plan, certificates evidencing New Notes received by
holders who may be "affiliates" or "underwriters" under the 1933 Act (as
determined in the reasonable discretion of the Board of Directors of Reorganized
Debtors) will bear a legend substantially in the form below:

         THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY
NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR
QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AMERICAN
BANKNOTE CORPORATION RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

E.       STOCKHOLDERS' AGREEMENT.

         The Exit Financing Parties and certain of their affiliates and the
Reorganized Debtor will enter into a Stockholders' Agreement with respect to the
shares of New Issued Common Stock of the Reorganized Debtor acquired by or
otherwise issued to the Exit Financing Parties and certain of their affiliates
pursuant to the Plan. The Stockholders' Agreement will grant the Exit Financing
Parties and certain of their affiliates contractual preemptive rights to
maintain their percentage ownership of the Reorganized Debtor upon any new
issuance of equity securities by the Reorganized Debtor, subject to exceptions
for stock issued under the Stock Option Plan or in connection with acquisition
transactions, by purchasing additional equity interests in the Reorganized
Debtor on the same terms as those offered to third parties. In addition, the
Exit Financing Parties and certain of their affiliates will agree not to
transfer their equity interests in the Reorganized Debtor, other than to an
affiliate of such Exit Financing Parties, without first offering to sell such
equity interests to the other Exit Financing Parties. Finally, the Stockholders'
Agreement will also contain customary "drag-along" and "tag-along" rights with
respect to sales of equity interests in the Reorganized Debtor by the Exit
Financing Parties and certain of their affiliates.

F.       REORGANIZATION VALUES.

         THE ESTIMATED VALUE OF THE REORGANIZED DEBTOR AND, THUS, THE NEW ISSUED
COMMON STOCK AND THE NEW NOTES TO BE ISSUED UNDER THE PLAN ARE PROVIDED IN
SECTION V.D ("VALUATION OF REORGANIZED DEBTORS") TO THIS DISCLOSURE STATEMENT.

         THE FOREGOING ESTIMATED VALUATIONS HAVE BEEN PREPARED BY AN INDEPENDENT
VALUATION SOURCE. NEVERTHELESS, ACTUAL VALUATIONS COULD MATERIALLY AND
SIGNIFICANTLY DIFFER FROM THOSE INCLUDED HEREIN. THE DEBTOR AND AMPER MAKE NO
REPRESENTATION AS TO THE ACCURACY OF THE VALUATIONS SET FORTH HEREIN. MANY OF
THE ASSUMPTIONS ON WHICH THE VALUATIONS ARE BASED ARE SUBJECT TO SIGNIFICANT
UNCERTAINTIES.

                                       56
<PAGE>

                       XI. RISK FACTORS TO BE CONSIDERED

         HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR SHOULD
READ AND CONSIDER CAREFULLY THE FACTORS SET FORTH BELOW AND THE FACTORS SET
FORTH IN THE DEBTOR'S MOST RECENT 10K (ATTACHED HERETO AS EXHIBIT C) AND RECENT
10Q (ATTACHED HERETO AS EXHIBIT D) UNDER THE HEADING "RISK FACTORS" AS WELL AS
THE OTHER INFORMATION SET FORTH IN THIS DISCLOSURE STATEMENT (AND THE DOCUMENTS
DELIVERED TOGETHER HEREWITH AND/OR INCORPORATED BY REFERENCE), PRIOR TO VOTING
TO ACCEPT OR REJECT THE PLAN. THESE RISK FACTORS SHOULD NOT, HOWEVER, BE
REGARDED AS CONSTITUTING THE ONLY RISKS INVOLVED IN CONNECTION WITH THE PLAN AND
ITS IMPLEMENTATION.

         The ultimate recoveries under the Plan to holders of Claims and Equity
Interests depend upon the realizable value of the New Issued Common Stock. The
securities to be issued pursuant to the Plan are subject to a number of material
risks, including, but not limited to, those specified below. Prior to voting on
the Plan, each holder of a Claim and Equity Interest should carefully consider
the risk factors specified or referred to below.

A.       SIGNIFICANT HOLDERS.

         Upon the consummation of the Plan, certain holders of Claims and Equity
Interests will receive distributions of shares of New Issued Common Stock. If
holders of significant numbers of shares of New Issued Common Stock were to act
as a group, such holders may be in a position to control the outcome of actions
requiring stockholder approval, including the election of directors. This
concentration of ownership could also facilitate or hinder a negotiated change
of control of Reorganized Debtor and, consequently, impact upon the value of the
New Issued Common Stock.

         Further, the possibility that one or more of the holders of significant
numbers of shares of the New Issued Common Stock may determine to sell all or a
large portion of their shares of New Issued Common Stock in a short period of
time may adversely affect the price of the New Issued Common Stock.

B.       LACK OF ESTABLISHED MARKET FOR NEW COMMON STOCK.

         The Reorganized Debtor will not be a public reporting company, and so
will not file periodic reports, such as annual reports on Form 10-K and
quarterly reports on Form 10-Q, with the SEC, nor will it otherwise make any
similar information publicly available. The majority of the shares of New Issued
Common Stock of the Reorganized Debtor issued pursuant to the Plan will be
restricted securities and therefore will not be freely tradable under applicable
securities laws. The shares of New Issued Common Stock, including restricted
securities as well as those shares that are freely tradable, will not be listed
on any stock exchange or electronic stock market, and so it is unlikely that any


                                       57
<PAGE>

market for the new common stock will develop. If any market for such shares does
develop, since the Reorganized Debtor will not provide any financial or other
business information about itself to the public, such market will be uninformed
and likely will not accurately reflect the value of the New Issued Common Stock.
As a result, the shares of New Issued Common Stock of the Reorganized Debtor
will be a highly illiquid investment.

C.       DIVIDEND POLICIES.

         The Reorganized Debtor does not anticipate paying any dividends on the
New Issued Common Stock in the foreseeable future. In addition, the covenants in
any future financing facility to which Reorganized Debtor may be a party may
limit the ability of Reorganized Debtor to pay dividends. Certain institutional
investors may only invest in dividend-paying equity securities or may operate
under other restrictions which may prohibit or limit their ability to invest in
the New Issued Common Stock.

D.       PROJECTED FINANCIAL INFORMATION.

         The Projected Financial Information included in this Disclosure
Statement is dependent upon the successful implementation of the business plan
and the validity of the other assumptions contained therein. These projections
reflect numerous assumptions, including confirmation and consummation of the
Plan in accordance with its terms, the anticipated future operations of
Reorganized Debtor's business, and certain assumptions with respect to
competitors of Reorganized Debtor, general business and economic conditions and
other matters, many of which are beyond the control of the Reorganized Debtor.
In addition, unanticipated events and circumstances occurring subsequent to the
preparation of the projections may affect the actual financial results of the
Reorganized Debtor. Although the Debtor believes that the projections are
attainable, some or all of the estimates will vary and variations between the
actual financial results and those projected may be material.

         THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH
THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS ("AICPA") OR THE FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB").
FURTHERMORE, THE PROJECTIONS HAVE NOT BEEN AUDITED OR REVIEWED BY THE DEBTOR'S
INDEPENDENT ACCOUNTANTS. WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THE
PROJECTIONS ARE BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS, WHICH,
ALTHOUGH DEVELOPED AND CONSIDERED REASONABLE BY THE DEBTOR, MAY NOT BE REALIZED
AND ARE SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, AND COMPETITIVE UNCERTAINTIES
AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE REORGANIZED
DEBTOR AND ITS MANAGEMENT. CONSEQUENTLY, THE PROJECTIONS SHOULD NOT BE REGARDED
AS AND DO NOT CONSTITUTE A REPRESENTATION OR WARRANTY BY THE DEBTOR, OR ANY
OTHER PERSON OR ENTITY, AS TO THE ACCURACY OF THE PROJECTIONS OR THAT THE
PROJECTIONS WILL BE REALIZED. ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE
PRESENTED IN THE PROJECTIONS.

                                       58
<PAGE>

E.       COMPETITIVE CONDITIONS AND TECHNOLOGICAL CHANGE.

         Certain of the Debtor's competitors are larger and have substantially
greater financial, research and development resources and more extensive
marketing power than the Debtor. There can be no assurance that additional
competitors will not enter markets that the Debtor plans to serve or that the
Debtor will be able to withstand the competition. Moreover, changes in
technology could lower the cost of competitive services to a level where the
Debtor's services would become less competitive or where the Debtor would need
to reduce its prices in order to remain competitive, which could have a material
adverse effect on the Debtor's business plan.

F.       MAINTENANCE OF OPERATIONS AND POST-PETITION FINANCING.

         Although the Debtor believes that it will have sufficient funds to meet
its obligations under the Plan, the failure by the Debtor to obtain sufficient
funds to meet its obligations under the Plan would pose serious risks to the
Debtor's viability, and could preclude consummation of the Plan or any other
recapitalization or reorganization.

G.       REORGANIZED DEBTOR WILL BE A PRIVATE COMPANY.

         The New Issued Common Stock issued to holders of certain Claims and
Equity Interests under the Plan and sold to new the Exit Financings Parties for
Cash under the Plan will be issued to fewer than 300 holders of record. As a
result, the Reorganized Debtor will deregister and will no longer be required to
file periodic reports (such as Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q) with the SEC.

         Class 4 (Note Convenience Claims) and Class 8 (DE MINIMIS Equity
Holders) are not receiving distributions of New Issued Common Stock so as to
keep the number of holders of New Issued Common Stock below three hundred.
Creditors in Class 4 (Note Convenience Claims) and holders of interests in Class
8 (DE MINIMIS Equity Holders) will, however, receive a distribution at least
equal in value to distributions to be made to creditors and holders of interests
in Class 3 (Note Claims) and Class 7 (Equity Interests), respectively.

H.       CERTAIN BANKRUPTCY CONSIDERATIONS.

         1.       EFFECT ON NON-FILING SUBSIDIARIES OR AFFILIATES.

         The filing of the Chapter 11 Case by the Debtor and the publicity
attendant thereto might also adversely affect the businesses of the non-filing
subsidiaries. The Debtor is a holding company that has no operations of its own.
Because the financial viability and business of the Debtor is wholly dependent
upon the businesses of its non-filing subsidiaries, any downturn in the
businesses of the non-filing subsidiaries as a result of the Debtor's Chapter 11
Case would also affect the Debtor's prospects. Although the Debtor does not
believe that the Chapter 11 Case has adversely affected the businesses of the
non-filing subsidiaries in a material way, if the Chapter 11 Case becomes
protracted, the possibility of adverse effects on such subsidiaries may
increase.

                                       59
<PAGE>

         2.       FAILURE TO CONFIRM THE PLAN.

         Section 1129 of the Bankruptcy Code requires, among other things, a
showing that confirmation of the Plan will not be followed by liquidation or the
need for further financial reorganization of the Debtor (SEE Section V.C.3 and
V.C.4, "Feasibility" and "Best Interests Test And Liquidation Analysis"), and
that the value of distributions to dissenting holders of Claims and Equity
Interests may not be less than the value such holders would receive if the
Debtor were liquidated under Chapter 7 of the Bankruptcy Code. SEE Section V.C.3
and V.C.4, "Feasibility" and "Best Interests Test And Liquidation Analysis."
Although the Debtor believes that the Plan will meet such tests, there can be no
assurance that the Bankruptcy Court will reach the same conclusion.

         3.       FAILURE TO CONSUMMATE THE PLAN.

         Consummation of the Plan is conditioned upon, among other things, entry
of the Confirmation Order and an order (which may be the Confirmation Order)
approving the assumption and assignment of all executory contracts and unexpired
leases (other than those specifically rejected by the Debtor) to Reorganized
Debtor or its assignees. As of the date of this Disclosure Statement, there can
be no assurance that any or all of the foregoing conditions will be met (or
waived) or that the other conditions to consummation, if any, will be satisfied.
Accordingly, even if the Plan is confirmed by the Bankruptcy Court, there can be
no assurance that the Plan will be consummated.

            XII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN

         THE FOLLOWING DISCUSSION SUMMARIZES CERTAIN ANTICIPATED U.S. FEDERAL
INCOME TAX CONSEQUENCES OF THE TRANSACTIONS PROPOSED IN THE PLAN TO THE DEBTOR
AND TO THE HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR WHO HOLD
SUCH CLAIMS AND EQUITY INTERESTS AS CAPITAL ASSETS. THIS DISCUSSION ASSUMES THAT
THE NOTES ARE PROPERLY TREATED AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES.
THE SUMMARY IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS BASED ON THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "TAX CODE"), THE TREASURY
REGULATIONS PROMULGATED THEREUNDER, JUDICIAL AUTHORITY, AND CURRENT
ADMINISTRATIVE RULINGS AND PRACTICE, ALL AS IN EFFECT AS OF THE DATE HEREOF AND
ALL OF WHICH ARE SUBJECT TO CHANGE, POSSIBLY WITH RETROACTIVE EFFECT THAT COULD
ADVERSELY AFFECT THE DEBTOR, ITS CREDITORS, AND EQUITY SECURITY HOLDERS.

         THE SUMMARY DOES NOT ADDRESS ALL ASPECTS OF FEDERAL INCOME TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF A CLAIM OR EQUITY INTEREST IN
LIGHT OF ITS PARTICULAR FACTS AND CIRCUMSTANCES OR TO CERTAIN TYPES OF HOLDERS
OF CLAIMS OR EQUITY INTERESTS SUBJECT TO SPECIAL TREATMENT UNDER THE TAX CODE
(INCLUDING, FOR EXAMPLE, CURRENT AND FORMER EMPLOYEES, FOREIGNERS, FINANCIAL
INSTITUTIONS, BROKER-DEALERS, LIFE INSURANCE COMPANIES, AND TAX-EXEMPT
ORGANIZATIONS) AND ALSO DOES NOT DISCUSS ANY ASPECTS OF STATE, LOCAL, OR FOREIGN
TAXATION. THE FOLLOWING SUMMARY DOES NOT ADDRESS THE FEDERAL INCOME TAX
CONSEQUENCES TO HOLDERS WHOSE CLAIMS ARE UNIMPAIRED UNDER THE PLAN OR WHOSE
CLAIMS WILL BE PAID IN FULL IN CASH UPON CONSUMMATION OF THE PLAN.

         IN ADDITION, A SUBSTANTIAL AMOUNT OF TIME MAY ELAPSE BETWEEN THE
CONFIRMATION DATE AND THE RECEIPT OF A FINAL DISTRIBUTION UNDER THE PLAN. EVENTS
SUBSEQUENT TO THE DATE OF THIS DISCLOSURE STATEMENT, SUCH AS ADDITIONAL TAX
LEGISLATION, COURT DECISIONS, OR ADMINISTRATIVE CHANGES, COULD AFFECT THE
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN AND THE TRANSACTIONS CONTEMPLATED
THEREUNDER.

                                       60
<PAGE>

         NO RULING WILL BE SOUGHT FROM THE INTERNAL REVENUE SERVICE (THE
"SERVICE") WITH RESPECT TO ANY OF THE TAX ASPECTS OF THE PLAN AND NO OPINION OF
COUNSEL HAS BEEN OBTAINED BY THE DEBTOR WITH RESPECT THERETO. ACCORDINGLY, EACH
HOLDER OF A CLAIM OR EQUITY INTEREST IS STRONGLY URGED TO CONSULT WITH ITS OWN
TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF
THE PLAN.

A.       FEDERAL INCOME TAX CONSEQUENCES TO THE DEBTOR.

         1.       CANCELLATION OF INDEBTEDNESS INCOME.

         A taxpayer generally must include in gross income for federal income
tax purposes the amount of any discharge of indebtedness income realized during
the taxable year. The Debtor will realize discharge of indebtedness income to
the extent (i) the sum of the adjusted issue prices, as determined for federal
income tax purposes, of Claims discharged pursuant to the Plan exceeds (ii) the
sum of the amount of Cash, the issue prices of the New Notes and any other debt
issued under the Plan and the fair market value of any stock and other
consideration issued under the Plan in full or partial satisfaction of such
Claims. There is an exception, however, to the extent payment of the Claims
would have given rise to a tax deduction. Another exception will apply because
the discharge of indebtedness is being accomplished pursuant to a Plan approved
by the Court in a proceeding under the Bankruptcy Code. However, to the extent
the latter exclusion applies, the Debtor's discharge of indebtedness income will
reduce its net operating losses and net operating loss carryforwards ("NOLs")
and certain other tax assets on a dollar-for-dollar basis (except, in the case
of credits which are reduced by one dollar for every three dollars of excluded
discharge of indebtedness income) remaining after the determination of the
Debtor's taxable income for the taxable year of the discharge or, if the Debtor
so elects, the excluded discharge of indebtedness income will first reduce the
basis of the Debtor's depreciable property (subject to certain limitations) and
then its NOLs and certain other tax assets.

         2.       LIMITATIONS ON NOLS AND OTHER TAX ATTRIBUTES.

         If a corporation undergoes an "ownership change," within the meaning of
Section 382 of the Tax Code, its NOLs and, if a threshold test is satisfied, its
built-in losses (i.e., losses that are economically accrued but not yet
recognized for tax purposes) and certain other tax assets allocable to periods
prior to the ownership change date ("Pre-Change Losses") that may be utilized to
offset future taxable income or tax liability will be subject to an annual
limitation (the "Annual Limitation") equal to the value of the stock of the


                                       61
<PAGE>

corporation immediately before the ownership change multiplied by a rate
published monthly by the Service. Furthermore, if the corporation does not
continue its historic business or use a significant portion of its business
assets in a new business for two years after the ownership change, this Annual
Limitation will be zero. An exception applies if the ownership change occurs
pursuant to a plan approved by the Court in a proceeding under the Bankruptcy
Code, provided shareholders and creditors receive at least 50% of the vote and
value of the corporation's stock in exchange for qualified claims and interests
pursuant to the bankruptcy plan. Under this exception (the "First Bankruptcy
Exception"), the corporation's Pre-Change Losses are not subject to an Annual
Limitation, but instead are reduced by interest deducted during that and the
three prior years on debt converted to stock pursuant to the bankruptcy plan.
However, if this First Bankruptcy Exception applies and, during the following
two years, the corporation has another ownership change, the Annual Limitation
in the subsequent ownership change will be zero, effectively preventing the
corporation from using any of the Pre-Change Losses it had at the time of the
subsequent ownership change. If the requirements to apply this First Bankruptcy
Exception are not satisfied or if the corporation elects not to apply it,
another special rule allows a corporation that has an ownership change pursuant
to a plan approved by the Court in a proceeding under the Bankruptcy Code to
compute the Annual Limitation resulting from the ownership change by reference
to the value of the corporation's stock after the discharge of indebtedness
pursuant to the plan.

         An ownership change of the Debtor occurred upon confirmation of the
2002 Plan. As a result of the 2002 ownership change, an Annual Limitation (the
"2002 Limitation") applies to the Pre-Change Losses that the Debtor had at that
time. It has not yet been determined whether a second ownership change will
occur as a result of the issuance of New Issued Common Stock pursuant to the
Plan or as a result of changes of ownership after the Effective Date of the
Plan. If another ownership change results from the Plan or thereafter, another
Annual Limitation will limit the Debtor's use of the Pre-Change Losses it has at
the time of the second ownership change, including Pre-Change Losses that are
also subject to the 2002 Limitation. The Debtor will continue to evaluate
whether the Plan will cause an ownership change and, if so, whether the
ownership change will qualify for, and if it does, whether the Debtor should
elect out of, the First Bankruptcy Exception.

B.       FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF CLAIMS AND EQUITY
         INTERESTS.

         1.       IN GENERAL.

         The federal income tax consequences of the Plan to a holder of a Claim
or Equity Interest will depend, in part, on whether such Claim or Equity
Interest constitutes a "security" for federal income tax purposes, the length of
time the Claim or Equity Interest has been held, what type of consideration was
received in exchange for the Claim or Equity Interest, whether the holder
reports income on the accrual or cash basis, whether the holder has taken a bad
debt deduction or worthless security deduction with respect to the Claim or
Equity Interest and whether the holder receives distributions under the Plan in
more than one taxable year. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISOR
TO DETERMINE THE TAX EFFECT OF THE PLAN AS IT APPLIES TO THEIR PARTICULAR
CIRCUMSTANCES.

                                       62
<PAGE>

         2.       TREATMENT OF GAIN OR LOSS.

         Assuming a Claim or Equity Interest is held as a capital asset, gain or
loss recognized on a deemed or actual exchange of the Claim or Equity Interest
will be capital gain or loss, subject to various exceptions, some of which are
discussed below.

                  a.       Accrued Interest.

         To the extent the amount of Cash and the value of property received by
a holder of a Claim (whether such property is New Issued Common Stock, New Notes
or any other property and whether or not such Cash or property is received in an
exchange which qualifies as a tax-free recapitalization) is received in
satisfaction of interest that accrued during the period that the holder held the
Claim, such amount generally will be taxable to the holder as interest income to
the extent the holder did not previously include the accrued interest in its
gross income. The amount of accrued interest with respect to Note Claims will be
determined in accordance with the original issue discount provisions of the Tax
Code.

         Pursuant to the Plan, distributions to a holder of Notes will be
allocated first to the portion of the holder's Note Claims representing
principal and then to the portion of the Claims representing accrued unpaid
interest. There is no assurance, however, that this allocation will be respected
by the Service for federal income tax purposes.

                  b.       Market Discount.

         The market discount bond provisions of the Tax Code may cause gain that
is recognized by a holder of a Claim to be treated in whole or in part as
ordinary income. Under these provisions, a Claim (other than one with a fixed
maturity of one year or less) that is acquired by a holder in the secondary
market (or, in limited circumstances, upon original issuance) is a "market
discount bond" as to the holder if its stated redemption price at maturity (or,
in the case of a Claim having original issue discount, its revised issue price)
exceeds the holder's tax basis in the Claim immediately after it was acquired. A
Claim will not be a market discount bond, however, if such excess is less than a
statutory de minimis amount. Gain that is recognized with respect to a market
discount bond generally will be treated as ordinary interest income to the
extent of the market discount that accrued during the period that the holder
held the Claim, unless the holder elected to include the market discount in
income as it accrued.

                  c.       Amortizable Bond Premium.

         Generally, if a Claim is held as a capital asset and the holder's tax
basis in the Claim exceeds the amount payable at maturity, the excess
constitutes amortizable bond premium which the holder can elect to amortize and
deduct over the period from acquisition to maturity of the Claim, generally as
an offset to interest income, calculated under the constant interest rate
method. In such case, the holder must reduce its tax basis in the Claim by the
amount amortized and deducted as bond premium. If a Claim that was purchased at
a premium is exchanged pursuant to the Plan and, as discussed below, the
exchange is treated as a taxable exchange, a holder of the Claim that has been
amortizing and deducting bond premium may deduct any remaining unamortized bond
premium at the time of the exchange.

                                       63
<PAGE>

         3.       FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF CLAIMS AND
                  EQUITY INTERESTS.

                  a.       Federal Income Tax Consequences to Holders of Allowed
                           Class 3 Note Claims.

         Pursuant to the Plan, each holder of an Allowed Class 3 Note Claim will
receive its Ratable Portion of 7,920,884 shares of New Issued Common Stock in
exchange for its Claim. Whether this exchange will qualify as a tax-free
"recapitalization" within the meaning of Section 368(a) of the Tax Code is
discussed below. If the exchange qualifies as a tax-free recapitalization, a
holder of Allowed Class 3 Note Claims will not recognize gain or loss on the
exchange of the Claims for New Issued Common Stock (except to the extent the New
Issued Common Stock is received on account of interest not previously included
in income by the holder). The holder will have a tax basis in the New Issued
Common Stock (other than New Issued Common Stock received on account of
interest) equal to the holder's tax basis in the Note Claims (other than the
portion of the Claims attributable to interest). The holder will include its
holding period for the Note Claims in its holding period for the New Issued
Common Stock (other than New Issued Common Stock received on account of
interest). A holder will have ordinary interest income to the extent of the
value of the New Issued Common Stock received on account of interest not
previously included in income by the holder. A holder's tax basis in New Issued
Common Stock received on account of interest will be equal to the value of such
stock at the time of the exchange, and the holding period for such stock will
begin on the day after the exchange. If the exchange of Allowed Class 3 Note
Claims for New Issued Common Stock is a tax-free recapitalization and the holder
of an Allowed Class 3 Note Claim has accrued market discount with respect to its
Claim, the holder may be required to treat all or part of any gain recognized on
a subsequent disposition of the New Issued Common Stock as ordinary income under
the market discount rules (SEE section XII.B.2.b).

         Whether the exchange of an Allowed Class 3 Note Claim for New Issued
Common Stock will qualify as a tax-free recapitalization depends on whether the
Claim is a "security" for federal income tax purposes. The term "security" is
not defined in the Tax Code or the Treasury Regulations thereunder. The
determination of whether a particular debt instrument is a "security" depends
upon an evaluation of the overall nature of the debt instrument. One of the most
significant factors is the original term of the debt instrument. Historically,
debt instruments with a weighted average maturity at issuance of five years or
less, such as trade debt and revolving credit obligations, have generally been
thought not to constitute securities, while debt instruments with a weighted
average maturity at issuance of ten years or more generally have been thought to
constitute securities. The Service recently ruled that when a debt instrument
that is a security is exchanged for another debt instrument with substantially
the same terms, including the same maturity date, but at the time of the
exchange, the remaining term of the debt instrument is only two years, the new
debt instrument will be treated as a security even though its term at issuance
was well under five years. Based on this ruling, an Allowed Class 3 Note Claim
may be a security for federal income tax purposes, even though its term at
issuance was under five years.

                                       64
<PAGE>

         If Allowed Class 3 Note Claims are securities, the exchange of such
Claims for New Issued Common Stock will be a tax-free recapitalization, as
described above. If not, the exchange will be taxable and holders will recognize
gain or loss (except that New Issued Common Stock received on account of
interest not previously included in income by the holder will be treated as
interest income). The amount of gain or loss recognized by a holder will be
equal to the difference between the value of the New Issued Common Stock
received for Allowed Class 3 Note Claims (other than New Issued Common Stock
received on account of interest) and the holder's tax basis in the Allowed Class
3 Note Claims (other than the portion of the Claims attributable to interest). A
holder will have ordinary interest income to the extent of the value of the New
Issued Common Stock received on account of interest not previously included in
income by the holder. The holder's tax basis in New Issued Common Stock received
on account of interest will be the value of such Stock at the time of the
exchange, and the holding period for such Stock will begin on the day after the
exchange.

         If a holder of an Allowed Class 3 Note Claim had previously claimed a
bad debt or other ordinary loss deduction with respect to the Claim, gain on a
subsequent disposition of the New Issued Common Stock received in exchange for
the Claim (or any stock or property received in a tax-free exchange for the New
Issued Common Stock) will be treated as ordinary income to the extent of the
excess of the bad debt and ordinary loss deductions that were previously claimed
by the holder over any gain recognized as ordinary income on the exchange of the
Allowed Class 3 Note Claims for New Issued Common Stock.

                  b. Federal Tax Consequences to Holders of Allowed Class 4 Note
Convenience Claims.

         A holder of an Allowed Class 4 Note Convenience Claim will receive, at
its election, either New Notes with a principal amount equal to the amount of
the holder's Claim or Cash in an amount equal to 60% of the Claim.

         If a holder elects to receive only Cash in exchange for its Allowed
Class 4 Note Convenience Claim, the holder will recognize gain or loss equal to
the difference between the amount of Cash received (other than Cash received on
account of interest) and the holder's tax basis in the Claim (other than the
portion of the Claim attributable to interest). A holder will have ordinary
interest income to the extent Cash is received on account of interest not
previously included in income by the holder.

         If a holder elects to receive New Notes in exchange for Allowed Class 4
Note Convenience Claims and if both the Claims and the New Notes are
"securities" (SEE section XII.B.3.a), the exchange will be a tax-free
recapitalization in which the holder will not recognize gain or loss. The
holder's tax basis in the New Notes received in a tax-free recapitalization
(other than New Notes received on account of interest) will be equal to the
holder's tax basis in the Claims exchanged for the New Notes (other than the
portion of the Claims attributable to interest). The holding period of the New
Notes (other than New Notes received on account of interest) will include the
holding period of the Claims exchanged for the New Notes. A holder will have
ordinary interest income to the extent New Notes are received on account of
interest not previously included in income by the holder. A holder's tax basis
in New Notes received on account of interest will be equal to the amount of
interest satisfied with New Notes. The holding period of New Notes received on
account of interest will begin on the day after receipt.

                                       65
<PAGE>

         If a holder elects to receive New Notes in exchange for Allowed Class 4
Note Convenience Claims and (i) either the Claims or the New Notes are not
"securities" (SEE section XII.B.3.a) and (ii) the installment method does not
apply, the holder will recognize gain or loss equal to the difference between
the amount realized, which will be the issue price, determined as described
below, of the New Notes received in the exchange (other than New Notes received
on account of interest) and the holder's tax basis in the Claims exchanged for
the New Notes (other than the portion of the Claims attributable to interest).
If the installment method does not apply to a taxable exchange, the holder's tax
basis in the New Notes (other than New Notes received on account of interest)
will be equal to the issue price of the New Notes received in the exchange and
the holding period for the New Notes will begin on the day after the exchange. A
holder may report gain under the installment method, provided the holder is not
a dealer with respect to the property underlying the Claim, the holder is not
related to the Debtor within the meaning of the installment method rules, the
Claim is not an item of inventory for the holder and neither the Claim nor the
New Notes are publicly traded. If a holder is eligible to report gain on the
installment method, the holder must elect out of the installment method in order
for the installment method not to apply. In certain circumstances, a holder that
reports gain on the installment method may be required to pay an interest charge
on all or a portion of the tax liability that is deferred under the installment
method and may be required to treat any proceeds of a loan secured by the New
Notes as a payment on the New Notes. Regardless of whether the installment
method applies, a holder will have ordinary interest income to the extent New
Notes are received on account of interest not previously included in income by
the holder, as described in the previous paragraph.

         As discussed in the previous paragraph, the amount realized by a holder
in respect of New Notes received in exchange for Claims will be the "issue
price" of the New Notes. The "issue price" of the New Notes will depend on
whether a substantial amount of the New Notes is traded on an "established
securities market" during the sixty day period ending thirty days after the
Effective Date, in which case the "issue price" of the New Notes will be their
fair market value (which, in general, will be their trading price) or, if not,
whether a substantial amount of the New Notes is received for Note Claims that
are so traded, in which case the "issue price" of the New Notes will be the fair
market value of the Note Claims (which, in general, will be the trading price of
the Note Claims). Pursuant to Treasury regulations, an established securities
market need not be a formal market. It is sufficient if there is a system of
general circulation (including a computer listing disseminated to subscribing
brokers, dealers or traders) that provides a reasonable basis to determine fair
market value by recent price quotations or actual prices of recent sales
transactions, or if price quotations are readily available from brokers, dealers
or traders. If neither the Notes nor the New Notes are traded on an established
securities market, as so defined, the "issue price" of the New Notes will be
their stated principal amount, provided the stated interest rate on the New
Notes is at least equal to the relevant applicable federal rate. Although the
relevant applicable federal rate has not yet been published, it is likely that
the stated interest rate of the New Notes will be at least equal to the relevant
applicable federal rate.

                                       66
<PAGE>

         A holder of New Notes will be required to include in income any future
payments of interest on the New Notes in accordance with the holder's method of
accounting for federal income tax purposes.

                  c. Federal Income Tax Consequences To Holders Of Allowed Class
6 SERP Claims.

         Pursuant to the Plan, each holder of an Allowed Class 6 SERP Claim will
receive its Class 6 Distribution (which will be an amount of Cash equal to the
value of any amounts payable to the holder in the calendar year following the
filing of the Plan pursuant to any non-qualified executive retirement plan that
was outstanding when the Plan was filed). Such holders will have taxable income
equal to the amount of their Class 6 Distribution of Cash and will be subject to
applicable employment tax and withholding requirements.

                  d. Federal Income Tax Consequences to Holders of Allowed Class
7 Equity Interests.

         Each holder of an Allowed Class 7 Equity Interest that does not hold an
Allowed Class 8 De Minimis Equity Interest will receive New Issued Common Stock
and Cash in exchange for its Allowed Class 7 Equity Interest. Each holder of an
Allowed Class 8 De Minimis Equity Interest will receive only Cash in exchange
for its Equity Interest. The tax treatment of a holder of an Allowed Class 7
Equity Interest that also holds an Allowed Class 8 De Minimis Equity Interest is
discussed in section XII.B.1.e, below. The exchange of an Allowed Class 7 Equity
Interest for New Issued Common Stock and Cash will be a tax-free
recapitalization. Holders will not be entitled to recognize a loss on the
tax-free recapitalization exchange, but will recognize gain equal to the amount
of Cash received or, if less, the amount of gain realized in the exchange. The
amount of gain, if any, realized in the exchange will be the excess of the
amount of Cash plus the value of the New Issued Common Stock received in the
exchange over the holder's tax basis in its Equity Interest. The holder's tax
basis in the New Issued Common Stock received in the exchange will be equal to
the holder's tax basis in its Equity Interest, decreased by the amount of Cash
received in the exchange and increased by the amount of gain, if any, recognized
in the exchange. The holder's holding period for New Issued Common Stock
received in the exchange will include its holding period for the Equity Interest
exchanged for the New Issued Common Stock.

                  e. Federal Income Tax Consequences to Holders of Allowed Class
8 De Minimis Equity Interests.

         Holders of Allowed Class 8 De Minimis Equity Interests will receive
only Cash in exchange for their Equity Interests and will recognize gain or loss
in an amount equal to the difference between the amount of Cash they receive and
their tax basis in the Equity Interests.

                  f. Federal Income Tax Consequences to Holders of Allowed Class
9 Other Equity Interests.

         Holders of Allowed Class 9 Other Equity Interests whose Other Equity
Interests are canceled pursuant to the Plan generally will incur a loss in an
amount equal to the tax basis of their Other Equity Interests.

                                       67
<PAGE>

         4.       NEW ISSUED COMMON STOCK.

         Holders who receive New Issued Common Stock pursuant to the Plan will
be required to include in income as ordinary dividend income any future
distributions with respect to the New Issued Common Stock to the extent paid out
of the Debtor's current or accumulated earnings and profits as determined for
federal income tax purposes. Distributions in excess of earnings and profits
will reduce a holder's tax basis in the New Issued Common Stock and, to the
extent in excess of the holder's tax basis, will be treated as gain from a sale
or exchange of the New Issued Common Stock. Subject to applicable requirements
and limitations, corporate holders may be entitled to a dividends received
deduction to the extent distributions with respect to New Issued Common Stock
are paid out of the Debtor's current or accumulated earnings and profits.

         5.       DISPUTED CLAIMS RESERVE.

         Amounts earned in an escrow, settlement fund or similar account or fund
are subject to current federal income tax. Applicable Treasury Regulations do
not say how this requirement applies to a disputed claims reserve in a
bankruptcy proceeding. Furthermore, it is uncertain how property held in a
disputed claims reserve will affect the computation of a holder's gain or loss
with respect to a claim or equity interest or how subsequent distributions from
the disputed claims reserve will be treated, giving rise to the possibility of
taxable income without a corresponding receipt of cash or property with which to
satisfy the tax liability. Unless precluded from doing so by the Service or
unless future guidance indicates that a different treatment is required, the
Debtor expects to treat the Disputed Claims Reserve as a grantor trust of the
Debtor. Such treatment would not result in taxable to a holder of Claims or
Equity Interests in respect of income or gain of the Disputed Claims Reserve.
Rather, any such income or gain will be taxable income to the Debtor. If the
Service does not respect such treatment, however, holders of Claims or Equity
Interests might be subject to current tax with respect to property held in the
Disputed Claims Reserve. Holders of Claims and Equity Interests are urged to
consult their own tax advisor regarding the federal income tax treatment of the
Disputed Claims Reserve and the consequences to them of such treatment

         6.       WITHHOLDING AND INFORMATION REPORTING.

         A holder may be subject to backup withholding at applicable rates with
respect to consideration received pursuant to the Plan, unless the holder (i) is
a corporation or comes within another category of persons exempt from backup
withholding and, when required, demonstrates this or (ii) provides a correct
taxpayer identification number ("TIN") on Internal Revenue Service Form W-9 (or
a suitable substitute form) and provides the other information and makes the
representations required by such Form and complies with the other requirements
of the backup withholding rules. An otherwise exempt holder may become subject
to backup withholding if, among other things, the holder (i) fails to properly
report interest and dividends for federal income tax purposes or (ii) in certain
circumstances, fails to certify, under penalty of perjury, that it has furnished
a correct TIN. A holder that does not provide a correct TIN also may be subject
to penalties imposed by the Service.

                                       68
<PAGE>

         Backup withholding is not an additional tax. The federal income tax
liability of a person subject to backup withholding is reduced by the amount of
tax withheld. If withholding results in an overpayment of federal income tax,
the holder may obtain a refund of the overpayment by properly and timely filing
a claim for refund with the Service.

         The Debtor and the Disbursing Agent may be subject to other withholding
and information reporting obligations with respect to consideration distributed
pursuant to the Plan and will comply with all such obligations and information
reporting obligations.

         THE FOREGOING SUMMARY HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES
ONLY. HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR ARE URGED TO
CONSULT THEIR OWN TAX ADVISOR CONCERNING THE FEDERAL, STATE, LOCAL AND OTHER TAX
CONSEQUENCES OF THE PLAN.

                      XIII. CONCLUSION AND RECOMMENDATION

         The Debtor believes that confirmation and implementation of the Plan is
preferable to any of the alternatives described above because it will provide
the greatest recoveries to holders of Claims and Equity Interests. In addition,
other alternatives would involve delay, uncertainty and substantial additional
administrative costs. The Debtor urges holders of impaired Claims and Equity
Interests entitled to vote on the Plan to vote to accept the Plan and to
evidence such acceptance by returning their ballots so that they will be
received not later than 4:00 p.m., Delaware time, on March 24, 2005.

Dated:     February 22, 2005

                                          Respectfully submitted,

                                         AMERICAN BANKNOTE
                                         CORPORATION


                                         By:  /S/ Patrick J. Gentile
                                              ---------------------------
                                             Patrick J. Gentile
                                             Executive Vice President and
                                             Chief Financial Officer

                                       69
<PAGE>





                                    EXHIBIT A
                                       TO
         AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
         PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

                                    _______

              DEBTOR'S AMENDED PLAN OF REORGANIZATION UNDER CHAPTER
                            11 OF THE BANKRUPTCY CODE



                         [See Exhibit 2.5 to this 10-K]


<PAGE>





                                    EXHIBIT B
                                       TO
         AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
         PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

                                    _______
<PAGE>


                      IN THE UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE

_____________________________________________:              Chapter
In re:                                       :
                                             :      Case No.: 05-10174(PJW)
AMERICAN BANKNOTE                            :
CORPORATION,                                 :
                                             :
                                   Debtor.   :    (RE: Docket Nos. 20 and 55)
_____________________________________________:

                ORDER APPROVING AMENDED DISCLOSURE STATEMENT AND.
                 VOTING AND NOTICING PROCEDURES WITH RESPECT TO
                    DEBTOR'S AMENDED PLAN OF REORGANIZATION
                    ---------------------------------------

         Upon the motion (the "Motion") by the above-captioned debtor and debtor
in possession (the "Debtor") for the entry of fl eider, pursuant to sections
105, 1125 and 1126 of Chapter II of Title LI of the United States Code (the
"Bankruptcy Code") and Rules 2002, 3017, and 3018 of the Federal Rules of
Bankruptcy Procedure, approving (a) certain voting and noticing procedures In
respect of the Debtor's Amended Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code, dated February 22, 2005 (the "Plan") and (b) the Debtor's
Amended Disclosure Statement with Respect to Debtor's Amended Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, dated February 22. 2005
(the "Disclosure Statement") in respect of the Plan; end due notice of the
Motion having been given under the circumstances; and it appearing that no other
or further notice is necessary or required and it appearing that the relief
requested in the Motion is in the best interests of the Debtor, its estate, its
creditors and other parties in Interest; and after due deliberation and
sufficient cause appearing therefore; It is hereby

             ORDERED, that the Motion is granted. and it is further

             ORDERED, that the Disclosure Statement contains adequate
information within the meaning of section 1125 of the Bankruptcy Code and it is
further

             ORDERED, that the Debtor shall mail only the Confirmation Notice
(1) to holders of Claims and Equity Interests in Class 1 (Other Priority
Claims), Class 2 (Miscellaneous Secured Claims), C1ass 5 (Miscellaneous
Unsecured Claims) and Class 9 (Other Equity Interests); and it is further

             ORDERED, that only holders of Claims and Equity Interests in Class
3 (Note Claims), Class 4 (Note Convenience Claims), Class 6 (SERP Claims), Class
7 (Equity Interests) and Class 8 (DE MINIMIS Equity Interests) can vote to
accept or reject the Plan; and it is further

             ORDERED, that the Debtor is authorized to implement the following
Plan solicitation and voting procedures:

       1.     VOTING RECORD DATE: February 24,2005, shall be set as the record
              date to vote on the Plan (the "Voting Record Date"). Only those
              holders of record of Claims at 4:00 p.m. Delaware time on the
              Voting Record Date shall be entitled to vote to accept or reject
              the Plan.

                                       1
<PAGE>

       2.     Ballots: The following Ballots will be mailed to the following
              creditors; (a) Class 3 Note Claims Master Ballot will be mailed to
              brokers, proxy intermediaries or other nominees ("Nominees") of
              beneficial owners or entitlement holders ("Holders") of Class 3
              Note Claims whose Claim arising under from or under the Debtor's
              10 3/8% Senior Notes Due 2005 (the "Notes") is more than
              $45,000.00 (the "Class 3 Note Claims Master Ballot") (the Class 3
              Note Claims Master Ballot; shall be substantially in the form
              attached to the Motion as Exhibit 1); (b) Class 3 Note Claims
              Beneficial Owner/Entitlement Holder Ballot will be mailed to
              Holders of the Notes



---------
(1)    Capital terms not otherwise herein defined shall have the meaning
       ascribed to such terms in the Motion.

                                        2


<PAGE>

              whose Claims arising from or under the Notes is more than
              $45,000.00 (the "Class 3 Note Claims Beneficial Owner Ballot")
              (the Class 3 Note Claims Beneficial Owner Ballot shall be
              substantially in the form attached to the Motion as EXHIBIT 2) (c)
              Class 3 Note Claims (Certificated) Beneficial Owner/Entitlement
              Holder Ballot will be mailed to Holders of the Notes whose Claims
              arising from or under the Notes is mom than $45,000.00 and who
              hold the physical certificate(s) for such Notes (the "Class 3 Note
              Claims (Certificated) Beneficial Owner Ballot") (the Class 3 Note
              Claims (Certificated) Beneficial Owner Ballot shall be
              substantially in the form attached to the Motion as EXHIBIT 3 (d)
              Class 4 Note Convenience Claims Master Ballot will be mailed to
              the Nominees of Holders of the Notes whose Claims arising from or
              under the Notes is less than $45,000 (the "Class 4 Note
              Convenience Claims Master Ballot") (the Class 4 Note Convenience
              Claims Master Ballot shall be substantially in the Form attached
              hereto as Exhibit A; (e) Class 4 Note Convenience Claims
              Beneficial Owner Ballot will be mailed to Holders of the Notes
              whose Claims arising from or under the Notes is less than
              $45,000.00 (the "Class 4 Note Convenience Claims Beneficial Owner'
              Ballot") (the Class 4 Note Convenience Claims Beneficial Owner
              Ballot shall be substantially in the form attached to the Motion
              as Exhibit 5); (f) Class 4 Note Convenience Claims (Certificated)
              Beneficial Owner Ballot will be mailed to Holders of the Notes
              whose Claims arising from or under the Notes is less than
              $45,000.00 and who hold the physical certificate(s) for such Notes
              (the "Class 4 Note Convenience Claims (Certificated) Beneficial
              Owner Ballot') (the Class 4 Note Convenience Claims (Certificated)
              Beneficial Owner Ballot shall be substantially In the form
              attached to the Motion as


                                       3
<PAGE>


              EXHIBIT 6 (g) Class 6 SERP Claims Ballot shall be mailed to
              holders of Claims against the Debtor arising from any
              non-qualified supplemental executive retirement plan of the Debtor
              that remains outstanding as of the filing of' the Plan (the "Class
              6 SERP Claims Ballot") (the Class 6 SERP shall be substantially in
              the form attached to the Motion as EXHIBIT 7) (h) Class 7 Equity
              Interests Master Ballot will be mailed to Nominees of Holders of
              the Debtor's Old Common Stock who hold more than 500,000 in number
              of shares of Old Common Stock (the "Class 7 Equity Interests
              Master Ballot") (the Class 7 Equity Interests Master Ballot shall
              be substantially in the form attached to the Motion as EXHIBIT 8)
              (i) Class 7 Equity Interests Beneficial Owner Ballot will be
              mailed to Holders of the Debtor's Old Common Stock who hold more
              than 500,000 in number of shares of Old Common Stock (the `Class 7
              Equity Interests Beneficial Owner Ballot') (the Class 7 Equity
              Interests Beneficial Owner Ballot shall be substantially in' the
              form attached to the Motion as EXHIBIT 9) (j) Class 7 Equity
              Interests (Certificated) Beneficial Owner Ballot will be mailed to
              Holders of the Debtor's Old Common Stock who hold more than
              500,000 in number of shares of Old Common Stock and hold the
              physical certificate(s) for such Old Common Stock (the "Class 7
              Equity Interests (Certificated) Beneficial Owner Ballot") (the
              Class 7 Equity Interests (Certificated) Beneficial Owner Ballot
              shall be substantially in the form attached to the Motion as
              EXHIBIT 10 (k) Class 8 DE MINIMIS Equity Interests Master Ballot
              will be mailed to Nominees of Holders of the Debtor's Old Common
              Stock who hold less than 500,001 in number of shares of Old Common
              Stock (the "Class 8 DE MINIMIS Equity Interests Master Ballot)
              (the Class 8 DE MINIMIS Equity Interests Master Ballot shall be
              substantially in the font attached to the Motion AS EXHIBIT 11 (I)


                                       4
<PAGE>
              Class 8 DE MINIMIS Equity Interests Beneficial Ballot will be
              mailed to Holders of the Debtor's Old Common Stock who hold less
              than 500,001 in number of shares of Old Common Stock (the "Class 8
              DE MINIMIS Equity Interests Beneficial Owner Ballot") (the Class 8
              DE MINIMIS Equity Interests Beneficial Owner Ballot shall be
              substantially in the farm attached to the Motion as EXHIBIT 12 and
              (M) Class 8 DE MINIMIS Equity Interests (Certificated) Beneficial
              Ballot will he mailed to Holders of the Debtor's Old Common Stock
              who hold less than 500,001 in number of shares of Old Common Stack
              and who hold physical certificate(s) for such Old Common Stock
              (the "Class 8 DE MINIMIS Equity Interests (Certificated)
              Beneficial Owner Ballot (the Class 8 DE MINIMIS, Equity Interests
              (Certiflcate4) Beneficial Owner Ballot shall be substantially in
              the form attached to the Motion as EXHIBIT 13.

       3.     CONFIRMATION NOTICE: Upon approval by the Court of the Disclosure
              Statement, a package (the "Solicitation Package") containing: (a)
              the Confirmation Notice substantially in the form attached to the
              Motion as ("EXHIBIT 14") (b) the Disclosure Statement (with
              exhibits, including the Plan); (c) this Order, approving the
              Disclosure Statement; (d) the Ballot and/or Ballots (with
              instructions); and (a) a pre-addressed postage-paid return
              envelope, shall be mailed to claims holders entitled to vote to
              accept or reject the Plan. The Confirmation Notice shall be mailed
              to all parties listed on the Verified List of Creditors and
              Parties with Whom the Debtor Does Business tiled with the Court on
              January 19, 2005 and any amendments thereto who are not creditors
              or holders of Equity Interests


                                       5
<PAGE>

       4.     ALLOWANCE OF CLAIMS FOR VOTING PURPOSES: The following rules,
              standards and protocols for the allowance of each claim against
              the Debtor for voting purposes only (and not for any other
              purpose) shall be established:

              a.     With respect to a Claim as to which a proof of claim has
                     not been filed and as to which an objection has not been
                     filed prior to the end of the voting period (the "Voting
                     Period") fixed by the Court with respect to the Plan (as
                     may be extended by the Debtor), the voting amount OF such
                     Claim (subject to any applicable limitations set forth
                     below) shall be equal to the amount listed, if any, in
                     respect of such Claim in the Debtor's Schedules of Assets
                     and Liabilities ("Schedules) filed with (the Court on
                     January 19. 2005 (as amended from time to time), to the
                     extent such Claim is not listed as contingent,
                     unliquidated, undetermined or disputed. Such Claim shall be
                     placed in the appropriate Plan class based upon the
                     Debtor's records and the classification scheme set forth in
                     the Plan.

              b.     With respect to a liquidated non-contingent, undisputed
                     Claim as to which a proof or claim has been timely filed
                     and as to which an objection has not been filed prior to
                     the end of the Voting Period, the amount and classification
                     of such Claim shall be that specified in such proof of
                     claim subject to any applicable limitations as set forth
                     below.

              c.     With respect to a proof of claim which is the subject of an
                     objection filed prior to the Voting Period, the Claim
                     represented by such proof of claim shall be disallowed
                     provisionally for voting purposes, except to the extent and
                     in the manner that (i) the Debtor indicates that the Claim
                     should be allowed in the objection to such Claim; or (ii)
                     the Court allows on motion filed at least ten days prior to
                     the end of the Voting Period.

              d.     With respect to a Claim that has been estimated or
                     otherwise allowed for voting purposes by order of the
                     Court, the amount and classification of such Claim shall be
                     that set by the Court.

              e.     A timely fled proof of claim tat Is designated as wholly
                     unliquidated and/or contingent shall be accorded one vote
                     valued at one dollar for purposes of' section 1126(c) of
                     the Bankruptcy Code unless the Claim is disputed as set
                     forth in subparagraph (d) above, in which case such Claim
                     shall be disallowed provisionally for voting purposes
                     subject to the provisions set forth in subparagraph (d)
                     above.

              f.     With respect to a Claim that is unliquidated, contingent
                     and/or disputed in part, the holder of such Claim shall be
                     entitled to vote that portion of the Claim that is
                     liquidated, non-contingent and undisputed in the
                     liquidated, non-contingent and undisputed amount subject to
                     any limitations set forth herein and unless otherwise
                     ordered by the Court.


                                       6
<PAGE>

              g.     A holder shall not be entitled to vote a Claim to the
                     extent such Claim duplicates or has been superseded by
                     another Claim of such holder.

       5.     TABULATION OF BALLOT: The following rules, standards and protocols
              for the tabulation of Ballots shall be established:

              a.     For the purpose of voting an the Plan, the Balloting Agent
                     will be deemed to be in constructive receipt of any Ballot
                     timely delivered to any address that the Balloting Agent
                     (or its authorized agent) designates for the receipt of
                     Ballots cast In connection with the Plan.

              b.     Any Ballot received by the Balloting Agent after the
                     deadline for submission of Ballots shall not be counted,
                     unless the Debtor, in its discretion consents to the
                     counting or such Ballot or the Court orders such Ballot to
                     be counted.

              c.     Whenever a holder of a Claim or Equity Interest submits
                     more than one Ballot voting the same Claim or Equity
                     Interest prior to the deadline for submission of Ballots,
                     the last Ballot timely received will supersede and revoke
                     any earlier received Ballot. Whenever a Nominee or proxy
                     holder of a Nominee or beneficial owner submits mot than
                     one maser ballot to transmit the votes of beneficial owners
                     in respect to their Claims or Equity Interests prior to the
                     deadline for submission of master ballots, the last master
                     ballot timely received will supersede and revoke an earlier
                     received master ballot.

              d.     Creditors and holders of Equity interests must vote all of
                     their Claims or Equity Interests within a particular Plan
                     class either to accept or reject the Plan and may not split
                     their vote. Accordingly a Ballot that partially rejects and
                     partially accepts the Plan will not be counted.

              e.     If a Ballot is signed by Trustees, executors,
                     administrators, guardians, attorneys-in-fact, officers of
                     corporations, or other acting in a fiduciary or
                     representative capacity, such persons should indicate such
                     capacity when signing and, unless otherwise determined by
                     the Debtor, must submit proper evidence satisfactory to the
                     Debtor to so act on

              f.     Any Ballot that is delivered by facsimile; email or any
                     other electronic means or that does not contain an original
                     signature will not be counted unless such Ballot is a
                     Master Ballot which is faxed to the Balloting Agent and a
                     hard copy of the Master Ballot is sent to the Balloting
                     Agent immediately (hereafter.

              g.     All votes must BE cast using the Ballots and master ballots
                     distributed to the holders of Claims or Equity Interests.
                     Votes cast in any manner other than by using such Ballots
                     will not be counted.

                                       7
<PAGE>

              h.     ANY holder of a Claim or Equity Interests in an Impaired
                     class who has delivered a valid Ballet voting on the Plan
                     may withdraw such vote solely in accordance with Rule
                     3018(a) of the Federal Rules of Bankruptcy Procedure.

              i.     Any Ballot that is returned indicating acceptance or
                     rejection of the Plan but that is unsigned shall not be
                     counted.

              j.     If a holder of a Claim or Equity Interest casts
                     simultaneous duplicative Ballots voted inconsistently, such
                     Ballots shall count as one VOTE accepting the Plan.

              k.     Each holder of a Claim or Equity Interest shall be. deemed
                     to have, voted the full amount of its Claim or Equity
                     Interest.

              Subject to any contrary order of the Court, the Debtor reserves
              the absolute right to reject any and all Ballots or Master Ballots
              not proper in form the acceptance of which would, in the opinion
              of the Debtor or its counsel, not be in accordance with the
              provisions of the Bankruptcy Code. Subject to contrary order OF
              THE Court, the Debtor further reserves the right to waive any
              defects or irregularities or conditions of delivery as to any
              particular Ballot or Master Ballot unless otherwise directed by
              the Court. The Debtor's interpretation of the terms end conditions
              of the Plan (including the Ballot, the Master Ballot, and the
              voting instructions), unless otherwise directed by the Court shall
              be final and binding an all parties. Unless waived or as ordered
              by the Court any defects or irregularities in connection with
              deliveries of Ballots or Master Ballots must be cured within such
              time as the Debtor (or the Court) determines. Neither the Debtor
              nor any other person or entity will be under any duty to provide
              notification of defects or irregularities with respect to
              deliveries of Ballots or Master Ballots or incur any liability for
              failure to provide such notification. Unless otherwise directed by
              the Court delivery of such Ballots or Master Ballots will not be
              deemed to have been made until such irregularities have been cured
              or waived. Ballots or Master Ballots previously furnished (and as
              to which any irregularities have not theretofore been cured or
              WAIVED) will not be counted.

       6.     CONFIRMATION HEARING AND PLAN-RELATED DEADLINES: The following
              deadlines in connection with the Plan confirmation process shall
              be set

                                       8
<PAGE>

              a.     Deadline for the Debtor to serve the Solicitation Packages:
                     Approximately thirty-five days prior to the Confirmation
                     Hearing. March 1.2005 at 4:00 p.m. Delaware time;

              b.     Deadline for Voting on the Plan (i.e., Voting Deadline):
                     Approximately fifteen days prior to the Confirmation
                     Hearing, March 24, 2005 at 4:00 p.m.;

              c.     Deadline for filing with the Court and serving upon counsel
                     for the Debtor objections to confirmation of the Plan:
                     Approximately nine days prior to the Confirmation Hearing,
                     Match 30, 2005 at 4:00 p.m.;

              d.     Deadline for filing and serving written responses to
                     objections to confirmation of the Plan: Approximately three
                     days prior to the Confirmation hearing April 5, 2005 at
                     4:00 p.m.;

              e.     Deadline fox filing the report of Plan voting.
                     Approximately two days before the Confirmation Hearing,
                     April 4, 2005; and

              f.     Confirmation Hearing: April 8, 2005 at 10:30 a.m. Delaware
                     time.

       7.     The Debtor shall publish the Confirmation Notice once in THE
              national edition of THE WALL STREET JOURNAL within 10 calendar
              days after entry by the Bankruptcy Court of this Order.

              ORDERED, that the form(2) at Class 3 Note Claims Master Ballot
attached s EXHIBIT 1 to the Motion IS approved; and IT is further

              ORDERED, that the form of the Class 3 Note Claims Beneficial Owner
Ballot attached as EXHIBIT 2 to the Motion IS approved; and it is further;

             ORDERED, that the form of the Class 3 Note Claims (Certificated)
Beneficial Owner Ballot attached as EXHIBIT 3 to the Motion is approved: and it
is further;

              ORDERED, that the form of the revised Class 4 Note Convenience
Claims Master Ballot attached hereto as EXHIBIT A is approved: and it is
further;

              ORDERED, that the form of the Class 4 Note Convenience Claims
Beneficial Owner Ballot attached as EXHIBIT 5 to the Motion is approved; and it
is further;

              ORDERED, that the form of the Class 4 Note Convenience Claims
(Certificated) Beneficial Owner Ballot attached as EXHIBIT 6 to the Motion is
approved; and it is further;


---------
(2)    The form of the ballots are approved with any necessary changes to the
       dates contained in the ballots to reflect dates consisting with those set
       forth in this order.


                                       9
<PAGE>

              ORDERED, that the form of the Class 6 SERP Claims Ballot attached
as EXHIBIT 7 to the Motion is approved; and it is further

              ORDERED, that the form of the Class 7 Equity Interests Master
Ballot attached as EXHIBIT 8 to the Motion is approved; and it is further

              ORDERED, that the form of the Class 7 Equity Interests Beneficial
Owner Ballot attached as EXHIBIT 9 to the Motion is approved; and it is further

              ORDERED, that the form of the Class 7 Equity Interests
(Certificated) Beneficial Owner Ballot attached as EXHIBIT 10 to the Motion is
approved; and it is further

              ORDERED, that the form of the Class 8 DE MINIMIS Equity Interests
Master Ballot attached as Exhibit 4 to the Motion is approved; and it is further

              ORDERED, that the form of the Class 8 DE MINIMIS Equity Interests
Beneficial Owner Ballot attached as Exhibit 12 to the Motion is approved; and it
is further

              ORDERED, that the form of the Class 8 DE MINIMIS Equity Interests
Master Ballot attached as Exhibit 13 to the Motion is approved.

              ORDERED, that the Confirmation Notice attached as EXHIBIT B hereto
is approved~

Dated Wilmington, Delaware


                                            ____________________________________
                                            United States Bankruptcy Judge

                                       10
<PAGE>


                                    EXHIBIT A



                                                                 CLASS 4 (MASTER

   NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR ADVICE. OR TO MAKE
    ANY REPRESENTATION, OTHER THAN WHAT IS CONTAINED IN THE MATERIALS MAILED
     WITH THIS BALLOT OR OTHER MATERIALS AUTHORIZED BY THE BANKRUPTCY COURT

                      IN THE UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE

_________________________________________
In ~      Chapter 11                    :
                                        :
AMERICAN BANKNOTE                       :          Case No: 05-10174 (PJW)
CORPORATION.                            :
                                        :
                         DEBTOR.        :
_________________________________________

                MASTER BALLOT FOR ACCEPTING OR REJECTING AMENDED
                            PLAN OF REORGANIZATION OF
                          AMERICAN BANKNOTE CORPORATION
                          -----------------------------

                        (Class 4 Note Convenience Claims)
                          10 3/8% Senior Notes Due 2005
                               Cusip No. 024490AE4
                    Record Date for Voting: February 24, 2005

THIS MASTER BALLOT CANNOT BE USED BY BROKERS, PROXY INTERMEDIARIES OR OTHER
NOMINEES 0F BENEFICIAL OWNERS OR ENTITLEMENT OWNERS OF NOTES WHOSE CLAIMS
ARISING FROM OR UNDER TUB NOTES ARE MORE THAN $45,000. NOTEHOLDERS WHOSE CLAIMS
ARISING FROM OR UNDER THE NOTES ARE MORE THAN $45,000 MUST USE THE CLASS 3 (NOTE
CLAIMS) BALLOT TO VOTE.

         American Banknote Corporation (the "Debtor") filed an Amended Plain of
Reorganization under Chapter 11 of the Bankruptcy Code in the above-captioned
case, dated February 22, 2005 (the Plan). The United States. Bankruptcy Court
for the District of Delaware (the "Court") has approved the Amended Disclosure
Statement with Respect to Debtor's Amended Plan of Reorganization under Chapter
11 of the Bankruptcy Code, dated February 22, 2005 (the "Disclosure Statement"),
which provides information to assist you in deciding how to vote your Ballot. If
you do not have a Disclosure Statement., you may obtain a copy from MacKenzie
Partners, Inc. (the "`Balloting Agent"). Court approval of the Disclosure
Statement clues not indicate approval of the Plan by the Court

         This Master Ballot is being sent to brokers, proxy intermediaries, or
other nominees of beneficial owners or entitlement holders' of the Debtor's 10
3/8% Senior Notes Due 2005 (the "Notes") other than those holders whose claim
arising from or under the Notes is more than



---------
(1)      For purposes of completing this Master Ballot, the term "beneficial
         owner(s)" also includes entitlement holders under Article 8 of the
         Uniform Commercial Code.


                                      A-1
<PAGE>


                                                                Class 4 (Master)

$45,000 (the "Note Claims"). Holders of Note C1aims will receive a different
Ballot. The creditors of and equity interests in the Debtor whose claims or
equity interests are impaired under the Plan arc afforded the opportunity to
vote on the Plan, which may be confirmed by the Court and thereby made binding
on beneficial owners if it is accepted by the holders of at least two-thirds in
dollar amount and more than one-half in number of claims in each class of claims
voting on the Plan and by at least two-thirds in the amount of equity interests
in each class of equity interests voting on the Plan. In the event the requisite
acceptances are not obtained, the Court may nevertheless confirm the Plan if it
finds that the Plan accords fair and equitable treatment to the class or classes
rejecting it and otherwise satisfies the requirements of 11 U.S.C. ss. 1129(b).
To HAVE the votes of beneficial owners count, you must complete and return this
Master Ballot.

         You are required to deliver the beneficial owner ballot to each
beneficial owner for whom you hold the Notes, and take any action required to
enable each such beneficial owner to timely vote its Notes to accept or reject
the Plan. In addition, you are required to provide each beneficial holder with a
complete copy of this solicitation package. With regard to any beneficial owner
ballots returned to you, you must (a) execute the Master Ballot so as to reflect
the voting instructions given to you in the beneficial owner ballots by the
beneficial owners for whom you hold Notes and (b) forward such Master Ballot to
the Balloting Agent. If you are both the registered or record holder AND
beneficial owner of any Notes and you wish to vote such Notes, you must return a
beneficial owner ballot

         PLEASE COMPLETE, SIGN AND DATE THI SMASTER BALLOT AND RETURN IT SO THAT
`THEYY ARE ACTUALLY RECEIVED BY 4:00 P.M., DELAWARE TIME, ON MARCH 24, 2005 (THE
"VOTING DEADLINE") BY THE BALLOTING AGENT AT THE ADDRESS LISTED BELOW. MASTER
BALLOTS MAY BE RETURNED TO THE BALLOTING AGENT VIA FACSIMILE AT (212)-929-0308,
BUT MUST BE FOLLOWED BY A HARD COPY MAILEI) TO THE FOLLOWING ADDRESS WHICH MUST
BE SENT VIA OVERNIGHT COURII~R ON OR BEFORE MARCH 24, 2005,

                             MacKenzie Partners, Inc.
                             105 Madison Avenue, 4~ Floor
                             New York, New York 10016
                             Att'n~ Jeanne M. Carr
                             Telephone:  (212) 929-5500
                             Telephone:  (800) 322-2885
                             American Banknote Corporation

         IF THE MASTER BALLOT IS NW RECEIVED BY THE BALLOTING AGENT ON OR BEFORE
         THE VOTING DEADLINE, AND SUCH DEADLINE IS NOT EXTENDED, THE VOTES
         CONTAINED IN THE MASTER BALLOT WILL NOT COUNT AS EITHER AN ACCEPTANCE
         OR REJECTION OF THE PLAN. THE BALLOTS LAST BY FACSIMILE WILL NOT BE
         COUNTED UNLESS FOLLOWED BY A HARD COPY WHICH MUST BE SENT VIA OVERNIGHT
         COURIER ON OR BEFORE MARCH 24, 2005.

                                      A-2
<PAGE>


                       ACCEPTANCE ORREJECTION OF TUE PLAN
                       ----------------------------------

         Please note that each beneficial owner of Notes must vote all of the
Notes held by such owner. For purposes of tabulating the votes, each beneficial
owner shall be deemed to have voted the full amount of' Notes owned by such
beneficia1 owners according to your records. A beneficial owner may not split
its vote.

         VOTE ON PLAN BY AGGREGATE FACEAMOUNTAND NUMBER OF HOLDERS. As
instructed by the beneficial owners of the aggregate face amount of Notes set
forth below, the undersigned transmits the following votes of such beneficial
owners IN respect of their Notes:

<TABLE>
<S>                                 <C>
To ACCEPT (Vote FOR) The Plan .     $__________________________         _________________________
                                    Aggregate Face Amount of Notes      Aggregate Number of Holders
                                                                        of Notes

To REJECT (Vote AGAINST) The Plan   $_________________________

         CERTIFICATION. By signing THIS Master Ballot, the undersigned
certifies that it is the registered owner or securities intermediary as of the
Voting Record Date of $________ aggregate face amount of Notes, for which voting
instructions have, been received from beneficial owners for whom the undersigned
holds Notes in its name (the "Beneficial Owners").

-------------------------- ------------------------ ------------------------ ------------------------------------------------
                                                                                         Distribution Election
      Customer Name                                                                       (Check one box only)
        For Each
    Beneficial Owner              To Accept                To Reject
        Of Notes               (For) The Plan         (Against) the Plan)             Notes                     Cash
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
1.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
2.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
3.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
4.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
5.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
6.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
7.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
8.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
9.                         $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
10.                        $                        $
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
</TABLE>


         2. As the Debtor may be issuing New Notes to the beneficial holders,
you are required to provide the name of the beneficial holder.

                                      A-3
<PAGE>


         PLEASE MAKE SURE YOU HAVE INDICATED THE DISTRIBUTION ELECTION .SELECTED
BY THE BENEFICIAL OWNERS OF THE NOTES BY CHECKING THE APPROPRIATE BOX IN ITEM 2
ABOVE. IF YOU DO NOT CHECK A BOX, THE BENEFICIAL OWNER WILL BE DEEMED TO HAVE
SELECTED THE CASH ELECTION.

         3. The undersigned certifies that listed below (or attached hereto) is
a true and accurate schedule of the Beneficial Owners who have indicated that
they have accounts at other financial institutions and have voted the Beneficial
Owner Ballots transmitted to them by such financial institutions (please use
additional sheets of paper if necessary):

<TABLE>
-------------------------------- ------------------------------ ------------------------------ ------------------------------
                                                                      Customer Account
      Your Customer Name         Name of Registered Holder or          Number of Other
   For Each Beneficial Owner       Nominee of Other Account        Account (If Applicable)           Principal Amount
-------------------------------- ------------------------------ ------------------------------ ------------------------------
<S>                              <C>                            <C>                            <C>
1.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
2.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
3.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
4.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
5.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
6.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
7.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
8.                                                                                             $
-------------------------------- ------------------------------ ------------------------------ ------------------------------
</TABLE>


         By signing this Master Ballot, the undersigned certifies that each
Beneficial Owner Notes whose votes are being transmitted by this Master Ballot
bas been provided with a copy of the Debtor's Disclosure Statement, the Plan,
the order approving the Disclosure Statement, the notice of the confirmation
hearing and objection dates, and any solicitation material ordered by the Court
to he transmitted to holders of claims or interests entitled to vote or the
Plan.

         By signing this Master Ballot, the undersigned certifies that it is the
registered or record builder or securities intermediary of the Notes to which
this Master Ballot pertains and/or has full power and authority to vote to
accept or reject the Plan and will submit evidence oh' same upon request. T he
undersigned also acknowledges that the tabulation of' votes is subject to all
terms and conditions set forth in the Disclosure Statement relating to the Plan.

         This Master Ballot may not be used for any purpose other than for
casting votes to accept or reject. the Plan. This Master Ballot is to be used by
brokers, proxy intermediaries or other nominees and/or intermediaries for
casting votes to accept or reject the Plan on behalf of Beneficial Owners
holding Notes-

                                      A-4
<PAGE>


         This Master Ballot does NOR constitute and shall NOR be deemed to
constitute (a) a proof of claim or (b) an admission BY the Debtor of the nature,
validity, or amount of any claim. The Master Ballot is NOT a letter of
transmittal and may RIOT be used Car arty other purpose than to cast votes to
accept or reject the Plan. Holders should NOT surrender certificates
representing their securities AT this time, and the Debtor will NOT accept
delivery of any such certificates surrendered together with this Master Ballot.


                Name or Nominee:________________________________________________
                                              (Print Or Type)
             DTC Participant No: _______________________________________________

                      Signature:________________________________________________
                                      (Signature Of Nominee Or Authorized Agent)
              Prim Or Type Name:________________________________________________

                          Title:________________________________________________

                        Address:________________________________________________

               Telephone Number:________________________________________________

                           Date:________________________________________________

         THIS MASTER BALI.OT MUST BE RECEIVED BY 4:00 P.M., DELAWARE TIME, ON
         MARCH 24, 2003 BY THE BALLOTING AGENT OR YOUR CUSTOMERS' VOTES WILL NOT
         BE COUNTED. PLEASE MAKE SURE YOU HAVE PROVIDED ALL. INFORMATION
         REQUESTED. YOU SIIOULD NOT SUBMIT THE NOTES WITH THIS MASTER BALLOT.

         IF YOU HAVE ANY QUESTIONS REGARDING THIS MASTER BALLOT OR THE VOTING
         PROCEDURES, OR IF YOU NEED ADDITIONAL COPIES OF THE MASTER BALLOT, THE
         BENEFICIAL OWNER BALLOT, OR THE OTHER ENCLOSED MATERIALS, PLEASE CALL.
         THE BALLOTING AGENT AT (80FF) 322-2855.

         NOTHING CONTAINED. HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
         YOU OR ANY OTHER PERSON AS AN AGENT FOR THE DEBTOR OIL TUE BALLOTING
         AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
         ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE PLAN,
         EXCEPT FOR THE STATEMENTS CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH.

                                      A-5
<PAGE>

                  INSTRUCTIONS FOR COMPLETING THE MASTER BALLOT

         American Banknote Corporation (the "Debtor" is soliciting votes on its
Amended Plan of Reorganization under Chapter 11 of' the Bankruptcy Code, dated
February 22, 2005 (the "Plan"). referred to in the Amended Disclosure Statement
with Respect to Debtor's Amended Plan under Chapter 11 of the Bankruptcy Code,
dated February 22, 2005, (the "Disclosure Statement"). Please review the
Disclosure Statement and Plan carefully before you vote. Unless otherwise
defined, capitalized terms used herein and in the Ballot have the meanings
ascribed to them in the Plan

         THE MASTER BALLOT is NOT a letter of transmittal and may not be used
for any purpose other than to cast votes TO ACCEPT OR reject the Plan. Holders
should NOT surrender, at this time4 certificates representing their securities,
and MacKenzie Partners, Inc. ("the Balloting Agent") will NOT accept delivery of
such certificates together with this Master Ballot.

         To have the vote of your customers count, you must forward the
Solicitation Package to each beneficial interest holder of the Notes for voting
and include a return envelope provided by and addressed to you, with sufficient
lead time so that the beneficial holder may return the completed Ballot to you
by 4:00 p.m., Delaware time, on March 24. 2005. You must summarize the
individual votes OF your respective beneficial holders from their Ballots on
this Master Ballot, sign and return this Master Ballot so it is RECEIVED by the
Balloting Agent, at the address set forth on page 2 of the Ballot, no later than
4:00 p.m., Delaware time, on March 24, 2005 (the "Voting Deadline").

         THIS MASTER BALLOT CANNOT BE USED DY BROKERS, PROXY INTERMEDIARIES OR
OTHER NOMINEES OF BENEFICIAL OWNERS OR ENTITLEMENT OWNERS FOR NOTEHOLDERS WHOSE
CLAIMS ARISING FROM OR UNDER THE NOTES ARE MORE THAN $45,000.00. NOTEHOI.DERS
WHOSE CLAIMS ARISING FROM OR UNDER THE NOTES ARE MORE THAN $45,000.00 MUST USE
THE CLASS 3 (NOTE CLAIMS) BALLOT TO VOTE.

         To complete the Master Ballot properly, take the following steps:

         (a)      Provide appropriate information for each of the items on the
                  Master Ballot Please note that item 2 requests information for
                  each individual Beneficial Owner for whom you hold Notes in
                  your name who have returned ballots to you (the Beneficial
                  Holders"). Please identify the customer name of each such
                  Beneficial Holder.

         (b)      Vote to accept or reject the Plan in Item I. for the notes
                  held by you as the registered or record holder en behalf of
                  the Beneficial Holders.

         (c)      Fill in the information requested in Item 2.

         (d)      PLEASE MAKE SURE YOU HAVE INDICATED THE DISTRIBUTION ELECTION
                  SELECTED BY THE BENEFICIAL OWNERS OF THE NOTES BY CHECKING THE
                  APPROPRIATE BOX IN ITEM 2. IF YOU DO NOT CHECK A BOX THE
                  BENEFICIAL OWNER WILL BE DEEMED TO HAVE SELECTED THE CASH
                  ELECTION.


                                      A-6
<PAGE>


         (e}      Complete Item 3, if applicable.

         (f)      Read the Master Ballot carefully

         (g)      Sign and date your Master Ballot.

         (h)      [C you are completing this Master Ballot on behalf of another
                  entity, indicate your relationship with such entity and the
                  capacity in which you are signing.

         (1)      Provide your name and mailing address.

         (j)      No foes or commissions or other remuneration will he payable
                  to any broker, dealer or other person for soliciting ballots
                  accepting [he Plan. The Balloting Agent will provide you with
                  sufficient solicitation packages to comply with these
                  instructions.

         Return this Master Ballot so that it will be received by the Balloting
Agent by 4:00 p.m. Delaware time, on March 24, 2005.

         IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING
PROCEDURES, OR IF YOU NEED ADDITIONAL COPIES OF THE MASTER BALLOT, THE
BENEFICIAL HOLI)ER BALLOT, OR THE OTHER ENCLOSED MATERIALS, PLEASE CONTACT THE
BALLOTING AGENT AT (800) 322-2885.

         NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON THE AGENT OF THE DEBTOR OR THE BALLOTING AGENT, OR
AUTUORJZE YOU OR ANY OTHER PERSON TO USE ANY OR MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM WITH RESPECT TO TUE PLAN, EXCEPT FOR THE STATEMENTS CONTAINED IN THE
DOCUMENTS ENCLOSED HEREWITH.


                                      A-7
<PAGE>

                                    EXHIBIT B




         (5) Holders of Claims and Equity Interests in Class I (Other Priority
Claims), Class (Miscellaneous Secured Claims), Class S (Miscellaneous Unsecured
Claims), and Class 9 (Other Priority Claims) are receiving this confirmation
notice only.

         (6) In order to be considered as a vote to accept or reject the Plan, a
Ballot must be completed, executed, and received by the Balloting Agent, on or
before 4:00 p.m. (Delaware time) on March 24, 2005 (the "Voting Deadline"). A
Ballot shall NOR be deemed an acceptance or rejection unless it is received by
the flaunting Agent on a timely basis and identities a holder of a Claim and
indicates a vote. Copies of(a) the Disclosure Statement (which includes a copy
of the Plan as an exhibit), (b) a Ballot; and (e) other solicitation materials
may be obtained by holders of Claims or Equity Interests by contacting the
Balloting Agent, as follows:

                                 MacKenzie Partners, Inc.
                                 105 Madison Avenue,14th Floor
                                 New York. New York 10016
                                 Attn: Jeanne M. Carr
                                 Telephone:  (212) 929-5500
                                 Telephone:  (800) 322-2885
                                 American Banknote Corporation

         (7) In order to be considered by the Court, objections, if any, to
confirmation of the must (i) be in writing; (ii) state the name and address of
the objecting parry (iii) state the nature of the Claim or interest of the
objecting party; (iv) state with particularity the legal and factual basis for
the objection; awl (v)be filed with the Clerk of the Court and served (so as to
be actually received no later than 4;00 p.m (Delaware time) on March 30, 2005 on
the following parties: (a) counsel for the Debtor, ANDREWS KURTH LLP (Att'n:
Richard Baumfield) 450 Lexington Avenue, 15th Floor New York, NY 10017; and (b)
co-counsel for the Debtor, COOCH AND TAYLOR (Att'n: Adam Singer) 824 Market
Street Mall, 10th Floor Wilmington. DE 19801.

    Dated:        Wilmington. Delaware
                  __________________,2005



                                             _______________________________
                                             United States Bankruptcy Judge


                                      B-1
<PAGE>


                      IN THE UNITED STATES BANKRUPTCY COURT

                          FOR THE DISTRICT OF DELAWARE


_______________________________________
         In re::                       :        (Chapter 11
                                       :
         AMERICAN DANKNQTE             :         Case No: 05-10174 (P1W)
         CORPORATION,                  :
                                       :
                            Debtor.    :
________________________________________

                   NOTICE OF HEARING TO CONSIDER CONFIRMATION
                            OF PLAN OF REORGANIZATION
                            -------------------------

                        PLEASE TAKE NOTICE THAT:

         (1) By order dated ________, 2005, the United States Bankruptcy Court
for the District of Delaware (the "Court") approval the Amended Disclosure
Statement with Respect to Debtor's Amended Plan of Reorganization under Chapter
11. of the Bankruptcy Code, dated February 22, 2005 (the "Plan"). Copies of the
Plan and of the Disclosure Statement are on file with Clerk of the Court (the
"Clerk"), 824 Market Street, 5 Floor. Wilmington, Delaware 19801 and may be
reviewed Monday through Friday during regular business hours. Copies of the
Disclosure Statement can be obtained from the Debtor's Balloting Agent,
MacKenzie Partners, Inc. at (800) 322-2885.

         (2) A hearing to consider confirmation of the Plan will be held before
The Honorable Peter J. Walsh, United States Bankruptcy Judge, United States
Bankruptcy Court for the District of Delaware, 824 Market Street, Wilmington,
Delaware 19801 on April 8, 2005, commencing at 10:30 am. (Delaware time).

         (3) Voting procedures for the Plan are set forth in the Disclosure
Statement. For the reasons discussed therein, only holders of Claims and Equity
Interests in Class 3 (Note Claims), Class 4 (Note Convenience Claims), Class 6
(SERP Claims), Class 7 (Equity Interests) and Class S (DE MINIMIS Equity
Interests) as of February 24, 2005 (the "Voting Record Date"), are entitled to
vote to accept or reject the Plan. Only those persons who arc entitled to vote
to accept or reject the Plan are being sent (i) 3 copy of the Disclosure
Statement with exhibits thereto including the Plan and (ii) a Ballot, The
aforementioned documents may also be obtained by visiting the website
www.bmcgroup.com/abn.

         (4) On or before March 1, 2005, the Debtor caused a Ballot, together
with copies of the Plan and Disclosure Statement, to be mailed to holders of
claims entitled to vote to accept a reject the Plan.




---------
(1)      Terms not otherwise defined herein shall have the meaning ascribed to
         thorn in the Plan.


                                      B-2



              ORDER OF THE BANKRUPTCY COURT DATED FEBRUARY 24, 2005
             APPROVING, AMONG OTHER THINGS, THE AMENDED DISCLOSURE
               STATEMENT AND ESTABLISHING CERTAIN PROCEDURES WITH
              RESPECT TO THE SOLICITATION AND TABULATION OF VOTES
                          TO ACCEPT OR REJECT THE PLAN.






<PAGE>





                                    EXHIBIT C
                                       TO
         AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
         PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

                                    _______


        FORM 10-K FOR THE DEBTOR FOR FISCAL YEAR ENDED DECEMBER 31, 2003


<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                _________________

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

                   For the fiscal year ended December 31, 2003

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

           For the transition period from ____________ to ____________

                         Commission File Number: 1-3410
                                _________________

                          AMERICAN BANKNOTE CORPORATION
             (Exact name of Registrant as specified in its charter)

            Delaware                                             13-0460520

(State or other jurisdiction of                               (I.R.S. Employer
 Incorporation or organization)                              Identification No.)

              560 Sylvan Avenue, Englewood Cliffs, New Jersey 07632
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (201) 568-4400

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

           Securities registered pursuant to Section 12(g) of the Act:

     Title of each class:                   Name of exchange on which registered
Common Stock, par value $.01 per share                     OTC-BB
 Series 1 Warrants                                         OTC-BB
 Series 2 Warrants                                         OTC-BB

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

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

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

         At March 16, 2004, the aggregate market value of the voting stock held
by non-affiliates was $4,237,493.

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No[ ]

         As of March 19, 2004, 11,770,815 shares of the registrant's common
stock were outstanding. Documents Incorporated by Reference:

None.

<PAGE>

                          AMERICAN BANKNOTE CORPORATION

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                  <C>
PART I

     Item 1.      Business.......................................................................................     1
     Item 2.      Properties.....................................................................................    18
     Item 3.      Legal Proceedings..............................................................................    18
     Item 4.      Submission of Matters to a Vote of Security Holders............................................    19

PART II

     Item 5.      Market for the Registrant's Common Equity and Related Stockholder Matters......................    20
     Item 6.      Selected Financial Data........................................................................    24
     Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations..........    26
     Item 7A.     Quantitative and Qualitative Disclosures About Market Risk.....................................    45
     Item 8.      Financial Statements and Supplementary Data....................................................    47
     Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........    47
     Item 9a.     Controls and Procedures........................................................................    47

PART III

     Item 10.     Directors and Executive Officers of the Registrant.............................................    48
     Item 11.     Executive Compensation.........................................................................    49
     Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
                  Matters........................................................................................    49
     Item 13.     Certain Relationships and Related
                  Transactions...................................................................................    49
     Item 14.     Principal Accountant Fees and Services.........................................................    50

PART IV

       Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K ..............................    51
</TABLE>

                                        i

<PAGE>

                                     PART I

ITEM 1. BUSINESS.

INTRODUCTION

         American Banknote Corporation is a holding company. All references to
the "Parent" are meant to identify the legal entity American Banknote
Corporation on a stand-alone basis. All references to the "Company" are to the
Parent and all of its subsidiaries, as a group.

         In October 2002, the Parent issued $91.6 million aggregate principal
amount of its 10 3/8% Senior Notes ("Senior Notes") in connection with the
Chapter 11 Proceeding described below. The maturity date for the Senior Notes,
was extended, to January 31, 2005, at which time the aggregate principal amount
thereof, which will then be approximately $111.6 million will be due and payable
in full. The Parent anticipates that, based upon the current and anticipated
future cash flows generated from operations, it will not be able to repay its
Senior Notes upon the January 31, 2005 maturity date. Further, as a result of
the Company's limited access to capital and financial markets, it is highly
unlikely that the Parent will be able to refinance the Senior Notes. Absent a
further agreement with the holders of the Senior Notes, the Parent will be
required to undergo a further restructuring, bankruptcy or partial or total
liquidation or sale of the Company. Any of these events will substantially
reduce, or perhaps eliminate, any value associated with the Parent's equity,
including its Common Stock and may substantially reduce the value of its other
securities. However, because each of the Parent's subsidiaries is a self-funded
stand-alone entity, it is anticipated that each subsidiary, with the exception
of LM will continue to operate its business in the normal course, on a
stand-alone basis, irrespective of any restructuring of the Parent. For a
discussion of LM see "Proposed 2004 LM Restructuring."

Business--Structural Overview

         Through its subsidiaries in the United States, Brazil, Australia, New
Zealand, France, and Argentina, the Company is a trusted provider of secure
printed documents, printed and personalized secure and non-secure transaction
and identification cards and systems, and a wide array of document management
and transaction services and solutions. The Company provides its customers in
the private and public sectors with products and services that incorporate
anti-fraud and counterfeit resistant facilities, processes and technologies. The
Company operates and manages its business based on geographic location in a
single industry along three principal product lines: Transaction Cards and
Systems; Printing Services and Document Management; and Security Printing
Solutions. The Company is endeavoring to expand along these and complementary
product and service lines, with particular emphasis on fields that are relevant
to its existing customer base, such as electronic commerce and secure
distribution and fulfillment.

         The Parent's principal subsidiaries are:

                  American Bank Note Company ("ABN") a New York Corporation (and
                  the Company's domestic operating subsidiary),

                  American Bank Note Ltda. ("ABNB"), a 77.5% owned Brazilian
                  company,

                  ABN Australasia Limited, trading as the Leigh-Mardon Group
                  ("LM"), a 90% owned Australian company, with an operating
                  subsidiary in New Zealand,

                  CPS Technologies, S.A. ("CPS"), a French company, and

                  Transtex S.A. ("Transtex"), an Argentine company.

         The Parent was incorporated in Delaware in 1993 as United States
Banknote Corporation and changed its name on July 1, 1995 to American Banknote
Corporation. The Company's principal executive offices are located at 560 Sylvan
Avenue, Englewood Cliffs, New Jersey 07632, and its telephone number is (201)
568-4400.

CONSUMMATION OF THE REORGANIZATION PLAN

         In December 1999, the Parent (but none of its subsidiaries) filed a
petition for reorganization relief under Chapter 11 of the United States
Bankruptcy Code (the "Chapter 11 Proceeding") in the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court"). On August
22, 2002, the Bankruptcy Court confirmed the Parent's Fourth Amended Plan of
Reorganization (the "Plan") in the Chapter 11 Proceeding.

         On October 1, 2002, all conditions required for the effectiveness of
the Plan were achieved and the Plan became effective (the "Effective Date"). On
the Effective Date, the Parent cancelled all shares of its then outstanding
common stock and preferred stock, and began to issue shares of its new common
stock, $.01 par value per share ("Common Stock"), and certain additional rights,
warrants and options entitling the holders thereof to acquire Common Stock, in
the amounts and on the terms set forth in the Plan.

         None of the Parent's subsidiaries was or has ever been a party to the
Chapter 11 Proceeding or any other insolvency or similar proceeding. As a
result, during the Parent's reorganization, each one of the Parent's
subsidiaries continued to operate its respective business in the normal course,
on a stand-alone basis.

                                        1
<PAGE>

DISTRIBUTIONS UNDER THE PLAN

         The following descriptions are summaries of material terms of the Plan.
This summary is qualified by the material agreements and related documents
constituting the Plan, copies of which were filed as exhibits to the Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (the
"2000 10-K"), the Parent's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2002 and the Parent's Current Reports on Form 8-K
filed on June 3, 2002, August 28, 2002, September 4, 2002 and October 16, 2002
and by the provisions of applicable law. All reference to "on a fully diluted
basis" or "subject to dilution" shall give effect to the issuance of the number
of shares of Common Stock of the Successor Company reserved for issuance in
order to settle the claims discussed below.

         Resolution of Pre-petition Claims. The former major classes of credit
and equity claims and their respective distributions received under the Plan are
described below. For more complete information of the claims and recoveries
under the Plan, see the referred above filings.

         11 1/4% Senior Subordinated Note Claims. Under the Plan, the Parent
exchanged on the Effective Date with the former holders of the $95 million
principal amount of the Parent's 11 1/4% Senior Subordinated Notes due December
1, 2007 (the "Senior Subordinated Notes"), in full satisfaction, settlement,
release, discharge of and in exchange for the $106.2 million in principal of,
and accrued interest on, the Senior Subordinated Notes, approximately 10.6
million shares of Common Stock, representing approximately 90% of the shares of
Common Stock of the reorganized Parent as of the Effective Date. Consequently, a
change in control occurred on the Effective Date, with control of the Parent
being transferred from the holders of the Parent's old common and preferred
stock outstanding prior to the Effective Date to the former holders of the
Parent's Senior Subordinated Notes.

         10 3/8% Senior Note Claims. The Parent's $56.5 million principal amount
of 10 3/8% Senior Notes due June 1, 2002 (the "Senior Notes") were reinstated at
par value, with accrued interest and a two percent consent fee paid in the form
of additional Senior Notes which in total aggregated approximately $79 million
of such Senior Notes. The Parent's $8.0 million principal amount of 11 5/8%
Notes due August 1, 2002 (the "11 5/8% Notes") were converted into Senior Notes
together with accrued interest which totaled $3.9 million as of the assumed July
31, 2002 payment date and a conversion fee of approximately $0.7 million.
Consequently, the former holders of the 11 5/8% Notes immediately prior to the
consummation of the Plan on the Effective Date received an aggregate amount of
approximately $12.6 million principal amount of Senior Notes, bringing the total
amount of Senior Notes outstanding as of the Effective Date to $91.6 million.
The maturity date for the Senior Notes was extended through January 31, 2005,
and a number of modifications were made to the indenture governing the Senior
Notes. Subsequent interest payments on the Senior Notes, which occurred
semi-annually on December 1, 2002, June 1, 2003 and December 1, 2003, have been
paid in kind at the Parent's option in accordance with its rights under the
indenture. At December 31, 2003 and 2002, the total reinstated amount of Senior
Notes, inclusive of paid in kind interest and fees, totaled $100.0 million and
$95.5 million, respectively. In light of the Parent's current financial
position, it is highly unlikely that the Parent will be able to pay the
principal amount due under the Senior Notes upon maturity on January 31, 2005,
and the failure to do so (or to obtain adequate replacement financing or obtain
an extension or other agreement with the holders thereof) will require the
Company to undergo a further restructuring, bankruptcy or partial or total
liquidation or sale of the Company. Any of these events will substantially
reduce, or perhaps even eliminate, any value associated with Parent's equity and
other securities, including its Common Stock.

         Convertible Subordinated Noteholders. Holders of the Parent's
Convertible Subordinated Notes due August 2, 2002 and November 25, 2002, who in
the aggregate were owed $3.7 million by the Parent, received 221,573 shares of
Common Stock in full satisfaction, settlement, release and discharge of and in
exchange for their claims. This represents approximately 1.9% of the initial
shares of Common Stock subject to dilution.

         General Unsecured Claims. Under the Plan, all General Unsecured
Creditors were unimpaired. As a result, each holder of a General Unsecured Claim
retained the full value for its claim, most of which were paid by the Parent in
the fully allowed amount or in such other amount and upon such terms as the
Parent and any such holder agreed. Other claims remain unpaid as of this date
and have been adequately reserved on the Parent's balance sheet. The estimated
total face amount of such claims was approximately $7.6 million.

         Equity Claims and Interests. All pre-petition equity holders shared in
a Common Stock Equity Reserve (the "Equity Reserve"). The Equity Reserve
contained 915,396 shares of Common Stock in the Successor Company, representing
approximately 7.7% of the Common Stock, subject to dilution. In addition, the
Equity Reserve held 622,481 warrants, representing the right to purchase
approximately 5% of the Common Stock, subject to dilution.

                                        2
<PAGE>

         The warrants consist of Series 1 Warrants ("Series 1 Warrants") and
Series 2 Warrants ("Series 2 Warrants"), with 311,241 Series 1 Warrants
representing the right to purchase 311,241 aggregate shares of Common Stock at
an exercise price of $10 per share, and 311,240 Series 2 Warrants representing
the right to purchase 311,240 aggregate shares of Common Stock at an exercise
price of $12.50 per share.

         The Equity Reserve was distributed to the holders of old preferred
stock and common stock and various securities claimants on various dates of
distribution following consummation of the Plan pursuant to the allocations
discussed below.

         Pre-petition Preferred Stock and Common Stock Interests - Primary share
distribution. Holders of 2,404,845 shares of preferred stock and 23,486,135
shares of common stock outstanding prior to the Effective Date (exclusive of
1,603,095 shares of former common stock owned by the old Parent's former
Chairman) received their pro-rata share of 60% of the 915,396 shares of Common
Stock in the Equity Reserve. This resulted in 549,238 shares of Common Stock
allocated to these holders on a pro-rata basis with 51,015 shares of Common
Stock issued to the holders of former preferred stock and 498,223 shares of
Common Stock issued to the holders of former common stock.

         Warrant Distribution. The holders of old preferred stock and old common
stock outstanding prior to the Effective Date also received on a pro-rata basis
60% of the 311,241 Series 1 Warrants and 60% of the 311,240 Series 2 Warrants in
the Equity Reserve. This resulted in 186,745 Series 1 Warrants and 186,744
Series 2 Warrants allocated to these holders on a pro-rata basis as follows:
17,346 Series 1 Warrants and 17,345 Series 2 Warrants were issued to the holders
of former preferred stock and 169,399 Series 1 Warrants and 169,399 Series 2
Warrants were issued to the holders of former common stock.

         Equity Options Distribution. In addition to the participation of the
former holders of former preferred stock and common stock in the Equity Reserve,
these holders also received on a pro-rata basis 177,061 Equity Options, each
representing the right to purchase one share of Common Stock. Fifty percent of
the Equity Options are exercisable when the Common Stock trades at an average of
$5.00 per share over twenty consecutive trading days, and the remaining fifty
percent is exercisable when the Common Stock trades at an average price of $7.50
per share over twenty consecutive trading days. These options, if exercised,
will allow the holders to purchase up to 1.28% of the outstanding shares of
Common Stock on a fully-diluted basis. The former holders of preferred stock
received 16,446 Equity Options and the former holders of common stock received
160,615 Equity Options.

         Securities Claims. The remaining 40% of the Common Stock and Warrants
in the Equity Reserve were issued in settlement of pre-petition securities
claims. This resulted in a transfer of 366,158 shares of Common Stock, 124,496
Series 1 Warrants and 124,496 Series 2 Warrants.

         Unsurrendered Old Preferred Stock Claims. Holders of unsurrendered
preferred stock outstanding prior to the Effective Date, who in the aggregate
had a claim of approximately $0.4 million, received 43,245 shares of Common
Stock in full satisfaction, settlement, release and discharge of and in exchange
for their claim, representing approximately 0.4% of the shares of Common Stock
issued on the Effective Date, subject to dilution.

FRESH START ACCOUNTING

         In accordance with the AICPA Statement of Position ("SOP") 90-7,
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, the
Company adopted fresh start reporting ("Fresh Start") as of September 30, 2002.
The Company recorded the effects of the Plan and Fresh Start as of October 1,
2002 which was the Effective Date of the Plan. Under Fresh Start, a new
reporting entity (the "Successor Company" or the "Reorganized Company") is
deemed to be created as a result of a change in control of ownership. SOP 90-7
requires, among other things, that the Company's recorded amounts of assets and
liabilities be adjusted to reflect their reorganization value ("Reorganization
Value"), which is defined as the fair value at the Effective Date, in accordance
with Statement of Financial Accounting Standards No. 141 "Business Combinations"
and Staff Accounting Bulletin No. 54. The reorganized values were accordingly
recorded on the books and records of the subsidiary companies. Any portion of
the Reorganized Company's assets not attributed to specific tangible or
identified intangible assets of the Reorganized Company were identified as
Reorganization Value in excess of amounts allocable to identified assets and has
been classified as goodwill ("Goodwill"). This Goodwill is periodically reviewed
and measured for impairment on an annual basis in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets." Goodwill of the Company was $72.1 million and $99.6 million at December
31, 2003 and December 31, 2002, respectively. The change in Goodwill between
periods was due to a remeasurement of the value of the Company's subsidiaries
based on the Parent's review of projected cash flows and valuation multiples
based on prevailing market conditions which resulted in an impairment of
approximately $42.6 million partly offset by a foreign currency translation gain
of approximately $15.1 million, in accordance with SFAS No. 52.

                                        3
<PAGE>
         The Effective Date was October 1, 2002 and, as a result, Fresh Start
was adopted on September 30, 2002. In addition to restating assets and
liabilities at their Reorganization Value, the Predecessor Company's accumulated
deficit, including accumulated foreign currency translation adjustments totaling
$289.6 million, was eliminated and the capital structure was recast in
conformity with the Plan. The adjustments to eliminate this accumulated deficit
consisted of a $91.4 million extraordinary gain on the forgiveness of debt of
which $91 million was converted into Common Stock and $0.4 million represented
discounts negotiated with various unsecured creditors, and a $223.2 million
Fresh Start gain with a corresponding $23.2 million charge related to ABNB's
minority interest holder's share of the valuation based upon the reorganization
value of the Successor Company. These gains were partly offset by a $1.8 million
extraordinary loss resulting from the reinstatement of the Senior Notes and the
exchange of the 11 5/8% Notes for Senior Secured Notes inclusive of all accrued
interest and consent premiums which were paid or accrued in kind.

         As a result of the Company's adoption of Fresh Start, reporting for the
Reorganized Company for the year ended December 31, 2002 reflects the financial
results of operations and cash flows of the Successor Company for the three
month period ended December 31, 2002 and those of the pre-reorganization Company
(the "Predecessor Company") for the nine month period ended September 30, 2002.
As a result of the application of Fresh Start, the complete financial statements
for the periods after reorganization are not comparable to the financial
statements for the periods prior to reorganization.

Primary Purposes of the Plan of Reorganization

         The primary purposes of the Plan were to reduce the Parent's debt
service requirements and overall level of indebtedness, to realign its capital
structure and to provide it with greater liquidity to operate its business.

         WHILE THE PLAN MATERIALLY IMPROVED THE PARENT'S INDEBTEDNESS, CAPITAL
STRUCTURE AND LIQUIDITY, MANY OF THE SAME RISKS THAT RESULTED IN THE PARENT'S
INABILITY TO MEET ITS INTEREST PAYMENTS PRIOR TO FILING CHAPTER 11 REMAIN TODAY,
INCLUDING FOREIGN CURRENCY RISK, ECONOMIC RECESSION AND POLITICAL INSTABILITY IN
CERTAIN REGIONS SERVED BY THE PARENT'S SUBSIDIARIES, AN ACCELERATED DECREASE IN
HIGH MARGIN PRODUCTS RESULTING IN SIGNIFICANTLY LOWER OPERATING INCOME LEVELS,
AND A HIGH LEVEL OF SENIOR NOTE INDEBTEDNESS. THE PARENT BELIEVES THAT, IN THE
NEAR TERM, IT CAN CONTINUE TO OPERATE AS A GOING CONCERN AND GENERATE SUFFICIENT
CASH FLOW FROM OPERATIONS TO MEET ITS OBLIGATIONS ON A TIMELY BASIS. HOWEVER,
ABSENT A SIGNIFICANT INCREASE IN AVAILABLE FREE CASH FLOW FROM OPERATIONS, IT IS
THE PARENT'S INTENTION DURING THIS TIME TO CONTINUE TO PAY ITS SEMI-ANNUAL
INTEREST PAYMENTS ON THE SENIOR NOTES IN KIND IN LIEU OF CASH INTEREST, AS
PERMITTED BY ITS REVISED INDENTURE.

         MOREOVER, NO ASSURANCE CAN BE MADE THAT THE COMPANY WILL HAVE
SUFFICIENT LIQUIDITY ON AN OVERALL BASIS TO MEET ITS FUTURE OPERATING NEEDS, AND
THERE IS A SIGNIFICANT LIKELIHOOD THAT, BASED UPON THE CURRENT AND ANTICIPATED
FUTURE CASH FLOWS GENERATED FROM OPERATIONS, THE PARENT WILL NOT BE ABLE TO
REPAY ITS SENIOR NOTES UPON THE JANUARY 31, 2005 MATURITY DATE. THIS FACTOR,
COMBINED WITH THE COMPANY'S LIMITED ACCESS TO CAPITAL AND FINANCIAL MARKETS TO
REFINANCE THE SENIOR NOTES, IS HIGHLY LIKELY TO REQUIRE A FURTHER RESTRUCTURING,
BANKRUPTCY OR PARTIAL OR TOTAL LIQUIDATION OR SALE OF THE COMPANY ON OR BEFORE
JANUARY 31, 2005. FOR A FURTHER DISCUSSION OF THESE RISKS, PLEASE SEE ITEM 7,
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," ITEM 7A, "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK," AND THE INDEPENDENT AUDITORS' REPORT WITH RESPECT TO THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS FILED HEREWITH.

RISK FACTORS

         THE FOLLOWING SECTION HIGHLIGHTS SOME, BUT NOT ALL OF THE RISKS
RELATING TO THE COMPANY, ITS BUSINESS AND THE COMMON STOCK. THIS INFORMATION
SHOULD BE CAREFULLY CONSIDERED AND EVALUATED BY ALL CURRENT AND PROSPECTIVE
HOLDERS OF THE PARENT'S SECURITIES IN CONJUNCTION WITH RISKS DESCRIBED UNDER
ITEM 7A, "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK" AND THE
OTHER INFORMATION CONTAINED IN THIS FORM 10-K.

The price of the Company's Common Stock may experience volatility.

         The trading price of the Company's Common Stock could be subject to
wide fluctuations in response to variations in the Company's quarterly operating
results, changes in earnings estimates by analysts, the failure of the Company
to meet analysts' quarterly earnings estimates, conditions in the industry,
conditions in foreign markets in which subsidiaries operate and the outlook for
the industry as a whole or general market or economic conditions. In addition,
in recent years, the stock market has experienced extreme price and volume
fluctuations. These fluctuations have had a substantial effect on the market
prices for many companies, often unrelated to the operating performance of the
specific companies. Such market fluctuations could have a material adverse
effect on the market price for the Company's securities.

                                        4
<PAGE>
The Company has significant indebtedness.

         The Company has significant indebtedness which continues to accrue
interest on a pay in kind basis. There is a significant likelihood that, based
upon the current and anticipated future cash flows generated from operations,
the Company will not be able to repay its Senior Notes upon the January 31, 2005
maturity date. The Company cannot assure investors that it will be successful in
developing and maintaining a level of cash flow from operations sufficient to
permit it to pay the principal of, and interest on, its indebtedness. If the
Company is unable to generate sufficient cash flow from operations to service
its indebtedness, it may have to modify its growth plans, restructure or
refinance its indebtedness or seek additional capital. The Company cannot assure
investors that any of these strategies could be effected on satisfactory terms,
if at all, in light of its high leverage, or that any such strategy would yield
sufficient proceeds to service its indebtedness. The Company's high level of
indebtedness imposes substantial risks to holders of its securities, including
the following:

         -        the Company's ability to obtain additional financing in the
                  future for working capital, capital expenditures, acquisitions
                  or general corporate purposes may be impaired;

         -        a substantial portion of the Company's cash flow from
                  operations must be dedicated to service its indebtedness and
                  will not be available for capital expenditures and other
                  purposes in furtherance of its strategic growth objectives,
                  and its failure to generate sufficient cash flow to service
                  this indebtedness could result in a default under this
                  indebtedness;

         -        the Company is more highly leveraged than many of its
                  competitors which may place it at a competitive disadvantage;

         -        the Company's high degree of leverage could make it more
                  vulnerable to adverse changes in its business and general
                  economic conditions;

         -        the Company's ability to satisfy its obligations under its
                  indebtedness will be dependent upon risks, uncertainties and
                  contingencies affecting its business and operations, many of
                  which are beyond the Company's control, such as general
                  economic conditions, the entry of new competitors in its
                  markets and the introduction of new technology; and

         -        if the Parent or LM is unable to repay indebtedness when due,
                  the defaulting entity may be required to undergo a further
                  restructuring, bankruptcy or partial or total liquidation or
                  sale, which could materially, adversely affect the value of
                  the Common Stock and other securities of the Company.

The Company's industry is highly competitive.

         Competition in the Company's markets is based upon price, service,
quality, reliability and the ability to offer a broad range of secure
transaction products and services. Certain of the Company's product lines have
high costs of entry into these markets. Conversely, the cost to enter certain
markets is much lower and in such markets, the Company faces many more diverse
competitors who possess equal or greater technology infrastructures. In
addition, certain of the Company's global competitors have greater financial
resources than does the Company.

         Each of the Company's domestic and foreign operations conducts its
business in highly-competitive markets. With respect to certain of its products,
the Company competes with other non-secure commercial printers. Strong
competitive pricing pressures exist, particularly with respect to products where
customers seek to obtain volume discounts and economies of scale. The
consolidation of certain financial and banking customers within certain of the
Company's markets, particularly in Brazil, Australia and France, has created
greater competitive pricing pressures and opportunities for increased volume
solicitation. In addition, there are several smaller local competitors in Brazil
who have manufacturing and service capabilities in certain transaction cards and
systems (including driver's license programs) and have therefore created
additional competitive pricing pressures. Also, many of the Company's larger
competitors, particularly in Europe, have significant excess capacity and have
therefore created an environment of significant competitive pricing pressures.
Alternative goods or services, such as those involving electronic commerce,
could replace printed documents and thereby also affect demand for the Company's
products.

                                        5
<PAGE>
The Company needs to keep pace with rapid industry and technological change.

         The Company's future financial performance will depend, in part, upon
the ability to anticipate and adapt to rapid regulatory and technological
changes occurring in the industry and upon the ability to offer, on a timely
basis, services that meet evolving industry standards. The Company cannot assure
investors that it will be able to adapt to such technological changes or offer
these services on a timely basis or establish or maintain a competitive
position. The industry is changing rapidly due to, among other things,
technological improvements and the globalization of the world's economies and
free trade. In addition, the industry is in a period of rapid technological
evolution. The Company is unable to predict which of the many possible future
product and service offerings will be important to establish and maintain
competitive position or what expenditures will be required to develop and
provide these products and services. The Company cannot assure investors that
one or more of these factors will not vary unpredictably, which could have a
material adverse effect on the Company. In addition, the Company cannot assure
investors, even if these factors turn out as it anticipates, that the Company
will be able to implement its strategy or that the strategy will be successful
in this rapidly evolving market.

Departure of key personnel could harm the Company's business.

         The Company will be managed by a small number of key executive officers
and operating personnel. The loss of key personnel could have a material adverse
effect on the Company's business. Further, the Company believes that its future
success will depend in large part on its continued ability to attract and retain
skilled and qualified personnel with experience in its industry. These employees
are in great demand and are often subject to competing offers of employment.

Because segments of the Company's operations are based in countries outside the
United States, its business is subject to risks relating to economic and
political uncertainty, including inflation and foreign taxes.

         The Company is subject to economic, political or social instability or
other developments not typical of investments made in the United States. These
events could adversely affect the Company's financial condition and results of
operations. During the past several years, countries in Latin America in which
the Company operates have been characterized by varying degrees of inflation,
uneven growth rates and political uncertainty. The Company currently does not
have political risk insurance in the countries in which it conducts business.
While the Company carefully considers these risks when evaluating investment
opportunities and seeks to mitigate these and other risks by diversifying its
operations, the Company may be materially adversely affected as a result of
these risks.

         The Company's operations depend upon the economies of the markets in
which it operates. These markets include countries with economies in various
stages of development or structural reform, some of which are subject to rapid
fluctuations in terms of consumer prices, employment levels, gross domestic
product and interest and foreign exchange rates. The Company is subject to
fluctuations in the local economies in which it operates. To the extent such
fluctuations occur, the growth of the Company's services in these markets could
be impacted negatively.

         Certain of the Company's markets are in countries in which the rate of
inflation is significantly higher than that of the United States. The Company
cannot make assurances that any significant increase in the rate of inflation in
these countries could be offset, in whole or in part, by corresponding price
increases by the Company, even over the long-term. Distributions of earnings and
other payments, including interest, received from the Company's subsidiaries may
be subject to withholding taxes imposed by the jurisdictions in which such
entities are formed or operating, which will reduce the amount of after-tax cash
the Parent can receive from these entities. In general, a United States
corporation may claim a foreign tax credit against its federal income tax
expense for such foreign withholding taxes and for foreign income taxes paid
directly by foreign corporate entities in which it owns 10% or more of the
voting stock. The Company may also be required to include in its income for
United States federal income tax purposes its proportionate share of certain
earnings of those foreign corporate subsidiaries that are classified as
"controlled foreign corporations" without regard to whether distributions have
been actually received from the Company's subsidiaries.

Strong labor unions in foreign markets may increase the Company's expenses.

         In many countries in which the Company operates, labor unions are
considered to be strong and influential. Accordingly, the Company may encounter
strikes or other types of conflicts with labor unions or personnel in its
markets, which could adversely affect the Company.



                                        6
<PAGE>

         In each of the markets that it serves, the Company is a leading
regional provider of secure transaction solutions, documents and systems for
financial institutions, governments and corporations. The Company's regional
operations are based in the United States, Brazil, Australia, New Zealand,
France and Argentina. The Company's Brazilian and Australian subsidiaries hold a
significant market position in virtually every material product line offered in
their respective home markets.

         Through its subsidiaries, the Company designs solutions and
manufactures products that incorporate anti-fraud and counterfeit resistant
facilities, processes and technologies, including stored-value (imbedded
circuit) and prepaid telephone, magnetic-stripe, memory and microprocessor-based
transaction cards ("smart cards"), licenses, identification and issuance
systems, bank and other checks, stock and bond certificates and a wide variety
of electronically or digitally produced personalized documents. Through
strategic alliances and joint ventures funded through operating cash flow, as
well as a program to realign and refine its manufacturing operations, the
Company continues to look for ways to improve its financial performance and
expand its technological base and product lines. There can be no assurance that
the Company can continue to pursue these activities, particularly in light of
the continued volatility of foreign currency (most notably the Brazilian Real),
the significant contraction of business activities at ABN, (which have resulted
in operating losses and restructuring changes generated by that subsidiary in
2003), competitive card pricing pressures, (which in many instances have created
a low price commodity environment) and, to a lesser extent, the Argentine
exchange rate and political environment (as more fully discussed herein).

         During the past several years, the Company has undergone several major
restructurings of its operations and has made strategic decisions to: (i)
restructure, consolidate and reduce its manufacturing costs, (ii) diversify and
expand its products and services in the major geographic regions where it
conducts business, (iii) package complete "end-to-end" transaction, printing
fulfillment and distribution solutions, products and services to retain and grow
market share and (iv) create strategic joint ventures and alliances with
partners who provide strong technology and/or value added products that are
complementary to its business. These restructurings and strategic decisions were
directed at reducing the Company's reliance on maturing product lines that have
been declining, in favor of new products and services with growth potential,
albeit at significantly lower gross margins.

         The Company operates and manages its business based on geographic
location. Each of its operating subsidiaries has a local management team that
manages and makes daily business decisions in relation to their respective
operations. The Company's corporate management provides general oversight of
local management, supplies strategic focus and direction, establishes and
oversees global and regional business strategies and corporate policies, and
works with local management on potential acquisitions, divestitures, joint
ventures, capital planning and financing opportunities. The Company's corporate
and local management work closely together to refine the Company's operations,
while at the same time pursuing new products and growth opportunities.

         The Company has significant operations in Brazil, Australia, Argentina
and France. On a consolidated basis, these operations have historically
experienced significant foreign exchange rate fluctuations against the US
Dollar. Significant foreign exchange rate fluctuations occurred in 2003, 2002
and 2001.

         Although over the last twelve months, the Real and the Argentine Peso
have each improved overall in relation to the US Dollar, the Company
nevertheless experienced an average devaluation in each of these currencies
against the US Dollar of approximately 5% and 1%, respectively, when compared to
the prior year. The Australian and Euro currencies both experienced an average
appreciation of approximately 20% during this same period resulting from an
overall weakening of the US Dollar compared to such currencies.

         Historically, and to date, the Brazilian Real has experienced
tremendous volatility against the US Dollar. The average exchange rate for the
twelve months ended December 31, 2003 was R$3.08 to the US Dollar. As of March
17, 2004, the Real had strengthened to R$2.90 to the US Dollar. Despite its
continued improvement in 2004 and 2003, the Real still continues to experience
exchange rate volatility, as the average exchange rate devaluation for the
twelve months ended December 31, 2003 was 5%, against the US Dollar when
compared to the prior year. The Real ended 2003 at R$2.89 to the US Dollar, an
improvement of approximately 22% from its rate at the beginning of that year
(R$3.53). However, in 2002, the Real devalued to its lowest level by over 41%
against the US Dollar as of October 22, 2002 (R$3.96), when compared to the
beginning of 2002 (R$2.35). Given its historic volatility there is no guarantee
that the Real will either improve or stabilize at any certain level against the
US Dollar.

         ABNB is the Company's largest subsidiary, historically contributing on
an annual basis, approximately half of the revenues, operating profit and cash
flow of the consolidated group. Despite the recent strengthening of the Real,
the currency's devaluation over the past two years has severely impacted ABNB's
cash flow in US Dollar terms, and has therefore threatened its ability to pay
dividends to the Parent at the same levels as in the past. Based on current
estimates, it is anticipated that dividends from ABNB (along with those of other
subsidiaries) will be sufficient to fund the Parent's operating expenses in the
foreseeable future. There can be no assurance, however, that further devaluation
of the Real or other business developments will not lead to a contrary result.

                                        7
<PAGE>

         In an effort to end its lengthy recession, in January 2002 Argentina
abandoned its Peso-Dollar currency peg system. Initially the Peso was reset at
an official rate of US $1 = AR $1.40. In February 2002, the official rate was
abandoned and the currency was allowed to float freely on currency markets. At
March 17, 2004, the quoted exchange rate for the Peso on freely trading markets
was approximately US$1 = AR$2.91.

         The severe and ongoing economic and political instability in Argentina
continues to negatively impact the carrying value of Transtex. However, despite
these issues, Transtex has generated positive operating income and cash flow for
the twelve months ended December 31, 2003. Throughout 2002, the Argentine
government imposed a moratorium on dividend repatriations outside the country.
The government has since lifted this ban and, as a result, the Parent was able
to receive a dividend of approximately $0.5 million from Transtex in 2003.
Despite the lifting of this ban, there can be no assurance that the ability to
repatriate dividends freely from Argentina will continue on a consistent basis
or that Transtex will continue to generate positive cash flow.

         As a result of the devaluation of the Argentine Peso, effective January
1, 2002, the Company's financial statements include the impact of foreign
currency translation on Transtex in accordance with FASB Statement No. 52,
"Foreign Currency Translation." The Argentine Peso was therefore adopted as the
functional currency for translation purposes. As is the case with the Parent's
other foreign subsidiaries, the balance sheet accounts of Transtex have been
translated using the exchange rates in effect at the balance sheet date, and the
income statement amounts have been translated using the average exchange rate
for the twelve months ended December 31, 2003 and 2002 (both Successor and
Predecessor Companies), as applicable.

         Despite the Real's recent strengthening, the continued devaluation to
date and the long-term threat of currency devaluation in Brazil and elsewhere,
(along with the weakness of certain product lines at ABN, and the diminished
value of LM) will severely impact the Company's ability to repay its Senior
Notes due January 31, 2005. See "Liquidity and Capital Resources" for further
information.

         In addition to the above and the risks described under Item 7A,
"Quantitative and Qualitative Disclosures About Market Risk," the Company is
subject to numerous risks in connection with doing business in its foreign
countries, including the risk that the Company will be subject to future
government imposed restrictions in these countries including, but not limited
to, new laws or prohibitions on the repatriation of dividends and government
action or intervention resulting in the nationalization or expropriation of the
Company's assets.

FINANCIAL INFORMATION ABOUT SEGMENTS

         The Company has five reportable segments: (1) United States, (2)
Brazil, (3) Australia, (4) France and (5) Argentina. The Australian segment also
has operations throughout New Zealand and in Taiwan. The Argentine segment has
operations in Chile and a representative office in Peru and also services
several other South American markets. The French company has a controlling
interest in a joint venture in Morocco. The Company evaluates performance and
allocates resources based on operating results of the reportable segments. There
are no material intersegment sales or transfers between reportable segments.
Each of these segments supplies products to their customers within one or more
of the following three main product lines: (1) Transaction Cards and Systems,
(2) Printing Services and Document Management and (3) Security Printing
Solutions. For further information on the Company's reportable segments, as well
as the accounting policies for these segments, see Note Q of Notes to
Consolidated Financial Statements included herein.

United States

         A provider of secure documents and transaction services of value, ABN
operates principally within the Company's Security Printing Solutions product
line. ABN offers a full range of security printing solutions to a wide array of
government, corporate and commercial accounts. In addition to secure base
printing, ABN offers its customers a wide variety of core competencies,
including but not limited to secure storage, direct fulfillment, distribution,
personalization, accountability, and inventory and database management. ABN and
its predecessors have printed security documents for over 200 years.

         ABN principally sells its products in the US markets, but from time to
time sells into foreign markets, particularly in parts of Latin America, Eastern
Europe and certain developing countries. US export sales in 2003, 2002 and 2001
were approximately $0.8 million, $0.7 million and $1.1 million, respectively, or
approximately 3%, 2% and 3%, respectively, of ABN's total sales.

         Over the past several years, ABN has restructured and streamlined its
operations in an attempt to exit negative margin product lines and to reduce its
cost structure to a level more appropriate to its remaining business. However,
over the past three years, ABN experienced a significant decline in demand for
its mature high margin product lines (particularly food coupons and stock and
bond certificates) and has been unable, thus far, to find a sufficient number of

                                        8
<PAGE>

opportunities in lower margin product lines to fully offset the significant
decline. Sales of stock and bond certificates were approximately 33% lower in
2003 versus 2002 ($7.0 million compared with $10.5 million) and 20% lower in
2002 versus 2001 ($10.5 million compared with $12.5 million), with a reduction
in gross margins of approximately 35% (approximately $5.2 million versus $8.0
million) and 16% (approximately $8 million versus $9.5 million), respectively.
The Company believes the decline in this product line may continue in 2004 due
to market and other external factors as more fully discussed in "Security
Printing Solutions."

         One of the Company's other significant concerns has been the
elimination in food coupon volumes at ABN, resulting from the replacement by the
USDA of printed food coupons with electronic card-based food coupon benefits. In
the third quarter of 2002, ABN was verbally notified by the USDA that it did not
anticipate the need to place any further purchase orders for the production of
food coupons for the remainder of the term of its requirements contract with
ABN. As a result of the USDA's notification, in the third quarter of 2002 ABN
took a restructuring charge of $0.2 million, which represents the write-down of
the carrying value of certain equipment specifically dedicated to this contract.

         In the third quarter of 2003, the USDA gave ABN final notification and
delivery instructions for the remaining food coupons held in secure storage by
ABN pursuant to its distribution contract with the USDA which expired on
September 30, 2003. ABN fully performed and completed the remaining two months
of service pursuant to the terms of this contract, and in the normal course
billed the USDA approximately $1.5 million in accordance with the contract. ABN
formally requested in writing that it be paid in full pursuant to the terms of
the contract and the USDA formally denied approximately $1.4 million of ABN's
claim. ABN believes it has fully complied with all terms under such contract.
However, pursuant to the revenue recognition rules under Statement of Accounting
Bulletin ("SAB") 101, the Company has not as of this date recognized any of the
revenue on these services as a result of the USDA's rejection of ABN's claim. On
March 19, 2004 ABN filed a complaint before the USDA Board of Contract Appeals,
seeking a judgment in the amount of $1.5 million plus interest thereon.

         Furthermore, the failure by ABN to fully recover its final invoicings
from the USDA under its distribution contract has and will continue to have a
direct and significant effect on the cash flow of ABN as well as the level of
dividends that will be available to the Parent.

         Food coupon sales in 2003 to the USDA, which only reflected
distribution revenue, was approximately $0.8 million. Sales and gross margins
(both print and distribution) for 2002 were $7.1 million and $4.0 million,
respectively, which represented a significant part of ABN's gross margins
(approximately 22%) for the twelve months ended December 31, 2002 (Predecessor
and Successor Company combined). The reduction in operating margins from food
coupon sales has and will continue to have a direct and significant effect on
the cash flow of ABN and the level of dividends that will be available to the
Parent. Although, based on current estimates, it is anticipated that dividends
from ABN (along with those of ABNB) will be sufficient to fund the Parent's
operating expense in the foreseeable future, no assurance can be made that
further loss of business at ABN, devaluation of the Real or other business
developments will not lead to a contrary result. Furthermore, these issues could
severely impact the Company's ability to repay its Senior Notes due January 31,
2005. Please refer to Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and "Liquidity and Capital Resources" for
further information.

         In the first quarter of 2003, in light of the significant contraction
in stock and bond and food coupon volume reductions, ABN consolidated its
Philadelphia operations into its Tennessee operation, thereby placing all of
ABN's manufacturing operations within a single location, resulting in the
termination of approximately 50 employees. Accordingly, ABN recorded a one-time
restructuring charge of $0.9 million related primarily to employee terminations.
In addition, one-time costs related to plant wind down and equipment relocation
were approximately $1.0 million and $0.1 million, respectively and were funded
through internal cash flow and expensed as incurred and have been included in
cost of goods sold in accordance with SFAS 146. The total costs resulting from
this restructuring were recovered within one year from its execution.
Additionally, in the third quarter of 2003, ABN consolidated its two secure
satellite storage and distribution facilities into a single facility. In January
2004, ABN sold its Philadelphia plant for approximately $0.8 million and will
record a gain of approximately $0.4 million in the first quarter of 2004. Also,
in January 2004, ABN sold currency equipment that was impaired in prior years
for approximately $0.5 million, with a corresponding gain in the same amount.

         Based upon a comparison of the results of operations for the twelve
months of 2003 versus 2002, 2002 versus 2001 and 2001 versus 2000, operating
income at ABN in 2003, 2002 and 2001, (as adjusted for goodwill, fresh start and
other asset impairments) declined by approximately $6.5 million, $2.3 million
and $3.3 million, respectively. As stated above, these lower levels of operating
income have and will continue to have a negative effect on ABN's ability to
upstream dividends to the Parent. In addition, cash flow at ABN is further
impacted by payments made under various non-performing equipment and facility
lease obligations that are fully reserved on its balance sheet as part of the
various restructuring programs implemented. The Company estimates that payments
under these obligations will be approximately $0.5 million in 2004.

                                        9
<PAGE>

         In October 2003, ABN entered into a settlement agreement on its lease
with the landlord of its idle Chicago facility. Pursuant to the terms of the
settlement, ABN and the landlord agreed to terminate the lease scheduled to
expire in December 2009 in exchange for the following consideration from ABN:
(i) ABN agreed to pay rent through December 31, 2003, (ii) ABN relinquished its
security deposit in the amount of $0.2 million, (iii) ABN assigned to the
landlord an early termination payment of $0.4 million owed by a sublessee of the
facility, and (iv) ABN agreed to use reasonable commercial efforts to assure
that the sublessee complies with its existing legal obligations. As a result of
the settlement, ABN remeasured its obligation under the lease and in the third
quarter of 2003 recorded a recovery of a previous impairment provision of
approximately $1.1 million that was established in the fourth quarter of 2002
based upon the difference between the present value of annual lease payments to
the landlord net of the estimated sublease income. This recovery is reflected as
part of the net overall annual impairment charge of the Company's Goodwill on
the income statement line "Goodwill and Asset Impairment."

         Brazil

         In 1993, the Company acquired ABNB, currently the largest
private-sector security printer and manufacturer of transaction cards in Brazil.
ABNB is also one of the main providers of stored-value telephone cards to
telephone companies in Brazil. ABNB provides a wide variety of document
management systems and solutions, and related services, to many of the largest
corporate, financial and government institutions in Brazil. Over 95% of ABNB's
sales are in Brazil. The Company owns 77.5% of ABNB, with the balance owned by a
subsidiary of the Bradesco Group, Brazil's largest privately owned commercial
bank.

         ABNB is the Company's largest subsidiary, contributing approximately
half of the revenues, operating profit and cash flow of the consolidated group.
Currency devaluation has severely impacted ABNB's cash flow in US Dollar terms,
and has therefore threatened its ability to send dividends to the Parent at the
same level as in the past. Although, based on current estimates, it is
anticipated that dividends from ABNB (along with those of its other
subsidiaries) will be sufficient to fund the Parent's operating expenses in the
foreseeable future, no assurance can be made that further devaluation of the
Real or other business developments will not lead to a contrary result.

         In December 2001, ABNB agreed to an incentive bonus arrangement with
Sidney Levy, President of ABNB, which would entitle Mr. Levy to a cash bonus
based upon a success formula in the event that the Parent sells ABNB while Mr.
Levy is employed by ABNB.

         In July 2002, ABNB filed a tax claim with the Brazil federal government
to utilize approximately $3.5 million in certain value added tax credits not
previously claimed. ABNB was permitted to carry forward these credits and fully
utilize them in 2002 against Brazilian federal taxes. In the third quarter of
2002 and fourth quarter of 2002, ABNB utilized approximately $2.0 million and
$1.5 million, respectively, of these credits. These credits were reflected as a
recovery against cost of goods sold and resulted in an increase of $3.5 million
to pre-tax operating income and cash flow in 2002.

         In January 2004 the Brazilian government enacted a new sales tax
structure called the COFINS which will result in increased taxation. ABNB has
taken all steps necessary in order to mitigate the effect of this tax on the
2004 operating income.

         Australia

         In 1996 the Company acquired LM, Australia and New Zealand's oldest,
largest and only fully integrated provider of secure document and transaction
card solutions.

         In June 2001, the Company granted to LM's Managing Director options to
purchase a 5% equity interest in LM, to vest over a period of 27 months, at an
aggregate exercise price of $10. The Company engaged in this transaction as a
part of a management incentive plan to retain the services of LM's Managing
Director into the future, and as a restructuring of a prior service agreement to
reduce aggregate cash compensation. It is anticipated that the Parent will exit
as controlling shareholder of LM in 2004, and, if that occurs, this option will
be exchanged for new equity (See "Proposed 2004 LM Restructuring" below).

         In an attempt to become more efficient, LM has undergone several
restructurings of its business over the past several years. This resulted in the
closure of several card personalization sites across Australia and New Zealand
and the consolidation of its existing plants. In the first quarter of 2002, LM
announced a restructuring program for the purpose of consolidating its check
manufacturing operations. As a result, approximately 80 employees were
terminated at one of its manufacturing facilities. This resulted in a total
restructuring charge of $1.9 million of which $1.4 million was paid in the first
quarter of 2002, $0.3 million in the second quarter of 2002 and $0.1 million in
the third and fourth quarter of 2002, respectively. The payback on costs
incurred on the restructuring was achieved within approximately one year from
date of execution.

                                       10
<PAGE>

         However, despite such restructurings, LM remains heavily leveraged and
will require additional capital to sustain its business. Moreover, its bank debt
is due in June 2004 and absent an agreement with the LM banking syndicate, (the
"Banking Syndicate") there is a significant likelihood that LM will be unable to
repay, refinance and/or restructure the $59.9 million debt obligation upon
maturity (See "Proposed 2004 LM Restructuring" below).

         In the third quarter of 2002, the Parent's management evaluated the
carrying value of Goodwill at LM in accordance with SFAS No. 142. In light of
the Parent's concerns surrounding the potential restructuring, refinancing
and/or re-capitalization of LM's bank debt along with the uncertainty
surrounding additional internal and external capital funding required to grow
significantly and/or further support the cost structure of LM's business, the
Parent evaluated and wrote down the entire carrying value of LM's Goodwill of
$25.2 million at September 30, 2002 to more appropriately reflect the Parent's
estimation of LM's fair value in accordance with SFAS No. 142.

         LM's management continues to hold in abeyance certain short-term profit
improvement programs requiring the use of capital, pending its ongoing
discussions with LM's banking syndicate as to whether a further restructuring,
refinancing and or re-capitalization of the LM bank debt in advance of the June
2004 loan maturity date can be accomplished. In April 2003, as a result of an
agreement between the Company, LM and the Banking Syndicate to place LM up for
sale, the Banking Syndicate consented to defer the June 2003 $1.2 million
principal repayment to the June 24, 2004 final maturity date of the loan. In
addition, in the second quarter of 2003, the Banking Syndicate agreed to suspend
all financial covenant testing on a monthly basis during the sale period, which
has been extended during the ongoing restructuring discussion between the
Company and the Banking Syndicate. As a result, the total amount of the loan has
been classified as current. (See "Liquidity and Capital Resources and "Ability
to Service Debt" for further information).

         In the first quarter of 2004, the Company sold LM's New Zealand
subsidiary to a local management group. As a result of the sale, LM will receive
approximately $4.3 million in cash resulting in a pre-tax gain from such sale of
approximately $ 3.5 million. The net proceeds from the sale will be utilized to
pay down approximately $3.6 million of LM's bank debt and approximately $0.7
million will be used to fund working capital as mutually determined by the
Company and the Banking Syndicate pursuant to the proposed restructuring plan
discussed below.

PROPOSED 2004 LM RESTRUCTURING

         In the third quarter of 2003, the Banking Syndicate evaluated the
public sale process conducted by LM's financial advisors. After reviewing all
options, the Banking Syndicate elected not to sell LM but instead entered into
negotiations with LM and the Parent, and subsequently verbally agreed (subject
to final documentation) in principle to restructure LM's bank debt through a
combination of debt forgiveness of approximately $45 million in exchange for a
preferred and common equity swap, thereby leaving approximately $15 million of
debt on LM's books. This transaction would give the Banking Syndicate an initial
controlling equity stake in LM and would result in the Parent relinquishing
control in exchange for approximately 11% of the preference stock and a
potential future equity interest of approximately 40% once the restructured bank
debt is fully amortized. The final terms and conditions are expected to be
completed sometime during the second quarter of 2004. The exchange is expected
to result in a non-cash gain to the Company to the extent of the net discharge
of the Parent's equity deficit in LM which is approximately $53.9 million at
December 31, 2003 and the value in its minority interest position based upon the
fair value received in preference stock which is estimated to be approximately
$2.1 million.

         The proforma effect of the LM restructuring on the Company's
consolidated balance sheet, income statement and earnings per share as if the
transaction occurred on December 31, 2003 would be as follows:

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                      Consolidated                              Consolidated
                                        with LM             LM               Proforma without LM
                                    December 31, 2003   Transaction           December 31, 2003
                                    -----------------   -----------           -----------------
<S>                                 <C>                 <C>                  <C>
PROFORMA BALANCE SHEET
Current assets                         $   66,764       $   (15,997)              $   50,767
  Property & Equipment, net                53,285            (8,657)                  44,628
  Other assets                             81,518              (170)                  81,348
                                       ----------       -----------               ----------
                                          201,567           (24,824)                 176,743

Current liabilities                        48,581           (20,434)                  28,147

Current portion of long-term debt          59,943           (59,914)                      29
                                       ----------       -----------               ----------
                                          108,524           (80,348)                  28,176

Long-term debt                            100,667                 -                  100,667

Other long-term liabilities                39,853              (428)                  39,425
                                       ----------       -----------               ----------
  Total liabilities                       249,044           (80,776)                 168,268

                                                             53,852
Stockholder's (deficit)                   (47,477)            2,100                    8,475
                                       ----------       -----------               ----------
                                       $  201,567      ($    24,824)              $  176,743
                                       ==========       ===========               ==========
PROFORMA INCOME
STATEMENT AND EARNINGS PER SHARE

Loss before taxes on income and
  minority interest                   ($   47,807)      $     4,026              ($   43,781)
Taxes on income                             4,249                 -                    4,249
                                       ----------       -----------               ----------
Loss before minority interest             (52,056)            4,026                  (48,030)
Minority interest                          (5,474)                -                   (5,474)
                                       ----------       -----------               ----------

  Net loss                            ($   46,582)      $     4,026              ($   42,556)
                                       ==========       ===========               ==========

Net loss per common share
  Basic and Diluted                   ($     3.96)      $      0.34              ($     3.62)
                                       ==========       ===========               ==========
</TABLE>

         While agreements in principle between the Company, LM and the Banking
Syndicate have resulted in satisfactory arrangements in the past, there is no
certainty that the above process will be satisfactorily concluded. As of March
26, 2004, the parties remained disagreed on certain material aspects of the
agreement. In the event that these discussions are not satisfactorily concluded,
there is a possibility LM may not be able to continue as a going concern absent
further accommodation from the Banking Syndicate. Moreover, LM's capital
constraints have caused local management difficulty in upgrading computer and
other systems that, in turn, continue to hamper LM management's ability to
effectively and efficiently operate, evaluate, restructure and report the
operation of the business. It is anticipated that the restructuring will provide
the future liquidity necessary to upgrade and enhance the quality of LM's
overall financial reporting environment. Under the terms of the LM Debt,
dividends payable to the Parent are prohibited.

         France

         In March 1998, the Company acquired CPS, a secure card personalization
facility. CPS operates within the Company's Transaction Cards and Systems
product line. All sales are generated locally in France. CPS is one of the
largest personalizers of prepaid telephone, bank and other financial cards.

         Through 2003, CPS had supplied prepaid phone cards under a supply
agreement with a local telephone company which was completed in 2003. In 2003,
the local telephone company requested a tender for a global supply agreement
from qualified bidders. CPS was not one of the awarded bidders in this tender.
Simultaneous with the phone company's decision, CPS determined to suspend its
activities in prepaid phone cards, due to exceptionally low margins in that
product line. While sales and gross margins on these phone cards are not
material on a consolidated basis, they represent a significant component of the
operating income of CPS. Sales and gross margins from prepaid phone cards were
$4.0 million and $0.4 million in 2003, $2.6 million and $0.6 million in 2002 and
$ 2.4 million and $0.6 million in 2001. During 2004, CPS will determine whether
to resume its pursuit of phone card activities, and/or pursue other types of
cards not previously sold by CPS.

                                       12
<PAGE>

         In April 2003, CPS entered into a joint venture with a local partner in
Morocco to establish a card personalization bureau. CPS has a fifty percent
controlling interest in the joint venture and is providing technical expertise
with a small capital contribution. There were no significant operating
activities from the joint venture in 2003.

         Argentina

         In April 1999, the Company acquired Transtex, Argentina's leading
manufacturer of transaction cards including debit, credit, telephone and smart
cards for a total cash purchase price of approximately $15.5 million. Transtex
maintains a sales office in Chile, where the Company is also the leading
supplier of secure transaction cards. It also maintains a representative office
in Peru. Transtex operates within the Company's Transaction Card and Systems
product line. Transtex principally sells its products within the three countries
mentioned above but also services several other countries in South America.

PRODUCT LINES

         Through its subsidiaries, the Company serves its customers in the
regions where it does business through three principal product lines:
Transaction Cards and Systems, Printing Services and Document Management, and
Security Printing Solutions. The Company manages and oversees these product
lines on a country-by-country basis.

         The following table presents the principal product line components of
these sales for the twelve months ended December 31, 2003 (Successor Company)
and December 31, 2002 (Successor and Predecessor Companies combined) and
December 31, 2001 (Predecessor Company). The table also reflects the three
months ended December 31, 2002 with respect to the Successor Company, and, with
respect to the Predecessor Company, the nine months ended September 30, 2002.
(Dollars in thousands):

<TABLE>
<CAPTION>
                                              December 31, 2003           December 31, 2002               December 31, 2001
                                              Successor Company     Successor/Predecessor Companies      Predecessor Company
                                            Sales       Percentage          Sales            %          Sales        Percentage
                                            -----       ----------       ---------         -----      ---------      ----------
<S>                                       <C>           <C>              <C>               <C>        <C>            <C>
Transaction Cards and Systems             $  74,662        33.6%         $  64,079          31.7%     $  71,875         32.5%
Printing Services and Document Mgmt          59,501        26.7%            37,466          18.5%        37,422         16.9%
Security Printing Solutions                  88,462        39.7%           100,731          49.8%       111,667         50.6%
                                          ---------       -----          ---------         -----      ---------        -----
                                          $ 222,625       100.0%         $ 202,276         100.0%     $ 220,964        100.0%
                                          =========       =====          =========         =====      =========        =====
</TABLE>

<TABLE>
<CAPTION>
                                                 Three Months Ended           Nine Months Ended
                                                  December 31, 2002           September 30, 2002
                                                  Successor Company          Predecessor Company
                                                  Sales           %            Sales           %
                                                --------         ----       ---------         ----
<S>                                             <C>              <C>        <C>               <C>
Transaction Cards and Systems                   $ 15,113         31.2%      $  48,966         32.0%
Printing Services and Document Mgmt                9,657         20.0%         27,809         18.0%
Security Printing Solutions                       23,618         48.8%         77,113         50.0%
                                                --------          ---       ---------         ----
                                                $ 48,388        100.0%      $ 153,888        100.0%
                                                ========        =====       =========        =====
</TABLE>

Transaction Cards and Systems

         The Company is a leading supplier of a wide range of transaction cards,
products and systems in the Latin American and Australasia (Australian and New
Zealand) markets. In France, CPS is one of the largest personalizers of bank and
other financial cards. The Company continues to expand and improve its
production and service capabilities to capitalize on the trend toward cashless
financial transactions. These products primarily include: (i) stored-value and
prepaid cards, (ii) transaction cards and personalization services, (iii)
licenses and issuance systems and (iv) micro-chip imbedded "smart-card"
applications.

         Stored-Value and Prepaid Cards. The Company is one of the main
suppliers of stored-value and prepaid telephone cards in Latin America and
France, and in Australia and New Zealand (through its joint venture
arrangement). In Brazil, ABNB supplies stored-value telephone cards to many
telephone companies as well as prepaid phone cards to

                                       13
<PAGE>

many mobile telecom operators. In Argentina, the Company is a major supplier of
prepaid phone cards to its respective local telephone carriers. In France the
Company supplied prepaid phone cards under a supply agreement with a local
telephone company which was completed in 2003. In 2003, the local telephone
company requested a tender for a global supply agreement from qualified bidders.
CPS was not one of the awarded bidders in this tender. The Company's Australian
subsidiary, LM, is a supplier of prepaid phone cards to Australia's and New
Zealand's national telephone company. The Company also provides stored-value
cards as well as contact and contactless cards to various firms in the financial
and transportation industries.

         Transaction Cards and Personalization Services. The Company is a
leading producer and personalizer of magnetic-stripe transaction cards,
including credit, debit, ATM, transportation, access and identification cards,
supplying customers in Latin America, Australia, New Zealand and Taiwan. The
Company supplies cards to financial institutions, including those issued for
Visa(TM), MasterCard(TM) and American Express(TM), as well as cards for major
corporations and other institutions. In France, CPS is a leading personalizer of
debit cards for many of the major French banks.

         In Latin America, Australia and New Zealand, the Company is a leader in
the manufacture and personalization of other magnetic stripe transaction cards,
including loyalty (frequent buyer) and health insurance program cards.

         License and issuance systems. The Company handles large scale license
contracts in a number of Brazilian and Australian states, including the
production and personalization of driver and shooter licenses as well as various
corporate identification programs. In Brazil, ABNB is a leading provider of
issuance systems including management of motor vehicle departments for a number
of states in Brazil.

         Smart card applications. The Company's subsidiaries in Brazil and
Australia have formed separate but similar joint venture companies with Gemplus
S.A., the world's leading systems designer and manufacturer of smart cards. A
smart card is a transaction card with an imbedded micro-chip which allows for
the storage of materially more data than the traditional magnetic stripe card in
a highly secure manner. The two joint venture companies each manufacture, market
and sell smart card systems and products in the Brazilian and Australian
markets. The Company has a 50% ownership interest in each of these joint
ventures. In France, CPS is a third-party personalizer of smart GSM phone cards,
and in Argentina, Transtex has started to supply a small volume of smart cards.

Printing Services and Document Management

         The Company's Printing Services and Document Management business allows
public and private sector institutions to outsource their printing,
personalization and document processing operations. Utilizing advanced inventory
control systems, e-commerce and web based solutions and "just-in-time"
distribution capabilities, the Company helps businesses and governmental
institutions effectively lower costs by supplying all of their printing,
storage, processing, system and distribution needs.

         Electronic Printing Applications. The Company is a full service
provider of electronic printing applications to a number of its corporate and
government customers. Electronic printing applications encompass the secure data
handling, electronic printing, personalization and mailing of documents for
large-scale essential mail document cycles. This process involves the
computerized printing of an array of variable data onto pre-printed base stock.
Some of the primary applications are billing and fund collection systems, check
and credit card statements, letter checks and invoices.

         In Brazil, Australia, and New Zealand, the Company provides electronic
printing application services for institutions in the banking, insurance,
utilities and telecommunication industries, as well as for a number of state and
federal government agencies. In Australia the Company provides customers with
efficient and cost effective mail aggregation solutions. While sales on the mail
aggregation product line have increased, operating margins on this product line
are very low in comparison to the margins on the Company's other product
offerings.

         Printing, Storage & Distribution. The Company prints products such as
business forms and checks and provides storage and distribution services to the
end user on behalf of its customers. For example, in Australia, LM prints and
distributes medical forms for a government agency. In Brazil, ABNB performs
print and document management and distribution services for leading financial
institutions.

Security Printing Solutions

         The Company supplies counterfeit-resistant documents of value in each
of the countries where it offers this product line. Such documents include
checks, money orders, passports, stock and bond certificates and other
commercial documents of value such as gift certificates. The Company utilizes a
variety of anti-counterfeiting features such as special inks and papers,
computer generated bar and micro encoding, elaborate steel-engraved designs and
distinctive lithographic printing techniques, all of which enable the Company to
manufacture products containing various security features. As an

                                       14
<PAGE>

additional security feature, many of the Company's manufacturing, storage and
distribution facilities employ high levels of plant security, including guards,
alarms, video monitoring and extensive accountability controls.

         Checks. The Company is the leading private sector supplier of
personalized checks for major banks in Brazil, Australia and New Zealand. The
Company supplies banks and other financial institutions with checks, same-day
check personalization, and a wide array of security printing products such as
money orders, vouchers and deposit books. With the advent of electronic payment
systems, demand for bank checks in all three countries continues to decline.
While in Brazil, checks represent a small percentage of ABNB's total revenue of
approximately 11% in 2003 and 2002 and 9% in 2001, LM's revenue base for bank
checks in Australia and New Zealand for 2003, 2002 and 2001, when compared to
its total revenue, are much higher (approximately 27%, 32% and 36%,
respectively).

         Stock and Bond Certificates. ABN produces stock and bond certificates.
ABN is one of the few remaining producers of engraved printed certificates with
the unique border designs and vignettes that had traditionally been required by
the New York Stock Exchange, Inc. (the "NYSE"). ABN maintains a library of
engraving plates for a large percentage of publicly traded securities.

         Stock and Bond certificates represent a declining product and there is
considerable risk of further decline particularly in light of the continued
trend toward next day settlement of securities. This risk has been further
exacerbated by the Securities and Exchange Commission's order dated July 26,
2001, which granted approval to the NYSE to change its physical format
requirements for stock and bond certificates (the "Rule Change"). The Rule
Change eliminated the NYSE's Listed Company Manual's requirements pertaining to
certificate printing and appearance, and retained only the requirements
specifying content. As a result, those requirements no longer mandate the use of
intaglio printing or the inclusion of a vignette on the face of the certificate.
Sales of stock and bond certificates were approximately 33% lower in 2003 versus
2002 ($7.0 million compared to $10.5 million) and 20% lower in 2002 versus 2001
($10.5 million compared to $12.5 million), with a reduction in gross margins of
approximately 35% (approximately $5.2 million versus $8.0 million) and 16%
(approximately $8 million versus $9.5 million), respectively. The Company
believes the decline may possibly continue in 2004 due to the weak stock market
and the other factors discussed above. In addition, the continued movement by
many large companies towards paperless electronic transaction settlement could
have a further impact on volume reduction in stock and bond certificates.

         Government Products. Government products include a variety of security
documents printed for federal, state and local governments throughout the world.
The Company manufactures food coupons, passports, visas, tax revenue stamps,
property tax vouchers, postal panels, gas coupons, and similar products for
federal governments. The Company also supplies secure documents such as motor
vehicle registrations, title certificates and licenses, birth certificates,
identity cards, and transportation passes for its government customers. The
Company, through ABN, also acts as the secure distribution and accountability
agent for the United States Postal Service (the "USPS") for its Stamps on
Consignment Program ("SOC") delivering stamps to private retailers throughout
the United States. In 2002, the USPS replaced the USDA as the Company and ABN's
largest single domestic customer, pursuant to a three-year requirements contract
with two additional option years. ABN is presently in the third year of the
contract with sales under the SOC program representing in 2003, 2002 and 2001
approximately 2.7%, 3.7% and 2.5%, respectively, of total consolidated sales of
the Company, and approximately 28% in 2003, 23% in 2002 and 16% in 2001 of total
sales of ABN. The USPS has verbally notified ABN of its intent to exercise the
first option year under the SOC contract.

         Until 2002, the USDA was the Company and ABN's largest single domestic
customer, for which ABN has printed, stored and distributed food coupon
requirements for more than 20 years. Food coupons are engraved printed documents
accepted by grocery stores in lieu of cash. ABN was verbally notified by the
USDA, during the third quarter of 2002, that it did not anticipate the need to
place any further purchase orders for the production of food coupons for the
remainder of the term of its requirements contract with ABN, which expired on
September 30, 2003. In the third quarter of 2003, the USDA gave ABN final
notification and delivery instructions for the remaining food coupons held in
secure storage by ABN pursuant to its distribution contract with the USDA which
expired on September 30, 2003. Revenue from food coupons as a percentage of
total consolidated sales for 2003, 2002 and 2001 is approximately nil, 3.5% and
3.3%, respectively, but represents approximately 3.5% in 2003, 22% in 2002 and
21% in 2001 of total sales of ABN. In addition, the gross margins were $4
million in both 2002 and 2001. The reduction in operating margins from the loss
of food coupon sales has had a direct and significant effect on the cash flow of
ABN as well as the level of dividends that are available to the Parent. The
dispute with the USDA on the remaining $1.5 million due to ABN under the
distribution contract has further exacerbated cash flows available to the
Parent. See "Special Note Regarding Forward-Looking Statements" for more
information.

FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

         The Company's foreign and domestic operations are managed by geographic
region. As a result, the Company considers each geographic region a reportable
segment. Financial information relating to foreign and domestic operations and
export sales for the year ended December 31, 2003 (Successor Company), the three
months ended December 31, 2002

                                       15
<PAGE>

(Successor Company) and the nine months ended September 30, 2002 and the years
ended December 31, 2001 and December 31, 2000 with respect to the Predecessor
Company were as follows ($ in millions):

<TABLE>
<CAPTION>
                                      Year       Three Months    Nine Months          Year             Year
                                     Ended          Ended           Ended             Ended            Ended
                                  December 31,   December 31,   September 30,     December 31,     December 31,
                                      2003          2002             2002             2001             2000
                                  Successor Co   Successor Co   Predecessor Co   Predecessor Co   Predecessor Co
                                  ------------   ------------   --------------   --------------   --------------
                                                                 (in millions)
<S>                               <C>            <C>            <C>              <C>              <C>
Sales to unaffiliated customers
United States                     $       21.9   $        7.9   $         24.5   $         36.0   $         37.5
Brazil                                    98.3           20.3             78.4            111.3            132.9
Australia                                 80.1           16.5             41.1             57.0             69.8
France                                    17.2            2.9              6.6              8.5              9.9
Argentina                                  5.1            0.8              3.3              8.2              9.8

Operating profit or loss (1):
United States (2)                 $      (13.5)  $      (13.8)  $          0.1   $          0.9   $          1.6
Brazil (2)                               (21.3)         (31.8)            12.1             11.1             14.2
Australia (2)                             (1.4)           0.7            (25.7)             2.3             (0.2)
France                                    (4.2)           0.6              0.4              0.5              0.2
Argentina                                  1.0            0.1              0.8             (2.1)            (9.5)

United States: Export Sales       $        0.8   $          -   $          0.7   $          1.1   $          1.4
</TABLE>

(1) Before Fresh-Start adjustments

(2) Includes the goodwill and asset impairment write offs for the year ended
December 31, 2003 (Successor Company) of US $7.6 million, Brazil $29.6 million,
France $4.4 million and Australia $1.1 million and for the three months ended
December 31, 2002 (Successor Company) of US $14.2 million and Brazil $33.2
million and for the nine months ended September 30, 2002 (Predecessor Company)
of US $0.2 million and Australia $25.2 million.

         For further information on the Company's foreign and domestic
operations and export sales, see Note Q of Notes to Consolidated Financial
Statements and the Report of Independent Auditors included herein.

Sales and Marketing

         The Company sells its products and services through a combination of
direct sales personnel, commissioned sales personnel, independent sales
representatives and alliances. Each of the Company's subsidiaries maintains its
own sales and marketing department. Each of the Company's subsidiaries markets
and sells secure products and services to a number of financial institutions,
corporations, governments and government agencies worldwide. Each sales force is
supported by marketing professionals who provide research and product
development assistance. The sales and marketing activity is focused on the three
main product lines within each geographically defined market.

Major Customer

         The Company derived $18.2 million for 2003, $17.6 million for 2002
(both Successor and Predecessor Companies combined) and $24.5 million for 2001,
or approximately 8.2%, 8.7% and 11.1%, respectively, of total consolidated
revenue from the Bradesco Group under a supply contract which expires in
September 2004. Bradesco Vida e Previdencia S.A. ("Bradesco"), a subsidiary of
the Bradesco Group, owns a 22.5% minority shareholder interest in ABNB. The
Company has supplied products to Bradesco under multi-year supply arrangements
since 1995. There can be no assurance that this supply contract will be renewed
or if renewed, will be based upon the same prices and conditions that exist
today.

Competition

         Competition in the Company's markets is based upon price, service,
quality, reliability and the ability to offer a broad range of secure
transaction products and services. Certain of the Company's product lines have
high costs of entry into these markets. Conversely, the cost to enter certain
markets is much lower and in such markets, the Company faces many more diverse
competitors who possess equal or greater technology infrastructures. In
addition, certain of the Company's global competitors have greater financial
resources than does the Company.

         Each of the Company's domestic and foreign operations conducts its
business in highly competitive markets. With respect to certain of its products,
the Company competes with other non-secure commercial printers. Strong
competitive pricing pressures exist, particularly with respect to products where
customers seek to obtain volume discounts and economies of scale. The
consolidation of certain financial and banking customers within certain of the
Company's markets, particularly in Brazil, Australia and France, has created
greater competitive pricing pressures and opportunities for increased volume
solicitation. In addition, there are several smaller local competitors in Brazil
who have

                                       16
<PAGE>

manufacturing and service capabilities in certain transaction cards and systems
(including driver's license programs) and have therefore created additional
competitive pricing pressures. Also, many of the Company's larger card
competitors, particularly in Europe, have significant excess capacity and have
therefore created an environment of significant competitive pricing pressures.
Alternative goods or services, such as those involving electronic commerce,
could replace printed documents and thereby also affect demand for the Company's
products.

Patents

         The Company may presently hold, or be licensed under, United States and
foreign patents, trademarks and copyrights and continues to pursue protection
when available in strategic markets. However, the Company believes that no one
patent, license, trademark or copyright is critical to its business such that if
one expired or became unavailable there would be no material adverse effect to
the Company's financial position, results of operation or cash flow.

Backlog

         At December 31, 2003, 2002 and 2001, the Company had an overall backlog
of approximately $16.3 million, $13.1 million and $21.4 million, respectively.
This backlog principally consists of orders related to stored-value telephone
cards, stamps on consignment distribution, personal checks and financial payment
cards. Generally, a substantial portion of the Company's backlog is produced and
shipped within twelve months. The Company believes that its backlog is not a
meaningful representation of the Company's expected revenues.

Raw Materials

         Sources of raw materials are generally reliable. However, the Company's
dependency upon any one supplier for raw materials and consumables used in its
businesses is dependent primarily upon the type of product and the region where
the Company conducts business. For instance, with respect to certain product
lines such as transaction cards, certain raw materials, such as specific
chemicals or plastics for card manufacturing and consumables for card
personalization, are available from either one or a limited number of suppliers.
Furthermore, some of these materials may contain certain petroleum or precious
metal based by-products that may cause periods of price volatility. In addition,
the continual threat of volatile foreign currency swings could result in higher
costs for raw materials from foreign suppliers who are based in countries with
stronger denominated currencies. There can be no assurance that significant
price increases in raw materials and consumables can be passed on either in
whole or in part to the Company's customers. As a result, any significant price
increase may have a material adverse effect on the results of operations,
financial position and cash flow of the Company.

Environmental

         The Company uses and disposes of substances that may be toxic or
hazardous substances under applicable environmental laws. Management believes
that its compliance with such laws has not had, and will not have, a material
effect on its capital expenditures, earnings, financial, or competitive
position. The Parent and its subsidiaries are involved in several civil and
Environmental Protection Agency claims as one of many co-defendants arising in
the ordinary course of business, and believes that none of the claims in the
individual or in the aggregate would be expected to have a material adverse
effect on the Company's financial condition or results of operations.

Employees

         At December 31, 2003, the Company had approximately 2,950 employees
consisting of 2,590 manufacturing employees, 220 plant administration and sales
personnel and 140 executive, corporate and administrative personnel.
Approximately 60% of LM's employees, 59% of Transtex's employees and all of
ABNB's employees are represented by labor unions. None of ABN's or CPS'
employees are represented by labor unions. The Company's future profitability
will depend, in part, on its ability to maintain satisfactory relationships with
labor unions and employees and in avoiding strikes and work stoppages. The
Company considers its employee relations to be good.

                                       17
<PAGE>

ITEM 2. PROPERTIES.

<TABLE>
<CAPTION>
                                                           Owned
                                              Approximate   or
Business Segment and Location                   Footage    Leased                             Operations
-----------------------------                   -------    ------                             ----------
<S>                                           <C>          <C>     <C>
United States:
      560 Sylvan Avenue,
        Englewood Cliffs, New Jersey                3,200  Leased  Executive, administration and offices, lease expires 8/06
      Trevose, Pennsylvania                        11,000  Leased  Administration and sales offices; printing, lease expires 12/04
      Columbia, Tennessee                          50,000  Owned   Administration and sales offices; security printing
      Mt. Pleasant, Tennessee                      15,000  Leased  Storage, lease expires 1/06
      Columbia, Tennessee                          15,000  Leased  Storage, lease expires 2/05
      Mt. Pleasant, Tennessee                      49,800  Leased  Distribution and storage, lease expires 6/06

Brazil:
      Jandira, Sao Paulo                          310,000  Leased  Printing, storage and distribution, electronic printing and
                                                                   smart-card manufacturing and personalization.  Lease month to
                                                                   month
      Rio de Janeiro, Rio de Janeiro              140,000  Owned   Checks, telephone cards, intaglio documents, printing and card
                                                                   personalization
      Erechim, Rio Grande do Sul                   40,000  Owned   Production of transaction cards

Australia: (Includes New Zealand and Taiwan)
      Highett, Victoria                           139,000  Leased  LM head office, administration, sales, plastic cards,
                                                                   manufacturing and personalization, base stock printing, check
                                                                   printing and personalization, smart card manufacturing and
                                                                   personalization and mail aggregation, lease expires 5/06
      Kedron, Queensland                            3,500  Leased  Sales, lease expired 07/04
      Moorabbin, Highett                           16,610  Leased  Warehousing, lease expires with 90 day notice
      Canberra, ACT                                 1,040  Leased  Sales, lease expires 10/04
      Ingleburn, NSW                               59,000  Leased  Sales, check and card personalization, printing services and
                                                                   document management, lease expires 3/07
      Wellington, New Zealand                      23,000  Leased  Sales, card manufacturing, check and card personalization;
                                                                   lease expires 2/06
      Auckland, New Zealand                        15,000  Leased  Check and card manufacturing and personalization, executive
                                                                   offices, lease expires 02/07
      Perth, Western Australia                      7,800  Leased  Sales, license card personalization, lease expires 12/05
      Dry Creek, South Australia                   37,000  Leased  Sales, PSDM, check manufacturing and personalization, lease
                                                                   expires 02/06.
      Taipei, Taiwan                               15,200  Leased  Card personalization, lease expires 3/05

France: (includes Morocco)
      Craponne, Lyon                               11,000  Leased  CPS head office, sales and card personalization, lease expires
                                                                   7/07
      Casablanca, Morocco                           1,200  Leased  Sales and card personalization lease month to month

Argentina: (includes Chile)
      Buenos Aires, Argentina                      32,000  Leased  Card manufacturing and personalization, lease expires 4/04
      Santiago, Chile                                 100  Leased  Sales and card personalization, lease month to month
</TABLE>

         The Company believes that all its material property, plants and
equipment are well maintained, in good operating condition and suitable for its
purposes and needs through calendar year 2006. See Note S to Consolidated
Financial Statements for additional information regarding lease costs. The
Company believes that there will be no difficulty either negotiating renewals of
its real property leases as they expire or in finding other satisfactory space.

ITEM 3.  LEGAL PROCEEDINGS.

CHAPTER 11 FILING - CONFIRMATION AND CONSUMMATION OF THE PLAN

         On December 8, 1999 (the "Petition Date"), the Parent (but none of its
subsidiaries) filed a petition for reorganization relief under Chapter 11 of the
United States Bankruptcy Code. On that date, the Parent also filed its initial
plan of reorganization which set forth the manner in which claims against and
interests in the Parent would be treated following its emergence from Chapter
11. Only the Parent filed a petition for reorganization relief under Chapter 11.
None of the Parent's subsidiaries was a party to the Chapter 11 Proceeding or
any other insolvency or similar proceeding.

         The Parent's plan of reorganization was subsequently amended four times
and on May 24, 2002, the Parent submitted its Final Disclosure Statement with
respect to its proposed Fourth Amended Reorganization Plan to the

                                       18
<PAGE>

Bankruptcy Court. On August 22, 2002, the Bankruptcy Court confirmed the Plan.
On October 1, 2002, the Effective Date, all conditions required for the
consummation of the Plan were achieved and the Plan became effective.

         On January 29, 2003, in accordance with the standard procedures of the
Bankruptcy Court, the Parent filed final omnibus objections to expunge all
claims that it believes have no basis or merit. The Parent's objections included
objections to claims that were duplicative, inconsistent with the Company's
books and records, untimely, already satisfied or resolved under the Plan, or
otherwise without merit. The Bankruptcy Court will consider the Company's
objections to the proofs of claim, and any responses by the affected claimants
thereto, at a hearing scheduled May 6, 2004, or on such other adjourned dates as
may be scheduled by the Bankruptcy Court. The Company has reinstated all known
creditor claims that were recorded as pre-petition liabilities net of any
negotiated settlements.

         OTHER POTENTIAL CLAIMS AND PROCEEDINGS

         Dispute with the Blackstone Group L.P. In the fourth quarter of 2003,
the Parent and its Chapter 11 investment advisors, the Blackstone Group
("Blackstone), agreed to settle Blackstone's asserted claim of $1.6 million plus
interest and costs (pursuant to an unsecured promissory note which was scheduled
to be payable upon consummation of the Plan). As a result of the settlement,
Blackstone received from the Parent approximately $0.6 million in cash and
approximately $1.3 million in Senior Notes which were repurchased by the Company
in the open market during 2003 at a cost of approximately $0.6 million.

         Lithuania Claim. In October 2003, the Parent notified the Bank of
Lithuania, ("Lithuania"), that it would not make its scheduled installment
settlement payment of $0.5 million due October 1, 2003 due to its cash flow
constraints. The payment was part of a remaining $1.7 million settlement
obligation between the Parent and Lithuania that was entered into the Bankruptcy
Court and became effective upon the October 1, 2002 consummation of the Plan.
Both parties initially entered into a discussion in an attempt to restructure
the balance of the obligation to avoid further litigation. However, counsel for
Lithuania indicated that the Parent's initial proposal was unacceptable and
issued a notice of default. As a result of the default, the entire $1.7 million
obligation was recorded as a current liability in accounts payable and accrued
expenses at December 31, 2003. On February 4, 2004, counsel for Lithuania filed
a complaint against the Parent in the United States District court, Southern
District of New York, seeking a judgment in the amount of $1.7 million, as well
as interest, costs and disbursements. On February 12, 2004, counsel for
Lithuania filed the identical complaint in the United States District Court,
District of New Jersey. The Parent has not yet formally responded to either
Complaint.

         Commonwealth of Australia Claim. In January 2003, LM received a
repayment request from the Australian Treasury Department (the "Treasury")
related to a contract under which LM provided services to the General Sales Tax
Office (the "GST"). Services rendered under this contract were provided by LM to
the GST between the years 2000 and 2001. The claim for repayment alleges that an
overpayment of approximately $1.0 million was made by the GST. In order to
resolve this dispute, LM and the GST executed a settlement agreement whereby LM
will pay $0.8 million from (i) the proceeds received from LM's sales process if
completed by December 31, 2003 or (ii) in twelve equal installments commencing
January 2004 which balance would be accelerated upon the proceeds from any sale
of LM after December 31, 2003. Accordingly, LM has fully reserved this amount as
of December 31, 2003 with respect to the proposed settlement.

         Potential SERP Claim. In the first quarter of 2004, the Parent notified
former pre-petition participants of the Parent's Supplemental Executive
Retirement Plan ("the SERP") that due to cash flow constraints it would
indefinitely suspend any future payments until further notice under the SERP.
One of the participants has formally filed a notice of default. The Parent
intends to enter into discussions with various participants in an attempt to
settle payments due under the SERP in an effort to avoid litigation. However
there can be no assurance that a successful outcome between the parties can be
achieved.

         Dispute with the USDA. In the third quarter of 2003, the USDA gave ABN
final notification and delivery instructions for the remaining food coupons held
in secure storage by ABN pursuant to its distribution contract with the USDA
which expired on September 30, 2003. ABN fully performed and completed the
remaining two months of service pursuant to the terms of this contract, and in
the normal course billed the USDA approximately $1.5 million in accordance with
the contract. ABN formally requested in writing that it be paid in full pursuant
to the terms of the contract and the USDA formally denied approximately $1.4
million of ABN's claim. ABN believes it has fully complied with all terms under
such contract. However, pursuant to the revenue recognition rules under
Statement of Accounting Bulletin ("SAB") 101, the Company has not as of this
date recognized any of the revenue on these services as a result of the USDA's
rejection of ABN's claim. On March 19, 2004 ABN filed a complaint before the
USDA Board of Contract Appeals, seeking a judgment in the amount of $1.5 million
interest thereon.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

                                       19
<PAGE>

         None.

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

         The Company's Common Stock trades on the over-the-counter market and is
quoted on the NASDAQ OTC Bulletin Board under the symbol "ABNT." The Series 1
Warrants and Series 2 Warrants are traded on the same market under the symbols
"ABNW" and "ABNZ", respectively. The Common Stock of the reorganized Company
began trading on October 15, 2002 after the emergence of the Company from
Chapter 11. Accordingly, prices for the old common shares are not shown because
they are not comparable.

         The following table sets forth the high and low per share bid
quotations for the Common Stock as reported by the OTC Bulletin Board since
October 15, 2002:

<TABLE>
<CAPTION>
                  High     Low
<S>              <C>      <C>
     2003
First Quarter    $ 0.24   $ 0.05
Second Quarter     0.33     0.24
Third Quarter      0.90     0.33
Fourth Quarter     0.75     0.41

     2002
Fourth Quarter   $ 0.54   $ 0.05
</TABLE>

         During the first quarter of 2004 through March 16, 2004, reported per
share bid quotations for the Common Stock ranged from a high of $0.61 to a low
of $0.36.

         The OTC market quotations reflect inter-dealer quotations, without
markup, markdown or commission and may not represent actual transactions.
Although shares of the Common Stock are traded on the OTC Bulletin Board,
trading of the shares is sporadic and, an established public trading market for
the Company's securities does not exist.

         As of March 18, 2004, the Parent had approximately 3,049 Common
Stockholders of record.

Securities authorized for issuance under Equity Compensation Plans.

         The following table represents compensation plans under which equity
securities of the Parent were authorized for issuance as approved by security
holders pursuant to the Plan. There were no equity compensation plans not
previously approved by security holders.

                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                                      Number of securities
                      Number of securities                           remaining available for
                          to be issued         Weighted-average       future issuance under
                        upon exercise of      exercise price of     equity compensation plans
                      outstanding options,   outstanding options,     (excluding securities
   Plan category      warrants and rights    warrants and rights    reflected in column (a)
-------------------   --------------------   --------------------   -------------------------
<S>                   <C>                    <C>                    <C>
Equity compensation
plans approved by
security holders                   780,000   $               2.50                     337,700

Equity compensation
plans not approved
by security holders                      -                      -                           -
                      --------------------   --------------------   -------------------------
Total                              780,000   $               2.50                     337,700
</TABLE>

Dividend Policy

         No cash dividends were paid on the Parent's common equity in 2003,
2002, or in 2001. The Parent is restricted from paying cash dividends on its
Common Stock by the terms of its financing agreements. As a result, the Parent
does not anticipate that any dividends with respect to the Common Stock will be
paid in the foreseeable future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

         As a holding company, the Parent is dependent on dividends from its
subsidiaries to service its US publicly held debt and to fund its corporate
office expenses. Currently, ABN, ABNB, CPS and Transtex are permitted to pay
dividends, although presently only ABN and ABNB generate sufficient excess cash
flow to fund any material portion of the Parent's obligations. With respect to
LM, the Parent is unable to repatriate dividends due to restrictions under LM's
banking facility. It is highly unlikely that ABN and ABNB will continue to
generate sufficient excess cash flow from their respective operations to service
and repay the principal on the Parent's remaining reorganized public debt
structure and fund the Parent's corporate office expenses. This factor, combined
with the Company's limited access to capital and financial markets to refinance
the Senior Notes, makes it highly likely that the Company will require a further
restructuring, bankruptcy or partial or total liquidation or sale of the Company
on or before January 31, 2005. For a further discussion of these risks, please
see Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," Item 7A, "Quantitative and Qualitative Disclosures About
Market Risk," and the Independent Auditors' Report with respect to the Company's
Consolidated Financial Statements filed herewith.

Trading of the Company's New Common Stock

         As a result of the consummation of the Plan, the Parent was able to
reduce a significant principal amount of its outstanding indebtedness by
converting a substantial portion of that indebtedness into Common Stock, the
majority which is closely held by a small number of holders. Due to the closely
held nature of the Common Stock and because of the continuing risks disclosed
herein, management believes that the Common Stock may be speculative and
therefore cannot predict its value, if any.

Post Reorganization Equity Structure

         Common Stock - Pursuant to the terms of the Plan, on the Effective
Date, the Parent authorized 20 million shares of Common Stock, $.01 par value
per share. 11,828,571 shares were issued pursuant to the Plan, which included
1,428 shares of Common Stock issued pursuant to a Rights Offering. There were no
new shares issued in 2003. Each share of Common Stock represents one voting
right and the Common Stock does not have any pre-emptive rights. Dividends on
the Common Stock are payable solely at the discretion of the Board of Directors
and are restricted pursuant to the terms of the Senior Note indenture.

         Warrants- Under the Plan on the Effective Date, the Parent authorized
and issued two series of warrants totaling 622,481, each representing the right
to purchase one share of Common Stock. These warrants vested immediately upon
issuance and will expire five years from the Effective Date. The 311,241 (Series
1 Warrants) will have a strike price of

                                       21
<PAGE>

$10.00 and the 311,240 (Series 2 Warrants) will have a strike price of $12.50.
Both sets of warrants have certain anti-dilution rights which upon exercise
shall be adjusted for stock splits, dividends, recapitalization, and similar
events. Upon a merger or consolidation of the Company, holders of warrants shall
receive the market value of the warrants or warrants in the merged or
consolidated company.

                                       22
<PAGE>

         Management Incentive Options- Under the Plan, the Parent was authorized
to issue Management Incentive Options to certain employees and consultants of
the reorganized Parent and its subsidiaries, following the Effective Date,
pursuant to the Parent's 2002 Management Incentive Plan (the "Incentive Plan").
Such Management Incentive Options permit recipients to purchase shares of Common
Stock at an option strike price of $2.50 per share, upon the terms and
conditions set forth in the Incentive Plan. The Incentive Plan permits the
issuance of Management Incentive Options to purchase up to 1,117,700 shares or
approximately 8.1% of the Common Stock on a fully diluted basis. Unless
otherwise determined by the Board of Directors upon issuance, the options are
scheduled to expire on the earlier of (i) 10 years after the initial grant, (ii)
90 days after termination of employment for any reason other than death,
disability, retirement or cause, (iii) one year after termination of employment
by reason of death, disability or retirement or (iv) termination of employment
for cause. On September 12, 2002, the Board of Directors of the Parent approved
a grant of 780,000 Management Incentive Options to key employees. No Management
Incentive Options were issued to employees in 2003.

         Consultant Options. Consultant Options were issued upon the Effective
Date of the Plan that entitle the Company's former Chairman and Chief Executive
Officer, Morris Weissman ("Weissman"), to purchase up to 88,531 shares of Common
Stock or approximately 0.64% of the New Common Stock on a fully diluted basis at
an exercise price of $2.50 per share. The Consultant Options shall expire on the
tenth anniversary of the Effective Date of the Plan in accordance with the terms
of a settlement agreement with Weissman.

         Equity Options. Equity Options were issued upon the Effective Date of
the Plan that entitle the holders of old preferred stock and common stock claims
to purchase (i) up to 88,531 shares of Common Stock, or approximately 0.64% of
the Common Stock on a fully diluted basis, at an exercise price of $2.50 per
share exercisable at such time as the Common Stock trades at an average price of
$5.00 over twenty (20) consecutive trading days, and (ii) up to 88,531 shares of
Common Stock or approximately 0.64% of the Common Stock on a fully diluted
basis, at an exercise price of $2.50 per share exercisable at such time as the
Common Stock trades at an average price of $7.50 over twenty (20) consecutive
trading days. The term of an Equity Option shall commence on the grant date and
terminate upon the expiration of ten years from the grant date. At the
expiration date all rights under an Equity Option shall cease. To the extent all
or any portion of an Equity Option becomes exercisable as described above, such
Equity Option will remain exercisable until the expiration date even though the
Common Stock subsequently trades at an average price less than the target levels
described above, provided however that no portion of any Equity Options shall be
exercisable after the expiration date.

         Plan Administrative Claims. Administrative Claims under the Plan
include primarily legal fees, investment advisors fees, US Trustee fees and
various printing and public notification costs. Expenses incurred in the year
ended December 31, 2003 (Successor Company), the twelve months ended December
31, 2002 (Predecessor and Successor Companies combined) and the year ended
December 31, 2001 (Predecessor Company) pursuant to the restructuring is as
follows (in thousands):

<TABLE>
<CAPTION>
                          Year      Three Months   Nine Months    Twelve Months        Year
                         Ended         Ended          Ended           Ended           Ended
                      December 31,  December 31,  September 30,   December 31,     December 31,
                      Successor Co  Successor Co  Predecessor Co    Combined     Predecessor Co.
                          2003          2002           2002            2002           2001
                      ------------  ------------  --------------  -------------  ---------------
<S>                   <C>           <C>           <C>             <C>            <C>
Legal                 $         93  $        (30) $          997  $         967  $           104
Investment Advisors            234
Trustees Fees                   33             -              35             35               20
Printing and mailing             -             -              62             62                3
Information agent                -             -              66             66                -
                      ------------  ------------  --------------  -------------  ---------------
                      $        360  $        (30) $        1,160  $       1,130  $           127
                      ============  ============  ==============  =============  ===============
</TABLE>

         Legal and other professional fees of approximately $0.4. million, $0.8
million and $0.7 million were paid in 2003, 2002, and 2001, respectively in
accordance with retentions approved by the Bankruptcy Court. In addition, the
Parent agreed in the fourth quarter of 2003 to settle with Blackstone, the
Parent's investment advisor, with respect to Blackstone's $1.6 million asserted
claim. As a result of the settlement, Blackstone received from the Parent in
January 2004 approximately $0.6 million in cash and approximately $1.3 million
in Senior Notes which were repurchased by the Company in the open market during
2003 at a cost of approximately $0.6 million.

         The Parent anticipates that additional legal expenses to wind down the
Chapter 11 Proceeding including but not limited to the filing of omnibus claims
objections will be required. It is anticipated that additional fees required to
perform

                                       23
<PAGE>

additional wind down and other ministerial services will be incurred potentially
in 2004 and should be less than $0.1 million.

ITEM 6.  SELECTED FINANCIAL DATA.

         The selected financial data presented below is for the twelve months
ended December 31, 2003 (Successor Company), the three months ended December 31,
2002 for the Successor Company and the nine months ended September 30, 2002
(Predecessor Company), and the year ended 2001 for the Predecessor Company and
is derived from the consolidated financial statements, and should be read in
conjunction with such consolidated financial statements, including the notes
thereto, appearing elsewhere herein. With respect to the Company's operating
results, the Company has presented the results of the Predecessor Company and
the Successor Company for 2002 on a combined basis, as these combined results
are capable of comparison to the results of the Successor Company for 2003 and
the Predecessor Company for 2001 and 2000, except for changes in interest and
depreciation expenses resulting from the reorganization of the Parent's debt and
fair market value adjustments to the Company's property, plant and equipment as
a consequence of the consummation of the Plan and related Fresh Start reporting.
Additionally, pursuant to the "Final Judgment as to Defendant American Banknote
Corporation" of the United States District Court of the Southern District of New
York, dated July 19, 2001, the Parent is omitting from this report (and from any
future report or statement filed with the Commission) the presentation of
selected financial information for the fiscal year ended December 31, 1999.
Therefore, only selected financial data for the above-mentioned years of both
the Predecessor and Successor Company is included in this section.

                                       24
<PAGE>

<TABLE>
<CAPTION>
                                                Year         Three Months        Nine Months
                                                Ended           Ending            Ending
                                             December 31,    December 31,     September 30,
                                                2003            2002              2002
                                             (Successor Co)  (Successor Co)  (Predecessor Co)
                                             --------------  --------------  ----------------
                                           (Dollars in thousands, except share and per share data)
<S>                                          <C>             <C>             <C>
INCOME STATEMENT DATA
Continuing Operations
Sales                                        $    222,625    $     48,388    $    153,888
Cost of good sold                                 171,167          36,673         110,485
Selling and administrative                         34,553           5,946          22,534
Restructuring                                         933              79           1,829
Goodwill and asset impairments                     42,668          47,435          25,383
Depreciation and amortization                      12,658           2,454           5,958
                                             ------------    ------------    ------------
  Operating income (loss)                         (39,354)        (44,199)        (12,301)
Post retirement benefit curtailment gain             (334)         (5,001)              -
Interest expense                                   12,942           2,795          10,086
Gain on senior note repurchases                    (3,393)              -               -
Interest and other, net                            (1,122)            (91)            631
                                             ------------    ------------    ------------
Loss before reorganization items,
  taxes on income and minority interest           (47,447)        (41,902)        (23,018)
Fresh-Start Gain                                        -               -        (223,185)
Reorganization costs                                  360             (30)          1,160
                                             ------------    ------------    ------------
Income (loss) before taxes on income
  and minority interest                           (47,807)        (41,872)        199,007
Taxes on income                                     4,249           4,976           2,934
                                             ------------    ------------    ------------
Income (loss) before minority interest            (52,056)        (46,848)        196,073
Minority interest                                  (5,474)         (7,417)         24,666
                                             ------------    ------------    ------------
Income (loss) from continuing operations          (46,582)        (39,431)        171,407
Discontinued operations
Income from discontinued operations                     -               -               -
Extraordinary items
Forgiveness of debt and debt reinstatement              -               -          89,520
                                             ------------    ------------    ------------
Net Income (loss)                            $    (46,582)   $    (39,431)   $    260,927
                                             ============    ============    ============

Income (loss) per commons share
basic and diluted (1)
Continuing operations                        $      (3.96)   $      (3.35)             NA
Discontinued operations                                 -               -              NA
Extraordinary items                                     -               -              NA
                                             ------------    ------------    ------------
Net income (loss) per share (1)              $      (3.96)   $      (3.35)             NA
                                             ============    ============    ============
Shares used in computing per share
amounts - basic and diluted:
Continuing operations                          11,770,815      11,770,815              NA
Discontinued operations                        11,770,815      11,770,815              NA
Extraordinary items                            11,770,815      11,770,815              NA
</TABLE>

<TABLE>
<CAPTION>
                                           Twelve Months        Year                Year
                                               2002            Ended               Ended
                                             Combined        December 31,       December 31,
                                           (Successor &         2001                2000
                                           Predecessor Co)  (Predecessor Co)  (Predecessor Co)
                                           ---------------  ----------------  ----------------
                                          (Dollars in thousands, except share and per share data)
<S>                                       <C>               <C>               <C>
INCOME STATEMENT DATA
Continuing Operations
Sales                                     $    202,276      $    220,964      $    259,939
Cost of good sold                              147,158           164,393           191,664
Selling and administrative                      28,480            31,247            36,252
Restructuring                                    1,908                 -                 -
Goodwill and asset impairments                  72,818             2,482            13,624
Depreciation and amortization                    8,412            10,175            12,088
                                          ------------      ------------      ------------
  Operating income (loss)                      (56,500)           12,667             6,311
Post retirement benefit curtailment gain        (5,001)                -                 -
Interest expense                                12,881            13,519            15,766
Gain on senior note repurchases                      -                 -
Interest and other, net                            540               355              (751)
                                          ------------      ------------      ------------
Loss before reorganization items,
  taxes on income and minority interest        (64,920)           (1,207)           (8,704)
Fresh-Start Gain                              (223,185)                -                 -
Reorganization costs                             1,130               127             2,740
                                          ------------      ------------      ------------
Income (loss) before taxes on income
  and minority interest                        157,135            (1,334)          (11,444)
Taxes on income                                  7,910             2,725             5,186
                                          ------------      ------------      ------------
Income (loss) before minority interest         149,225            (4,059)          (16,630)
Minority interest                               17,249             1,395             1,968
                                          ------------      ------------      ------------
Income (loss) from continuing operations       131,976            (5,454)          (18,598)
Discontinued operations
Income from discontinued operations                  -                 -             1,732
Extraordinary items
Forgiveness of debt and debt reinstatement      89,520                 -                 -
                                          ------------      ------------      ------------
Net Income (loss)                         $    221,496      $     (5,454)     $    (16,866)
                                          ============      ============      ============

Income (loss) per commons share
basic and diluted (1)
Continuing operations                               NA                NA               N/A
Discontinued operations                             NA                NA               N/A
Extraordinary items                                 NA                NA               N/A
                                          ------------      ------------      ------------
Net income (loss) per share (1)                     NA                NA               N/A
                                          ============      ============      ============
Shares used in computing per share
amounts - basic and diluted:
Continuing operations                              N/A               N/A               N/A
Discontinued operations                            N/A               N/A               N/A
Extraordinary items                                N/A               N/A               N/A
</TABLE>



(1)  Per share amounts are not shown for the Predecessor Company and the
     Combined Successor and Predecessor Companies due to non-comparability.

(2)  Discontinued operations include the operations of a subsidiary sold and the
     gain on its sale of $0.6 million in October 2000.

                                       25
<PAGE>

<TABLE>
<CAPTION>
                                                           As of December 31,
                                             2003         2002         2001         2000
                                               (Successor Co)             (Predecessor Co)
                                           ----------------------    ----------------------
<S>                                        <C>          <C>          <C>          <C>
BALANCE SHEET DATA:
Cash and cash equivalent                   $   9,101    $  10,769    $   9,740    $   8,278
Working capital surplus (deficiency) (1)      18,183       13,964     (184,046)    (181,716)
Total assets                                 201,567      217,751      164,786      181,098
Long-term debt including current
portion (2)                                  160,610      141,451       41,814       46,303
Stockholders' deficit                        (47,477)      (8,781)    (161,533)    (148,620)
</TABLE>

(1)  Includes Parent liabilities subject to compromise totaling $209.4 million
        and $203.2 million in 2001 and 2000 which were exchanged, reinstated and
        /or modified upon consummation in accordance with the Plan.

(2)  Includes Parent Company Senior Notes of $100 million and $95.5
        million in 2003 and 2002, respectively which were reinstated on
        consummation in October 2002 pursuant to the Plan.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

         The following Management's Discussion and Analysis of Financial
Condition and Results of Operations relates entirely to the comparison of the
twelve months ended December 31, 2003 (Successor Company) to the twelve months
ended December 31, 2002 (both Predecessor and Successor Companies combined), the
twelve months ended December 31, 2002 (both Predecessor and Successor Companies
combined) to the twelve months ended December 31, 2001 (Predecessor Company) and
the comparison of the Predecessor Company for the twelve months ended December
31, 2001 and 2000. The Company's combined results of operations for 2002
(Predecessor and Successor Companies) are capable of comparison to the results
of operations of the Successor Company for 2003 and the Predecessor Company for
2001, except for changes in interest and depreciation expenses resulting from
the reorganization of the Parent's debt and fair market value adjustments to the
Company's property, plant and equipment as a consequence of the consummation of
the Plan and related Fresh Start reporting. As a result, unless otherwise
indicated the discussion of results of operations for the years 2003 versus 2002
and 2002 versus 2001 will be on a twelve month basis.

         The Company operates and manages its businesses based on geographic
location. See Note P of "Notes to Consolidated Financial Statements," which
include geographic information for the Company's businesses.

         THE COMPARISONS THAT FOLLOW ISOLATE AND QUANTIFY THE EFFECT THAT
CHANGES IN FOREIGN EXCHANGE RATES HAVE HAD ON THE RESULTS OF OPERATIONS OF THE
COMPANY, THEREBY ENABLING COMPARISON OF OPERATING RESULTS OF THE COMPANY'S
SUBSIDIARIES IN US CONSTANT DOLLAR TERMS ("CONSTANT DOLLARS"). IN PERFORMING
THIS COMPARISON, THE COMPANY UTILIZES A CONSTANT DOLLAR EXCHANGE RATE AS IF THE
EXCHANGE RATE FOR THE MOST RECENT PERIOD REMAINED AT THE SAME LEVELS AS THE
PRIOR PERIOD FOR WHICH THE COMPARISON IS BEING PERFORMED.

         The following abbreviations are used to refer to the Company's three
principal product lines: Transaction Cards and Systems - "TCS"; Printing
Services and Document Management - "PSDM"; and Security Printing Solutions -
"SPS".

COMPARISON OF RESULTS OF OPERATIONS - 2003 (SUCCESSOR COMPANY) WITH 2002
(PREDECESSOR AND SUCCESSOR COMPANIES)

         Sales for the years ended 2003 (Successor Company) and 2002
(Predecessor and Successor Companies, combined) were $222.6 million and $202.3
million, respectively. Sales, in millions, and as a percentage of total sales
for each of the Company's geographic locations is as follows:

                                       26
<PAGE>

<TABLE>
<CAPTION>
                                  Years Ended
                ----------------------------------------------
                 December 31, 2003    December 31, 2002
                    (Successor      (Successor and Predecessor
                      Company)        Companies Combined)
                 Sales      %               Sales     %
                ------    ------           -------   ------
<S>             <C>       <C>              <C>       <C>
Brazil          $   98.3   44.2%           $  98.7   48.8%
Australia           80.1   36.0%              57.6   28.5%
United States       21.9    9.8%              32.4   16.0%
Argentina            5.1    2.3%               4.1    2.0%
France              17.2    7.7%               9.5    4.7%
                --------  -----            -------  -----
                $  222.6  100.0%           $ 202.3  100.0%
                ========  =====            =======  =====
</TABLE>

         Sales

Sales by foreign subsidiaries represented approximately 90% in 2003 (Successor
Company), as compared to 84% in 2002 (Successor and Predecessor Companies
Continued) of the Company's consolidated  sales.

Although reported sales in 2003 increased by $20.3 million or 10.0% from 2002,
sales increased by $12.3 million in constant US dollars, after deducting $8.0
million attributable to foreign currency fluctuations. The adjustments due to
exchange rate fluctuations included an appreciation in the Australian and Euro
(France) currencies that resulted in increased revenues of $13.5 million and
$2.9, respectively, partly offset by a $8.3 million decline in sales
attributable to a devaluation of the Brazilian Real and a $0.1 million decline
attributable to a devaluation of the Argentine Peso. The constant dollar sales
increase of $12.3 million resulted from higher sales in Brazil of $7.9 million,
Argentina of $1.1 million, France of $4.9 million and Australia of $8.9 million,
partly offset by lower sales in the United States of $10.5 million. The net
increase in sales in constant dollars is discussed in detail by subsidiary
below.

The decrease of $10.5 million in sales in the United States was due to decreased
SPS sales at ABN of food coupons (including distribution sales) of $6.4 million,
stock and bond certificates of $3.6 million, and $1.4 million of lower revenue
generated from ABN's distribution and fulfillment program with the United States
Postal Service (the "USPS"). These decreases were partly offset by $0.9 million
of increases in secure commercial and government print sales at lower margins.
The continued reduction in stock and bond certificate sales is due to the trend
toward book entry securities and next day settlement (reducing or eliminating
the need for physical certificates), as well as a decline in new issues of
securities. The elimination in food coupon sales reflects the completion of the
United States Department of Agriculture's (the "USDA's") transition to the
electronic benefits program with respect to ABN's print contract with the USDA,
and the USDA's written denial of ABN's claim for $1.5 million in final billings
owed under ABN's fulfillment of its distribution contract. (See Item 2
"Liquidity and Capital Resources" provided herein for further information). The
lower revenue on the USPS program was due to the loss of a major customer in
2002, a union work stoppage at certain customers on the West coast of the United
States which restricted shipments, and lower overall customer demand resulting
from a U.S. postal stamp rate increase. In general, the overall demand for
secure paper-based documents of value that are used in the public and private
sector continues to decline. These trends have and will continue to have a
negative effect on revenues and on the mix of sales and gross margins at ABN.

Sales in Australia at LM were $8.9 million higher when compared to the prior
year. This increase was due to $11.7 million in higher PSDM sales primarily
resulting from new revenues generated by LM through the introduction of its mail
aggregation business albeit at lower margins. These increases were partly offset
by lower SPS sales of $2.0 million, of which $1.4 million represents a reduction
in passport orders placed by the Australian government as a result of its
decision not to renew the passport contract with LM and $0.6 million in lower
sales due to decreases in check usage and check prices received from banks. In
addition, TCS sales were lower by $0.8 million due to a reduction in the
issuance of drivers' licenses and lower volume levels on card personalization
offset partly by higher base stock card production.

At Transtex, TCS sales increased by $1.1 million despite the severe and ongoing
economic recession which continues in Argentina. The increase in TCS sales was
primarily due to a higher volume of orders placed in 2003 on prepaid telephone
cards and non-secure commercial loyalty cards, partly offset by lower overall
prices received on cards due to competitive pressures. Because of the volatility
of Argentine credit markets, however, the overall trend in card usage remains
uncertain. As a result, there can be no assurance that the volume of TCS sales
will continue to grow.

In France, the increase of $4.9 million in TCS sales at CPS was principally due
to an increase in sales on bank cards of approximately $4.9 million. This
increase was primarily due to the banks' requirement that CPS purchase and
charge them for the cost of non-personalized base stock transactions cards. CPS
also received higher card volumes from existing banking customers as well as
acquired new banking customers in 2003 and also received higher pricing for new
technological enhancements required by certain banks to include electronic purse
capabilities on cards. In addition, a higher volume of phone card orders were
placed in 2003 versus 2002, partly offset by lower prices for such cards,
resulting in a net increase in phone card sales of $0.8 million. These increases
were partly offset by reduced volumes on loyalty and other financial card
programs of $0.8 million.

                                       27
<PAGE>
Sales at ABNB in Brazil in 2003 were $7.9 million higher than in 2002. The net
increase is attributable to higher PSDM, TCS and SPS sales of $6.9 million, $1.5
million and $0.9 million, respectively. The increase in PSDM sales was primarily
due to increased sales of printing services predominantly due to two new banking
customers and the increase in TCS sales was due to a $1.2 million increase in
credit card sales due to higher volume and increased prices and a $0.3 million
increase in phone card sales due to higher prices, partly offset by lower
volumes resulting from the telephone companies' decision to increase the unit
value on card denominations. The increase in SPS sales was due to higher volumes
in driver's license issuances. These increases were partly offset by lower check
volume sales of $1.4 million.

         Cost of Goods Sold

Although reported cost of goods sold in 2003 increased $24.0 million or 16.3% as
compared to 2002 (with a corresponding decrease in gross margins of
$3.7 million), cost of goods sold increased by $16.8 million in constant US
dollars, after deducting $7.2 million attributable to foreign currency
fluctuations. As a result, exchange rate fluctuations account for increased
gross margins of $0.8 million. The effect of exchange rate appreciation by
country on cost of goods sold and gross margins, respectively, was as follows:
Australia - $10.9 million and $2.6 million and France - $2.5 million and $0.3
million partly offset by exchange rate devaluation in Brazil - $6.2 million and
$2.1 million. There was no impact in Argentina resulting from exchange rate
fluctuations.

The constant dollar increase in cost of goods sold resulted primarily from the
increase in sales discussed above, a shift in product mix towards higher volume,
lower margin products, and overall competitive pricing pressures. As a result,
gross margins in constant dollars decreased by approximately $4.5 million when
compared to the prior year. The net increase in cost of goods sold in constant
dollars is discussed in detail by subsidiary below.

As a percentage of sales, cost of goods sold increased to 76.9% in 2003 as
compared to 72.8% in 2002. A comparison of the percentage of cost of goods sold
by each of the Company's geographic locations to the prior year is as follows:

<TABLE>
<CAPTION>
                       TWELVE MONTHS ENDED DECEMBER 31,
                 ------------------------------------------
                        2003                 2002
                 (SUCCESSOR COMPANY)  (PREDECESSOR COMPANY)
                 -------------------  ---------------------
<S>              <C>                  <C>
Brazil                  74.7%               74.6%
Australia               80.7%               78.8%
United States           68.8%               58.4%
Argentina               58.1%               52.7%
France                  87.5%               74.3%
</TABLE>


Cost of goods sold at ABNB in Brazil increased by $6.0 million from 2002, with a
corresponding increase in gross margins of $1.9 million. Cost of goods sold as a
percentage of sales was approximately the same when compared to 2002. The
increase in cost of goods sold in constant dollar terms was primarily
attributable to the increase in sales discussed above. In addition, there were
higher fixed costs primarily attributable to increased maintenance, rental, and
communication costs with respect to SPS driver's license, electronic print, and
PSDM products, and additional maintenance required on the TCS phone card
chemical lines. Also, PSDM costs in 2002 were lower as a result of the one-time
value added tax credits received from the Brazilian federal government of
approximately $3.5 million. These increases were partly offset by a favorable
product mix resulting from higher margin sales of SPS driver's license and
intaglio products and TCS magnetic stripe transaction cards.

Costs of goods sold at LM in Australia increased by $8.2 million and were
accompanied by an increase in gross margins of $0.7 million when compared to the
prior year. As a percentage of sales, cost of goods sold increased by 1.9% when
compared to the prior year. The increase in cost of goods sold in constant
dollar terms is primarily due to a change in product mix resulting from higher
variable costs and lower margins from the introduction of LM's mail aggregation
business. A reduction in volume order levels on higher margin SPS bank checks
and passports contributed to the trend toward lower margins and higher costs as
a percentage of sales.

Cost of goods sold at ABN in the United States decreased by $3.8 million and
gross margins declined $6.7 million when compared to the prior year. As a
percentage of sales, cost of goods sold increased by approximately 10.4%. This
is primarily due to a change in product mix whereby sales of higher margin,
lower cost stock and bond and food coupon products continued to decline and were
partly replaced by sales of lower margin, higher cost direct fulfillment, secure
government and commercial printing products. The reduction in food coupon
products resulted from the termination of both the print and distribution
contracts with the USDA. This trend was partly offset by lower fixed costs as a
result of the consolidation of ABN's Philadelphia operation into its Tennessee
location. (See Part 1- "Financial Information about Segments" provided herein
for further information).

In Argentina, cost of goods sold at Transtex was approximately $0.9 million
higher than in 2002, with an increase in gross margins of $0.2 million,
primarily as a result of increased sales. Cost of goods sold as a percentage of
sales increased by 5.4% over the prior year. This increase was primarily due to
a higher volume of phone and non-secure commercial and

                                       28
<PAGE>

loyalty cards produced at significantly lower competitive prices along with
higher imported raw material costs due to the weak Argentine Peso.

At CPS in France, cost of goods sold increased by approximately $5.5 million
when compared to 2002 resulting in an decrease in gross margins of $0.6 million.
As a percentage of sales, cost of goods sold increased by approximately 13.2%
from 2002 primarily due to higher costs as a result of the requirement from the
banks that CPS purchase the non-personalized base stock transaction card and
pass the cost along to the banks. In addition, there was a change in product mix
resulting from an increase in lower margin phone card orders beginning in the
second quarter of 2003.

         Selling and Administrative Expenses

Reported selling and administrative expenses increased by $6.1 million when
compared to 2002. Exchange rate appreciation resulted in a net increase of $2.1
million in such expenses, attributable to currency appreciation in Australia and
France of approximately $2.3 million and $0.2 million, respectively, partly
offset by currency devaluation in Brazil of approximately $0.4 million. There
was no impact of foreign currency in Argentina. As a result, the net increase in
selling and administrative expense from the prior year in constant dollars was
$4.0 million.

In constant dollars, ABNB's selling and administrative expense increased by $1.6
million principally due to higher commissions and salaries on increased sales
and increased administrative wages pursuant to union increases. LM's
administrative expense increased by $3.3 million in constant dollars primarily
due to an increase in professional, investment advisory, bank and due diligence
fees in connection with the proposed sale and restructuring of LM, (See Part 1
"Financial Information about Segments for further information") and the
establishment of a provision to settle the Australian General Sales Tax office
claim. (See Part II Item 1 "Legal Proceedings" for further information). These
increases were partly offset by $0.3 million due to lower commissionable sales
at ABN, and lower administrative expenses of $0.4 million at ABN due to the
reduction in personnel expenses related to the closure of its Philadelphia plant
and additional cost cutting initiatives at its Tennessee location.
Administrative expenses in France and Argentina were approximately the same when
compared to 2002. As a result of the above, for the Company as a whole, selling
and administrative expenses as a percentage of sales were higher at 15.5% in
2003 as compared to 14.1% in 2002.

         Restructuring

The restructuring charge of $0.9 million in 2003 represents severance payments
to employees in connection with ABN's decision to close its Philadelphia plant
and consolidate all of its manufacturing operations into its Tennessee location.
(See Item 1 - "Financial Information About Segments" and Note G to the Company's
Consolidated Financial Statements provided herein for further information).

The restructuring charge of $1.9 million in 2002 represents termination payments
to employees in connection with LM's restructuring program for the purpose of
consolidating its manufacturing operations. (See Item 1 - "Financial Information
About Segments" and Note G to the Company's Consolidated Financial Statements
provided herein for further information).

         Goodwill and asset impairment

The Goodwill and asset impairment charge of $42.7 million in 2003, represents
the remeasurement of the value of the Company's subsidiaries based on the
Parent's review of projected cash flows and valuation multiples based on
prevailing market conditions which resulted in a $42.6 million impairment charge
in accordance with SFAS No. 142 "Goodwill and Other Intangible Assets" and an
impairment provision of $1.2 million established for certain non-performing
assets at LM. These charges were partly offset by a $1.1 million recovery at ABN
resulting from a favorable settlement on its lease with the landlord of its idle
Chicago facility. (See Part I "Financial Information About Segments" and Note H
).

A review by the Parent in 2002 of valuation multiples based on prevailing market
conditions led to a Goodwill and asset impairment charge of $72.8 million for
the twelve months ended December 31, 2002. This review resulted in an impairment
charge of $47.4 million for the three months ended December 31, 2002 (Successor
Company), of which $33.2 million related to ABNB and $14.2 million related to
ABN. In addition, in the third quarter of 2002 (Predecessor Company), the Parent
took a charge of $25.4 million which consisted of a write-off of LM's entire
Goodwill balance of $25.2 million based on an evaluation of LM's high level of
indebtedness and a $0.2 million reserve with respect to the carrying value of
certain equipment at ABN dedicated to the production of food coupons (See Note H
to the Company's Consolidated Financial Statements provided herein for further
information).

         Depreciation Expense

Reported depreciation and amortization expense for 2003 was $4.2 million higher
when compared to 2002. Exchange rate variations on a net basis had no impact on
the increase. The increase was primarily related to the additional depreciation
expense at ABNB resulting from the fair valuation of fixed assets which resulted
in a step-up in basis in accordance with Fresh Start accounting in the third
quarter of 2002.

                                       29
<PAGE>

         Interest Expense

Reported interest expense in 2003 was approximately the same when compared to
2002. Exchange rate appreciation accounts for an increase of approximately $0.4
million, resulting in a net decrease of $0.4 million in constant dollars. This
decrease resulted primarily from lower interest at ABNB of $0.7 million and ABN
of $0.2 million due to lower borrowings partly offset by an increase of $0.4
million in accrued interest on the Parent's Senior Notes which continue to
accrue interest on a pay-in-kind basis and an increase of $0.1 million at LM due
to higher borrowings.

         Gain on Senior Note Repurchase

In 2003, through privately negotiated transactions, the Parent purchased $6.3
million face amount of bonds for an aggregate purchase price of $2.9 million.
The Parent recorded a gain in 2003 of approximately $3.4 million on the
repurchase of these bonds reflecting the difference between the face amount and
the purchase price. (See "Liquidity and Capital Resources" for further
information).

         Post retirement Benefit Curtailment Gain

In 2002, ABN made significant changes to its post retirement health care and
life insurance benefits in order to limit future costs under the plan. ABN
increased participant contributions, fixed the maximum amount it would
contribute to each participant and as a result had certain participants opt out
from participating in the plan. As a result, the combination of these changes
resulted in the recognition of a one time $5 million non-cash actuarial gain
resulting from the plan settlement. In 2003, ABN recognized an additional $0.3
million non-cash actuarial gain resulting from the closure of its Philadelphia
facility. (See Note O to the Company's Consolidated Financial Statements
provided herein for further information).

         Other, Net

Other, net in 2003 reflects a $1.7 million net favorable gain when compared to
2002 primarily attributable to the reversal of the remaining pre-petition
liabilities which were determined to no longer be disputed by creditors in the
Chapter 11 proceedings.

         Bankruptcy Costs

Bankruptcy costs decreased by $0.8 million from 2002. This decrease resulted
from approximately $0.4 million in administrative wind down costs in 2003,
including an accrual for the additional estimated cost of approximately $0.2
million to settle the Blackstone claim as compared to approximately $1.2 million
required in 2002 in connection with the consummation of the Plan. Remaining
costs to be incurred will result from the further administrative wind down of
the Plan, which are reasonable and customary to complete the reorganization
process and are not expected to be significant.

         Taxes on Income

Taxes on income are calculated using the effective tax rate for each tax
jurisdiction and various assumptions such as state and local taxes and the
utilization of foreign taxes in the U.S. The effective tax rate is further
adjusted for any permanent differences between the book basis and tax basis of
assets and liabilities. In addition, the Company has provided a valuation
allowance against its U.S. and Australia net operating losses and other U.S. and
Australia deferred tax assets due to the uncertainty as to the realization of
taxable income in both jurisdictions in the future. Taxes on income are provided
only in Brazil, France and Argentina which are the jurisdictions that reported
taxable income for the period.

         Minority Interest

Minority interest represents the 22.5% minority interest in ABNB held by
Bradesco Vida e Previdencia S.A., a subsidiary of the Bradesco Group.

COMPARISON OF RESULTS OF OPERATIONS - 2002 (PREDECESSOR AND SUCCESSOR COMPANIES)
WITH 2001 (PREDECESSOR COMPANY)

         Sales for the years ended 2002 (Predecessor and Successor Companies
combined) and 2001 were $202.3 million and $221.0 million respectively. Sales,
in millions, and as a percentage of total sales for each of the Company's
geographic locations were as follows:

                                       30
<PAGE>

<TABLE>
<CAPTION>
                  Three Months Ended   Nine Months Ended
                  December 31, 2002   September 30, 2002
                   (Successor Co)      (Predecessor Co)
                  Sales        %        Sales        %
                --------     ------   --------     -----
<S>             <C>          <C>      <C>          <C>
Brazil          $   20.3      41.9%   $   78.4     51.0%
Australia           16.5      34.1%       41.1     26.7%
United States        7.9      16.3%       24.5     15.9%
Argentina            0.8       1.7%        3.3      2.1%
France               2.9       6.0%        6.6      4.3%
                --------     -----    --------    -----
                $   48.4     100.0%   $  153.9    100.0%
                ========     =====    ========    =====
</TABLE>

<TABLE>
<CAPTION>
                                  Years Ended
                --------------------------------------------------
                  December 31, 2002
                (Successor and Predecessor    December 31, 2001
                     Cos Combined)             (Predecessor Co)
                  Sales            %             Sales        %
                ----------   -------------     ---------   -------
<S>             <C>          <C>               <C>         <C>
Brazil          $   98.7         48.8%         $  111.3     50.4%
Australia           57.6         28.5%             57.0     25.8%
United States       32.4         16.0%             36.0     16.3%
Argentina            4.1          2.0%              8.2      3.7%
France               9.5          4.7%              8.5      3.8%
                --------        -----          --------    -----
                $  202.3        100.0%         $  221.0    100.0%
                ========        =====          ========    =====
</TABLE>




         Sales by foreign subsidiaries represented approximately 84% in both
2002 (Successor and Predecessor Companies Combined) and 2001 (Predecessor
Companies) respectively of the Company's consolidated sales.

         Sales in 2002 decreased by $18.7 million or 8.5% from 2001. Exchange
rate devaluation resulted in net decreased revenues of approximately $28.1
million, of which $24.2 million is attributable to Brazil and $7.7 million to
Argentina. The devaluation in these countries was partly offset by an
appreciation in the Australian and Euro currencies, resulting in increased
revenues of $3.3 million and $0.5 million, respectively. After giving effect to
the above net devaluation, sales increased by $9.4 million in constant dollars
as a result of higher sales in Brazil of $11.6 million, Argentina of $3.5
million and France of $0.5 million, partly offset by lower sales in the United
States of $3.6 million and in Australia of $2.6 million. The net increase in
sales in constant dollars is discussed in detail by subsidiary below.

         The decrease of $3.6 million in sales at ABN was due to $2.3 million in
lower stock and bond sales, $2.4 million in decreased sales of secure government
print and $0.8 million in lower secure commercial sales. These decreases were
partly offset by $1.9 million in higher revenue generated primarily from ABN's
distribution and fulfillment program with the United States Postal Service (the
"USPS"). The continued trend toward next day settlement of securities, the
decreasing overall demand for secure paper-based documents of value that are
used in the public and private sector and the recent verbal notification by the
USDA that it did not anticipate the need to place any future orders for food
coupons during the remaining term of the agreement, are expected to have a
negative effect on the future mix of sales and gross margins at ABN. For further
information regarding USDA food coupon sales, see "Liquidity and Capital
Resources".

         Sales in Australia at LM in constant dollars were $2.6 million lower
when compared to the prior year as sales in two of the three product lines
experienced negative trends. SPS sales were $5.9 million lower, mainly resulting
from $3.3 million in lower sales due to decreases in check usage and check
prices received from banks. Additional declines in SPS sales of approximately
$2.6 million were due to a reduction in orders placed for passports by the
Australian government stemming from the downturn in travel after September 11,
2001, excess inventory presently held by the government, and the decision by the
government not to renew the passport contract with LM. It is anticipated that
the downward trends on check sales will continue. Sales of TCS products declined
by approximately $2.1 million resulting from the loss of a phone card contract
to a competitor and a reduction in export sales to China as a result of a change
in Chinese banking regulations that curtailed the importation of cards. In
addition, higher card sales were generated in 2001 as a result of the merger of
certain banks and the issuance of certain loyalty card programs, which did not
occur in 2002. These decreases were partly offset by higher PSDM sales of $5.4
million, resulting primarily from $6.3 million in new revenues generated in the
third and fourth quarter from LM's introduction of its mail aggregation business
partly offset by $0.9 million in lower electronic print sales due to competitive
pricing pressures and a weak print market.

         At Transtex, TCS sales increased by $3.5 million in constant dollars
despite the severe and ongoing economic recession, which continues to negatively
impact Argentina. The increase was primarily due to an increase in orders placed
on prepaid telephone cards, an increase in card personalization volumes and
higher pricing received on bank debit and credit cards. In addition, the
devaluation of its local currency, the Argentine Peso, has allowed Transtex to
be more

                                       31
<PAGE>

competitive with foreign suppliers. Despite this improvement in sales in 2002,
there is no guarantee that this trend will continue as the economy of and credit
markets in Argentina continue to remain highly volatile, such that the overall
trend in card usage remains uncertain.

         In France, the constant dollar increase of $0.5 million in TCS sales at
CPS was principally due to stronger demand for bank and other financial cards of
$0.9 million, partly offset by lower phone card sales of $0.4 million resulting
from an overall weakness in the telecommunications market in France.

         Sales at ABNB in Brazil were $11.6 million higher than in 2001 in
constant dollars. The net increase is attributable to higher TCS and SPS sales
of $2.9 million and $9.7 million, respectively, partly offset by a decrease in
PSDM sales of $1.0 million. The $2.9 million increase in TCS sales is due
entirely to an increase in revenue from phone cards of which the increase is
evenly split between price and volume. The $9.7 million increase in SPS sales
resulted primarily from an increase in driver license revenues of $6.9 million
due to an increase in volume, as well as incremental revenue generated from
adding fingerprint identification on driver licenses. In addition, an increase
in sales of checks and electronic print of $2.8 million resulted from new
business received from telephone and banking customers. The $1.0 million net
reduction in PSDM revenue levels was due to decreased demand, primarily from
ABNB's minority shareholder Bradesco Bank.

         Cost of Goods Sold

         Cost of goods sold in 2002 decreased $17.2 million or 10.5% as compared
to 2001, with a corresponding decrease in gross margins of $1.5 million. The
impact of exchange rate devaluation resulted in decreased cost of goods sold and
gross margins of approximately $19.2 million and $9.0 million, respectively. The
net effect of devaluation by country on cost of goods sold and gross margins,
respectively, was as follows: Brazil - $18.1 million and $6.2 million, and
Argentina - $4.1 million and $3.6 million. The devaluation in these countries
was partly offset by an appreciation in Australia's currency resulting in an
increase in costs of goods sold and gross margins of $2.6 million and $0.7
million, respectively, and with regard to France, the appreciation in the Euro
resulted in an increase in cost of goods sold and gross margins of $0.4 million
and $0.1 million, respectively.

         After giving effect to the above net devaluation, cost of goods sold in
constant dollars increased by $2.0 million, which resulted primarily from the
increase in sales discussed above, partly offset by a reduction in costs and a
favorable change in product mix. As a result, gross margins in constant dollars
increased by approximately $7.4 million when compared to the prior year. The net
increase in cost of goods sold in constant dollars is discussed in detail by
subsidiary below.

                                       32
<PAGE>

         As a percentage of sales, cost of goods sold decreased to 72.8% in 2002
as compared to 74.4% in 2001. A comparison of the percentage of cost of goods
sold by each of the Company's geographic locations to the prior year is as
follows:

<TABLE>
<CAPTION>
                       Year Ended December 31,
                        2002          2001
                       -------     -----------
<S>                    <C>         <C>
Brazil                  74.6%        78.6%
Australia               78.8%        76.2%
United States           58.4%        57.9%
Argentina               52.7%        72.1%
France                  74.3%        79.1%
</TABLE>

         Cost of goods sold at ABNB in Brazil increased by $4.2 million from
2001, with a corresponding increase in gross margins of $7.4 million. Cost of
goods sold as a percentage of sales decreased by 4% when compared to 2001. The
increase in cost of goods sold in constant dollar terms resulted from
approximately $9.1 million in higher costs associated with increased sales and
$0.8 million in higher costs due to changes in product mix resulting primarily
from higher cost, lower margin SPS electronic print sales. These increases were
partly offset by a reduction in costs of approximately $2.2 million due to
improved manufacturing processes on phone cards and a one-time value added tax
credit in the third quarter of 2002 received on PSDM and SPS electronic print
material costs totaling approximately $3.5 million.

         Costs of goods sold at LM in Australia decreased by $0.6 million and
resulted in a corresponding reduction in gross margins of $2.0 million when
compared to the prior year. As a percentage of sales, cost of goods sold
increased by 2.6% when compared to the prior year. The decrease in cost of goods
sold in constant dollar terms was primarily attributable to lower variable costs
of $4.4 million directly related to the decrease in sales volume discussed,
excluding the mail aggregation business, and reductions in fixed overhead of
$2.4 million resulting from the cost savings and profit improvement programs
initiated both in 2002 and 2001. These decreases were partly offset by a $6.2
million increase in variable costs due to a change in product mix primarily
resulting from the introduction of the mail aggregation business which results
in higher costs and lower margins as compared to the reduction in sales of lower
cost and higher margin TCS and SPS product lines.

         Cost of goods sold at ABN in the United States decreased by $1.9
million and resulted in a decrease in gross margins of $1.7 million when
compared to the prior year. As a percentage of sales, cost of goods sold
increased by 0.5%. The decrease in costs is principally due to the lower sales
volume discussed above.

         In Argentina, cost of goods sold in constant dollar terms at Transtex
was approximately $0.2 million higher than in 2001, which resulted in an
increase in gross margins of $3.3 million. As a result, cost of goods sold as a
percentage of sales decreased by 19.4% from 2001. This improvement was primarily
the result of higher margins generated as a result of higher prices received
from customers on bank and debit cards and reductions in material and personnel
costs on that portion of such costs which are priced in Argentine Pesos. In
light of the severe ongoing economic crisis in Argentina, there is no guarantee
that this improved trend will continue.

         At CPS in France, cost of goods sold in constant dollar terms was
approximately the same when compared to 2001 resulting in an $0.5 million
increase in gross margins. As a percentage of sales, cost of goods sold
decreased by approximately 4.8% from 2001 primarily resulting from a change in
product mix with increased sales of higher margin bank cards.

         Selling and Administrative Expenses

         Selling and administrative expenses in 2002 decreased by $2.8 million
when compared to 2001. Exchange rate devaluation resulted in decreases in such
expenses of approximately $2.7 million, attributable to devaluation of $1.7
million in Brazil and $1.5 million in Argentina, partly offset by an
appreciation in Australia of $0.5 million. As a result, the net decrease in
selling and administrative expense in 2002 from 2001 in constant dollars was
$0.1 million. The net decrease primarily resulted from a $0.3 million decrease
at LM resulting from lower personnel costs, partly offset by an increase in
professional fees due to work performed in connection with a failed acquisition,
a $0.8 million decrease at the Parent resulting from lower professional fees and
a $0.1 million decrease in selling expense at ABN due to lower commissionable
sales. These decreases were partially offset by higher administrative expenses
at ABNB of $0.5 million due primarily to a one-time tax credit received in 2001,
a $0.4 million increase at Transtex primarily related to severance costs
associates with downsizing and a $0.2 million increase at CPS resulting from
higher personnel costs. As a result of the above, selling and administrative

                                       33
<PAGE>

expenses as a percentage of sales was approximately the same (14.1%) for both
years.

         Restructuring

         The restructuring charge of $1.9 million in 2002 represents termination
payments to employees in connection with LM's restructuring program for the
purpose of consolidating its manufacturing operations (See Item 1 - "Financial
Information About Segments" and Note G to the Company's Consolidated Financial
Statements provided herein for further information).

         Goodwill and asset impairment

         A review by the Parent in 2002 of valuation multiples based on
prevailing market conditions led to a Goodwill and asset impairment charge of
$72 million for the twelve months ended December 31, 2002. This review resulted
in an impairment charge of $47.4 million for the three months ended December 31,
2002 (Successor Company), of which $33.2 million related to ABNB and $14.2
million related to ABN. In addition, in the third quarter of 2002 (Predecessor
Company), the Parent took a charge of $25.4 million, which consisted of a
write-off of LM's entire Goodwill balance of $25.2 million based on an
evaluation of LM's high level of indebtedness and a $0.2 million reserve with
respect to the carrying value of certain equipment at ABN dedicated to the
production of food coupons (See Note H to the Company's Consolidated Financial
Statements provided herein for further information).

         Goodwill and asset impairment in 2001 of $2.5 million represents the
remaining write down of $1.9 million in Goodwill on the books of Transtex as a
result of operating losses and the economic uncertainties in Argentina and a
$0.6 million third quarter charge related to the carrying value of certain
equipment and leases no longer used at ABN as a result of its exit from the
currency printing business (See Note H to the Company's Consolidated Financial
Statements provided herein for further information).

         Depreciation Expense

         Depreciation and amortization expense for 2002 was $1.8 million lower
when compared to 2001. Exchange rate devaluation accounted for approximately
$1.5 million of this decrease, resulting in a net decrease of $0.3 million in
constant dollars. This decrease in constant dollars was primarily the result of
the elimination of Goodwill amortization in accordance with SFAS No. 142,
"Goodwill and Other Intangible Assets" of approximately $2.2 million, partly
offset by an increase in depreciation expense of $1.9 million primarily
attributable to capital expenditures in Brazil, which increased depreciation by
approximately $1.0 million, and $0.9 million of additional depreciation expense
related to the fair valuation of fixed assets in accordance with Fresh Start
accounting.

         Interest Expense

         Interest expense in 2002 was approximately $0.6 million lower when
compared to 2001. Exchange rate devaluation accounts for approximately $0.1
million of this decrease resulting in a net decrease of $0.5 million in constant
dollars. This net decrease resulted from a decrease of $1.7 million resulting
primarily from the interest rate reduction due to the amendment to LM's credit
agreement which was executed in June 2001 partly offset by $0.6 million in
additional accrued interest payable in kind on the Parent's US Dollar
denominated public debt, which was restructured and reinstated on the effective
date of the Parent's Plan, and the 2001 reversal of $0.6 million in accrued
interest in connection with a state and local tax reserve no longer required.

         Post retirement Benefit Curtailment Gain

         In 2002, ABN made significant changes to its post retirement health
care and life insurance benefits in order to limit future costs under the plan.
ABN increased participant contributions, fixed the maximum amount it would
contribute to each participant and, as a result, had certain participants opt
out from participating in the plan. As a result, the combination of these
changes resulted in the recognition of a one time $5 million non-cash actuarial
gain resulting from the plan settlement (See Note O to the Company's
Consolidated Financial Statements provided herein for further information).

         Other, Net

         Other net expense in 2002 was approximately $0.2 million higher when
compared to 2001. Exchange rate devaluation resulted in an increase of $0.5
million. After giving effect to the net devaluation, other net expenses in
constant dollars decreased by $0.3 million. The majority of the net changes
relate to a gain of $0.5 million from the

                                       34
<PAGE>

proceeds received by ABN from a one time private sale of certain printed
materials in 2002, partly offset by $0.2 million of increased other net expenses
in 2002.

         Fresh-Start Adjustments

         The Fresh Start adjustments represent a gain of $223.2 million based
upon the Reorganization Value of the Successor Company. See Item 1 - "Fresh
Start Accounting".

         Reorganization Costs

         Reorganization costs related to the bankruptcy increased in 2002
by $1.0 million when compared to 2001 principally due to additional legal and
administrative costs associated with work done related to amendments to the
Parent's Plan.

         Taxes on Income

         Taxes on income are calculated using the effective tax rate for each
tax jurisdiction and various assumptions such as state and local taxes and the
utilization of foreign taxes in the US. The effective tax rate is further
adjusted for any permanent differences between the book basis and tax basis of
assets and liabilities. In addition, the Company has provided a valuation
allowance both in Australia and the US against the net operating losses and
other deferred tax assets of each respective jurisdiction due to the uncertainty
as to the realization of taxable income in the future.

         Minority Interest

         Minority interest represents the 22.5% minority interest in ABNB held
by Banco Bradesco, as adjusted for the fair valuation of Bradesco's equity in
accordance with Fresh Start accounting.

         Extraordinary Items

         Extraordinary items represent the gain on the forgiveness of the Senior
Subordinated Notes of $91 million and certain creditor discounts of $0.4 million
partly offset by a $1.8 million extraordinary loss resulting from the
reinstatement of the Senior Notes inclusive of all accrued interest and consent
premiums which were paid in kind.


                                       35
<PAGE>


         COMPARISON OF RESULTS OF OPERATIONS OF PREDECESSOR COMPANY - 2001 WITH
2000

Sales

         Sales for the years ended 2001 and 2000 were $221.0 million and $259.9
million respectively. Sales, in millions, and as a percentage of total sales for
each of the Company's geographic locations is as follows:

<TABLE>
<CAPTION>
                      2001            2000
                 Sales     %      Sales     %
                -------  -----   ------   -----
<S>             <C>      <C>     <C>      <C>
Brazil          $111.3   50.4%   $132.9   51.1%
Australia         57.0   25.8%     69.8   26.9%
United States     36.0   16.3%     37.5   14.4%
Argentina          8.2    3.7%      9.8    3.8%
France             8.5    3.8%      9.9    3.8%
                ------  -----    ------  -----
                $221.0  100.0%   $259.9  100.0%
                ======  =====    ======  =====
</TABLE>


         Sales by foreign subsidiaries represented approximately 84% and 86% in
2001 and 2000, respectively of the Company's consolidated sales.

         Sales

         Sales in 2001 decreased by $39.0 million or approximately 14.9% from
2000. Exchange rate devaluation produced a decrease in sales of approximately
$39.1 million, of which $31.5 million was attributable to Brazil, $7.3 million
to Australia and $0.3 million to France. This resulted in a net increase in
sales of $0.1 million in constant dollars resulting from $9.9 million in higher
sales in Brazil, offset by lower sales of $1.4 million in the United States,
$5.5 million in Australia, $1.6 million in Argentina and $1.2 million in France.
The net increase in sales in constant dollars is discussed in detail by
subsidiary below.

         The decrease of $1.4 million in sales in the United States was
principally due to the elimination of $2.6 million in revenues resulting from
the sale of American Banknote Card and Merchant Services ("ABNCMS"), the
Company's former card and merchant processing business, in September 2000 partly
offset by $1.2 million in higher SPS sales at ABN. The increase in SPS sales at
ABN was due to $5.5 million in new revenue generated from lower margin
distribution and fulfillment programs partly offset by $4.3 million in decreased
sales from higher margin products such as stock and bond certificates,
traveler's checks, postal commemorative panels and other secure print.

         Sales in Australia at LM were $5.6 million lower when compared to the
prior year, as sales in all three principal product lines experienced negative
trends when compared to the prior year. SPS sales were $3.2 million lower mainly
due to $5.1 million in reduced volumes on bank checks resulting from the loss of
a customer and an overall downward trend in check usage. This decrease was
partly offset by an increase in passport orders from the Australian government
of $1.9 million. Sales of PSDM products were $1.9 million lower due mainly to a
one-time increase in sales in 2000 as a result of a one-time contract with the
Australian Government resulting from the introduction of its general sales tax
program. TCS sales were lower by $0.4 million due to the elimination of $3.0
million in revenues resulting from LM's sale of its transaction card equipment
business in December 2000, partly offset by an increase in demand for credit and
debit card base stock and card personalization of $1.6 million and an increase
in driver license issuances of $1.0 million.

         In Argentina, the severe and ongoing economic recession continued to
negatively impact Transtex. As a result, the TCS product line at Transtex
experienced a significant decline in transaction card personalization and
transaction card equipment sales due to an overall weakness in the banking
sector as credit markets continued to tighten. In addition, the mix of
production in base stock cards whereby larger volumes of lower margin bank debit
and phone cards have replaced higher margin credit cards reduced Transtex's
profitability. As a result of these factors, sales were $1.6 million lower when
compared to the prior year.

         In France, the decrease of $1.2 million in TCS sales at CPS was
primarily due to a decline in demand for phone cards of $2.3 million partly
offset by an increase in sales of bank and financial cards of $1.1 million. The
decrease in sales of phone cards was principally a result of the overall
weakness experienced in the French telecommunications sector.

         Sales at ABNB in Brazil were $9.9 million higher than in 2000. The net
increase was the result of a $6.9 million increase in TCS sales due to higher
demand for stored value telephone cards of $5.5 million and magnetic stripe
cards of $1.4 million. In addition, SPS sales were higher by $4.9 million
primarily due to a strong increase in driver license

                                       36
<PAGE>

issuances. These increases were partly offset by a decrease in volume in PSDM
sales of $1.9 million primarily due to competitive market pricing pressures.

         Cost of Goods Sold

         Cost of goods sold in 2001 decreased $27.3 million or 14.2% from 2000,
with a corresponding decrease in gross margins of $11.7 million. Exchange rate
devaluation produced decreases in cost of goods sold and gross margins of
approximately $30.6 million and $8.5 million, respectively. The effect of
devaluation by country on cost of goods sold and gross margins, respectively,
was as follows: Brazil - $24.8 million and $6.8 million, Australia - $5.6
million and $1.7 million, and France - $0.2 million and nil.

         The resulting net increase in cost of goods sold of $3.3 million in
constant dollars was primarily the result of a change in product mix. As a
result, gross margins in constant dollars were unfavorable by approximately $3.2
million when compared to the prior year. The net increase in cost of goods sold
in constant dollars is discussed in detail by subsidiary below.

         As a percentage of sales, cost of goods sold increased to 74.4% in 2001
as compared to 73.7% in 2000. A comparison of cost of goods sold, as a
percentage of sales, by each of the Company's geographic locations to the prior
year is as follows:

<TABLE>
<CAPTION>
                 Year Ended December 31,
                  2001          2000
                --------    -------------
<S>             <C>         <C>
Brazil            78.6%         77.7%
Australia         76.2%         76.8%
United States     57.9%         52.8%
Argentina         72.1%         68.4%
France            79.1%         83.8%
</TABLE>

         Cost of goods sold at ABNB in Brazil increased by $9.0 million with a
corresponding increase in gross margins of $0.9 million. As a percentage of
sales, cost of goods sold at ABNB was 0.9% higher than in 2000. The increase as
both a percentage of sales and in constant dollar terms was predominantly
attributable to an increase in chemical costs and higher than normal waste
factors, as ABNB was required to adopt a new manufacturing process mandated by
the Brazilian telephone companies in connection with the production of
stored-value telephone cards. This increase was partly offset by a favorable
product mix resulting from an increase in lower cost driver license issuances,
which result in higher gross margins.

         Costs of goods sold at LM in Australia decreased by $4.6 million and
resulted in a corresponding reduction in gross margins of $1.0 million when
compared to the prior year. The decrease in cost of goods sold in constant
dollar terms was primarily attributable to lower variable costs of $2.5 million
directly related to the lower sales discussed above. The balance of the decrease
of $2.1 million results from an overall reduction in fixed overhead of $1.6
million and a $0.5 million reversal of an inventory obsolescence provision no
longer required. As a result of the reductions in fixed overhead, cost of goods
sold as a percentage of sales decreased by approximately 0.6% when compared to
the prior year.

         The net increase of $1.1 million in cost of goods sold in the United
States was principally due to an increase at ABN in cost of goods sold of $3.5
million resulting from higher variable costs due to a change in product mix,
whereby higher margin, lower cost security print products were replaced by value
added fulfillment and printing services which bear higher costs and provide
lower gross margins. This increase was partly offset by the elimination of $2.4
million in expenses resulting from the sale of ABNCMS in September 2000. As a
result, the Company's US segment experienced a reduction in gross margins of
$2.5 million and a 5.1% net increase in the cost of goods sold as a percentage
of sales when compared to 2000.

         At Transtex in Argentina, cost of goods sold was approximately $0.8
million lower than in 2000 on a significantly lower sales base due primarily to
the change in sales mix discussed above. This resulted in a reduction in gross
margins of $0.8 million when compared to the prior year. As a percentage of
sales, cost of goods sold increased by 3.7% as the continuing economic crisis
resulted in declining prices and excess capacity due to lower transaction card
and card personalization volume levels.

         At CPS in France, cost of goods sold decreased by $1.4 million from
2000 with gross margins up approximately $0.2 million. As a percentage of sales,
cost of goods sold improved by approximately 4.7% from 2000 primarily due to a

                                       37
<PAGE>

change in product mix with higher margin bank card volumes replacing the reduced
volumes on lower margin phone cards.

Selling and Administrative Expenses

         Selling and administrative expenses in 2001 decreased by $5.0 million
when compared to the prior year. The impact of exchange rate devaluation on
selling and administrative expenses accounts for approximately $3.2 million of
this decrease, of which $2.3 million is attributable to Brazil and $0.9 million
to Australia. The net decrease in selling and administrative expenses from the
prior year in constant dollar terms was $1.8 million. This decrease was
principally due to the elimination of $1.0 million in expenses related to the
sale of ABNCMS in September 2000, one-time provisions of $2.3 million
established in 2000 at the Parent, which were recorded to reflect a $1.6 million
settlement obligation payable to the Company's former Chairman and the
establishment of an $0.7 million restructuring pool to be payable to the
reorganized executive management team over a three year period. The remaining
operating subsidiaries closely approximated the prior year with the exception of
ABN, which had an increase of $1.0 million primarily due to startup charges and
consulting fees necessary to set up its new fulfillment operations, and LM,
which had $0.5 million in higher professional fees and severance related costs.
As a percentage of sales, selling and administrative expenses were 14.1.% in
2001 as compared to 14.0% in 2000.

Goodwill and Asset Impairment

         Goodwill and asset impairments in 2001 totaled $2.5 million, which
represents the remaining $1.9 million write down of goodwill on the books of
Transtex, the Company's Argentine subsidiary, as a result of operating losses
and the economic uncertainties in that country, and $0.6 million related to
ABN's write down of the carrying value of certain equipment and leases related
to the exit from its currency business. This is compared to the 2000 provision
of $13.6 million which was based on an evaluation of the recoverability of
certain Goodwill which resulted in a write down at LM in Australia of $4.1
million and the initial write down of $9.5 million of Goodwill taken in
Argentina. The evaluation of the above impairments was based on various analyses
including cash flow and profitability projections and addresses the impact on
existing Company business. The evaluation involves significant management
judgment.

Depreciation Expense

         Depreciation and amortization expense was $1.9 million lower when
compared to the prior year. This decrease was entirely attributable to the
impact of exchange rate devaluation thereby resulting in no significant
fluctuation in constant dollars when compared to the prior year.

Bankruptcy Costs

         Bankruptcy costs decreased $2.6 million or approximately 95% from 2000
principally due to the reduction in administrative costs associated with the
Bankruptcy proceedings following confirmation of an earlier version of the
Parent's Plan in November 2000.

Interest Expense

         Interest expense decreased by $2.3 million from 2000. The impact of
exchange rate devaluation on interest expense resulted in a decrease of
approximately $0.8 million, thereby resulting in a constant dollar decrease of
approximately $1.5 million when compared to the prior year. This decrease was
the direct result of the reversal at the Parent of approximately $0.7 million in
accrued interest in connection with a state and local tax reserve no longer
required and lower interest of approximately $1.1 million resulting from the 50%
interest rate reduction at LM as part of the June 2001 restructuring of LM's
loan agreement with its banking syndicate and $0.5 million of lower interest due
to reduced borrowings at the Company's other operating subsidiaries. These
decreases were partly offset by $0.8 million in additional accrued interest
payable in kind on the Parent's US Dollar denominated public debt.

Other Income and Expense, Net

Other income and expense decreased by $1.1 million from 2000. The impact of
exchange rate devaluation resulted in a decrease of approximately $0.2 million
thereby resulting in a constant dollar decrease of approximately $0.9 million.
This decrease was principally due to the gain on the sale of ABN's Pennsylvania
facility in 2000 of $0.7 million and an increase in other miscellaneous expenses
of approximately $0.2 million in 2001.

                                       38
<PAGE>

Discontinued Operations

         In October 2000, the Company sold the entire printing operations of its
French subsidiary, the Sati Group ("Sati"). Discontinued operations represents
the net income of $1.1 million of the Sati Group through September 30, 2000 and
the corresponding gain on the sale of $0.6 million in October 2000.

Taxes on Income

         Taxes on income are calculated using the effective tax rate for each
tax jurisdiction and various assumptions such as state and local taxes and the
utilization of foreign taxes in the US. The effective tax rate is further
adjusted for any permanent differences between the book basis and tax basis of
assets and liabilities. In addition, the Company provided a valuation allowance
against its US net operating losses and other US deferred tax assets due to the
uncertainty as to the realization of the US taxable income in the future.

Minority Interest

         Minority interest represents the 22.5% minority interest in ABNB held
by Bradesco.

LIQUIDITY AND CAPITAL RESOURCES

         Overview

         The high level of the Parent's Senior Note indebtedness, ($100.0
million at December 31, 2003), poses a high degree of uncertainty as to the
Company's ability to repay this debt upon the January 31, 2005 maturity date.
Absent a significant increase in available free cash flow from operations, it is
the Parent's intention from now until the maturity date to continue to pay in
kind its semi-annual interest payments on the Senior Notes in lieu of cash
interest, as permitted under its revised indenture. As a result, it is highly
unlikely that the Company will generate sufficient future cash flow from
operations to repay these Senior Notes upon maturity. This factor combined with
the Company's limited access to capital and financial markets for the purpose of
obtaining new financing or equity to refinance the Senior Notes is likely to
require a further restructuring, bankruptcy or partial or total liquidation or
sale of the Company. However, because each of the Parent's subsidiaries is a
self-funded stand-alone entity, it is anticipated that each subsidiary, with the
exception of LM will continue to operate its business in the normal course, on a
stand-alone basis, irrespective of any restructuring of the Parent. For a
discussion of LM see "Proposed 2004 LM Restructuring."


         Cash. At December 31, 2003, 2002 and 2001, the Company had
approximately $9.1 million, $10.8 million and $9.7 million in cash and cash
equivalents.

         Short-Term Borrowings. At December 31, 2003, the Company's subsidiaries
had outstanding an aggregate of approximately $3.8 million (excluding letters of
credit) under their respective short-term credit facilities. The Company's
domestic subsidiary, ABN, has a one year $2 million asset-based working capital
facility with a local bank in Tennessee, which allows it to borrow at a 5.5%
short term interest rate for general working capital and letters of credit
purposes subject to annual compliance with certain net worth to debt covenants.
At December 31, 2003, ABN had used approximately $1.1 million of which $0.8
million was for general working capital purposes and $0.3 million for
outstanding letters of credit leaving approximately $0.9 million available for
borrowing. ABN's current use of the line presently stands at $0.5 million and it
is anticipated that additional borrowings on the line may be required at various
times in 2004. ABN is in compliance with all debt covenant calculations. The
Company's French subsidiary, CPS, has available approximately $1.2 million at
December 31, 2003 under its working capital credit facility, with several
different local banks which allows it to borrow at an average rate of
approximately 3.5% partly collateralized by certain receivables. At December 31,
2003, CPS has used approximately $0.6 million for general working capital
purposes, leaving approximately $0.6 million available for borrowing. CPS's
current use of the line presently stands at the same amount as at year end, and
it is anticipated that additional borrowings on the line may be required at
various times in 2004. The Company's Australian subsidiary, LM, has a working
capital facility of approximately $4.3 million with a local bank, collateralized
by LM's banking syndicate at a current interest rate of 8.95%. At December 31,
2003, LM had used approximately $2.5 million for working capital purposes and
$0.2 million for outstanding letters of credit under the line, leaving
approximately $1.6 million available for working capital purposes. The line is
scheduled to expire March 31, 2004, but it is anticipated that it will be
extended until May 31, 2004 in connection with LM's proposed restructuring. (See
Part 1-"Proposed 2004 LM Restructuring"). The Company's Brazilian and Argentine
subsidiaries, had no outstanding short-term borrowings. As a result of overall
credit tightening by the banks in Argentina, credit terms are generally not
available to Transtex.

         Long-Term Debt- The Company's long-term debt consists of the $100.0
million of the Parent's Senior Notes due January 31, 2005, $59.9 million of LM's
senior and subordinated non-recourse debt (the "LM Debt") due June 2004 and $0.7
million of mortgage indebtedness at ABN. Approximately $59.9 million of this
debt is due and payable in 2004 and represents the amortization on the LM Debt
which is presently being restructured with the LM Banking Syndicate. For a
further discussion on the ability to pay this debt, see "Non-Compliance of Debt
Covenants and Ability to Service Debt" and "Proposed 2004 LM Restructuring".

                                       39
<PAGE>

         Repurchase of Senior Notes- Pursuant to the Parent's announcement in
its Form 8-K filed October 16, 2002, the Parent's Board of Directors authorized
the Parent to repurchase up to $15 million face amount of its outstanding Senior
Notes from time to time at a discount to par value. The Senior Notes were to be
repurchased at management's discretion, either in the open market or in
privately negotiated block transactions.

         The decision to buy back any Senior Notes was dependent upon the
availability of cash at the Parent and other corporate developments. On June 26,
2003, management made a determination to terminate the repurchase program as a
result of its current cash flow concerns. There can be no certainty as to
whether the Parent will resume such purchases at a future date.

         In total, the Parent purchased through privately negotiated
transactions, approximately $6.3 million face amount of Senior Notes for an
aggregate purchase price of approximately $2.9 million. The Parent recorded a
gain of approximately $3.4 million on the repurchase of these bonds reflecting
the difference between the face amount and the purchase price during the first
half of 2003.

         Commitments

         As of December 31, 2003, the Company had the following outstanding cash
contractual commitments (in thousands):

<TABLE>
<CAPTION>
                                                          Total      Less than 1 Year   1-3 Years   3-5 Years    After 5 Years
                                                        ---------    ----------------   ---------   ---------    -------------
<S>                                                     <C>          <C>                <C>         <C>          <C>
Long Term Debt                                          $ 160,610    $         59,943   $ 100,133   $     120    $         414
Capital lease obligations                                   2,666                 195       2,273         198                -
Operating Leases                                           13,569               6,471       6,527         571                -
Post-retirement and other benefit obligations               6,723                 104       1,986       1,833            2,800
                                                        ---------    ----------------   ---------   ---------    -------------
Total Contractual Cash Obligations                      $ 183,568    $         66,713   $ 110,919   $   2,722    $       3,214
                                                        =========    ================   =========   =========    =============
</TABLE>

         Summary of Cash Flows. Cash and cash equivalents decreased by $1.7
million in the twelve months of 2003 compared to an increase of $1.0 million in
the comparable period of 2002. This $2.7 million reduction in cash flow resulted
principally from the following:

         -        A $6.1 million net decrease in cash flow from operating
                  activities attributable to a $6.2 million decrease in net
                  income after non-cash adjustments partly offset by a 0.1
                  million favorable working capital variance. The favorable
                  working capital variance was attributable to a $4.3 million
                  increase in payables and other liabilities, offset by a $0.8
                  million net decrease in receivable collections and a $3.4
                  million build-up in inventory. The increase in payables was
                  attributable in France to a corresponding build-up in
                  inventory in 2003 stemming from the banks' requirement that
                  CPS purchase the non-personalized base stock transaction card
                  and pass along the cost to the banks; at ABN from payments
                  made in 2002 for non-performing lease obligations; and at LM
                  in Australia due to higher inventory levels in 2003 related to
                  the higher cost of specially treated paper used for check
                  customers in addition to accelerated purchases at the end of
                  2003. These increases were partly offset by lower payables in
                  Brazil resulting from the elimination of costs associated with
                  the loss of a customer in electronic print. Brazil also
                  accelerated payments to paper suppliers in 2003 in order to
                  take advantage of supplier discounts. The increased receivable
                  and inventory levels principally were related to the large
                  collection of USDA food coupon orders in 2002 at ABN, the
                  banks' requirement at CPS as discussed above, and the higher
                  cost of paper stock in Australia. The increased receivables
                  were partly offset by improved collections in Brazil and
                  Australia.

         -        A $1.5 million net increase in cash flow from investing
                  activities attributable to a $1.5 million net reduction in
                  capital expenditures in 2003 and a decrease in investments in
                  smart card joint ventures at LM of $0.5 million in 2003,
                  partly offset by the $0.5 million of proceeds received from
                  the one-time private sale of certain printed materials outside
                  the ordinary course of business by ABN in 2002. Of the $1.5
                  million net decrease in capital expenditures in 2003, $1.5
                  million and $0.6 million of the decrease were attributable to
                  LM and Brazil, respectively, partly offset by $0.4 million and
                  $0.2 million of increase at France and ABN, respectively.

         -        A $1.1 million net increase in cash from financing activities
                  attributable to lower repayments of $2.9 million related to
                  the prior year pay down of the working capital facility at
                  ABN, net increased borrowings at CPS in France of $0.6 million
                  and at ABN of $0.8 million in 2003, a $0.8 million net

                                       40
<PAGE>

                  reduction in repayments on short-term equipment financing in
                  Brazil, and a $0.2 million reduction in dividends paid to
                  minority shareholders in 2003. These net cash flow increases
                  were partly offset by $1.3 million of decreased borrowings by
                  LM in Australia in 2003 under its revolving credit facility
                  and the Company's use of $2.9 million to buy back its Senior
                  Notes in 2003.

         -        A $0.8 million net increase in cash due to the impact of
                  favorable exchange rate valuation in 2003 on cash balances on
                  hand.

Economic Conditions And Currency Devaluation

         The Company has significant operations in Brazil, Australia, Argentina
and France. In 2003 and in recent years, on a consolidated basis, the Company
has experienced significant foreign exchange rate fluctuations.

         In 1999, 2001 and 2002, the Brazilian Real experienced tremendous
volatility with a devaluation versus the US Dollar of approximately 48%, 40% and
41%, respectively. In 2004 and 2003, the Real has strengthened against the US
Dollar although it still continues to experience exchange rate volatility, as
the average exchange rate devaluation for the twelve months ended December 31,
2003 was 5%, against the US Dollar when compared to the prior year. The Real
ended 2003 at R$2.89 to the US Dollar, an improvement of approximately 22% from
its rate at the beginning of that year (R$3.53). In 2002, the Real devalued to
its lowest level by over 41% against the US Dollar as of October 22, 2002
(R$3.96), when compared to the beginning of 2002 (R$2.35). As of March 17, 2004
the Real had strengthened to R$2.90 to the US Dollar. Given its historic
volatility, there is no guarantee that the Real will either improve or stabilize
at any certain level against the US Dollar. As the Parent continues to rely upon
ABNB for dividends to upstream cash to the Parent, there is no guarantee or
assurance that significant further devaluation will not adversely affect the
Parent's ability to fund its operating expenses in the future. Furthermore, the
continued long-term threat of currency devaluation could severely impact the
Company's ability to repay its Senior Notes due January 31, 2005.

         In an effort to end its lengthy recession, in January 2002 Argentina
abandoned its Peso-Dollar currency peg system. Initially the Peso was reset at
an official rate of US $1 = AR $1.40. In February 2002, the official rate was
abandoned and the currency was allowed to float freely on currency markets. At
March 17, 2004, the quoted exchange rate for the Peso on freely trading markets
was approximately US$1 = AR$2.91.

         The severe and ongoing economic and political instability in Argentina
continues to negatively impact the carrying value of Transtex. However, despite
these issues, Transtex has generated positive operating income and cash flow for
the twelve months ended December 31, 2003. Throughout 2002, the Argentine
government imposed a moratorium on dividend repatriations outside the country.
The government has since lifted this ban and, as a result, the Parent was able
to receive $0.5 million in dividends from Transtex in 2003. Despite the
lifting of this ban, there can be no assurance that the ability to repatriate
dividends freely out of the country will continue on a consistent basis or that
Transtex will continue to generate positive cash flow.

         In France, the Euro continues to remain strong against the US dollar
and has appreciated by an average of approximately 20% compared to the prior
year. However cash dividends from CPS to the Parent were only $0.7 million and
are not considered significant.

         As for LM, the Parent is unable to repatriate dividends from its
Australian subsidiary due to restrictions under its banking facility (see
below). In 2003 the Australian Dollar experienced an average appreciation of
approximately 20% versus the US Dollar when compared to 2002.

         Despite the Real's recent strengthening, the continued devaluation to
date and the long-term threat of currency devaluation in Brazil and elsewhere,
(along with the weakness of certain product lines at ABN, and the diminished
value of LM) will severely impact the Company's ability to repay its Senior
Notes due January 31, 2005. See "Liquidity and Capital Resources" for further
information.

Ability to Service Debt

         The high level of the Parent's Senior Note indebtedness, $100.0
million at December 31, 2003, poses a high degree of uncertainty as to the
Company's ability to repay this debt upon the January 31, 2005 maturity date.
Absent a significant increase in available free cash flow from operations, it is
the Parent's intention from now until the maturity date to continue to pay in
kind its semi-annual interest payments on the Senior Notes in lieu of cash
interest, as permitted under its revised indenture. As a result, it is highly
unlikely that the Company will generate sufficient future cash flow from
operations to repay these Senior Notes upon maturity. This factor combined with
the Company's limited access to capital and financial markets for the purpose of
obtaining new financing or equity to refinance the Senior Notes make it highly
likely that the Company would require a further restructuring, bankruptcy or
partial or total liquidation or sale of the Company.

                                       41
<PAGE>

         In addition to the indebtedness represented by the Company's Senior
Notes described above, the Company's Australian subsidiary, LM, is highly
leveraged with approximately $59.9 million of local bank debt, which is
non-recourse to the Parent. The Parent and LM notified LM's Banking Syndicate in
December 2000 that LM would be unable to fully repay the loan by the December
31, 2001 maturity date and therefore requested that the banks consider a
modification, restructuring and extension to the existing terms of the present
banking facility.

         On July 26, 2001, the Banking Syndicate and LM entered into an
agreement with respect to the LM Debt extending the maturity date of the loan
for three years, along with an interest rate reduction equal to approximately
50% of its current interest rate on the borrowings. The amended agreement
required LM to make a $1.2 million principal repayment due on the second
anniversary of the amendment with the balance of the loan maturing on June 24,
2004. In exchange for these amendments and the return of a 5% equity interest
granted to the Banking Syndicate in 2000, LM's Banking Syndicate will receive
approximately ten percent (10%) of LM's equity which will vest over a period of
time. As a condition to the amendment, the Parent made a capital contribution of
$1.2 million to LM in June 2001.

         LM's management continues to hold in abeyance certain short-term profit
improvement programs requiring the use of capital, pending its ongoing
discussions with LM's banking syndicate as to whether a further restructuring,
refinancing and or re-capitalization of the LM bank debt in advance of the June
2004 loan maturity date can be accomplished. In April 2003, as a result of an
agreement between the Company, LM and the Banking Syndicate to place LM up for
sale, the Banking Syndicate consented to defer the June 2003 $1.2 million
principal repayment to the June 24, 2004 final maturity date of the loan. In
addition, in the second quarter of 2003, the Banking Syndicate agreed to suspend
all financial covenant testing on a monthly basis during the sale period, which
has been extended during the ongoing restructuring discussion between the
Company and the Banking Syndicate. As a result, the total amount of the loan has
been classified as current. (See "Liquidity and Capital Resources and "Ability
to Service Debt" for further information).

         In the first quarter of 2004, the Company sold LM's New Zealand
subsidiary to a local management group. As a result of the sale, LM will receive
approximately $4.3 million in cash resulting in a pre-tax gain of approximately
$3.5 million. The net proceeds from the sale will be utilized to pay down
approximately $3.6 million of LM's bank debt and approximately $0.7 million will
be used to fund working capital as mutually determined by the Company and the
Banking Syndicate pursuant to the proposed restructuring plan discussed below.

PROPOSED 2004 LM RESTRUCTURING

         In the third quarter of 2003, the Banking Syndicate evaluated the
public sale process conducted by LM's financial advisors. After reviewing all
options, the Banking Syndicate elected not to sell LM but instead entered into
negotiations with LM and the Company, and subsequently verbally agreed (subject
to final documentation) in principle to restructure LM's bank debt through a
combination of debt forgiveness of approximately $45 million in exchange for a
preferred and common equity swap, thereby leaving approximately $15 million of
debt on LM's books. This transaction would give the Banking Syndicate an initial
controlling equity stake in LM and would result in the Parent relinquishing
control in exchange for approximately 11% of the preference stock and a
potential future equity interest that could vest to 40% once the restructured
bank debt is fully amortized. The final terms and conditions are expected to be
completed sometime during the second quarter of 2004. The exchange is expected
to result in a non-cash gain to the Company to the extent of the net discharge
of the Parent's equity deficit in LM which is approximately $53.9 million at
December 31, 2003 and the value in its minority interest position based upon the
fair value received in preference stock which is estimated to be approximately
$2.1 million.

         While agreements in principle between the Company, LM and the Banking
Syndicate have resulted in satisfactory arrangements in the past, there is no
certainty that the above process will be satisfactorily concluded. As of March
26, 2004, the parties remained disagreed on certain material aspects of the
agreement. In the event that these discussions are not satisfactorily concluded,
there is a possibility LM may not be able to continue as a going concern absent
further accommodation from the Banking Syndicate. Moreover, LM's capital
constraints have caused local management difficulty in upgrading computer and
other systems that, in turn, continue to hamper their ability to effectively and
efficiently operate, evaluate, restructure and report the operations of the
business. It is anticipated that the restructuring will provide the future
liquidity necessary to upgrade and enhance the quality of LM's overall financial
reporting environment. Under the terms of the LM Debt, dividends payable to the
Parent are prohibited.

CRITICAL ACCOUNTING POLICIES

Use of Estimates

         The preparation of the financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements, and the
reported amounts of revenues and expenses during the reporting period. Estimates
are used for, but

                                       42
<PAGE>

not limited, to the useful lives of fixed assets, allowances for doubtful
accounts and product returns, inventory and warranty reserves, fixed asset and
investment impairment charges, facilities lease losses and other charges,
accrued liabilities and other reserves, taxes, and contingencies. Actual results
could differ from these estimates.

Intangible Assets

         Patents and certain other intangibles are amortized over their useful
lives. Beginning in 2002 and in accordance with Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS
142"), Goodwill is reviewed for impairment on an annual basis. Goodwill was
amortized over periods ranging from 20 to 30 years using the straight-line
method. As a result of the adoption of SFAS 142 in 2002, the non-amortization of
Goodwill had the effect of increasing the Company's income by approximately $2.2
million. In October 2002, in accordance with SOP 90-7, the Company implemented
Fresh Start reporting and recorded any portion of the fair value of the
Reorganized Company's assets that was not attributed to specific tangible or
identified assets as Goodwill. The balance of Goodwill at December 31, 2003 and
2002 after performing the annual impairment test in accordance with SFAS 142 was
$72.1 million and $99.6 million, respectively.

Fair Value of Financial Instruments

         The Company defines the fair value of a financial instrument as the
amount at which the instrument could be exchanged in a current transaction
between willing parties. The carrying value of cash and cash equivalents,
accounts receivable and accounts payable approximates the fair value because of
the short maturity of those instruments. The carrying amounts of revolving
credit facilities approximates the fair value since these debt instruments have
variable interest rates similar to those that are currently available to the
Company.

Long-Lived Assets

         The Company reviews its long-lived assets for impairment when changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company evaluates the recoverability of its long-lived assets
whenever events or changes in circumstances indicate that a recorded asset might
not be recoverable by taking into consideration such factors as recent operating
results, projected undiscounted cash flows and plans for future operations.
Assets to be disposed of and assets not expected to provide any future service
potential to the Company are recorded at the lower of carrying amount or fair
value less cost to sell.

Revenue Recognition

         Revenue is recognized when goods are shipped, or in certain situations
upon customer acceptance, and title has passed. In some instances, at the
customer's request, arrangements are made to provide on-site secure storage at
the Company's premises. The Company treats this service as a component of a
multiple element arrangement and revenue is allocated among the elements based
on their respective fair values. The amount allocated to storage revenue is
recognized over the expected storage period.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Certain statements in this Form 10-K, under the captions, "The
Company," "Business," and "Management Discussion and Analysis of Financial
Condition and Results of Operations" and in certain documents incorporated by
reference herein constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve unknown and uncertain risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Forward-looking statements are identified by the use
of forward-looking words or phrases such as "anticipates," "intends," "expects,"
"believes," "estimates," or words or phrases of similar import. These
forward-looking statements are subject to numerous assumptions, risks, and
uncertainties, and the statements looking forward beyond 2003 are subject to
greater uncertainty because of the increased likelihood of changes in underlying
factors and assumptions. Actual results could differ materially from those
anticipated by the forward-looking statements.

         Factors that could cause actual results to differ materially include,
but are not limited to those described below:

         -        The Company's existing debt obligations and history of
                  operating losses;

         -        The Company's ability to have access to capital markets to
                  raise capital to restructure, reorganize and/or grow our
                  business;

                                       43
<PAGE>

         -        General economic, political, market and business conditions,
                  which may, among other things, affect demand for the Company's
                  products;

         -        Economic conditions, inflation, recession and currency
                  exchange rates in those foreign countries in which the Company
                  generates a large portion of its sales (including Brazil and
                  Australia which accounted for approximately 44%, and 36%,
                  respectively, of consolidated sales) and particularly in
                  Brazil, where the majority of positive foreign operating
                  income is generated by ABNB ($8.2 million exclusive of
                  Goodwill impairment), which may, among other things, affect
                  the Company's ability to service its debt;

         -        New product development and technological advances which may,
                  among other things, affect the Company's printing business and
                  certain government contract performance;

         -        Commencement of war, armed hostilities, terrorist activities
                  or other similar international calamity directly or indirectly
                  involving or affecting the United States or any one of the
                  Company's foreign subsidiaries or joint venture partners;

         -        New plant and contract start-up conditions which may, among
                  other things, affect the profitability of the Company's
                  operations;

         -        Seasonality;

         -        Competition;

         -        Changes in business strategy or expansion plans;

         -        Raw material costs, availability and price volatility;

         -        Customer inventory levels;

         -        The loss of any of the Company's significant customers;

         -        The ability to achieve anticipated cost reductions and
                  synergies;

         -        The possibility of unsuccessful bids for government contracts;

         -        Changes in, or the failure of the Company to comply with,
                  government regulations, bid requirements or product
                  specifications; and

         -        Other factors referenced in this Annual Report.

         The Company's stock and bond business is also subject to certain risks,
such as the trend towards shorter settlement cycles, book entry ownership and
the overall weakness in the stock market, which may impact future results. The
continued trend towards shorter settlement cycles and electronic book entry
ownership have significantly impacted the volume of stock and bond certificate
sales. This risk has been further exacerbated by the Securities and Exchange
Commission's order dated July 26, 2001, which granted approval to the NYSE to
change its physical format requirements for stock and bond certificates (the
"Rule Change"). The Rule Change eliminated the NYSE's Listed Company Manual's
requirements pertaining to certificate printing and appearance, and retained
only the requirements specifying content. As a result, those requirements no
longer mandate the use of intaglio printing or the inclusion of a vignette on
the face of the certificate. As a result, there is no guarantee that the
complete elimination of or substantial further reduction in the use of intaglio
printing or for that matter the certificate in general could not occur, the
result of which could have a material adverse effect on the sales, earnings and
cash flow of the Company. In addition, the recent movement by many large
companies towards paperless electronic transaction settlement could have a
further impact on volume reduction in stock and bond certificates.

         The verbal notification given by the USDA in the third quarter of 2002
that it did not anticipate the need to place any further purchase orders for the
production of food coupons for the remainder of the term of its requirements
contract with ABN, has had a significant impact on the Company's cash flow.
While revenue from food coupons as a percentage of total consolidated sales for
2002 and 2001 is small (approximately 3.5% and 3.3%, respectively), the gross
margins are significant ($4 million in 2002 and 2001). The reduction in
operating margins from food coupon sales will have a direct and significant
effect on the cash flow of ABN as well as the level of dividends that will be
available to the Parent.

                                       44
<PAGE>

         In the third quarter of 2003, the USDA gave ABN final notification and
delivery instructions for the remaining food coupons held in secure storage by
ABN pursuant to its distribution contract with the USDA which expired on
September 30, 2003. ABN fully performed and completed the remaining two months
of service pursuant to the terms of this contract, and in the normal course
billed the USDA approximately $1.5 million in accordance with the contract. ABN
formally requested in writing that it be paid in full pursuant to the terms of
the contract and the USDA formally denied approximately $1.4 million of ABN's
claim. ABN believes it has fully complied with all terms under such contract.
However, pursuant to the revenue recognition rules under Statement of Accounting
Bulletin ("SAB") 101, the Company has not as of this date recognized any of the
revenue on these services as a result of the USDA's rejection of ABN's claim. On
March 19, 2004 ABN filed a complaint before the USDA Board of Contract Appeals,
seeking a judgment in the amount of $1.5 million plus interest thereon.

         Furthermore, the failure by ABN to fully recover its final invoicings
from the USDA under its distribution contract has and will continue to have a
direct and significant effect on the cash flow of ABN as well as the level of
dividends that will be available to the Parent.

         Despite the increase in operating efficiencies and reductions in
manufacturing and overhead costs achieved through its restructuring, ABN
continues to be negatively impacted by a decline in demand for its products due
to the growth of electronic commerce. Overall there has been a continued
movement toward the dematerialization of paper-based documents as well as the
complete or partial elimination of intaglio printing as a security feature. For
example, volumes for stock and bond certificates and food coupons have shown
significant declines over the past several years.

         Overall, the business that the Company engages in within both its
domestic and foreign operations are in highly competitive markets. With respect
to certain of its products, the Company competes with other non-secure
commercial printers. Strong competitive pricing pressures exist, particularly
with respect to products where customers seek to obtain volume discounts and
economies of scale. The consolidation of certain financial and banking customers
within certain of the Company's markets, particularly in Brazil, Australia and
France, has created greater competitive pricing pressures and opportunities for
increased volume solicitation. In addition, there are several smaller local
competitors in Brazil who have manufacturing and service capabilities in certain
transaction cards and systems (including driver's license programs) and have
therefore created additional competitive pricing pressures. With respect to
driver's licenses in Brazil, additional competitors have begun competitively
bidding on several Brazilian states as contracts come up for renewal. Also, many
of the Company's larger card competitors, particularly in Europe, have
significant excess capacity and have therefore created an environment of
significant competitive pricing pressures. Alternative goods or services, such
as those involving electronic commerce, could replace printed documents and
thereby also affect demand for the Company's products.

         In addition to factors previously disclosed herein, certain other
factors could cause actual results to differ materially from such
forward-looking statements. All written and verbal forward-looking statements
attributable to the Company, or persons acting on behalf of the Company, are
expressly qualified in their entirety by reference to such factors.

         The Company's forward-looking statements represent its judgment only on
the dates such statements are made. By making any forward-looking statements,
the Company, and its employees, agents and representatives, assume no duty to
update them to reflect new changed, or unanticipated events or circumstances.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

IMPACT OF INFLATION

         The introduction by the Brazilian government of a new currency in 1994
in order to achieve the government's economic stabilization program effectively
eliminated the country's hyper-inflation. As a result of this program, the
inflation rate has decreased substantially to approximately 10% for 2003 as
compared to 941% for 1994. Consequently, the Company is no longer required to
translate ABNB's financial statements as if ABNB were operating in a
hyperinflationary economy whereby gains and losses resulting from translation
and transactions were reflected in earnings. The Company follows the
non-hyperinflationary method for ABNB as well as its other foreign subsidiaries
in accordance with FASB Statement No. 52 "Foreign Currency Translation." As a
result, the Company translates its foreign subsidiaries by reflecting exchange
gains and losses in other comprehensive income as a separate component of
shareholders' equity. As a result of the recent economic improvement in
Argentina in 2003 over 2002, inflation in that country has improved to
approximately 2% in 2003 as compared to approximately 118% in 2002. The
Company's US, Australian, New Zealand and French operations were not affected
materially by inflation in 2003.

ARGENTINE ECONOMIC RECESSION

                                       45
<PAGE>
         The Argentine economy continues to experience high levels of government
debt, interest rates and unemployment. The government has imposed zero deficit
budget spending measures at the federal and local levels in an attempt to
continue to try to stabilize its economy and currency. Despite the economic
environment in Argentina, Transtex has generated positive operating income and
cash flow for the year ended December 31, 2003. Throughout 2002, the Argentine
government imposed a moratorium on dividend repatriations outside the country.
The government has since lifted this ban and, as a result, the Parent was able
to receive $0.5 million dividend from Transtex in 2003. Despite the lifting of
this ban, there is no guarantee that Transtex can continue to repatriate
dividends freely out of the country or continue to operate at its current level
in the present economic environment, particularly with credit institutions
placing a hold on many lending activities which directly impacts the issuance of
credit cards to consumers. As the operations of Transtex are very small in
relation to the consolidated group, the Company believes that any negative
impact resulting from its Argentine operations will not have a material adverse
effect on the Company.

FOREIGN OPERATIONS AND FOREIGN CURRENCY

         The Company's foreign exchange exposure policy generally calls for
selling its domestic manufactured product in US Dollars and, in the case of LM,
ABNB and CPS, selling in their national currencies, in order to minimize
transactions occurring in currencies other than those of the originating
country. For the twelve months ended December 31, 2003, the Company experienced
an average devaluation in the Brazilian and Argentine currencies of
approximately 5% and 1%, respectively. As ABNB is the Company's largest
subsidiary, historically contributing approximately half of the revenues,
operating profit and cash flow of the consolidated group, continued volatility
in the Real could severely further impact the Company's ability to repay upon
maturity its Senior Notes due January 31, 2005.

         The Company has, from time to time, entered into foreign currency
option contracts in order to limit the effect of currency fluctuations on future
expected cash receipts which are used for general Company purposes, including
debt service. The options generally have covered periods from two to four months
from the date of purchase. However, with the significant devaluation and
volatility of the Brazilian currency over the past two years, the market to
purchase foreign currency option contracts is either non-existent or
prohibitively expensive. The Company has been at times successful in purchasing
short term contracts in Argentina when available and where not cost prohibitive.
When practical, the Company has established restricted investment accounts which
are controlled by the Parent, and in the case of ABNB, have funds which are from
time to time invested in US Dollar-indexed money market investments. Such
activities may be discontinued at any time depending on, among other things,
management's views concerning future exchange rates, local interest rates and
the cost of such contracts. At present, the current interest rate in Brazil of
approximately 16.5% for local denominated investments is far greater than the
return that would be earned in a US Dollar-indexed account, thereby rendering
this type of hedging mechanism ineffective in the opinion of management.
Therefore the Company has not engaged in material hedging activities. Currently,
repatriation of earnings from ABNB is permitted, subject to certain approvals.
Dividends or distributions from Brazil could be subject to government
restrictions in the future. In 2003, 2002 and 2001, the Company received
approximately $3.9 million, $4.6 million and $2.4 million, respectively in cash
dividends from ABNB.

         Earnings on foreign investments, including operations and earnings of
foreign companies in which the Company may invest or rely upon for sales, are
generally subject to a number of risks, including high rates of inflation,
recession, currency exchange rate fluctuations, trade barriers, exchange
controls, government expropriation, energy risks and political instability and
other risks. These factors may affect the results of operations in selected
markets included in the Company's growth strategy, such as in Latin America and
Asia. For example, the ongoing economic volatility in Argentina has affected the
sales, operating income and cash flow of that subsidiary and has also adversely
impacted the strength of the Brazilian currency. The Company's financial
performance on a dollar-denominated basis can be significantly affected by these
changes. The Company's cash balances and borrowings in foreign currency can
mitigate the effects of fluctuating currency exchange rates; however, borrowings
and investments in foreign currency and markets may not be available or
practical and may face local interest rate and principal risks. In addition,
adverse changes in foreign interest and exchange rates could adversely affect
the Company's ability to meet its interest and principal obligations on the
Parent's Senior Notes.

         See Notes A and P of "Notes to Consolidated Financial Statements" for
the disclosure of certain financial information relating to foreign operations.

         The Company has from time to time reorganized and restructured, and may
in the future reorganize and restructure, its foreign operations based on
certain assumptions about the various tax laws (including capital gains and
withholding tax), foreign currency exchange and capital repatriation laws and
other relevant laws of a variety of foreign jurisdictions. While management
believes that such assumptions are correct, there can be no assurance that
foreign taxing or other authorities will reach the same conclusion. If such
assumptions are incorrect, or if such foreign jurisdictions were to change or
modify such laws, the Parent may suffer adverse tax and other financial
consequences which could impair the Parent's ability to meet its obligations and
the Company's other subsidiary indebtedness.

                                       46
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The consolidated financial statements and schedules, together with the
Independent Auditors' Report thereon, are set forth in Item 15 (a)(1) and (2) of
this Form 10-K, and are only presented for the year ended December 31, 2003
(Successor Company), three months ended December 31, 2002 (Successor Company),
the nine months ended September 30, 2002 (Predecessor Company) and the year
ended December 31, 2001 (Predecessor Company).

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         On April 5, 2001, Ernst & Young LLP ("E&Y") advised the Parent that it
was resigning as the Parent's independent accountants. E&Y had verbally advised
the Parent that it was resigning because it had concluded that it was unwilling
to rely on the representations of certain members of management. E&Y advised the
Parent that it reached this conclusion because of the uncompleted investigations
of the United States Attorney's Office for the Southern District of New York and
the Securities and Exchange Commission relating to the revenue recognition
issues involving the Parent's former subsidiary, ABH, a $1.5 million consulting
fee that one of the Parent's subsidiaries had agreed to pay to a consultant in
connection with a foreign printing project, and past and potential future SEC
proceedings involving certain members of management.

         E&Y was engaged by the Parent as its independent accountants in March
2000 and had not issued a report on the Parent's financial statements for any
fiscal period.

         During the period prior to its resignation, there were no disagreements
with E&Y on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction of E&Y, would have caused E&Y to make reference
to the subject matter of the disagreement(s) in connection with its audit report
on the Parent's financial statements if issued. Nor had E&Y discovered any facts
which lead it to believe that any misconduct of any kind had occurred during the
period covered by its engagement.

         E&Y had discussed its concerns with a non-employee director of the
Parent.

         The Board of Directors authorized the Parent to engage the firm of
Ehrenkrantz Sterling & Co. LLC (a member of DFK International) ("ES"), to serve
as the Parent's independent accountants. The Parent has authorized E&Y to fully
respond to inquiries of ES, or any other successor accountant, concerning the
reasons for E&Y's resignation and any other matters.

         The Parent had not consulted with ES regarding the application of
accounting principles or practices to any specific transaction, or the type of
audit opinion that might be rendered on the Parent's financial statements. Since
there was no disagreement between the Parent and E&Y on any matter of accounting
principles or practices or any reportable events, the Parent had not consulted
with ES regarding any matter that was the subject of a disagreement or a
reportable event.

ITEM 9A. CONTROLS AND PROCEDURES.

         (a) Evaluation of Disclosure Controls and Procedures

         Our management, with the participation of the Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this report.
Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures as of the end of
the period covered by this report were designed and were functioning effectively
to provide reasonable assurance that the information required to be disclosed by
us in reports filed under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. We believe that a controls system, no matter how well
designed and operated, cannot provide absolute assurance that the objectives of
the controls system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within a
company have been detected.

         (b) Change in Internal Control over Financial Reporting

         No change in our internal control over financial reporting occurred
during our most recent fiscal year that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

                                       47
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The following table sets forth certain information regarding the
current executive officers and directors of the Parent. All officers serve at
the discretion of the Board of Directors.

<TABLE>
<CAPTION>
           Name               Age    Officer/Director Since                             Position
           ----               ---    ----------------------                             --------
<S>                           <C>    <C>                           <C>
Steven G. Singer              43          November 2000            Chairman of the Board and Chief Executive Officer
C. Gerald Goldsmith (a)(b)    76          December 1990            Chairman Emeritus and Director
Sidney Levy                   47          June 1998                Director
Raymond L. Steele (a)(b)      70          March 2001               Director
Lloyd Miller (a)              49          October 2002             Director
James Dondero                 41          October 2002             Director
Steven A. Van Dyke (b)        44          July 2001                Director
Patrick J. Gentile            45          June 1995                Executive Vice President and Chief Financial Officer
David M. Kober                40          May 2002                 Vice President and General Counsel
Craig D. Weiner               38          April 2002               Acting Treasurer
Elaine Lazaridis              41          October 2001             Corporate Secretary & Chief Administrative Officer
</TABLE>

(a) Audit Committee Member

(b) Compensation Committee
    Member

         STEVEN G. SINGER has served as Chairman of the Board and Chief
Executive Officer and as a Director of the Parent since November 2000. From 1995
through 2000, Mr. Singer served as Executive Vice President and Chief Operating
Officer of Romulus Holdings, Inc., a family owned investment fund. Mr. Singer
also serves as Chairman and Chief Executive Officer of Pure 1 Systems, a
manufacturer and distributor of water treatment products. Mr. Singer is a
Director and the Non-Executive Chairman of the Board of Globix Corporation and
of Motient Corporation, both publicly traded companies.

         C. GERALD GOLDSMITH has been an independent investor and financial
advisor since 1976. He has served as a director of Palm Beach National Bank and
Trust since 1991, Innkeepers USA Trust since 1996, and Plymouth Rubber Company,
Inc. since 1998.

         SIDNEY LEVY has served as Director of the Parent since June 1998 and
has served as President of ABNB since February 1994.

         RAYMOND L. STEELE has served as a Director of the Parent since March
2001. Mr. Steele has served as a director of Modernfold, Inc. since 1991, I.C.H.
Corporation since 1998, DualStar Technologies Corporation since 1998 and Globix
Corporation since 2003.

         STEVEN A. VAN DYKE has served as a Director of the Parent since July
2001. He has been a managing principal of Bay Harbour Management L.C. since
1987. Bay Harbour is an investment advisor and manages private equity and debt
funds. He is a Chartered Financial Analyst and is a member of both the Financial
Analysts Society of Central Florida and the Association for Investment
Management and Research. Mr. Van Dyke has served on the board of directors of
Barneys New York, Inc. since 1999 and Buckhead America Corporation since 1997.

         LLOYD I. MILLER has served as Director of the Parent since October
2002. Mr. Miller is an independent investor and currently serves as a director
of Aldila, Inc., Stamps.com, Celeritek Inc., and Dynabazaar. He is a
member of the Chicago Board of Trade and the Chicago Stock Exchange, and is a
Registered Investment Advisor.

         JAMES DONDERO has served as Director of the Parent since October 2002.
Mr. Dondero has served as President of Highland Capital Management, L.P., a
registered investment advisor specializing in credit and special situation
investing, since 1993. Mr. Dondero currently serves as a director of
NeighborCare, Inc., Hedstrom, Audio Visual Corporation and Motient Corporation.

         PATRICK J. GENTILE has served as Executive Vice President and Chief
Financial Officer since October 2001, as Senior Vice President Finance and Chief
Accounting Officer from September 1998 to October 2001, as Vice President and
Comptroller from June 1995 to September 1998, and as Comptroller from 1989 to
June 1995. Mr. Gentile also served as Assistant Comptroller of a predecessor of
the Parent from 1986 to 1989.

                                       48
<PAGE>

         DAVID M. KOBER has served as Vice President and General Counsel since
May 2002. He previously served as Vice President and General Counsel at Art
Kober and Associates, Inc., a direct marketing and venture capital firm from
1988 to May 2002 and, prior to such time, was associated with the law firm of
Paul, Weiss, Rifkind, Wharton & Garrison, New York, NY.

         CRAIG D. WEINER has served as Acting Treasurer since September 2002,
and as Director of Financial Reporting since May 2002. Mr. Weiner worked from
1998 to May 2002 as a consultant on various assignments with Resources
Connection LLC and from 1997 to 1998 served as Controller at Gund, Inc., an
international toy manufacturer.

         ELAINE LAZARIDIS has served as Corporate Secretary and Chief
Administrative Officer since October 2001. From 1995 to 2001, she served as the
Vice President and Secretary of Romulus Holdings, Inc., a private investment
fund. Previously she has served as the Director of Human Resources for First
Pacific Networks, a telephone apparatus provider, and as Director of
Administration for the Cooper Companies, Inc., a supplier of diversified
healthcare products and services.

         Each of the directors had been approved by the Bankruptcy Court to
serve on the Board of Directors effective on the consummation of the Plan.

AUDIT COMMITTEE FINANCIAL EXPERT

         The members of the Audit Committee are Messrs. Goldsmith, Miller and
Steele, all of whom are independent directors. The Board of Directors has
determined that each of Messrs. Goldsmith, Miller and Steele qualify as an
"audit committee financial expert" as that term is defined in Section 401 of
Regulation S-K.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Parent's executive officers and directors, and persons who own more than 10% of
the Parent's Common Stock to file reports of ownership and changes in ownership
with the SEC. Officers, directors and greater than ten-percent stockholders are
required by SEC regulations to furnish the Parent with copies of all such
reports they file.

         Based solely on a review of the copies of such reports received by us
with respect to fiscal 2003, or written representations from certain reporting
persons, to the best of our knowledge, the Parent believes that all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with through December 31, 2003.

CODE OF ETHICS

         In 2004, the Parent adopted the American Banknote Corporation Code of
Business Conduct and Ethics (the "Code of Ethics"), a code that applies to the
Board of Directors, Chief Executive Officer, Chief Financial Officer, and other
financial professionals. The Code of Ethics is publicly available on our website
at www.americanbanknote.com. If we make any substantive amendments to the Code
of Ethics or grant any waiver, including any implicit waiver, from a provision
of the Code of Ethics to any person covered by the Code, we will disclose the
nature of such amendment or waiver on our website or in a Current Report on Form
8-K.

ITEM 11. EXECUTIVE COMPENSATION.

     See Item 13.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

     See Item 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required for Items 11, 12 and 13, is incorporated herein by
reference to the Amendment to this Annual Report on Form 10-K to be filed no
later than April 30, 2004.

                                       49
<PAGE>


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

         Ehrenkrantz Sterling & Co. L.L.C. ("Ehrenkrantz") billed the Parent an
aggregate of $275,000 for professional services rendered by them for the audit
of the Parent's annual consolidated financial statements for 2003, and reviews
of the interim consolidated financial statements included in the Parent's Form
10-Q's filed during 2003. Ehrenkrantz billed the Parent an aggregate of $231,850
for professional services rendered by them for the audit of the Parent's annual
consolidated financial statements for 2002 and, reviews of the interim
consolidated financial statements included in the Parent's Form 10-Q's filed
during 2002.

AUDIT-RELATED FEES

         Ehrenkrantz billed the Parent $9,000 in the aggregate in each of 2003
and 2002 for assurance-related services rendered by Ehrenkrantz in connection
with the audit of the Company's pension plan.

         No other fees were billed by Ehrenkrantz with respect to 2003 or 2002.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS.

         The policy of the Audit Committee of the Parent is to pre-approve all
audit and permissible non-audit services provided by the independent auditors.
These services may include audit services, audit-related services, tax services,
and other services. Pre-approval is generally provided for up to one year, and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The independent auditors
and management are required to periodically report to the Audit Committee
regarding the extent of services provided by the independent auditors in
accordance with this pre-approval and the fees for the services performed to
date. The Audit Committee may also pre-approve particular services on a
case-by-case basis. The Audit Committee pre-approved all audit and audit-related
fees described above.

                                       50
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)      The following documents are filed as a part of this report on Form
10-K:

         1.   The following consolidated financial statements are included
              as follows:

              Independent Auditors' Report                                   F-1

              Consolidated Balance Sheets as of December 31, 2003 and
                December 31, 2002 (Successor Company)                        F-2

              Consolidated Statement of Operations for the twelve months
                 ended December 31, 2003, (Successor Company) the three
                 months ended December 31, 2002 (Successor Company),
                 the nine months ended September 30, 2002 (Predecessor
                 Company), and the year ended December 31, 2001
                 (Predecessor Company)                                       F-4

              Consolidated Statement of Cash Flows for the for the
                 twelve months ended December 31, 2003 (Successor
                 Company), the three months ended December 31, 2002
                 (Successor Company), the nine months ended September
                 30, 2002 (Predecessor Company), and the year ended
                 December 31, 2001 (Predecessor Company)                     F-5

              Consolidated Statement of Stockholders' Deficit and
                 Comprehensive Income for the for the twelve
                 months ended December 31 2003 (Successor Company), the
                 three months ended December 31, 2002 (Successor Company),
                 the nine months ended September 30, 2002 (Predecessor
                 Company), and the year ended December 31, 2001
                 (Predecessor Company)                                       F-6

              Notes to Consolidated Financial Statements                     F-8

         2.   The following consolidated financial statement
              schedules are included as follows:

              Schedule I - Condensed Financial Information of Parent         S-1

              Schedule II - Valuation and Qualifying Accounts                S-5

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

         3.   Exhibits:  See "Exhibit Index"

(b)      Reports on Form 8-K

         None.
                                       51
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
American Banknote Corporation
New York, New York

         We have audited the accompanying consolidated balance sheets of
American Banknote Corporation, a Delaware corporation and subsidiaries, as of
December 31, 2003 and 2002, and the related consolidated statements of
operations, cash flows, and stockholders' equity (deficit) and comprehensive
income for the year ended December 31, 2003 (Successor Company), the three
months ended December 31, 2002 (Successor Company), the nine months ended
September 30, 2002 (Predecessor Company), and the year ended December 31, 2001
(Predecessor Company). Our audit also included the financial statement schedules
listed in the Index at Item 15(a). These financial statements and schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits, provide a
reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Banknote Corporation as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the year ended December 31, 2003
(Successor Company), the three months ended December 31, 2002 (Successor
Company), the nine months ended September 30, 2002 (Predecessor Company), and
the year ended December 31, 2001 (Predecessor Company), in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company's results for the year
ended December 31, 2003, along with insufficient funding sources to satisfy its
indebtedness (absent a restructuring of its Senior Notes due January 31, 2005),
continue to raise substantial doubt as to its ability to continue as a going
concern at December 31, 2003. Management's plans in regard to these matters are
discussed in Note B. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ Ehrenkrantz Sterling & Co., L.L.C.

Livingston, New Jersey
March 19, 2004

                                      F-1
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                            2003           2002
                                                                       (Successor Co)  (Successor Co)
                                                                       --------------  --------------
<S>                                                                    <C>             <C>
ASSETS
Current assets
    Cash and cash equivalents                                            $   9,101       $  10,769
    Accounts receivable, net allowance for doubtful
       accounts of $1,249 in 2003 and $1,120 in 2002                        26,922          24,714
    Inventories, net of allowances of $314 in 2003 and $594 in 2002         24,752          16,491
    Prepaid expenses and other                                               3,745           4,184
    Deferred tax assets                                                      2,244           1,712
                                                                         ---------       ---------
                   Total current assets                                     66,764          57,870
                                                                         ---------       ---------

Property, plant and equipment
    Land                                                                     2,179           1,835
    Buildings and improvements                                               9,865           8,183
    Machinery, equipment and fixtures                                      101,586          82,501
    Construction in progress                                                    34              46
                                                                         ---------       ---------
                                                                           113,664          92,565
    Accumulated depreciation and amortization                              (60,379)        (42,427)
                                                                         ---------       ---------
                                                                            53,285          50,138
                                                                         ---------       ---------

Other assets                                                                 3,322           5,121

Investment in non-consolidated subsidiaries                                  6,075           5,035

Goodwill                                                                    72,121          99,587

                                                                         ---------       ---------
                                                                         $ 201,567       $ 217,751
                                                                         =========       =========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-2
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                        2003           2002
                                                                                   (Successor Co)  (Successor Co)
                                                                                   --------------  --------------
<S>                                                                                <C>             <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
    Current portion of long-term debt                                                 $  59,943       $   3,186
    Revolving credit facilities of subsidiaries                                           3,833           1,933
    Accounts payable and accrued expenses                                                44,748          38,787
                                                                                      ---------       ---------
                  Total current liabilities                                             108,524          43,906
                                                                                      ---------       ---------

Long-term debt, less current portion                                                    100,667         138,265

Other long-term liabilities                                                              13,440          16,921

Deferred taxes                                                                            2,196           1,858

Minority interest                                                                        24,217          25,582
                                                                                      ---------       ---------

                  Total liabilities                                                     249,044         226,532
                                                                                      ---------       ---------

Commitments and Contingencies

Stockholders'  equity (deficit)
    Common Stock, par value $.01 per share, authorized
       20,000,000 shares, issued 11,828,571 shares at December 31, 2003 and 2002            118             118
    Capital surplus                                                                      20,893          20,893
    Retained deficit                                                                    (86,013)        (39,431)
    Treasury stock, at cost (57,756 shares at December 31, 2003 and 2002)                  (103)           (103)
    Accumulated other comprehensive income                                               17,628           9,742
                                                                                      ---------       ---------
                  Total stockholders' deficit                                           (47,477)         (8,781)
                                                                                      ---------       ---------
                                                                                      $ 201,567       $ 217,751
                                                                                      =========       =========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-3
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                     (Successor Co)                (Predecessor Co)
                                             ----------------------------   -----------------------------
                                                Year         Three Months    Nine Months        Year
                                                Ended           Ended           Ended           Ended
                                             December 31,    December 31,   September 30,    December 31,
                                                 2003            2002            2002            2001
                                             ------------    ------------   -------------    ------------
<S>                                          <C>             <C>            <C>              <C>
CONTINUING OPERATIONS
Sales                                         $ 222,625       $  48,388       $ 153,888       $ 220,964
                                              ---------       ---------       ---------       ---------

   Cost and expenses
   Cost of goods sold                           171,167          36,673         110,485         164,393
   Selling and administrative                    34,553           5,946          22,534          31,247
   Restructuring                                    933              79           1,829               -
   Goodwill and asset impairment                 42,668          47,435          25,383           2,482
   Depreciation and amortization                 12,658           2,454           5,958          10,175
                                              ---------       ---------       ---------       ---------
                                                261,979          92,587         166,189         208,297

   Operating income (loss)                      (39,354)        (44,199)        (12,301)         12,667

Other expense (income)
   Post retirement plan curtailment gain           (334)         (5,001)              -               -
   Interest expense                              12,942           2,795          10,087          13,519
   Gain on senior note repurchases               (3,393)              -                                      -               -
   Other, net                                    (1,122)            (91)            630             355
                                              ---------       ---------       ---------       ---------
                                                  8,093          (2,297)         10,717          13,874

Loss before reorganization items,
   taxes on income and minority interest        (47,447)        (41,902)        (23,018)         (1,207)

Reorganizations (income) expense
   Fresh-Start adjustments                            -               -        (223,185)              -
   Reorganization costs                             360             (30)          1,160             127
                                              ---------       ---------       ---------       ---------
                                                                    (30)       (222,025)            127

Income (loss) before taxes on income
   and minority interest                        (47,807)        (41,872)        199,007          (1,334)

Taxes on income                                   4,249           4,976           2,934           2,725
                                              ---------       ---------       ---------       ---------

Income (loss) before minority interest          (52,056)        (46,848)        196,073          (4,059)

Minority interest                                (5,474)         (7,417)         24,666           1,395
                                              ---------       ---------       ---------       ---------

Income (loss) from continuing operations        (46,582)        (39,431)        171,407          (5,454)

EXTRAORDINARY ITEMS
   Gain on forgiveness of debt                        -               -          91,364               -
   Loss on debt reinstatement                         -               -          (1,844)              -
                                              ---------       ---------       ---------       ---------
                                                      -               -          89,520               -
                                              ---------       ---------       ---------       ---------
NET INCOME (LOSS)                             $ (46,582)      $ (39,431)      $ 260,927       $  (5,454)
                                              =========       =========       =========       =========

Net loss per common share -
   Basic and Diluted (1)
Continuing operations                         $   (3.96)      $   (3.35)         N/A             N/A
Extraordinary items                                   -               -          N/A             N/A
                                              ---------       ---------       ---------       ---------
                Net loss                      $   (3.96)      $   (3.35)         N/A             N/A
                                              =========       =========       =========       =========
</TABLE>

(1) Per share amounts are not shown for the Predecessor Company due to
non-comparability.

                 See Notes to Consolidated Financial Statements

                                      F-4
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                  (Successor Co)                 (Predecessor Co)
                                                           ----------------------------   -----------------------------
                                                              Year         Three Months    Nine Months        Year
                                                              Ended           Ended           Ended           Ended
                                                           December 31,    December 31,   September 30,    December 31,
                                                              2003            2002            2002            2001
                                                           ------------    ------------   -------------    ------------
<S>                                                        <C>             <C>            <C>              <C>
Operating Activities
Net income (loss)                                           $ (46,582)      $ (39,431)      $ 260,927       $  (5,454)
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities
   Gain on repurchase of Senior Notes                          (3,393)              -               -               -
   Fresh-Start adjustments                                          -               -        (223,185)              -
   Extraordinary item - Gain on Forgiveness of Debt                 -               -         (91,364)              -
   Extraordinary item - Loss on debt reinstatement                  -               -           1,844
   Depreciation and amortization                               12,658           2,454           5,958          10,527
   Goodwill and asset impairments                              42,668          47,435          25,383           2,482
   Post retirement plan curtailment gain                         (334)         (5,001)              -               -
   Accrued pay in kind interest on Senior Notes                 9,563           2,400           6,778           8,249
   (Gain) loss on sale of assets                                  142             (12)           (550)              -
   Deferred taxes                                                (254)          3,974          (1,017)         (1,463)
   Minority interest                                           (5,474)         (7,417)         24,666           1,395
   Bad debt recovery                                             (372)              -               -               -
   Other                                                         (526)             64             395            (282)
Changes in operating assets and liabilities
   Accounts receivable                                          3,338          (3,002)          7,168          (2,846)
   Inventories                                                 (4,741)            385          (1,763)            645
   Prepaid expenses and other                                     705             482             425             184
   Accounts payable and accrued expenses                          352          (1,855)           (202)           (972)
   Pre-petition liabilities subject to compromise                   -               -               -            (365)
   Post-petition liabilities of Parent                              -               -               -            (825)
   Other liabilities                                           (1,579)             87          (3,749)           (512)
                                                            ---------       ---------       ---------       ---------
Net cash provided by operating activities                       6,171             563          11,714          10,763
                                                            ---------       ---------       ---------       ---------

Investing Activities
   Capital expenditures                                        (5,350)         (1,974)         (5,419)         (8,940)
   Proceeds from sale of assets and subsidiary                      4              12             550               -
                                                            ---------       ---------       ---------       ---------
Net cash used in investing activities                          (5,346)         (1,962)         (4,869)         (8,940)
                                                            ---------       ---------       ---------       ---------

Financing Activities
   Revolving credit facilities, net                             1,151             102          (2,808)          3,658
   Payments of long-term debt, net                                (42)            (16)            (36)         (2,820)
   Repurchase of Senior Notes                                  (2,929)              -               -               -
   Dividend to minority shareholder                            (1,139)           (355)           (979)           (966)
                                                            ---------       ---------       ---------       ---------
Net cash used in financing activities                          (2,959)           (269)         (3,823)           (128)
                                                            ---------       ---------       ---------       ---------

Effect of foreign currency exchange rate changes on
   cash and cash equivalents                                      466             332            (657)           (233)
Increase (decrease) in cash and cash equivalents               (1,668)         (1,336)          2,365           1,462
Cash and cash equivalents - beginning of period                10,769          12,105           9,740           8,278
                                                            ---------       ---------       ---------       ---------
Cash and cash equivalents - end of period                   $   9,101       $  10,769       $  12,105       $   9,740
                                                            =========       =========       =========       =========

Supplemental disclosures of cash flow information
   Taxes                                                    $   4,700       $   1,300       $   3,200       $   3,000
   Interest                                                     2,900             500           2,100           4,200
   Reorganization items                                           446             555             325           1,050
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-5
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                     Accumulated
                          Preferred                                                                      Other
                        Stock Series     Common     Capital   Comprehensive    Retained    Treasury  Comprehensive  Total (Deficit)
                             B           Stock      Surplus        Loss        Deficit      Stock    Income (Loss)       Equity
                        ------------   ---------   ---------  -------------   ----------  ---------- -------------  ---------------
<S>                     <C>            <C>         <C>        <C>             <C>         <C>        <C>            <C>
Balance -
  January 1, 2001
(Predecessor Company)     $      24    $     278   $  82,525                  $(191,883)  $  (1,285)   $ (38,279)      $(148,620)

Net loss - 2001                                                 $  (5,454)       (5,454)                                  (5,454)

Minimum
  Pension Liability                                                  (210)                                  (210)           (210)

Currency Translation
  Adjustment                                                       (7,249)                                (7,249)         (7,249)
                                                                ---------
Total Comprehensive
  Loss                                                          $ (12,913)
                          ---------    ---------   ---------    =========     ---------   ---------    ---------       ---------
Balance December 31,
  2001 (Predecessor
  Company)                       24          278      82,525                   (197,337)  $  (1,285)     (45,738)       (161,533)

Net loss  - Nine
  Months                                                        $ (28,585)      (28,585)                                 (28,585)

Currency Translation
  Adjustment                                                      (19,396)                               (19,396)        (19,396)
                                                                ---------

Total Comprehensive
  Loss                                                          $ (47,981)
                          ---------    ---------   ---------    =========     ---------   ---------    ---------       ---------
Balance
  September 30, 2002
  (Predecessor
  Company)                       24          278      82,525                   (225,922)     (1,285)     (65,134)       (209,514)
</TABLE>

                                      F-6
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)-(continued)
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                     Accumulated
                          Preferred                                                                      Other
                        Stock Series     Common     Capital   Comprehensive    Retained    Treasury  Comprehensive  Total (Deficit)
                             B           Stock      Surplus        Loss        Deficit      Stock    Income (Loss)       Equity
                        ------------   ---------   ---------  -------------   ----------  ---------- -------------  ---------------
<S>                     <C>            <C>         <C>        <C>             <C>         <C>        <C>            <C>
Recapitalization and
  Fresh Start
  Adjustments

Cancel Old shares               (24)        (278)                                                                           (302)

  Issue New Common
  Shares                                     118                                                                             118

Fresh Start
  Adjustments                                        (61,643)                   225,922       1,182       65,134         230,595
                          ---------    ---------   ---------                  ---------   ---------    ---------       ---------

Balance
at October 1, 2002
  (Successor Co)                  -          118      20,882                          -        (103)           -          20,897

Net loss - Three
  Months                                                        $ (39,431)      (39,431)                                 (39,431)

Currency Translation
  Adjustment                                                        9,742                                  9,742           9,742
                                                                ---------

Total Comprehensive
  Loss                                                          $ (29,689)
                                                                =========

Issuance of shares
  from rights offering                                    11                                                                  11
                          ---------    ---------   ---------                  ---------   ---------    ---------       ---------

Balance at December
  31, 2002 (Successor
  Co)                     $       -    $     118   $  20,893                  $ (39,431)  $    (103)   $   9,742       $  (8,781)

Net loss - 2003                                                 $ (46,582)      (46,582)                                 (46,582)

Currency Translation
  Adjustment                                                        7,886                                  7,886           7,886
                                                                ---------

Total Comprehensive
  Loss                                                          $ (38,696)
                          ---------    ---------   ---------    =========     ---------   ---------    ---------       ---------
Balance at December
  31, 2003                $       -    $     118   $  20,893                  $ (86,013)  $    (103)   $  17,628       $ (47,477)
                          =========    =========   =========                  =========   =========    =========       =========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-7
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - Basis Of Presentation And Summary Of Significant Accounting Policies

General

            American Banknote Corporation is a holding company. Through its
subsidiaries in the United States, Brazil, Australia, New Zealand, France, and
Argentina, it operates regionally in a single industry along one or more of
three principal product lines: Transaction Cards and Systems; Printing Services
and Document Management; and Security Printing Solutions. All references to the
"Parent" are meant to identify the legal entity American Banknote Corporation on
a stand-alone basis. All references to the "Company" are to the Parent and all
of its subsidiaries, as a group.

            The Parent's principal subsidiaries are: American Bank Note Company
("ABN"), its domestic operating subsidiary, American Bank Note Ltda. ("ABNB"), a
77.5% owned Brazilian company, ABN Australasia Limited, trading as Leigh-Mardon
Pty. Ltd. ("LM"), a 90% owned Australian company with an operating subsidiary in
New Zealand, CPS Technologies, S.A. ("CPS"), a French company and Transtex S.A.
("Transtex"), an Argentine company.

            The Parent was incorporated in 1993 in Delaware as United States
Banknote Corporation and changed its name on July 1, 1995 to American Banknote
Corporation.

            In December 1999, the Parent (but none of its subsidiaries) filed a
petition for reorganization relief under Chapter 11 of the United States
Bankruptcy Code (the "Chapter 11 Proceeding") in the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court"). On August
22, 2002, the Bankruptcy Court confirmed the Parent's Fourth Amended Plan of
Reorganization (the "Plan") in the Chapter 11 Proceeding.

            On October 1, 2002, all conditions required for the effectiveness of
the Plan were achieved and the Plan became effective (the "Effective Date"). On
the Effective Date, the Parent cancelled all shares of its old preexisting
common stock and preferred stock, and commenced the issuance of its new common
stock, $.01 par value per share ("Common Stock"), and certain additional rights,
warrants and options entitling the holders thereof to acquire Common Stock, in
the amounts and on the terms set forth in the Plan.

            None of the Parent's subsidiaries was or has ever been a party to
the Chapter 11 Proceeding or any other insolvency or similar proceeding. As a
result, during the Parent's reorganization, each one of the subsidiaries
continued to operate its respective business in the normal course, on a
stand-alone basis.

Fresh-Start Reporting

            In accordance with the AICPA Statement of Position ("SOP") 90-7,
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, the
Company adopted fresh start reporting ("Fresh Start") as of September 30, 2002.
The Company recorded the effects of the Plan and Fresh Start as of October 1,
2002 which was the Effective Date of the Plan. Under Fresh Start, a new
reporting entity (the "Successor Company" or the "Reorganized Company") is
deemed to be created as a result of a change in control of ownership. SOP 90-7
requires, among other things, that the Company's recorded amounts of assets and
liabilities be adjusted to reflect their reorganization value ("Reorganization
Value"), which is defined as the fair value at the Effective Date, in accordance
with Statement of Financial Accounting Standards No. 141 "Business Combinations"
and Staff Accounting Bulletin No. 54. The reorganized values were accordingly
recorded on the books and records of the subsidiary companies. Any portion of
the Reorganized Company's assets not attributed to specific tangible or
identified intangible assets of the Reorganized Company were identified as
Reorganization Value in excess of amounts allocable to identified assets and
were classified as goodwill ("Goodwill"). This Goodwill is periodically reviewed
and measured for impairment on an annual basis in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets." Goodwill of the Company was $72.1 million and $99.6 million at December
31, 2003 and December 31, 2002, respectively. The change in Goodwill between
periods was due to a remeasurement of the value of the Parent's subsidiaries
resulting in an impairment of approximately $42.6 million partly offset by a
foreign currency translation gain of approximately $15.1 million, in accordance
with SFAS No. 52.

                                      F-8
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      The Effective Date was October 1, 2002 and, as a result, Fresh Start was
adopted on September 30, 2002. In addition to restating assets and liabilities
at their Reorganization Value, the Predecessor Company's accumulated deficit,
including accumulated foreign currency translation adjustments totaling $289.6
million, was eliminated and the capital structure was recast in conformity with
the Plan. The adjustments to eliminate this accumulated deficit consisted of a
$91.4 million extraordinary gain on the forgiveness of debt of which $91 million
was converted into Common Stock and $0.4 million represented discounts
negotiated with various unsecured creditors, and a $223.2 million Fresh Start
gain with a corresponding $23.2 million charge related to ABNB's minority
interest holder's share of the valuation based upon the reorganization value of
the Successor Company. These gains were partly offset by a $1.8 million
extraordinary loss resulting from the reinstatement of the Senior Secured Notes
and the exchange of the 11 5/8% Notes for Senior Secured Notes inclusive of all
accrued interest and consent premiums which were paid or accrued in kind.

      As a result of the Company's adoption of Fresh Start, reporting for the
Reorganized Company for the year ended December 31, 2002 reflects the financial
results of operations and cash flows of the Successor Company for the three
month period ended December 31, 2002 and those of the pre-reorganization Company
(the "Predecessor Company") for the nine month period ended September 30, 2002.
As a result of the application of Fresh Start, the complete financial statements
for the periods after reorganization are not comparable to the financial
statements for the periods prior to reorganization.

Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
of the Parent and its subsidiaries. All significant intercompany items have been
eliminated. "Investment in non-consolidated subsidiaries" represents ABNB's and
LM's respective fifty percent equity interests in separate but similar smart
card joint ventures in Brazil and Australia. These joint ventures are recorded
under the equity method of accounting.

Use of Estimates

         The preparation of the financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements, and the
reported amounts of revenues and expenses during the reporting period. Estimates
are used for, but not limited, to the useful lives of fixed assets, allowances
for doubtful accounts and product returns, inventory and warranty reserves,
fixed asset and investment impairment charges, facilities lease losses and other
charges, accrued liabilities and other reserves, taxes, and contingencies.
Actual results could differ from these estimates.

Comprehensive Income

         The Company applies FASB Statement No. 130, "Reporting Comprehensive
Income. "This statement establishes standards for the reporting and display of
comprehensive income, requiring its components to be reported in a financial
statement that is displayed with the same prominence as other financial
statements.

Foreign Currency Translation

         The financial statements of foreign subsidiaries have been translated
into US Dollars in accordance with FASB Statement No. 52, Foreign Currency
Translation. All balance sheet accounts have been translated using the exchange
rates in effect at the balance sheet date. Income statement amounts have been
translated using the average exchange rate for the year. Gains and losses
resulting from changes in exchange rates from year to year have been reported in
other comprehensive income. The effect on the statement of operations of
transaction gains and losses is insignificant in 2003.

Concentration of Business and Credit Risk

         The Company extends credit to its customers, principally on a net 30 to
45 day basis depending upon the subsidiaries' policies in effect where the
Company conducts business. In some instances the Company may require collateral
based on evaluations of customers' financial condition and credit history.

         The Company derived a significant amount of its revenues, operating
income and cash flows from security printing sales of such products as bank
checks, stock and bond certificates and USDA food coupons. The continued trend
toward electronic commerce, electronic payment systems and benefits may result
in lower sales, operating income and cash flow from these product lines. This
risk has been further exacerbated by the Securities and Exchange Commission's
order dated July 26, 2001, which granted approval to the NYSE to change its

                                      F-9
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

physical format requirements for stock and bond certificates (the "Rule
Change"). The Rule Change eliminated the NYSE's Listed Company Manual's
requirements pertaining to certificate printing and appearance, and retained
only the requirements specifying content. As a result, those requirements no
longer mandate the use of intaglio printing or the inclusion of a vignette on
the face of the certificate. In addition, the recent movement by many large
companies towards paperless electronic transaction settlement could have a
further impact on volume reduction in stock and bond certificates. These mature
products have been partly replaced by secure distribution programs such as the
US Postal Service Stamps on Consignment Program.

         In the third quarter of 2002 verbal notification was given by the USDA
that it did not anticipate the need to place any further purchase orders for the
production of food coupons for the remainder of the term of its requirements
contract with ABN. Gross margins from this product line were $4 million in 2002
and 2001 and $3.7 million in 2000.

         In the third quarter of 2003, the USDA gave ABN final notification and
delivery instructions for the remaining food coupons held in secure storage by
ABN pursuant to its distribution contract with the USDA which expired on
September 30, 2003. ABN fully performed and completed the remaining two months
of service pursuant to the terms of this contract, and in the normal course of
business billed the USDA approximately $1.5 million in accordance with the
contract. ABN formally requested in writing that it be paid in full pursuant to
the terms of the contract and the USDA formally denied approximately $1.4
million of ABN's claim. ABN believes it has fully complied with all terms under
such contract. However, pursuant to the revenue recognition rules under
Statement of Accounting Bulletin ("SAB") 101, the Company has not as of this
date recognized any of the revenue on these services as a result of the USDA's
rejection of ABN's claim. On March 19, 2004 ABN filed a complaint before the
USDA Board of Contract Appeals, seeking a judgment in the amount of $1.5 million
plus interest thereon.

         Each of the Company's domestic and foreign operations conducts its
business in highly competitive markets. With respect to certain of its products,
the Company competes with other non-secure commercial printers. Strong
competitive pricing pressures exist, particularly with respect to products where
customers seek to obtain volume discounts and economies of scale. The
consolidation of certain financial and banking customers within certain of the
Company's markets, particularly in Brazil, Australia and France, has created
greater competitive pricing pressures and opportunities for increased volume
solicitation. Additionally, the privatization and sale of Brazil's national
telephone company, has created several smaller phone companies, which has
resulted in greater pricing sensitivity. In addition, there are several smaller
local competitors in Brazil who have manufacturing and service capabilities in
certain transaction cards and systems (including driver's license programs) and
have therefore created additional competitive pricing pressures. Also, many of
the Company's larger card competitors, particularly in Europe, have significant
excess capacity and have therefore created an environment of significant
competitive pricing pressures. Alternative goods or services, such as those
involving electronic commerce, could replace printed documents and thereby also
affect demand for the Company's products.

         Certain geographic areas in which the Company operates subject it to
fluctuations in operating performance based upon fiscal restraints imposed by
foreign governments and foreign currency fluctuations.

Cash and Cash Equivalents

         All highly liquid investments with a maturity date of three months or
less, when purchased, are considered to be cash equivalents.

Accounts Receivable

         The Company carries its accounts receivable at cost less an allowance
for doubtful accounts. On a periodic basis, the Company evaluates its accounts
receivable and changes the allowance for doubtful accounts, when deemed
necessary, based on its history of past write-offs and collection, contractual
terms and current credit conditions.

Inventories

         Inventories are stated at the lower of cost or market with cost being
determined on the first-in, first-out (FIFO) method.

Depreciation and Amortization

         Property, plant and equipment is recorded at cost prior to the
Effective Date, October 1, 2002 (Predecessor Company), and depreciated by the
straight-line method over the assets estimated useful lives of 3 to 20 years.
Amortization of leasehold improvements is computed by the straight-line method
based upon the remaining term of the applicable lease, or the estimated useful
life of the asset, whichever is shorter. In 2002, in accordance with SOP 90-7,
the Company has implemented Fresh Start reporting and reevaluated the fair
market value of certain assets and liabilities as of the Effective Date, October
1, 2002 (Successor Company). Based upon this reevaluation, the Company revalued
its property plant and equipment in 2002, increasing it by $14.2 million based
upon independent appraisals.

                                      F-10
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets

         Patents and certain other intangibles are amortized over their useful
lives. Beginning in 2002 and in accordance with Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS
142"), Goodwill is reviewed for impairment on an annual basis. Goodwill was
amortized over periods ranging from 20 to 30 years using the straight-line
method. As a result of the adoption of SFAS 142 in 2002, the non-amortization of
Goodwill had the effect of increasing the Company's income by approximately $2.2
million. In October 2002, in accordance with SOP 90-7, the Company implemented
Fresh Start reporting and recorded any portion of the fair value of the
Reorganized Company's assets that was not attributed to specific tangible or
identified assets as Goodwill. The balance of Goodwill at December 31, 2003 and
2002 after performing the annual impairment test in accordance with SFAS 142 was
$72.1 million and $99.6 million, respectively.

Fair Value of Financial Instruments

         The Company defines the fair value of a financial instrument as the
amount at which the instrument could be exchanged in a current transaction
between willing parties. The carrying value of cash and cash equivalents,
accounts receivable and accounts payable approximates the fair value because of
the short maturity of those instruments. The carrying amounts of revolving
credit facilities approximates the fair value since these debt instruments have
variable interest rates similar to those that are currently available to the
Company.

Long-Lived Assets

         The Company reviews its long-lived assets for impairment when changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company evaluates the recoverability of its long-lived assets
whenever events or changes in circumstances indicate that a recorded asset might
not be recoverable by taking into consideration such factors as recent operating
results, projected undiscounted cash flows and plans for future operations.
Assets to be disposed of and assets not expected to provide any future service
potential to the Company are recorded at the lower of carrying amount or fair
value less cost to sell.

Revenue Recognition

         Revenue is recognized when goods are shipped, or in certain situations
upon customer acceptance, and title has passed. In some instances, at the
customer's request, arrangements are made to provide on-site secure storage at
the Company's premises. The Company treats this service as a component of a
multiple element arrangement and revenue is allocated among the elements based
on their respective fair values. The amount allocated to storage revenue is
recognized over the expected storage period.

Shipping Costs

         The Company records the cost of shipping in its income statement as a
component of Cost of Goods Sold.

Research and Development

         Research and development costs are expensed as incurred.

Income Taxes

         The Parent accounts for income taxes under the liability method, which
requires an asset and liability approach that recognizes deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Parent's financial statements or tax returns. In estimating
future tax consequences, all expected future events are considered other than
changes in the tax law or rates.

                                      F-11
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share Computations

         Amounts used in the calculation of basic and diluted per share amounts
follow:

<TABLE>
<CAPTION>
                                                                     Year       Three Months
                                                                    Ended          Ended
                                                                 December 31,   December 31,
                                                                     2003           2002
                                                                 ------------   ------------
                                                                         Successor Co
<S>                                                              <C>            <C>
Numerator for loss from continuing operations                      $(46,582)      $(39,431)
Denominator for per share computations
Weighted average number of shares outstanding (in thousands):
Common Stock                                                         11,771         11,771
</TABLE>

         Earnings per share for periods prior to the October 1, 2002 Effective
Date have been omitted as these amounts do not reflect the current capital
structure resulting from the consummation of the Plan and therefore would not be
comparable.

         The denominator for computing diluted income per share excludes certain
warrants, equity options and management incentive options issued in accordance
with the Plan, as the exercise prices of such warrants and options were greater
than the market price of the common shares - (See Notes N and O).

Stock Based Compensation Plans

         As permitted by Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), which establishes a fair
value based method of accounting for stock-based compensation plans, the Company
elected to follow Accounting Principles Board Opinion No. 25 "Accounting for
Stock Issued to Employees ("APB No. 25") for recognizing stock-based
compensation expense for financial statement purposes. Under APB No. 25, the
Company elected the intrinsic value method of accounting and therefore does not
recognize compensation expense for options granted. The options were granted
with an exercise price of $2.50 which is substantially higher than the
negligible trading market price of the New Common Stock. The Company has
determined that this factor combined with the thinly traded public float of the
New Common Stock results in an insignificant value and therefore there is no
proforma compensation to be measured.

         In 2002 the Parent granted 780,000 Management Options which are
currently two-thirds vested, 88,531 Consultant Options and 177,061 Equity
Options which are both totally vested. All options were granted at an exercise
price of $2.50 per share. No options were granted in 2003. At the date of
grant, the expiration date of the options was 10 years and currently the
remaining contractual life of the options is approximately 8.75 years.

Segment Information

         The Company applies Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information"("SFAS 131"), which requires the
Company to report information about its operating segments according to the
management approach for determining reportable segments. This approach is based
on the way management organizes segments within a company for making operating
decisions and assessing performance. SFAS 131 also establishes standards for
supplemental disclosure about products and services, geographical areas and
major customers.

Recent Accounting Pronouncements

         SFAS 150 - In May 2003, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 150 (SFAS 150),
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The

                                      F-12
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

adoption of SFAS 150 in the third quarter of 2003 did not have a material impact
on the Company's results of operations or financial position.

         SFAS 132(R) - In December 2003, the FASB issued SFAS 132(R), Employers'
Disclosures about Pensions and Other Postretirement Benefits. The provisions of
this Statement do not change the measurement and recognition provisions of SFAS
87, Employers' Accounting for Pensions, SFAS 88, Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits, and SFAS 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions. SFAS 132(R) replaces SFAS 132 and adds disclosures
of plan assets by category, investment policies and strategies for these
categories, estimated future benefit payments and contributions and improves
quarterly disclosures. This statement is effective for financial statements with
fiscal years ending after December 15, 2003, except for the disclosure of
estimated future benefit payments which is effective for fiscal years ending
after June 15, 2004. The interim-period disclosures required by this statement
are effective for interim periods beginning after December 15, 2003. The Company
adopted the provisions of this statement in 2003.

         FIN 46 - In January 2003, the FASB issued FASB Interpretation (FIN) No.
46, Consolidation of Variable Interest Entities (revised December 2003), an
interpretation of Accounting Research Bulletin No. 51, Consolidated Financial
Statements. FIN 46 requires variable interest entities (VIEs) to be consolidated
by the primary beneficiary of the entity. VIEs are entities that lack sufficient
equity to finance its activities without additional subordinated financial
support or whose equity investors do not have the characteristics of a
controlling financial interest. All VIEs, with which the Company is involved,
must be evaluated to determine the primary beneficiary of the risks and rewards
of the VIE. The provisions of FIN 46 must be applied to all entities subject to
this Interpretation in the first quarter of 2004. However, prior to the required
application of this Interpretation, FIN 46 must be applied to those entities
that are considered to be special-purpose entities no later than as of the end
of the first reporting period that ends after December 15, 2003. The adoption of
FIN 46 does not have a material effect on the Company's results of operations or
financial position.

         FIN 45 - In November 2002, the FASB issued FIN 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. FIN 45 is principally a clarification and
elaboration of SFAS No. 5, Accounting for Contingencies under which companies
were required to recognize a liability when it became likely that the company
would have to honor its guarantee. FIN 45 adds disclosures required by the
guarantor about its obligations under guarantees it has issued. The disclosure
requirements in FIN 45 are effective for annual and interim periods ending after
December 15, 2002. It also requires a guarantor to recognize a liability for
certain guarantees, at the inception of a guarantee, for the fair value of the
obligations it as assumed, even if it is not probable that payments will be
required. The initial recognition and measurement provisions of FIN 45 are
required only on a prospective basis for guarantees issued or modified after
December 31, 2002. The adoption of FIN 45 did not have a material impact on the
Company's financial position or results of operations.

         SFAS 144 - In October 2001, the FASB issued Statement of Financial
Accounting Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"). SFAS 144 supersedes Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," and certain provisions of APB
Opinion No. 30 "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions." SFAS 144 establishes standards for
long-lived assets to be disposed of, and redefines the valuation and
presentation of discontinued operations. SFAS 144 is effective for fiscal years
beginning after December 15, 2001, and interim periods within those fiscal
years. The effect of SFAS 144 has been recorded in the financial statements but
did not have a material effect on the Company's financial position, results of
operations, or liquidity.

         SFAS 146 - In July 2002, the FASB issued Statement of Financial
Accounting Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities"("SFAS 146"). SFAS 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. Examples of costs
covered by SFAS 146 include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing or other exit or disposal activity. SFAS 146 is to be
applied prospectively to exit or disposal activities initiated after September
30, 2002. The effect of SFAS 146 has been recorded in the financial statements
but did not have a material effect on our consolidated financial position,
results of operations or liquidity.

         SFA 148 - In December 2002, the FASB issued SFAS No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure." SFAS No. 148 permits
two additional transition methods for companies that elect to adopt the
fair-value-based method of accounting for stock-based employee compensation. The
statement also expands the disclosure requirements for stock-based compensation.
The provisions of this statement apply to financial statements for fiscal years
ending after December 15, 2002. The adoption of SFAS No. 148 did not have a
material impact on the financial statements.

                                      F-13
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B - Going Concern

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. The Company's results for the
year ended December 31, 2003, along with insufficient funding sources to satisfy
its indebtedness (absent a restructuring of its Senior Notes due January 31,
2005), continue to raise substantial doubt as to its ability to continue as a
going concern at December 31, 2003.

The Parent is a holding company and has no significant assets or operations but
does have on its balance sheet $100 million of Senior Notes due January 31,
2005. Accordingly, its ability to service its debt depends upon the future
performance of its subsidiaries. There can be no assurance that the Company will
have sufficient liquidity on an overall basis to meet its future operating
needs, and it is highly unlikely that, based upon the current and anticipated
future cash flows generated from operations, the Parent will be able to repay
its Senior Notes upon the January 31, 2005 maturity date. This factor, combined
with the Company's limited access to capital and financial markets to refinance
the Senior Notes, is highly likely to require a further restructuring,
bankruptcy or partial or total liquidation or sale of the Company. However,
because each of the Parent's subsidiaries is a self-funded stand-alone entity,
it is anticipated that each subsidiary, with the exception of LM will continue
to operate its business in the normal course, on a stand-alone basis,
irrespective of any restructuring of the Parent. For a discussion of LM see
Note V.

                                      F-14
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                 December 31,   December 31,
                                                                                ------------- ----------------
                                                                                    2003            2002
                                                                                ------------- ----------------
                                                                                Successor Co) (Predecessor Co)
<S>                                                                             <C>           <C>
NOTE C - Inventories

           Finished goods                                                          $   773         $   613
           Work-in-process                                                          10,559           7,294
           Raw material and supplies (net of allowances of $314 and $594)           13,420           8,584
                                                                                   -------         -------
                                                                                   $24,752         $16,491
                                                                                   =======         =======

NOTE D - Accounts Payable and Accrued Expenses

           Accounts payable - trade                                                $15,822         $13,785
           Accrued expenses                                                          8,088           9,423
           Bank of Lithuania                                                         1,723               -
           Salaries and wages                                                       12,155           9,781
           Customers' advances                                                       2,031           1,353
           Lease obligations                                                           541           1,347
           Accrued interest                                                          2,152           1,143
           Dividend payable to minority interest owner                                 152             115
           Other                                                                     2,084           1,840
                                                                                   -------         -------
                                                                                   $44,748         $38,787
                                                                                   =======         =======
NOTE E - Other Long Term Liabilities

           Post-retirement benefit obligations                                     $ 6,570         $ 6,665
           Provision for tax assessments                                             3,402           3,410
           Lease obligations                                                         2,666           3,700
           Bank of Lithuania                                                             -           1,551
           Other long-term employee benefits                                           597           1,112
           Other                                                                       205             483
                                                                                   -------         -------
                                                                                   $13,440         $16,921
                                                                                   =======         =======
</TABLE>

NOTE F - Other, Net

<TABLE>
<CAPTION>
                                     Year Ended            Three Months            Nine Months            Year Ended
                                    December 31,           December 31,           September 30,          December 31,
                                        2003                   2002                   2002                   2001
                                   (Successor Co)         (Successor Co)        (Predecessor Co)       (Predecessor Co)
                                   --------------         --------------        ----------------       ----------------
<S>                                <C>                    <C>                   <C>                    <C>
(Gain) loss on asset sales                142                 $(12)                  $ (550)                 $  -
Other (income) expense, net           $(1,264)                $(79)                  $1,180                  $355
                                      -------                 ----                   ------                  ----
                                      $(1,122)                $(91)                  $  630                  $355
                                      =======                 ====                   ======                  ====
</TABLE>


NOTE G - Restructuring

         In the first quarter of 2002, LM announced a restructuring program for
the purpose of consolidating its check manufacturing operations. As a result,
approximately 80 employees were terminated at one of its manufacturing
facilities. This resulted in a total restructuring charge of $1.9 million of
which $1.4 million was paid in the first quarter of 2002, $0.3 million in the
second quarter of 2002 and $0.1 million in the third and fourth quarters of
2002, respectively. The cost resulting from this restructuring was recovered
within one year from its execution.

                                      F-15
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         In the first quarter of 2003, in light of the significant contraction
in stock and bond and food coupon volume reductions, ABN consolidated its
Philadelphia operations into its Tennessee operation, thereby placing all of
ABN's manufacturing operations within a single location, resulting in the
termination of approximately 50 employees. Accordingly, ABN recorded a one-time
restructuring charge of $0.9 million related primarily to employee terminations.
In addition, one-time costs related to plant wind down and equipment relocation
were approximately $1.0 million and $0.1 million, respectively and were funded
through internal cash flow and expensed as incurred and have been included in
cost of goods sold in accordance with SFAS 146. It is contemplated that the
total costs resulting from this restructuring will be recovered within one year
from its execution. Additionally, in the third quarter of 2003, ABN consolidated
its two secure satellite storage and distribution facilities into a single
facility.

NOTE H - Goodwill and Asset Impairment

         The Goodwill and asset impairment charge of $42.7 million in 2003,
represents the remeasurement of the value of the Company's subsidiaries based on
the Parent's review of projected cash flows and valuation multiples based on
prevailing market conditions which resulted in a $42.6 million impairment charge
in the fourth quarter of 2003 in accordance with SFAS No. 142 "Goodwill and
Other Intangible Assets". In addition, an impairment provision of $1.2 was
million established in the fourth quarter of 2003 for certain non-performing
assets at LM. These charges were partly offset by a $1.1 million recovery at ABN
in the third quarter of 2003 resulting from a favorable settlement on its lease
with the landlord of its idle Chicago facility.

         A review by the Parent of valuation multiples based on prevailing
market conditions which existed for the three months ended December 31, 2002
(Successor Company) resulted in an impairment charge of $47.4 million of which
$33.2 million related to ABNB and $14.2 million related to ABN.

         With respect to the Predecessor Company, the Company performed several
impairment tests resulting in significant write-downs. Goodwill and other asset
impairments for the nine months ended September 30, 2002 (Predecessor Company)
totaled $25.4 million. This charge consisted of a $25.2 million write-down in
Goodwill at LM based on the Parent's assessment of LM's net assets and a $0.2
million reserve with respect to the carrying value of certain equipment at ABN
associated with the USDA food coupon contract.

         In 2001 the Company took a Goodwill and asset impairment charge of $2.5
million, which represented the $1.9 million write down of the balance of
Goodwill on the books of Transtex, the Company's Argentine subsidiary, as a
result of operating losses and the economic uncertainties in that country and
$0.6 million related to ABN's write down of the carrying value of certain
equipment and leases related to its exit from the currency business.

NOTE I - Reorganization Costs

         Reorganization costs represent administrative expenses incurred under
the Plan and consist of the following:

<TABLE>
<CAPTION>
                            Year        Three Months      Nine Months          Year
                           Ended           Ended            Ended             Ended
                        December 31,    December 31,     September 30,     December 31,
                            2003            2002             2002              2001
                       (Successor Co)  (Successor Co)  (Predecessor Co)  (Predecessor Co)
                       --------------  --------------  ----------------  ----------------
<S>                    <C>             <C>             <C>               <C>
Legal                     $    93         $   (30)         $   997           $   104
Investment advisors           234               -                -                 -
Trustee fees                   33               -               35                20
Printing and mailing            -               -               62                 3
Information agent               -               -               66                 -
                          -------         -------          -------           -------
                          $   360         $   (30)         $ 1,160           $   127
                          =======         =======          =======           =======
</TABLE>

                                      F-16
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE J - Comprehensive Income (Loss)

         The accumulated comprehensive income (loss) for the year ended December
31, 2003, (Successor Company) three months ended December 31 2002 (Successor
Company), the nine months ended September 30, 2002 (Predecessor Company) and
year ended December 31, 2001 (Predecessor Company) consists of:

<TABLE>
<CAPTION>
                                                       Year        Three Months      Nine Months          Year
                                                      Ended           Ended            Ended             Ended
                                                   December 31,    December 31,     September 30,     December 31,
                                                       2003            2002             2002              2001
                                                  (Successor Co)  (Successor Co)  (Predecessor Co)  (Predecessor Co)
                                                  --------------  --------------  ----------------  ----------------
<S>                                               <C>             <C>             <C>               <C>
Minimum pension liability                            $    -           $    -          $ (1,543)         $ (1,543)
Cumulative currency translation adjustments           7,886            9,742           (63,591)          (44,195)
                                                     ------           ------          --------          --------
Total accumulated comprehensive income (loss)        $7,886           $9,742          $(65,134)         $(45,738)
                                                     ======           ======          ========          ========
</TABLE>

         No tax benefits were recorded as realization of future tax benefits are
not assured, due to the Parent's and domestic subsidiaries' earnings history.

                                      F-17
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE K - Income Taxes

         The Parent files a US consolidated federal income tax return, which
includes its domestic subsidiaries.

         Deferred income taxes arise from differences between the tax basis of
   assets and liabilities, and their amounts in the balance sheet.

     Taxes on income for the year ended December 31, 2003 (Successor Company),
     the three months ended December 31, 2002 (Successor Company),
     the nine months ended September 30, 2002 (Predecessor Company)
     and the year ended December 31, 2001 (Predecessor Company) are as follows:

<TABLE>
<CAPTION>
                         Year Ended       Three Months      Nine Months        Year Ended
                        December 31,         Ended              Ended          December 31,
                           2003               2002              2002              2001
                       (Successor Co)    (Successor Co)   (Predecessor Co)   (Predecessor Co)
                       --------------    --------------   ----------------   ----------------
<S>                    <C>               <C>              <C>                <C>
Current
  Foreign                $ 4,439            $   590           $ 4,664            $ 4,227
  State and local             50                (49)              107                100
                         -------            -------           -------            -------
                           4,489                541             4,771              4,327
Deferred
  Foreign                   (240)             4,435            (1,542)              (420)
  State and local              -                  -              (295)            (1,182)
                         -------            -------           -------            -------
                            (240)             4,435            (1,837)            (1,602)
                         -------            -------           -------            -------
                         $ 4,249            $ 4,976           $ 2,934            $ 2,725
                         =======            =======           =======            =======
</TABLE>

         A reconciliation of taxes on income (benefit) using the US federal
   income tax statutory rate of 35% to the Company's effective tax rate is as
   follows:

<TABLE>
<CAPTION>
                                                             Year Ended       Three Months     Nine Months       Year Ended
                                                            December 31,         Ended            Ended          December 31,
                                                                2003              2002             2002              2001
                                                           (Successor Co)    (Successor Co)  (Predecessor Co)  (Predecessor Co)
                                                           --------------    --------------  ----------------  ----------------
<S>                                                        <C>               <C>             <C>               <C>
Statutory tax (benefit) at U.S. rate                         $(16,732)         $(14,655)        $ 69,652          $   (467)
Difference between federal and foreign statutory rates            408               309              296               (23)
Non-deductible goodwill, including impairment
   and Fresh Start                                             16,338            15,977          (69,564)            1,694
Reversal of Australia net operating losses                         --             5,128                -                 -
Brazil dividend deduction                                      (1,240)             (538)          (1,479)           (1,071)
US tax on foreign deemed dividends                                127               183              133              (201)
US tax on Brazil unrepatriated earnings                         2,824               429            1,180             1,776
Foreign withholding taxes, net of federal benefit                 280               (47)            (189)             (239)
State and local income taxes, net of federal benefit               33                57               75               647
Other non-deductible expenses                                      46              (510)           1,041               799
Change in valuation allowance                                   2,165            (1,357)           1,789              (190)
                                                             --------          --------         --------          --------
                                                             $  4,249          $  4,976         $  2,934          $  2,725
                                                             ========          ========         ========          ========
</TABLE>

         As a result of the continued operating losses at LM, the Company
evaluated in the year ended December 31, 2003 and the three months ended
December 31, 2002 (Successor Company) the realizability of LM's net operating
loss carryforwards ("NOLs") and determined that it was more likely than not that
they would not be utilized. Accordingly, the Company established a full
valuation allowance for these NOLs.

                                      F-18
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE K - Income Taxes (continued)

         Pursuant to the August 22, 2002 confirmation of the Plan, the valuation
of the Company's reorganized equity was $85 million. The total discharge of
indebtedness that was exchanged for this equity was $110.3 million. The
difference between the discharge of creditor claims and the fair value of equity
received of approximately $25.3 million is considered for US federal income tax
purposes to be a cancellation of indebtedness ("COD"). However, the COD is not
included in income when the discharge of indebtedness is accomplished pursuant
to a plan approved by a court in a case under the United States Bankruptcy Code.
Instead, the amount of discharged indebtedness that would otherwise have been
required to be included in taxable income was applied to reduce certain tax
attributes of the Company. The first tax attribute to be reduced was the
Company's NOLs and, since there were sufficient NOLs to offset this taxable
income, the Company did not need to reduce any of its other tax attributes.

         In addition to the reduction in the Company's NOLs, since there was a
substantial change in ownership upon consummation of the Plan, there are annual
limitations on the amount of Federal NOLs which the Company may be able to
utilize on the Company's income tax returns in future periods. This annual
limitation is an amount equal to the value of the Company's stock immediately
before the ownership change adjusted to reflect the increase in value resulting
from the cancellation of creditor's claims multiplied by a federally mandated
long-term tax exempt rate.

         After adjusting for COD, the Company's US domestic consolidated NOLs at
December 31, 2003 were approximately $66.8 million, which are scheduled to
expire as follows: $36.6 million, $5.3 million, $6.1 million, $7.6 million and
$11.2 million in 2019, 2020, 2021, 2022 and 2023 respectively.

                                      F-19
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE K - Income Taxes (continued)


         Tax effects of items comprising the Company's deferred income tax
assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                          ------------------------------
                                                             2003             2002
                                                          (Successor Co)   (Successor Co)
                                                          --------------   --------------
<S>                                                       <C>              <C>
Current deferred tax assets
Inventory obsolescence                                      $    558        $    615
Uniform capitalization of inventory                              210             114
Bad debt provision                                               197             129
Lease obligations                                                415             842
Pension and post retirement benefit obligations                1,839             387
Vacation, severance and deferred pay provisions                  432             554
Litigation and other contingent provisions                     1,143           1,104
Other                                                            960             697
Valuation  allowance                                          (3,510)         (2,730)
                                                            --------        --------
Total current deferred tax assets                              2,244           1,712
                                                            --------        --------

Non-current deferred tax assets
Pension and post retirement benefit obligations                1,893           3,040
Lease obligations                                                166             667
Difference between book and tax basis of fixed assets         (1,035)         (1,488)
Brazil subsidiary earnings not permanently reinvested        (10,688)         (9,482)
Tax benefit of operating loss carryforwards                   34,666          23,238
Litigation and other contingent provisions                       803             466
Other                                                            197             408
Valuation allowance                                          (26,002)        (16,849)
                                                            --------        --------
Total non-current deferred tax assets                            --               --
                                                            --------        --------
Non-Current deferred tax liabilities

Difference between book and tax basis of fixed assets         (2,328)         (2,057)
Lease obligations                                                122             199
Other                                                             10              --
                                                            --------        --------
Total non-current deferred tax liabilities                    (2,196)         (1,858)
                                                            --------        --------
Net deferred tax asset (liability)                          $     48        $   (146)
                                                            --------        --------
</TABLE>

         At December 31, 2003, the unrepatriated earnings of CPS is
approximately $4.4 million and is considered permanently invested overseas,
therefore no provision for federal and state taxes has been provided on these
earnings. LM does not have any positive earnings and profits. The Parent has
recorded a deferred tax liability of approximately $10.8 million to record the
tax effect on ABNB's unrepatriated earnings.

         At December 31, 2003, 2002 and 2001, the Company provided a valuation
allowance related to its US federal NOLs, LM's Australia NOLs and other US and
Australia deferred tax assets due to uncertainty as to the realization of
taxable income in the future.

         Deferred tax assets and liabilities are netted where applicable based
upon the individual tax jurisdiction in which each of the Company's
subsidiaries  has operations.

                                      F-20
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Certain foreign subsidiaries have on-going audits with foreign tax
authorities in connection with income and other tax matters considered in the
ordinary course of business. Whenever amounts could be quantified an anticipated
liability was accrued.

         Through December 31, 2003, ABNB had been assessed approximately $23
million in prior years from the Brazilian tax authorities relating to taxes
other than income taxes. The assessments are in various stages of administrative
process or in lower courts of the judicial system and are expected to take years
to resolve. It is the opinion of ABNB's Brazilian counsel that an unfavorable
outcome on these assessments is not probable. To date, the Company has received
favorable court decisions on matters similar to some of the ones included in the
above amount for, approximately, $5.6 million. Thus the Company believes that
the eventual outcomes of these assessments will not have a material impact on
the Company's consolidated financial position or results of operations. As a
result the Company has not made any significant provision for the assessments.

         The statute of limitations relating to the potential assessment of New
York City franchise taxes for tax years ended 1993 through 1997 expired on June
30, 2002. As a result of the expired statute, the Parent reversed in the third
quarter of 2002 estimated provisions of approximately $0.4 million, which
includes $0.3 million of principal and $0.1 million of interest, which no longer
are required to be reserved. The Parent continues to vigorously contest the NYC
Department of Finance formal assessment for additional taxes and interest of
approximately $1.3 million related to tax years up to and including 1992 for
which the Parent is adequately reserved. Management believes that it has
meritorious defenses with regard to the assessment for these years and is
challenging the assessment in the local tax court.

NOTE L - Revolving Credit Facilities of Subsidiaries

         Revolving credit facilities consists of the following (in thousands):

<TABLE>
<CAPTION>
                    December 31,
               2003             2002
          (Successor Co)  (Predecessor Co)
          --------------  ----------------
<S>       <C>             <C>
ABN (a)       $  777          $    -
ABNB (b)           -             300
LM (c)         2,440           1,633
CPS              616               -
              ------          ------
              $3,833          $1,933
              ======          ======
</TABLE>

(a)  In June 2003, ABN executed a new one year $2 million asset based working
     capital facility secured by accounts receivable and certain inventory with
     a local bank in Tennessee at a 5.5% interest rate per year which became
     effective upon the expiration of its old facility. The facility is for
     general working capital and letters of credit purposes are subject to
     annual compliance with certain net worth to debt contracts.

(b)  ABNB had $0.3 million of short-term borrowings at December 31, 2002 in
     connection with various equipment purchases which were repaid in 2003.

(c)  LM currently has a working capital facility of $4.3 million with a local
     bank, which is fully collateralized by letters of credit issued by LM's
     long-term banking syndicate (See Note M - "Long term debt of
     subsidiaries"). The facility is presently under normal periodic review with
     an expiry date of March 31 2004 and a proposed extension date through May
     31, 2004 and bears interest at the bank's benchmark rate of 8.95% per year.
     At December 31, 2003, LM had used approximately $2.5 million for working
     capital and $0.2 million for outstanding letters of credit under the line,
     leaving $1.6 million of availability for working capital purposes.

(d)  CPS currently has a $1.1 million line of credit for general working capital
     purposes with several different local banks at an average rate of 3.5%
     partly collateralized by certain receivables. At December 31, 2003 CPS used
     approximately $0.6 million of this line leaving approximately $0.5 million
     of availability for working capital purposes.

     Transtex had no outstanding borrowings at December 31, 2003. As a result of
     overall credit tightening by the banks in Argentina no further credit terms
     are available to Transtex.

                                      F-21
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE M - Long-Term Debt

         Long term debt of subsidiaries consists of the following:

<TABLE>
<CAPTION>
                                                     December 31,
                                                2003            2002
                                           (Successor Co)  (Successor Co)
                                           --------------  --------------
<S>                                        <C>             <C>
Parent 10 3/8% Senior Secured Notes (a)      $ 100,013       $  95,496
LM non-recourse debt (b)                        59,914          45,230
ABN mortgages (c)                                  683             725
                                             ---------       ---------
Total debt                                     160,610         141,451
Less current portion                           (59,943)         (3,186)
                                             ---------       ---------
                                             $ 100,667       $ 138,265
                                             =========       =========
</TABLE>

(a)  The Parent's $56.5 million principal amount of 10 3/8% Senior Notes due
     June 1, 2002 (the "Senior Notes") were reinstated at par value, with
     accrued interest and a two percent consent fee paid in the form of
     additional Senior Notes which in total aggregated approximately $79 million
     of such Senior Notes. The Parent's $8.0 million principal amount of 11 5/8%
     Notes due August 1, 2002 (the "11 5/8% Notes") were converted into Senior
     Notes together with accrued interest which totaled $3.9 million as of the
     assumed July 31, 2002 payment date and a conversion fee of approximately
     $0.7 million. Consequently, the former holders of the 11 5/8% Notes
     immediately prior to the consummation of the Plan on the Effective Date
     received an aggregate amount of approximately $12.6 million principal
     amount of Senior Notes, bringing the total amount of Senior Notes
     outstanding as of the Effective Date to $91.6 million. The maturity date
     for the Senior Notes was extended through January 31, 2005, and a number of
     modifications were made to the indenture governing the Senior Notes.
     Interest payments on the Senior Notes after the Effective Date which
     occurred semi-annually on December 1,, 2002, June 1, 2003 and December 1,
     2003, have been paid in kind at the Parent's option in accordance with its
     rights under the indenture.

     Pursuant to the Parent's announcement in its 8-K filed October 16, 2002,
     the Parent's Board of Directors authorized the Parent to repurchase up to
     $15 million face amount of its outstanding Senior Notes from time to time
     at a discount to par value following the Effective Date. The Senior Notes
     were repurchased at management's discretion, either in the open market or
     in privately negotiated block transactions. The decision to buy back any
     Senior Notes was dependent upon the availability of cash at the Parent and
     other corporate developments. On June 26, 2003, management made a
     determination to terminate the repurchase program as a result of its
     current cash flow concerns. There can be no certainty as to whether the
     Parent will resume such purchases at a future date.

     In total, the Parent purchased through privately negotiated transactions,
     approximately $6.3 million face amount of Senior Notes for an aggregate
     purchase price of approximately $2.9 million. The Parent recorded a gain of
     approximately $3.4 million on the repurchase of these bonds reflecting the
     difference between the face amount and the purchase price.

     Although the Parent negotiated the above purchases, it is unable to
     determine whether these purchases represent with fair accuracy the fair
     market value of the Senior Notes.

(b)  The terms under the LM Amended and Restated Credit Agreement dated March
     31, 2000 (the "LM facility") included a revolving credit facility at
     December 31, 2003 and 2002 of approximately $59.9 million and $45.2
     million, respectively. Substantially all of LM's assets and those of its
     subsidiaries secure the LM facility. Under the facility, dividend payments
     to the Parent are restricted. On June 26, 2001, the LM facility was
     amended, extending the maturity date of the loan for three years, along
     with an interest rate reduction equal to approximately 50% of its current
     interest rate on the borrowings. A $1.2 million principal repayment was due
     June 24, 2003, on the second anniversary of the amendment with the balance
     of the loan maturing on June 24, 2004. In exchange for these amendments and
     the return of a 5% equity interest granted to the banking syndicate in
     2000, LM's banking syndicate will receive approximately ten percent (10%)
     of LM's equity, which will vest over a period of time. As a condition to
     the amendment, the Company made a capital contribution of $1.2 million to
     the subsidiary in June 2001. In 2003, LM and LM's Banking Syndicate agreed
     in principle on a capital reorganization of LM's business so that it could
     be restructured. In connection with the restructuring, LM's Banking
     Syndicate consented to defer the June 2003 $1.2 million principal repayment
     to the June 24, 2004 maturity date of the loan. In addition, the Banking
     Syndicate agreed to suspend all financial covenant testing on a monthly
     basis during the restructuring period. As a result, the total amount of the
     loan of $59.9 million at December 31, 2003, has been classified as current.

                                      F-22
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE M - Long-Term Debt (continued)

(c)  The mortgage is secured by property owned by ABN with a net book value of
     approximately $1.9 million and matures in 2018. The weighted average
     interest rate is approximately 6.3%. Principal payments of less than $0.1
     million are required over each of the next five years, with the balance
     payable thereafter. In November 2003, the mortgage was refinanced by ABN
     with the same local bank with a reduction in the interest rate of
     approximately 3.4%.

     Principal maturities of long-term debt at December 31, 2003 (Successor
     Company) are as follows:

<TABLE>
<S>             <C>
   2004         $ 59.9
   2005          100.0
   2006            0.1
   2007            0.1
Thereafter         0.5
                ------
                $160.6
                ======
</TABLE>

NOTE N - Capital Stock

         Pursuant to the terms of the Plan, on the Effective Date, the Parent
authorized 20 million shares of Common Stock, $.01 par value per share.
11,828,571 shares were issued pursuant to the Plan, which included 1,428 shares
of Common Stock issued pursuant to a Rights Offering. There were no new shares
issued in 2003. Each share of Common Stock represents one voting right and the
Common Stock does not have any pre-emptive rights. Dividends on the Common Stock
are payable solely at the discretion of the Board of Directors and are
restricted pursuant to the terms of the Senior Note indenture.

         Warrants - Under the Plan on the Effective Date, the Parent authorized
and issued two series of warrants totaling 622,481, each representing the right
to purchase one share of Common Stock. These warrants vested immediately upon
issuance and will expire five years from the Effective Date. The 311,241 (Series
1 Warrants) will have a strike price of $10.00 and the 311,240 (Series 2
Warrants) will have a strike price of $12.50. Both sets of warrants have certain
anti-dilution rights which upon exercise shall be adjusted for stock splits,
dividends, recapitalization, and similar events. Upon a merger or consolidation
of the Company, holders of warrants shall receive the market value of the
warrants or warrants in the merged or consolidated company

         Management Incentive Options - Under the Plan, the Parent was
authorized to issue Management Incentive Options to certain employees and
consultants of the reorganized Parent and its subsidiaries, following the
Effective Date, pursuant to the Parent's 2002 Management Incentive Plan (the
"Incentive Plan"). Such Management Incentive Options permit recipients to
purchase shares of Common Stock at an option strike price of $2.50 per share,
upon the terms and conditions set forth in the Incentive Plan. The Incentive
Plan permits the issuance of Management Incentive Options to purchase up to
1,117,700 shares or approximately 8.1% of the Common Stock on a fully diluted
basis. Unless otherwise determined by the Board of Directors upon issuance, the
options will be scheduled to expire on the earlier of (i) 10 years after the
initial grant, (ii) 90 days after termination of employment for any reason other
than death, disability, retirement or cause, (iii) one year after termination of
employment by reason of death, disability or retirement or (iv) termination of
employment for cause. On September 12, 2002, the Board of Directors of the
Parent approved a grant of 780,000 Management Incentive Options to key
employees. No Management Incentive Options were issued to employees in 2003.

         Consultant Options - Consultant Options were issued upon the Effective
Date of the Plan that entitle the Company's former Chairman and Chief Executive
Officer, Morris Weissman ("Weissman"), to purchase up to 88,531 shares of Common
Stock or approximately 0.64% of the New Common Stock on a fully diluted basis at
an exercise price of $2.50 per share. The Consultant Options shall expire on the
tenth anniversary of the Effective Date of the Plan in accordance with the terms
of a settlement agreement with Weissman.

                                      F-23
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE N - Capital Stock (continued)

         Equity Options. Equity Options were issued upon the Effective Date of
the Plan that entitle the holders of old preferred stock and common stock claims
to purchase (i) up to 88,531 shares of Common Stock, or approximately 0.64% of
the Common Stock on a fully diluted basis, at an exercise price of $2.50 per
share exercisable at such time as the Common Stock trades at an average price of
$5.00 over twenty (20) consecutive trading days, and (ii) up to 88,531 shares of
Common Stock or approximately 0.64% of the Common Stock on a fully diluted
basis, at an exercise price of $2.50 per share exercisable at such time as the
Common Stock trades at an average price of $7.50 over twenty (20) consecutive
trading days. The term of an Equity Option shall commence on the grant date and
terminate upon the expiration of ten years from the grant date. At the
expiration date all rights under an Equity Option shall cease. To the extent all
or any portion of an Equity Option becomes exercisable as described above, such
Equity Option will remain exercisable until the expiration date even though the
Common Stock subsequently trades at an average price less than the target levels
described above, provided however that no portion of any Equity Options shall be
exercisable after the expiration date.

NOTE O - Employee Benefits Plans

         The Parent has a noncontributory supplemental executive retirement plan
("SERP") for certain senior management employees. Benefits under the
noncontributory plan are based on years of service and average final
compensation, as defined. The plan is unfunded and benefits are paid from the
assets of the Parent.

         LM has a plan, which includes a defined contribution section and a
defined benefit section. The defined contribution section is funded on a current
basis, whereas the defined benefit section is funded in accordance with
actuarial recommendations. In 2002, LM froze the defined benefit plan, resulting
in a settlement charge of $0.3 million, with the remaining members continuing to
accrue defined benefits until the plan's final termination on December 31, 2003.
Retirement benefits provided under the LM defined contribution section and
charged to operations totaled $1.8 million for the year ended December 31, 2003.

         ABN also provides certain postretirement health care and life insurance
benefits for certain eligible retired employees and their eligible dependents.
Both the health-care and life insurance benefits are contributory. ABN's
employees may become eligible for these benefits if they reach normal retirement
age, with certain service requirements. ABN does not currently fund these
benefit arrangements and has the right to amend or terminate these benefits at
any time. In 2002, significant changes were made by ABN to limit its future
costs under benefit arrangements to the post retirement plan. ABN increased
participant contributions, fixed the maximum amount it would contribute to each
participant and as a result had certain participants opt out from participating
in the plan. As a result, the combination of these changes resulted in the
recognition in 2002 of a one time $5 million actuarial non-cash actuarial gain
resulting from the plan settlement. In 2003, ABN recognized an additional $0.3
million actuarial non-cash gain resulting from the closure of its Philadelphia
facility.

         For each of the next five years, the Company expects total benefits
payable of $0.6 million per year to be adjusted for inflation. And for the next
five years thereafter the Company expects to pay out an aggregate sum of $3.1
million to be adjusted for inflation.

         ABN had a noncontributory defined benefit pension plan which at
December 31, 2001 was overfunded. Benefits under the plan, which were frozen in
1992, were based on years of service and average final compensation. The funding
policy was to pay at least the minimum amounts required by the Employee
Retirement Income Security Act of 1974. A determination letter filed with the
IRS for the purpose of filing a plan termination was approved by the IRS in
2001. In connection with the Plan, an overfunding of $1.1 million was
distributed in December 2001 as follows: $0.3 million was transferred to ABN's
defined contribution plan, $0.6 million reverted to the Company and $0.2 million
in excise tax was paid upon reversion.

                                      F-24
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain information as of December 31, 2003 (Successor Co) follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                    ABN
                                                                        LM         Post-
                                                                      Pension    Retirement
                                                            SERP       Plan       Benefits
                                                           -------    -------    -----------
<S>                                                        <C>        <C>        <C>
Change in benefit obligation:
     Benefit obligation at December 31, 2002               $ 5,585    $   252    $ 1,187
     Cost of benefits earned (service cost)                     66         30          7
     Interest cost on benefit obligation                       419         31         49
     Plan participants' contributions                            -          5          -
     Benefits paid                                            (507)      (342)      (104)
     Curtailment                                                 -          -       (156)
     Actuarial (gain) or loss                                  (32)        24        392
                                                           -------    -------    -------
     Benefit obligation at December 31, 2003               $ 5,531    $     -    $ 1,375
                                                           =======    =======    =======

Change in plan assets:
     Fair value of plan assets
          at December 31, 2002                                            $95
     Actual return on plan assets                                          28
     Company contribution                                                 282
     Benefits paid                                                       (342)
     Administrative expenses                                              (63)
     Fair value of plan assets                                              -
                                                                      -------
          at December 31, 2003                                        $     -
                                                                      =======

Funded status at December 31, 2003                         $(5,531)   $     0    $ 1,375
Unrecognized prior service cost                                965          -          -
Unrecognized transitional obligation                             -          -       (215)
Unrecognized net actuarial (gain) loss                       1,641          -        468
                                                           -------    -------    -------
Prepaid/(accrued) benefit cost at Dec. 31, 2003            $(2,925)   $     -    $ 1,628
                                                           =======    =======    =======

Components of expense:
     Cost of benefits earned                               $    66    $    85    $     6
     Interest cost on benefit obligation                       419         32         49
     Expected return on plan assets                              -        (30)         -
     Amortization of prior service cost                        130          -          -
     Recognized actuarial (gain) loss                           67          -        (47)
     Amortization of transitional (asset) or obligation          -         (2)        22
     FAS 88 Accounting charge for settlement                     -         31          -
     Asset withdrawal                                            -          -          -
                                                           -------    -------    -------
Net periodic cost                                          $   682    $   116    $    30
                                                           =======    =======    =======
</TABLE>

         At December 31, 2003, the weighted average discount rate and rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligation under the SERP was 7.5% and 5.0%,
respectively.

                                      F-25
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         At December 31, 2003, the weighted average discount rate and rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligation under the LM defined benefit plan was
6.0% and 4.0%, respectively. The expected long-term rate of return on the LM
plan assets was 7.0%.

         The weighted average discount rate used for the ABN postretirement
benefits plan in determining the accumulated postretirement benefit obligation
was 7.5% at December 31, 2003. The assumed health care cost trend rate used in
measuring the accumulated postretirement benefit obligation, at January 1, 2003
was 6.5%, decreasing each successive year until it reaches 5.0% in 2005, after
which it remains constant. A one-percentage-point increase in the assumed health
care cost trend rate for each year would increase service cost plus interest on
the accumulated postretirement benefit obligation by approximately 7.5%. A
one-percentage point decrease in the assumed healthcare cost trend rate for each
year would decrease service cost plus interest on the accumulated postretirement
benefit obligation by approximately 6.5%.

Certain information as of December 31, 2002 (Successor Co) in follows (in
thousands):

<TABLE>
<CAPTION>
                                                                            LM       ABN Post-
                                                                          Pension   Retirement
                                                                SERP       Plan      Benefits
                                                               -------    -------    -------
<S>                                                            <C>        <C>        <C>
Change in benefit obligation:
     Benefit obligation at December 31, 2001 (Predecessor Co)  $ 5,551    $ 1,567    $ 3,315
     Cost of benefits earned (service cost)                         69        115         28
     Interest cost on benefit obligation                           402        126        165
     Plan participants' contributions                                -         21          -
     Benefits paid                                                (471)    (1,675)      (222)
     Settlements                                                     -          -     (2,085)
     Actuarial (gain) or loss                                       34         98        (14)
                                                               -------    -------    -------
     Benefit obligation at December 31, 2002 (Successor Co)    $ 5,585    $   252    $ 1,187
                                                               =======    =======    =======

Change in plan assets:
     Fair value of plan assets at December 31, 2001
       (Predecessor Co)                                                   $ 1,712
     Actual return on plan assets                                             (36)
     Company contribution                                                     102
     Benefits paid                                                         (1,675)
     Administrative expenses                                                   (8)
     Fair value of plan assets
                                                                          -------
     at December 31, 2002 (Successor Co)                                  $    95
                                                                          =======
Funded status at December 31, 2002                             $(5,585)   $   143    $ 1,187
Unrecognized prior service cost                                  1,095          -       (267)
Unrecognized net actuarial (gain) loss                           1,739         (4)       938
                                                               -------    -------    -------
Prepaid/(accrued) benefit cost at Dec. 31, 2002
(Successor Co)                                                 $(2,751)   $   139    $ 1,858
                                                               =======    =======    =======

Components of expense:
     Cost of benefits earned                                   $    69    $   127    $    28
     Interest cost on benefit obligation                           402        126        165
     Expected return on plan assets                                  -       (150)         -
     Amortization of prior service cost                            130          -          -
     Recognized actuarial (gain) loss                               81          -       (119)
     Amortization of transitional (asset) or obligation              -         (8)        48
     FAS 88 Accounting charge for settlement                         -        345          -
                                                               -------    -------    -------
Net periodic cost                                              $   682    $   440    $   122
                                                               =======    =======    =======
</TABLE>

         At December 31, 2002, the weighted average discount rate and rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligation under the SERP was 7.5% and 5.0%,
respectively.

                                      F-26
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         At December 31, 2002, the weighted average discount rate and rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligation under the LM defined benefit plan was
6.0% and 4.0%, respectively. The expected long-term rate of return on the LM
plan assets was 7.0%.

The weighted average discount rate used for the ABN postretirement benefits plan
in determining the accumulated postretirement benefit obligation was 7.5% at
December 31, 2002. The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation, at January 1, 2002 was 7.0%,
decreasing each successive year until it reaches 5.0% in 2005, after which it
remains constant. A one-percentage-point increase in the assumed health care
cost trend rate for each year would increase service cost plus interest on the
accumulated postretirement benefit obligation by approximately 7.5%. A
one-percentage point decrease in the assumed healthcare cost trend rate for each
year would decrease service cost plus interest on the accumulated postretirement
benefit obligation by approximately 6.5%.

                                      F-27
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain information as of December 31, 2001 (Predecessor Co) follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                                ABN
                                                             ABN                    LM          Post-
                                                           Pension                Pension     Retirement
                                                            Plan        SERP        Plan       Benefits
                                                          --------    --------    --------    -----------
<S>                                                       <C>         <C>         <C>         <C>
Change in benefit obligation:
     Benefit obligation at December 31, 2000              $  9,459    $  5,215    $  1,394    $  6,430
     Cost of benefits earned (service cost)                      -          48          97          44
     Interest cost on benefit obligation                       709         391         103         244
     Plan participants' contributions                            -           -          27           -
     Benefits paid                                         (11,194)       (434)        (54)       (239)
     Curtailment                                                 -           -           -           -
     Actuarial (gain) or loss                                1,026         331           -      (3,164)
                                                          --------    --------    --------    --------
     Benefit obligation at December                       $      -    $  5,551    $  1,567    $  3,315
                                                          ========    ========    ========    ========

Change in plan assets:
     Fair value of plan assets
          at December 31, 2000                            $ 14,031                $  1,591
     Actual return on plan assets                           (1,635)                     26
     Company contribution                                   (1,062)                    153
     Benefits paid                                         (11,194)                   (54)
     Administrative expenses                                  (140)                     (4)
     Fair value of plan assets                                   -                       -
                                                          --------                --------
          at December 31, 2001                            $      -                $  1,712
                                                          ========                ========

Funded status at December 31, 2001                        $      -    $ (5,551)   $    148    $ 3,315
Unrecognized prior service cost                                  -       1,224         134     (1,484)
Unrecognized net actuarial (gain) loss                           -       1,786         (78)     5,138
                                                          --------    --------    --------    -------
Prepaid/(accrued) benefit cost at Dec. 31, 2001           $      -    $ (2,541)   $    204    $ 6,969
                                                          ========    ========    ========    =======

Components of expense:
     Cost of benefits earned                              $    140    $     47    $     93    $    44
     Interest cost on benefit obligation                       709         391         103        244
     Expected return on plan assets                         (1,193)          -        (130)         -
     Amortization of prior service cost                          -         130           -       (218)
     Recognized actuarial (gain) loss                         (234)         66           -          -
     Amortization of transitional (asset) or obligation          -           -          (7)       135
     FAS 88 Accounting charge for settlement                  (275)          -           -          -
     Asset withdrawal                                        1,062           -           -          -
                                                          --------    --------    --------    -------
Net periodic cost                                         $    209    $    634    $     59    $   205
                                                          ========    ========    ========    =======
</TABLE>


         At December 31, 2001, the weighted average discount rate and rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligation under the SERP was 7.25% and 6.0%,
respectively.

         At December 31, 2001, the weighted average discount rate and rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligation under the LM defined benefit plan was
7.0% and 5.0%, respectively. The expected long-term rate of return on the LM
plan assets was 8.0%.

         The weighted average discount rate used for the ABN postretirement
benefits plan in determining the accumulated postretirement benefit obligation
was 7.5% at December 31, 2001. The assumed health care cost trend rate used in
measuring the accumulated postretirement benefit obligation, at January 1, 2000
was 7.0%, decreasing each successive year until it reaches 5.0% in 2007, after
which it

                                      F-28

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

remains constant. A one-percentage-point increase in the assumed health care
cost trend rate for each year would increase service cost plus interest on the
accumulated postretirement benefit obligation by approximately 10%. A
one-percentage point decrease in the assumed healthcare cost trend rate for each
year would decrease service cost plus interest on the accumulated postretirement
benefit obligation by approximately 9.0%.

         Retirement benefits are also provided to eligible union and non-union
employees, through defined contributions to an employees' retirement plan.

NOTE P - Condensed Financial Information And Geographic Area Data

         The following subsidiaries are domiciled as follows: ABN - US; ABNB -
Brazil; LM - Australia and New Zealand; CPS - France; and Transtex - Argentina.

         Government sales in each of the geographic locations where the Company
conducts business is principally dependent on successful competitive bids which
are generally awarded on the basis of price but may also include other factors.
Many of the Company's contracts are re-bid annually or on a multiple year basis.
Government sales are generally subject to provisions allowing termination for
the convenience of the government.

         Sales to ABNB's 22.5% minority owner in 2003, 2002 and 2001 were 8.2%,
8.7% and 11.1%, respectively, of consolidated sales.

         US export sales were less than 1% of consolidated sales in 2003, 2002
and 2001, respectively.

         The following condensed consolidating financial information (amounts in
millions) illustrates the composition of the subsidiaries and provides
additional information, which is useful in assessing the financial composition
of the subsidiaries. The Company accounts for investments in subsidiaries on the
equity method. Intercompany investments and transactions are eliminated in
consolidation.

<TABLE>
<CAPTION>
                                                                           Condensed Balance Sheets
                                                          -----------------------------------------------------------
                                                                              Successor Company
                                                          -----------------------------------------------------------
                                                          Parent    ABN     ABNB     LM      CPS    Transtex  Consol.
                                                          ------   ------  ------  ------   ------  --------  -------
<S>                                                       <C>      <C>     <C>     <C>      <C>     <C>       <C>
As of December 31, 2003
   Cash and cash equivalents                              $  3.2   $  0.1  $  5.2  $  0.1   $  0.2  $    0.3  $   9.1
   Accounts receivable, net                                    -      2.9    11.6     7.5      4.4       0.5     26.9
   Inventories                                                 -      2.5    11.3     8.1      1.9       1.0     24.8
   Prepaid expenses and other                                 .2      0.8     1.4      .3      0.6        .5      3.8
   Investments in and receivables from subsidiaries, net    58.0        -       -       -      1.4         -        -
   Property, plan and equipment, net                           -      5.5    35.7     8.7      2.8       0.6     53.3
   Other assets                                             (0.7)     1.9     8.0     2.2      0.2         -     11.6
   Goodwill                                                  3.2      9.2    50.6       -      3.0       6.1     72.1
                                                          ------   ------  ------  ------   ------  --------  -------
        Total Assets                                      $ 63.9   $ 22.9  $123.7  $ 26.9   $ 14.5  $    9.0  $ 201.6
                                                          ======   ======  ======  ======   ======  ========  =======
   Other current liabilities                                 4.8      5.3    11.1    80.3      6.3       1.1    108.5
   Long-term debt                                          100.0      0.7       -       -        -         -    100.7
   Other liabilities                                         6.6      2.0     2.7     0.4      1.8         -     13.5
   Deferred income taxes                                       -        -     2.2       -        -         -      2.2
   Minority interest                                           -        -    24.2       -        -         -     24.2
   Equity (deficit)                                        (47.5)    14.9    83.5   (53.8)     6.4       7.9    (47.5)
                                                          ------   ------  ------  ------   ------  --------  -------
   Total liabilities and equity (deficit)                 $ 63.9   $ 22.9  $123.7  $ 26.9   $ 14.5  $    9.0  $ 201.6
                                                          ======   ======  ======  ======   ======  ========  =======
</TABLE>

                                      F-29
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                           Condensed Balance Sheets
                                                          -----------------------------------------------------------
                                                                              Successor Company
                                                          -----------------------------------------------------------
                                                          Parent    ABN     ABNB     LM      CPS    Transtex  Consol.
                                                          ------   ------  ------  ------   ------  --------  -------
<S>                                                       <C>      <C>     <C>     <C>      <C>     <C>       <C>
As of December 31, 2002
   Cash and cash equivalents                              $  3.8   $  3.6  $  1.9  $  0.1   $  0.8  $    0.6  $  10.8
   Accounts receivable, net                                    -      4.3    10.9     6.7      2.4       0.4     24.7
   Inventories                                                 -      1.8     7.9     5.6       .6       0.7     16.5
   Prepaid expenses and other                                 .1      1.2     1.3      .2      1.1        .2      4.2
   Investments in and receivables from subsidiaries, net    87.1        -       -       -      0.6         -        -
   Property, plan and equipment, net                           -      5.3    34.0     8.3      1.7       0.7     50.1
   Other assets                                             (0.6)     2.2     7.4     2.8      0.0         -     11.9
   Goodwill                                                 10.6     10.5    67.1       -      6.2       5.3     99.6
                                                          ------   ------  ------  ------   ------  --------  -------
   Total assets                                           $101.0   $ 28.9  $130.5  $ 23.7   $ 13.4  $    7.9  $ 217.8
                                                          ======   ======  ======  ======   ======  ========  =======
   Other current liabilities                              $  8.2   $  3.9  $ 12.0  $ 15.9   $  3.1  $    0.9  $  43.9
   Long-term debt                                           93.5      0.7       -    44.1        -         -    138.3
   Other liabilities                                         8.1      4.0     3.0     0.5      1.4         -     16.9
   Deferred income taxes                                       -        -     1.8       -        -         -      1.9
   Minority interest                                           -        -    25.6       -        -         -     25.6
   Equity (deficit)                                         (8.8)    20.3    88.1   (36.8)     8.9       7.0     (8.8)
                                                          ------   ------  ------  ------   ------  --------  -------
   Total liabilities and equity (deficit)                 $101.0   $ 28.9  $130.5  $ 23.7   $ 13.4  $    7.9  $ 217.8
                                                          ======   ======  ======  ======   ======  ========  =======
</TABLE>

<TABLE>
<CAPTION>
                                                                           Condensed Balance Sheets
                                                          -----------------------------------------------------------
                                                                             Predecessor Company
                                                          -----------------------------------------------------------
                                                          Parent    ABN     ABNB     LM      CPS    Transtex  Consol.
                                                          ------   ------  ------  ------   ------  --------  -------
<S>                                                       <C>      <C>     <C>     <C>      <C>     <C>       <C>
As of December 31, 2001
   Cash and cash equivalents                              $  1.8   $  3.7  $  3.0  $  0.2   $  1.0  $    0.1  $   9.8
   Accounts receivable, net                                    -      8.4    15.8     6.4      2.4       1.6     34.6
   Inventories                                                 -      1.5    10.0     5.6      0.4       0.8     18.3
   Prepaid expenses and other                                0.1      1.8     2.6     1.7      0.7       0.9      6.6
   Investments in and receivables from subsidiaries, net    49.0        -    (1.7)    0.8      0.4         -        -
   Property, plan and equipment, net                         0.1      4.8    30.6     7.2      1.7       2.9     47.3
   Other assets                                              2.8      2.5     4.1     5.8        -         -     11.4
   Goodwill                                                    -        -    12.0    23.8      1.0         -     36.8
                                                          ------   ------  ------  ------   ------  --------  -------
   Total assets                                           $ 53.8   $ 22.7  $ 76.4  $ 51.5   $  7.6  $    6.3  $ 164.8
                                                          ======   ======  ======  ======   ======  ========  =======
   Prepetition liabilities                                $209.4  $     - $     -  $    -   $    -  $      -  $ 209.4
   Postpetition liabilities                                  1.9        -       -       -        -         -      2.0
   Other current liabilities                                 1.5      8.5    17.8    10.4      3.1       2.7     42.1
   Long-term debt                                              -      0.7       -    41.0        -         -     41.7
   Other liabilities                                         0.1      8.6     3.8     2.0      1.6       0.2     16.3
   Deferred income taxes                                     2.4        -     3.7     1.4        -         -      3.7
   Minority interest                                           -        -    11.1       -        -         -     11.1
   Equity (deficit)                                       (161.5)     4.9    40.0    (3.3)     2.9       3.4   (161.5)
                                                          ------   ------  ------  ------   ------  --------  -------
   Total liabilities and equity (deficit)                 $ 53.8   $ 22.7  $ 76.4  $ 51.5   $  7.6  $    6.3  $ 164.8
                                                          ======   ======  ======  ======   ======  ========  =======

</TABLE>

                                      F-30
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                                                   Consolidated Statement of Operations
                                             --------------------------------------------------------------
                                                                               Successor Company
                                             --------------------------------------------------------------
                                             Parent    ABN      ABNB      LM      CPS     Transtex   Consol.
                                             ------   ------   ------   ------   ------   --------   -------
<S>                                          <C>      <C>      <C>      <C>      <C>      <C>        <C>
Year Ended December 31, 2003
Continuing Operations

  Sales                                      $    -   $ 21.9   $ 98.3   $ 80.1   $ 17.2   $    5.1   $222.6
                                             ------   ------   ------   ------   ------   --------   ------
  Cost of Goods                                   -     15.1     73.4     64.6     15.1        3.0    171.2
  Selling and administrative                    3.6      7.4      8.0     13.7      1.1        0.8     34.6
  Restructuring                                          0.9                                            0.9
  Goodwill and asset impairments                7.4      0.2     29.6      1.1      4.4          -     42.7
  Depreciation and amortization                   -      0.8      8.6      2.1      0.8        0.3     12.6
                                             ------   ------   ------   ------   ------   --------   ------
  Total costs and expenses                     11.0     24.4    119.6     81.5     21.4        4.1    262.0
                                             ------   ------   ------   ------   ------   --------   ------

  Post Retirement Benefit Curtailment             -     (0.3)       -        -        -          -     (0.3)
  Interest expense                              9.7      0.2      0.2      2.7      0.1          -     12.9
  Gain on Senior Note repurchases              (3.4)       -        -        -        -          -     (3.4)
  Other expenses (income), net                 (0.7)     0.1     (0.8)    (0.1)       -        0.4     (1.1)
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before reorganization
    items and taxes                           (16.6)    (2.5)   (20.7)    (4.0)    (4.3)       0.6    (47.5)
  Reorganization gain                           0.4        -        -        -        -          -      0.4
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before taxes and
    minority interest                         (17.0)    (2.5)   (20.7)    (4.0)    (4.3)       0.6    (47.9)
  Taxes                                         0.1      0.4      3.5        -        -        0.2      4.2
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before minority interest      (17.1)    (2.9)   (24.2)    (4.0)    (4.3)       0.4    (52.1)
  Minority interest                               -        -     (5.5)       -        -          -     (5.5)
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before extraordinary items    (17.1)    (2.9)   (18.7)    (4.0)    (4.3)       0.4    (46.6)
  Extraordinary gain                              -        -        -        -        -          -        -
                                             ------   ------   ------   ------   ------   --------   ------
    Net income (loss)                        $(17.1)  $ (2.9)  $(18.7)  $ (4.0)  $ (4.3)  $    0.4   $(46.6)
                                             ======   ======   ======   ======   ======   ========   ======
</TABLE>


<TABLE>
<CAPTION>
                                                           Condensed Statements of Operations
                                             --------------------------------------------------------------
                                                                   Successor Company
                                             --------------------------------------------------------------
                                             Parent    ABN      ABNB      LM      CPS     Transtex   Consol.
                                             ------   ------   ------   ------   ------   --------   -------
<S>                                          <C>      <C>      <C>      <C>      <C>      <C>        <C>
Three Months Ended December 31, 2002
Continuing Operations
  Sales                                      $    -   $  7.9  $  20.3   $ 16.5   $  2.9   $    0.8   $ 48.4
                                             ------   ------   ------   ------   ------   --------   ------
  Cost of Goods                                   -      4.7     15.9     13.7      1.9        0.5     36.7
  Selling and administrative                    0.7      1.9      1.3      1.6      0.3        0.1      5.9
  Goodwill and asset impairments                        14.3     33.2      0.1        -          -     47.5
  Depreciation and amortization                   -      0.1      1.7      0.4      0.2        0.1      2.5
                                             ------   ------   ------   ------   ------   --------   ------
  Total costs and expenses                      0.7     21.0     52.1     15.8      2.4        0.7     92.6
                                             ------   ------   ------   ------   ------   --------   ------

  Post Retirement Benefit Curtailment             -     (5.0)       -        -        -          -     (5.0)
  Interest expense                              2.3      0.1        -      0.4        -          -      2.8
  Other expenses (income), net                  0.1        -      0.1      0.1      0.1       (0.5)    (0.1)
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before reorganization
    items and taxes                            (3.1)    (8.2)   (31.9)     0.2      0.4        0.6    (41.9)
  Reorganization gain                             -        -        -        -        -          -        -
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before taxes and
    minority interest                          (3.1)    (8.2)   (31.9)     0.2      0.4        0.6    (41.9)
  Taxes                                         0.1     (0.1)    (0.1)     4.8      0.2          -      5.0
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before minority interest       (3.2)    (8.1)   (31.8)    (4.6)     0.2        0.6    (46.9)
  Minority interest                               -        -     (7.4)       -        -          -     (7.4)
                                             ------   ------   ------   ------   ------   --------   ------
  Income (loss) before extraordinary items     (3.2)    (8.1)   (24.4)    (4.6)     0.2        0.6    (39.5)
  Extraordinary gain                              -        -        -        -        -          -        -
                                             ------   ------   ------   ------   ------   --------   ------
    Net income (loss)                        $ (3.2)  $ (8.1)  $(24.4)  $ (4.6)  $  0.2   $    0.6   $(39.5)
                                             ======   ======   ======   ======   ======   ========   ======
  </TABLE>

                                      F-31
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                  Condensed Statements of Operations
                                             --------------------------------------------------------------------------
                                                                         Predecessor Company
                                             --------------------------------------------------------------------------
                                              Parent       ABN        ABNB        LM        CPS     Transtex    Consol.
                                             --------    -------    --------    -------    ------    ------    --------
<S>                                          <C>         <C>        <C>         <C>        <C>       <C>       <C>
Nine Months Ended September 30, 2002
Continuing Operations

  Sales                                      $    0.1    $  24.4    $   78.4    $  41.1    $  6.6    $  3.3    $  153.9
                                             --------    -------    --------    -------    ------    ------    --------

  Cost of Goods                                   0.2       14.1        57.7       31.7       5.1       1.7       110.5
  Selling and administrative                      3.0        6.2         5.5        6.5       0.7       0.6        22.5
  Goodwill and asset impairments                    -        0.2           -       27.0         -         -        27.2
  Depreciation and amortization                     -        0.7         3.1        1.6       0.4       0.2         6.0
                                             --------    -------    --------    -------    ------    ------    --------
  Total costs and expenses                        3.2       21.2        66.3       66.8       6.2       2.5       166.2
                                             --------    -------    --------    -------    ------    ------    --------

  Interest expense                                7.0        0.3         0.9        1.7       0.1       0.1        10.1
  Other expenses (income), net                    0.8       (0.8)       (0.3)       0.8         -       0.1         0.6
                                             --------    -------    --------    -------    ------    ------    --------
  Income (loss) before reorganization
   items and taxes                              (10.9)       3.7        11.5      (28.2)      0.3       0.6       (23.0)
  Reorganization gain                           (87.8)      24.2      (100.1)         -      (4.7)     (5.1)     (222.0)
                                             --------    -------    --------    -------    ------    ------    --------
  Income (loss) before taxes and
   minority interest                             76.9       27.9       111.7      (28.2)      5.0       5.7       199.0
  Taxes                                          (1.4)       1.5         3.1       (0.6)      0.1       0.2         2.9
                                             --------    -------    --------    -------    ------    ------    --------
  Income (loss) before minority interest         78.3       26.4       108.6      (27.6)      4.9       5.5       196.1
  Minority interest                                 -          -        24.7          -         -         -        24.7
                                             --------    -------    --------    -------    ------    ------    --------
  Income (loss) before extraordinary items       78.3       26.4        83.9      (27.6)      4.9       5.5       171.4
  Extraordinary gain                            (89.5)         -           -          -         -         -       (89.5)
                                             --------    -------    --------    -------    ------    ------    --------
     Net income (loss)                       $  167.8    $  26.4    $   83.9    $ (27.6)   $  4.9    $  5.5    $  260.9
                                             ========    =======    ========    =======    ======    ======    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                  Condensed Statements of Operations
                                             --------------------------------------------------------------------------
                                                                        Predecessor Company
                                             --------------------------------------------------------------------------
                                              Parent       ABN        ABNB        LM        CPS     Transtex    Consol.
                                             --------    -------    --------    -------    ------    ------    --------
<S>                                          <C>         <C>        <C>         <C>        <C>       <C>       <C>
Year Ended December 31, 2001
Continuing Operations
  Sales                                      $   0.5     $  35.6    $  111.2    $  57.0    $  8.5    $  8.2    $  221.0
                                             -------     -------    --------    -------    ------    ------    --------
  Cost of Goods                                  0.4        20.5        87.5       43.4       6.7       5.9       164.4
  Selling and administrative                     4.6         8.2         8.0        8.0       0.7       1.8        31.3
  Goodwill and asset impairments                   -         0.6           -          -         -       1.9         2.5
  Depreciation and amortization                    -         0.8         4.7        3.3       0.6       0.7        10.1
                                             -------     -------    --------    -------    ------    ------    --------
  Total costs and expenses                       5.0        30.1       100.2       54.7       8.0      10.3       208.3
                                             -------     -------    --------    -------    ------    ------    --------

  Interest expense                               8.0         0.3         1.1        3.6       0.1       0.4        13.5
  Other expenses (income), net                  (0.2)        0.1         0.6        0.1      (0.1)        -         0.5
                                             -------     -------    --------    -------    ------    ------    --------
  Income (loss) before reorganization
   items and taxes                             (12.3)        5.1         9.3       (1.4)      0.5      (2.5)       (1.3)
  Reorganization items                           0.1           -           -          -         -         -         0.1
                                             -------     -------    --------    -------    ------    ------    --------
  Income (loss) before taxes and
   minority interest                           (12.4)        5.1         9.3       (1.4)      0.5      (2.5)       (1.4)
  Taxes                                         (1.8)        1.1         2.8        0.4       0.2                   2.7
                                             -------     -------    --------    -------    ------    ------    --------
  Income (loss) before minority interest       (10.6)        4.0         6.5       (1.8)      0.3      (2.5)       (4.1)
  Minority interest                                -           -         1.4          -         -         -         1.4
                                             -------     -------    --------    -------    ------    ------    --------
     Net income (loss)                       $ (10.6)    $   4.0    $    5.1    $  (1.8)   $  0.3    $ (2.5)   $   (5.5)
                                             =======     =======    ========    =======    ======    ======    ========
</TABLE>

                                      F-32
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                             Condensed Statements of Cash Flows
                                                                    Successor Company
                                         Parent     ABN       ABNB        LM       CPS     Transtex   Consol.
                                         ------    ------    -------     -----    ------   --------   -------
<S>                                      <C>       <C>       <C>         <C>      <C>      <C>        <C>
Year Ended December 31, 2003
 Net cash - operating activities         $ (5.3)   $ (0.6)   $  11.9     $   -    $ (0.1)   $  0.2    $   6.1
                                         ------    ------    -------     -----    ------    ------    -------
 Investing activities
  Proceeds from sale of assets                -         -          -         -         -         -        -
  Capital expenditures                        -      (1.2)      (3.3)     (0.5)     (0.6)     (0.1)      (5.7)
  Other                                                                    0.4                            0.4
                                         ------    ------    -------     -----    ------    ------    -------
 Net cash - investing activities              -      (1.2)      (3.3)     (0.1)     (0.6)     (0.1)      (5.3)
                                         ------    ------    -------     -----    ------    ------    -------
 Financing activities
  Proceeds from borrowings                    -       0.8          -       0.1       0.6         -        1.5
  Borrowings (repayments)                     -         -       (0.4)        -         -         -       (0.4)
  Dividends to minority shareholder           -         -       (1.1)        -         -         -       (1.1)
  Senior Note repurchases                  (2.9)                                                         (2.9)
                                         ------    ------    -------     -----    ------    ------    -------
 Net cash - financing activities           (2.9)      0.8       (1.5)      0.1       0.6         -       (2.9)
                                         ------    ------    -------     -----    ------    ------    -------
 Effect of foreign currency exchange
  rate changes on cash and cash
  equivalents                                 -         -        0.1         -       0.2       0.1        0.4
                                         ------    ------    -------     -----    ------    ------    -------
 Increase (decrease) in cash and
  cash equivalents:                        (8.2)     (1.0)       7.2       0.0       0.1       0.2       (1.7)
 Dividends and advances
  from subsidiaries, net                    7.6      (2.5)      (3.9)        -      (0.7)     (0.5)         -
 Beginning of period                        3.8       3.6        1.9       0.1       0.8       0.6       10.8
                                         ------    ------    -------     -----    ------    ------    -------
 End of period                           $  3.2    $  0.1    $   5.2     $ 0.1    $  0.2    $  0.3    $   9.1
                                         ======    ======    =======     =====    ======    ======    =======
</TABLE>


<TABLE>
<CAPTION>
                                                             Condensed Statements of Cash Flows
                                                                    Successor Company
                                             Parent     ABN      ABNB       LM       CPS      Transtex      Consol.
                                             ------     ---      ----       --       ---      --------      -------
<S>                                        <C>        <C>       <C>       <C>      <C>        <C>          <C>
Three Months Ended December 31, 2002
 Net cash - operating activities            $ (1.9)   $ (1.3)   $  3.3    $  0.2    $  --       $  0.3     $   0.6
                                            ------    ------    ------    ------    -----       ------     -------
 Investing activities

  Proceeds from sale of assets                  --        --        --        --       --           --          --
  Capital expenditures                          --        --      (1.5)     (0.4)      --           --         1.9
                                            ------    ------    ------    ------    -----       ------     -------
 Net cash - investing activities                --        --      (1.5)     (0.4)      --           --         1.9
                                            ------    ------    ------    ------    -----       ------     -------
 Financing activities
  Proceeds from borrowings                      --        --        --       0.2       --           --         0.2
  Borrowings (repayments)                       --        --      (0.1)       --       --           --        (0.1)
 Dividends to minority shareholder              --        --      (0.4)       --       --           --        (0.4)
                                            ------    ------    ------    ------    -----       ------     -------
 Net cash - financing activities                          --      (0.5)      0.2       --           --        (0.3)
 Effect of foreign currency exchange
  rate changes on cash and cash
  equivalents                                   --        --       0.2       0.1       --           --         0.3
                                            ------    ------    ------    ------    -----       ------     -------
 Increase (decrease) in cash and
  cash equivalents:                           (1.9)     (1.3)      1.5       0.1       --          0.3        (1.3)
 Dividends and advances
  from subsidiaries, net                       1.4      (0.1)     (1.2)       --     (0.1)          --          --
 Beginning of period                           4.3       5.0       1.5        --      0.9          0.3        12.1
                                            ------    ------    ------    ------    -----       ------     -------
 End of period                              $  3.8    $  3.6    $  1.8    $  0.1    $ 0.8       $  0.6     $  10.8
                                            ======    ======    ======    ======    =====       ======     =======
</TABLE>


<TABLE>
<CAPTION>
                                                          Condensed Statements of Cash Flows
                                                                  Predecessor Company
                                         Parent      ABN      ABNB        LM       CPS     Transtex   Consol.
                                         ------    ------    ------     ------    ------    ------    -------
<S>                                      <C>       <C>       <C>        <C>       <C>      <C>        <C>
Nine Months Ended September 30, 2002
 Net cash - operating activities         $  4.7    $  7.5    $  8.9     $ (0.5)   $  0.1    $  0.5    $  11.7
                                         ------    ------    ------     ------    ------    ------    -------

 Investing activities
  Proceeds from sale of assets                -       0.5         -          -         -         -        0.5
  Capital expenditures                        -      (0.9)     (2.4)      (1.7)     (0.2)     (0.1)      (5.3)
                                         ------    ------    ------     ------    ------    ------    -------
 Net cash - investing activities              -      (0.4)     (2.4)      (1.7)     (0.2)     (0.1)      (4.8)
                                         ------    ------    ------     ------    ------    ------    -------
 Financing activities
  Proceeds from borrowings                    -         -         -        1.2         -         -        1.2
  Borrowings (repayments)                     -      (2.9)     (1.1)         -         -      (0.1)      (4.1)
 Dividends to minority shareholder            -         -      (1.0)         -         -         -       (1.0)
                                         ------    ------    ------     ------    ------    ------    -------
 Net cash - financing activities              -      (2.9)     (2.1)       1.2         -      (0.1)      (3.9)
 Effect of foreign currency exchange
  rate changes on cash and cash
  equivalents                                 -         -      (0.8)       0.1       0.1      (0.1)      (0.7)
                                         ------    ------    ------     ------    ------    ------    -------
 Increase (decrease) in cash and
  cash equivalents                         (4.7)      4.2       3.6       (0.9)        -       0.2        2.3
 Dividends and advances
  from subsidiaries, net                    7.2      (2.9)     (5.1)       0.7      (0.1)        -          -
 Beginning of period                        1.8       3.7       3.0        0.2       1.0       0.1        9.8
                                         ------    ------    ------     ------    ------    ------    -------
 End of period                           $  4.3    $  5.0    $  1.5     $    -    $  0.9    $  0.3    $  12.1
                                         ======    ======    ======     ======    ======    ======    =======
</TABLE>

                                      F-33
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                         Condensed Statements of Cash Flows
                                                               Predecessor Company
                                         Parent     ABN       ABNB        LM       CPS     Transtex   Consol.
                                         ------    ------    -------    ------    -----     ------    -------
<S>                                      <C>       <C>       <C>        <C>       <C>      <C>        <C>
Year Ended December 31, 2001
 Net cash - operating activities         $ (6.0)   $  2.3    $  12.5    $ (0.5)   $  1.4    $  1.1    $  10.8
                                         ------    ------    -------    ------    ------    ------    -------
 Investing activities
  Proceeds from sale of assets                -         -          -         -         -         -        -
  Capital expenditures                     (0.1)     (1.8)      (6.2)     (0.3)     (0.1)     (0.4)      (8.9)
                                         ------    ------    -------    ------    ------    ------    -------
 Net cash - investing activities           (0.1)     (1.8)      (6.2)     (0.3)     (0.1)     (0.4)      (8.9)
                                         ------    ------    -------    ------    ------    ------    -------
 Financing activities
  Proceeds from borrowings                    -       2.0        2.5       0.5                   -        5.0
  Borrowings (repayments)                     -      (0.1)      (1.9)     (1.0)     (0.4)     (0.6)      (4.0)
 Dividends to minority shareholder            -         -       (1.0)        -         -         -       (1.0)
                                         ------    ------    -------    ------    ------    ------    -------
 Net cash - financing activities              -       1.9       (0.4)     (0.5)     (0.4)     (0.6)       -
 Effect of foreign currency exchange
  rate changes on cash and cash
  equivalents                                 -         -       (0.1)               (0.1)        -       (0.2)
                                         ------    ------    -------    ------    ------    ------    -------
 Increase (decrease) in cash and
  cash equivalents:                        (6.1)      2.4        5.8      (1.3)      0.8       0.1        1.7
 Dividends and advances
  from subsidiaries, net                    3.8      (1.7)      (3.3)      1.3                            0.1
 Beginning of period                        4.1       3.0        0.5       0.2       0.2         -        8.0
                                         ------    ------    -------    ------    ------    ------    -------
 End of period                           $  1.8    $  3.7    $   3.0    $  0.2    $  1.0    $  0.1    $   9.8
                                         ======    ======    =======    ======    ======    ======    =======
</TABLE>

                                      F-34
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE Q - Commitments and Contingencies

LEGAL AND OTHER PROCEEDINGS

Confirmation and Consummation of the Plan - On December 8, 1999 (the "Petition
Date"), the Parent (but none of its subsidiaries) filed a petition for
reorganization relief under Chapter 11 of the United States Bankruptcy Code. On
that date, the Parent also filed its initial plan of reorganization which set
forth the manner in which claims against and interests in the Parent would be
treated following its emergence from Chapter 11. Only the Parent filed a
petition for reorganization relief under Chapter 11. None of the Parent's
subsidiaries was a party to the Chapter 11 Proceeding or any other insolvency or
similar proceeding.

         The Parent's plan of reorganization was subsequently amended four times
and on May 24, 2002, the Parent submitted its Final Disclosure Statement with
respect to its proposed Fourth Amended Reorganization Plan to the Bankruptcy
Court. On August 22, 2002, the Bankruptcy Court confirmed the Plan. On October
1, 2002, the Effective Date, all conditions required for the consummation of the
Plan were achieved and the Plan became effective.

         On January 29, 2003, in accordance with the standard procedures of the
Bankruptcy Court, the Parent filed final omnibus objections to expunge all
claims that it believes have no basis or merit. The Parent's objections included
objections to claims that were duplicative, inconsistent with the Company's
books and records, untimely, already satisfied or resolved under the Plan, or
otherwise without merit. The Bankruptcy Court will consider the Company's
objections to the proofs of claim, and any responses by the affected claimants
thereto, at a hearing scheduled on May 6, 2004, or on such other adjourned dates
as may be scheduled by the Bankruptcy Court. The Company has reinstated all
known creditor claims that were recorded as pre-petition liabilities net of any
negotiated settlements.

OTHER POTENTIAL CLAIMS AND PROCEEDINGS

         Dispute with the Blackstone Group L.P. In the fourth quarter of 2003,
the Parent and its Chapter 11 investment advisors, the Blackstone Group
("Blackstone), agreed to settle Blackstone's asserted claim of $1.6 million plus
interest and costs (pursuant to an unsecured promissory note which was scheduled
to be payable upon consummation of the Plan). As a result of the settlement,
Blackstone received from the Parent approximately $0.6 million in cash and
approximately $1.3 million in Senior Notes which were repurchased by the Company
in the open market during 2003 at a cost of approximately $0.6 million.

         Lithuania Claim. In October 2003, the Parent notified the Bank of
Lithuania, ("Lithuania"), that it would not make its scheduled installment
settlement payment of $0.5 million due October 1, 2003 due to its cash flow
constraints. The payment is part of a remaining $1.7 million settlement
obligation between the Parent and Lithuania that was entered into the Bankruptcy
Court and became effective upon the October 1, 2002 consummation of the Plan.
Both parties initially entered into a discussion in an attempt to restructure
the balance of the obligation to avoid further litigation. However, counsel for
Lithuania indicated that the Parent's initial proposal was unacceptable and
issued a notice of default. As a result of the default, the entire $1.7 million
obligation was recorded as a current liability in accounts payable and accrued
expenses at December 31, 2003. On February 4, 2004, counsel for Lithuania filed
a complaint against the Parent in the United States District court, Southern
District of New York, seeking a judgment in the amount of $1.7 million, as well
as interest, costs and disbursements. On February 12, 2004, counsel for
Lithuania filed the identical complaint in the United States District Court,
District of New Jersey. The Parent has not yet formally responded to either
Complaint.

         Commonwealth of Australia Claim. In January 2003, LM received a
repayment request from the Australian Treasury Department (the "Treasury")
related to a contract under which LM provided services to the General Sales Tax
Office (the "GST"). Services rendered under this contract were provided by LM to
the GST between the years 2000 and 2001. The claim for repayment alleges that an
overpayment of approximately $1.0 million was made by the GST. In order to
resolve this dispute, LM and the GST executed a settlement agreement whereby LM
will pay $0.8 million from (i) the proceeds received from LM's sales process if
completed by December 31, 2003 or (ii) in twelve equal installments commencing
January 2004 which balance would be accelerated upon the proceeds from any sale
of LM after December 31, 2003. Accordingly, LM has fully reserved this amount as
of September 30, 2003 with respect to the proposed settlement.

         Potential SERP Claim. In the first quarter of 2004, the Parent notified
former pre-petition participants of the Parent's Supplemental Executive
Retirement Plan ("the SERP") that due to cash flow constraints it would
indefinitely suspend any future payments until further notice under the SERP.
One of the participants has formally filed a notice of default. The Parent
intends to enter into a discussion with various participants in an attempt to
settle payments due under the

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SERP in an effort to avoid litigation. However there can be no assurance that a
successful outcome between the parties can be achieved.

        Dispute with the USDA. - In the third quarter of 2003, the USDA gave ABN
final notification and delivery instructions for the remaining food coupons held
in secure storage by ABN pursuant to its distribution contract with the USDA
which expired on September 30, 2003. ABN fully performed and completed the
remaining two months of service pursuant to the terms of this contract, and in
the normal course billed the USDA approximately $1.5 million in accordance with
the contract. ABN formally requested in writing that it be paid in full pursuant
to the terms of the contract and the USDA formally denied approximately $1.4
million of ABN's claim. ABN believes it has fully complied with all terms under
such contract. However, pursuant to the revenue recognition rules under
Statement of Accounting Bulletin ("SAB") 101, the Company has not as of this
date recognized any of the revenue on these services as a result of the USDA's
rejection of ABN's claim. On March 19, 2004 ABN filed a complaint before the
USDA Board of Contract Appeals, seeking a judgment in the amount of $1.5 million
plus interest thereon.

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE R - Unaudited Quarterly Results of Operations - (Unaudited amounts in
thousands, except per share data)

<TABLE>
<CAPTION>
                                                                      Year End December 31, 2003
                                                                            (Successor Co)
                                                   First Quarter    Second Quarter    Third Quarter    Fourth Quarter
                                                   -------------    --------------    -------------    --------------
<S>                                                <C>              <C>               <C>             <C>
Continuing Operations
 Sales                                               $ 48,872         $ 55,604         $ 59,865          $ 58,284
 Cost of goods sold                                    38,830           42,744           44,783            44,810
 Loss from continuing operations (a)                   (2,655)          (2,328)          (1,390)          (40,209)
 Net income (loss)                                     (2,655)          (2,328)          (1,390)          (40,209)
 Net income (loss) per share - Basic and Diluted
 Continuing operations                                  (0.22)           (0.20)           (0.12)            (3.42)
 Net income (loss) per share                            (0.22)           (0.20)           (0.12)            (3.42)
</TABLE>


<TABLE>
<CAPTION>
                                                            Nine Months                       Three Months
                                                               Ended                              Ended
                                                         September 30, 2002                 December 31, 2002
                                                         (Predecessor Co)                    (Successor Co)
                                                   First Quarter    Second Quarter    Third Quarter   Fourth Quarter
                                                   -------------    --------------    -------------   --------------
<S>                                                <C>              <C>               <C>             <C>
Continuing Operations
 Sales                                               $ 49,909          $ 52,988        $ 50,991          $ 48,388
 Cost of goods sold                                    37,531            37,091          35,863            36,673
 Loss from continuing operations (a)                   (3,186)               88         174,503           (39,431)
 Extraordinary item (b)                                     -                 -          89,520                 -
 Net income (loss)                                     (3,185)               88         264,024           (39,431)
 Net income (loss) per share - Basic and Diluted
 Continuing operations                                    N/A               N/A             N/A             (3.33)
 Extraordinary item                                       N/A               N/A             N/A                 -
 Net income (loss) per share                              N/A               N/A             N/A             (3.33)

</TABLE>

<TABLE>
<CAPTION>
                                                                  Year End December 31, 2001
                                                                      (Predecessor Co)
                                                      First         Second       Third      Fourth
                                                     Quarter        Quarter     Quarter     Quarter
                                                     -------        -------     -------     -------
<S>                                                <C>            <C>           <C>         <C>
Continuing Operations
 Sales                                             $  58,087      $  52,008     $ 52,963    $ 57,907
 Cost of goods sold                                   43,409         40,190       38,412      42,381
 Loss from continuing operations (a)                  (2,031)        (5,033)        (221)      1,831
 Net income (loss)                                    (2,031)        (5,033)        (221)      1,831
 Net income (loss) per share - Basic and Diluted
 Continuing operations                                   N/A            N/A          N/A         N/A
 Net income (loss) per share                             N/A            N/A          N/A         N/A
</TABLE>

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         (a) Includes Goodwill and asset impairment write offs as follows: $42.7
million in the fourth quarter of 2003 (Successor Company), $47.4 million in the
three months ended December 31, 2002 (Successor Company), $25.4 million in the
third quarter of 2002 (Predecessor Company) and $1.9 million and $0.6 million in
the second and third quarter of 2001, respectively (Predecessor Company).

         (b) Extraordinary item represents the forgiveness and reinstatement of
certain debt in accordance with the consummation of the Plan.

NOTE S - Commitments and Contingencies

Operating lease commitments

         The Company has long-term operating leases for offices, manufacturing
facilities and equipment which expire through 2009. The Company has renewal
options on some locations, which provide for renewal rents based upon increases
tied to the consumer price index. Net rental expense for the year ended December
31, 2003, the three months ended December 31, 2002 (Successor Company), the nine
months ended September 30, 2002 (Predecessor Company) and the year ended
December 31, 2001 (Predecessor Company) was $13.2 million, $3.6 million, $10.7
million, and $16.7 million, respectively. At December 31, 2003, future minimum
lease payments under non-cancelable operating leases are as follows: $6.5
million in 2004; $4.3 million in 2005; $1.4 million in 2006; $0.9 million in
2007; $0.5 million in 2008 and insignificant thereafter.

NOTE T - Related Party Transactions

         In recognition of services provided during the bankruptcy period, Mr.
Gary A. Singer, a brother of Mr. Steven G. Singer, was awarded a participation
in the Company's restructuring bonus pool at a $325,000 level, which was fully
paid over a 36-month period commencing in January 2001 and ending December 31,
2003. On November 21, 2000, the Board of Directors (excluding Steven Singer, who
abstained from discussion and voting on this subject) authorized, (but the
Company did not execute, pending Compensation Committee ratification), a
three-year consulting agreement with Mr. Gary Singer, to ensure the continuity
of his services. On March 22, 2001, as Mr. Gary Singer had continued to provide
consulting services to the Parent but the authorized agreement remained
unexecuted, the Board of Directors (excluding Steven Singer, who abstained from
discussion and voting on this subject) authorized the payment to Mr. Gary Singer
of $10,000 for consulting services rendered in January 2001. Thereafter, the
Parent entered into a three-year consulting agreement, effective retroactively
as of February 1, 2001, which expired on February 1, 2004, providing for annual
consulting fees of $120,000, payable monthly. The consulting agreement provided
that if the agreement was terminated, other than for cause, as defined therein,
Mr. Gary Singer would receive a lump-sum payment in an amount that would have
otherwise been paid through the term of the agreement. On August 21, 2001, the
Compensation Committee ratified the November 2000 and March 2001 actions of the
Board of Directors with respect to compensation matters. Mr. Singer's consulting
agreement was not renewed upon expiration.

NOTE U - Subsequent Events

         In January 2004, ABN sold its Philadelphia plant for approximately $0.8
million and will record a gain of approximately $0.4 million in the first
quarter of 2004. Also in January 2004, ABN sold currency equipment that was
impaired in prior years for approximately $0.5 million with a corresponding gain
in the same amount.

         In the first quarter of 2004, the Company sold LM's New Zealand
subsidiary to a local management group. As a result of the sale, LM will receive
approximately $4.3 million in cash resulting in a pre-tax gain of approximately
$ 3.5 million. The net proceeds from the sale will be utilized to pay down
approximately $3.6 million of LM's bank debt and approximately $0.7 million will
be used to fund working capital as mutually determined by the Company and the
Banking Syndicate pursuant to the proposed restructuring plan discussed below.

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE V -

LM Proposed Restructuring

         In the third quarter of 2003, the Banking Syndicate evaluated the
public sale process conducted by LM's financial advisors. After reviewing all
options, the Banking Syndicate elected not to sell LM but have instead entered
into negotiations with LM and the Company, and subsequently verbally agreed
(subject to final documentation) in principle to restructure LM's bank debt
through a combination of debt forgiveness of approximately $45 million in
exchange for a preferred and common equity swap, thereby leaving approximately
$15 million of debt on LM's books. This transaction would give the Banking
Syndicate an initial controlling equity stake in LM and would result in the
Parent relinquishing control in exchange for approximately 11% of the preference
stock and a potential future equity interest of approximately 40% once the
restructured bank debt is fully amortized. The final terms and conditions are
expected to be completed sometime between the first and the second quarters of
2004. The exchange is expected to result in a non-cash gain to the Company to
the extent of the net discharge of the Parent's equity deficit in LM which is
approximately $53.9 million at December 31, 2003 and the value in its minority
interest position based upon the fair value received in preference stock which
is estimated to be approximately $2.1 million.

         The proforma effect of the LM restructuring on the Company's
consolidated balance sheet , income statement and earnings per share as if the
transaction occurred on December 31, 2003 would be as follows:

<TABLE>
<CAPTION>
                                             Consolidated                          Consolidated
                                               with LM                LM        Proforma without LM
                                          December 31, 2003      Transaction     December 31, 2003
                                          -----------------      -----------     -----------------
<S>                                       <C>                    <C>            <C>
PROFORMA BALANCE SHEET

Current assets                                $  66,764           $ (15,997)          $  50,767
 Property & Equipment, net                       53,285              (8,657)             44,628
 Other assets                                    81,518                (170)             81,348
                                              ---------           ---------           ---------
                                                201,567             (24,824)            176,743

Current liabilities                              48,581             (20,434)             28,147

Current portion of long-term debt                59,943             (59,914)                 29
                                              ---------           ---------           ---------
                                                108,524             (80,348)             28,176

Long-term debt                                  100,667                   -             100,667

Other long-term liabilities                      39,853                (428)             39,425
                                              ---------           ---------           ---------

 Total liabilities                              249,044             (80,776)            168,268

                                                                     53,852
Stockholder's (deficit)                         (47,477)              2,100               8,475
                                              ---------           ---------           ---------
                                              $ 201,567           $ (24,824)          $ 176,743
                                              =========           =========           =========

PROFORMA INCOME
STATEMENT AND EARNINGS PER SHARE

Loss before taxes on income and
 minority interest                            $ (47,807)          $   4,026           $ (43,781)
Taxes on income                                   4,249                   -               4,249
                                              ---------           ---------           ---------
Loss before minority interest                   (52,056)              4,026             (48,030)
Minority interest                                (5,474)                  -              (5,474)
                                              ---------           ---------           ---------

 Net loss                                     $ (46,582)          $   4,026           $ (42,556)
                                              =========           =========           =========

Net loss per common share
 Basic and Diluted                            ($   3.96)          $    0.34           ($   3.62)
                                              =========           =========           =========
</TABLE>

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

While agreements in principle between the Company, LM and the Banking Syndicate
have resulted in satisfactory arrangements in the past, there is no certainty
that the above process will be satisfactorily concluded. As of March 26, 2004,
the parties remained disagreed on certain material aspects of the agreement. In
the event that these discussions are not satisfactorily concluded, there is a
possibility LM may not be able to continue as a going concern absent further
accommodation from the Banking Syndicate. Moreover, LM's capital constraints
have caused local management difficulty in upgrading computer and other systems
that, in turn, continue to hamper LM management's ability to effectively and
efficiently operate, evaluate, restructure and report the operations of the
business. It is anticipated that the restructuring will provide the future
liquidity necessary to upgrade and enhance the quality of LM's overall financial
reporting environment. Under the terms of the LM Debt, dividends payable to the
Parent are prohibited.

<PAGE>

CONDENSED FINANCIAL INFORMATION OF REGISTRANT                         SCHEDULE I
AMERICAN BANKNOTE CORPORATION
PARENT COMPANY BALANCE SHEET
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                               December 31,
                                                         2003                2002
                                                    (Successor Co)     (Successor Co)
                                                    --------------     --------------
<S>                                                 <C>                <C>
ASSETS

Current assets
 Cash and cash equivalent                              $  3,195           $  3,811
 Prepaid expenses and other receivables                     187                134
 Current deferred taxes                                    (807)              (844)
                                                       --------           --------
                         Total current assets             2,575              3,101

Receivables from subsidiaries, net                         (988)               (99)
Investments in subsidiaries, at equity                   58,982             87,149
                                                       --------           --------
                                                         57,994             87,050

Furniture and equipment, at cost                            167                159
Less accumulated depreciation                              (147)              (125)
                                                       --------           --------
                                                             20                 34

Other assets and deferred charges
 Deferred pension expense                                 1,094              1,094
 Deferred taxes                                          (1,093)            (1,396)
 Other                                                      140                538
 Goodwill                                                 3,214             10,561
                                                       --------           --------
                                                          3,355             10,797
                                                       --------           --------
                                                       $ 63,944           $100,982
                                                       ========           ========
</TABLE>

   Note references are to the Notes to the Consolidated Financial Statements.

<PAGE>

CONDENSED FINANCIAL INFORMATION OF REGISTRANT                         SCHEDULE I
AMERICAN BANKNOTE CORPORATION
PARENT COMPANY BALANCE SHEET
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                           December 31,
                                                                    2003               2002
                                                                (Successor Co)     (Successor Co)
                                                                --------------     --------------
<S>                                                             <C>                <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
 Current portion of long-term debt                                $       -           $   2,000
 Accounts payable and accrued expenses                                4,861               6,153
                                                                  ---------           ---------
Total Current Liabilities                                             4,861               8,153

Long term debt - Senior Notes                                       100,013              93,496

Other long-term liabilities                                           6,547               8,114
                                                                  ---------           ---------

                                                                    111,421             109,763
Commitments and Contingencies - Note B and R

Stockholders' deficit
  Common Stock par value $.01 per share authorized
  20,000,000 shares issued 11,828,571 at December 31, 2003
  and 2002                                                              118                 118
 Capital surplus                                                     20,893              20,893
 Retained deficit                                                   (86,013)            (39,431)
 Treasury stock, at cost (57,756 shares)                               (103)               (103)
 Accumulated other comprehensive income                              17,628               9,742
                                                                  ---------           ---------
                         Total stockholders' deficit                (47,477)             (8,781)
                                                                  ---------           ---------
                                                                  $  63,944           $ 100,982
                                                                  =========           =========
</TABLE>

   Note references are to the Notes to the Consolidated Financial Statements.
<PAGE>

CONDENSED FINANCIAL INFORMATION OF REGISTRANT                         SCHEDULE I
AMERICAN BANKNOTE CORPORATION
PARENT COMPANY INCOME STATEMENT
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                            Three Months       Nine Months            Year
                                                                                Ended             Ended              Ended
                                                           December 31,     December 31,      September 30,      December 31,
                                                               2003             2002              2002                 2001
                                                          (Successor Co)   (Successor Co)   (Predecessor Co)   (Predecessor Co)
                                                          --------------   --------------   ----------------   ----------------
<S>                                                       <C>              <C>              <C>                <C>
Administrative and other expenses
  Corporate office expenses                               $        3,906   $          687   $          2,978   $          4,446
  Depreciation and amortization                                       13                3                 12                 13
  Goodwill and asset impairment                                    7,347                -                  -                  -
  Interest expense                                                 9,703            2,272              7,008              8,006
  Gain on Senior Note repurchase                                  (3,393)               -                  -                  -
  Other income, net                                                 (711)             103                767               (199)
                                                          --------------   --------------   ----------------   ----------------
  Loss before reorganization items, taxes and
    equity in earnings of subsidiaries                           (16,865)           (3,065)           (10,765)           (12,266)

  Reorganization (income) expense
    Fresh-Start adjustments                                            -                -            (88,991)                 -
    Reorganization costs                                             360              (30)             1,160                127
                                                          --------------   --------------   ----------------   ----------------
                                                                     360              (30)           (87,831)               127
  Income (loss) before taxes and equity
    in earnings of subsidiaries                                  (17,225)          (3,035)            77,066            (12,393)
Taxes
  State and local                                                     25              (60)                78                 60
  Deferred state and local                                             -               (4)              (291)            (1,182)
  Foreign (foreign withholding taxes on dividends)                   431               73                290                366
  Deferred federal (eliminated in consolidation
    against domestic subsidiary's deferred provision)               (340)              65             (1,430)            (1,010)
                                                          --------------   --------------   ----------------   ----------------
                                                                     116               74             (1,353)            (1,766)
  Loss before Extraordinary items and equity
  in earnings of subsidiaries                                    (17,341)          (3,109)            78,419            (10,627)

  Extraordinary items
    Gain or forgiveness of debt                                        -                -             91,364                  -
    Loss on debt reinstatement                                         -                -             (1,844)                 -
                                                          --------------   --------------   ----------------   ----------------
                                                                       -                -             89,520                  -

                                                          --------------   --------------   ----------------   ----------------
Income (loss) before equity in earnings of subsidiaries          (17,341)          (3,109)           167,939                  -

Equity in earnings of subsidiaries, net                          (29,241)         (36,322)            92,988              5,173

                                                          --------------   --------------   ----------------   ----------------
NET INCOME (LOSS)                                         $      (46,582)  $      (39,431)  $        260,927   $         (5,454)
                                                          ==============   ==============   ================   ================
</TABLE>

   Note references are to the Notes to the Consolidated Financial Statements.

<PAGE>

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
AMERICAN BANKNOTE CORPORATION
PARENT COMPANY STATEMENT OF CASH FLOW
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                               Year         Three Months       Nine Months           Year
                                                               Ended            Ended            Ended              Ended
                                                           December 31,     December 31,      September 30,      December 31,
                                                               2003             2002              2002               2001
                                                          (Successor Co)   (Successor Co)   (Predecessor Co)   (Predeccesor Co)
                                                          --------------   --------------   ----------------   ----------------
<S>                                                       <C>              <C>              <C>                <C>
Cash From Operations:
  Net Income                                              $      (46,582)  $      (39,431)  $        260,927   $         (5,454)
                                                          --------------   --------------   ----------------   ----------------

Items not affecting cash:
  Fresh Start Adjustments                                              -                -            (88,991)                 -
  Extraordinary item-(Gain) on forgiveness of debt                     -                -            (91,364)                 -
  Extraordinary item-Loss on debt reinstatement                        -                -              1,844                  -
  Extraordinary item-(gain) on repurchase
    of 10 3/8% debt                                               (3,393)               -                  -                  -
  Accrued PIK Interest-10 3/8% Senior Debt                         9,563            2,400              6,778              8,249
  Equity in Earnings of subsidiaries                              29,241           36,322            (92,988)            (5,175)
  Deferred taxes                                                    (340)              65             (1,430)            (2,871)
  Amortization of deferred compensation                                -                -                  -                  -
  Amortization of deferred debt expense                                -                -                191                352
  Depreciation and amortization                                       13                3                 12                 13
  Goodwill and asset impairment                                    7,347                -                  -                  -
  Gain on Sale of Assets                                               -                -                  -                  -
  Other                                                               (4)              33                (67)                15
Changes in operating assets and liabilities
  Prepaid expenses and other receivables                             379               89                375                401
  Receivables                                                        752              165                868                  5
  Accounts Payable and Accrued Expenses                              (17)          (1,619)             1,167                  -
  Other liabilities                                               (1,556)            (255)            (1,219)                 -
  Other                                                              398              130                855                  -
  Pre-petition liabilities subject to compromise                       -                -                  -               (365)
  Post-petition liabilities                                            -                -                  -               (662)
                                                          --------------   --------------   ----------------   ----------------
Net cash (used in) provided by operating activities               (4,199)          (2,098)            (3,042)            (5,492)

Investing Activities
  Investment in subsidiary                                             -                -                  -             (1,275)
  Capital Expenditures                                                (8)               -                  -                (50)
  Proceeds from sale of assets                                         -                -                  -                  -
                                                          --------------   --------------   ----------------   ----------------
Net cash provided by investing activities                             (8)               -                  -             (1,325)

Financing Activities
  Dividends from subsidiaries                                      6,520            1,668              5,524              5,024
  Proceeds from stock issuance                                         -               11                  -                  -
  Repurchase of Debt (10 3/8% Bonds)                              (2,929)             (14)                 -                  -
                                                          --------------   --------------   ----------------   ----------------
Net cash (used in) provided by financing activities                3,591            1,665              5,524              5,024

Increase (Decrease) in Cash:                                        (616)            (433)             2,482             (1,793)

Cash Balance - Beginning                                           3,811            4,244              1,762              3,555
                                                          --------------   --------------   ----------------   ----------------

Cash Balance - Ending                                     $        3,195   $        3,811   $          4,244   $          1,762
                                                          ==============   ==============   ================   ================

Supplemental cash payments:
  Taxes (principally foreign withholding
    taxes on dividends)                                   $          408   $           69   $            293   $            400
  Reorganization items                                               446              555                325              1,050
</TABLE>

   Note references are to the Notes to the Consolidated Financial Statements.

<PAGE>

CONDENSED FINANCIAL INFORMATION OF REGISTRANT                       SCHEDULE  II
AMERICAN BANKNOTE CORPORATION
YEAR ENDED DECEMBER 31, 2003, THREE MONTHS ENDED DECEMBER 31, 2002, NINE MONTHS
ENDED SEPTEMBER 30, 2002 AND YEAR ENDED DECEMBER 31, 2002

SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

<TABLE>
<CAPTION>
                                                                        Column C
                                                           Column B    Additions
                                                          Balance at   Charged to                      Column E
                         Column A                         Beginning    Costs and       Column D       Balance at
                      Description                         of Period     Expenses     (Deductions)       End of
-------------------------------------------------------   ----------   ---------   ----------------   ----------
<S>                                                       <C>          <C>         <C>                <C>
Doubtful accounts allowance

Year Ended December 31, 2000 (Predecessor)                $    1,446   $     636   $      (404) (a)   $    1,554
                                                                                          (124) (b)

Year Ended December 31, 2001  (Predecessor)               $    1,554   $      37   $         -        $    1,591

Nine Months Ended September 30, 2002 (Predecessor)        $    1,591   $     399             -        $    1,990

Three Months Ended December 31, 2002 (Successor)          $    1,990           -   $      (676) (a)   $    1,120
                                                                                   $      (194) (b)

Year Ended December 31, 2003 (Successor)                      $1,120         494   $      (553) (a)   $    1,249
                                                                                   $       188  (b)

Inventory valuation allowance

Year Ended December 31, 2000 (Predecessor)                $    2,553   $     235   $      (419) (c)   $    2,037
                                                                                   $      (332) (b)

Year Ended December 31, 2001 (Predecessor)                                         $      (810) (c)
                                                          $    2,037   $       -   $      (259) (b)   $      968

Nine Months Ended September 30, 2002 (Predecessor)        $      968   $       -   $      (384) (c)   $      571
                                                                                   $       (13) (b)

Three Months Ended December 31, 2002 (Successor)          $      571   $      33   $       (10) (c)   $      594

Year Ended December 31, 2003 (Successor)                  $      594   $     285   $      (572) (c)   $     314
                                                                                   $         7  (b)
</TABLE>

(a)      Uncollectible accounts written off, net of recoveries

(b)      Changes in exchange rates

(c)      Inventory charged against allowance

<PAGE>

SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 30, 2004.

                                        AMERICAN BANKNOTE CORPORATION

                                        By: /s/ Steven G. Singer
                                            ------------------------------------
                                            Steven G. Singer
                                            Chief Executive Officer

                                        By: /s/ Patrick J. Gentile
                                            ------------------------------------
                                            Patrick J. Gentile
                                            Senior Vice President Finance and
                                            Chief Accounting Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
         SIGNATURE                            TITLE                       DATE
---------------------------   ------------------------------------   --------------
<S>                           <C>                                    <C>
/s/  Steven G. Singer         Chief Executive Officer and Chairman   March 30, 2004
---------------------------   (Principal Executive Officer)
Steven G. Singer

/s/ C. Gerald Goldsmith       Chairman Emeritus and Director         March 30, 2004
---------------------------
C. Gerald Goldsmith

/s/ James Dondero             Director                               March 30, 2004
---------------------------
James Dondero

/s/ Sidney Levy               Director                               March 30, 2004
---------------------------
Sidney Levy

/s/ Lloyd Miller              Director                               March 30, 2004
---------------------------
Lloyd Miller

/s/ Raymond L. Steele         Director                               March 30, 2004
---------------------
Raymond L. Steele

/s/ Steven A. Van Dyke        Director                               March 30, 2004
---------------------------
Steven Van Dyke
</TABLE>
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                                Description
-------                               -----------
<S>          <C>
 2.1         Fourth Amended Reorganization Plan of the Parent, is incorporated
             herein by reference to Exhibit 2.2 to the Parent's Current Report on
             Form 8-K/A dated September 3, 2002.

 2.2         Disclosure Statement with Respect to Fourth Amended Reorganization Plan
             of the Parent, dated May 24, 2002, is incorporated herein by reference
             to Exhibit 2.1 to the Parent's Current Report on Form 8-K dated May 31,
             2002.

 2.3         Order of the Bankruptcy Court, dated August 21, 2002, Confirming the
             Fourth Amended Reorganization Plan of the Parent is incorporated herein
             by reference to Exhibit 2.1 to the Parent's Current Report on Form 8-K
             dated August 28, 2002.

 3.1         Amended and Restated Certificate of Incorporation of the Parent is
             incorporated herein by reference to Exhibit 3.1 to the Parent's Current
             Report on Form 8-K dated October 16, 2002 (the "October 16, 2002 Form
             8-K")

 3.2         Restated By-Laws of the Parent is incorporated herein by reference to
             Exhibit 3.2 to the October 16, 2002 Form 8-K.

 3.3         By-Laws of American Bank Note Company Grafica e Servicos Ltda., as
             amended, are incorporated herein by reference to the Parent's Current
             Report on Form 8-K dated July 10, 1995.

 3.4         Certificate of Incorporation and By-Laws of subsidiaries is
             incorporated herein by to Exhibits 3.1(b) through (m) and Exhibits
             3.2(b) through (m) to the Parent's Registration Statement on Form S-4
             (File No. 333-44069) filed January 12, 1998 (the "January 12, 1998 Form
             S-4").

 4.1         Indenture dated as of May 15, 1992 between the Parent and Chemical
             Bank, as Trustee, relating to the 10-3/8% Senior Notes due January 31,
             2005 is incorporated herein by reference to Exhibit 4.2 to the Parent's
             Current Report on Form 8-K dated May 26, 1992 (the "May 26, 1992 Form
             8-K").

 4.2         Pledge Agreement, as amended, dated as of May 26, 1992 between the
             Parent and Chemical Bank, as Trustee, relating to the Parent's 10-3/8%
             Senior Notes due January 31, 2005 is incorporated herein by reference
             to Exhibit 4.3 to the May 26, 1992 Form 8-K.

 4.3         First Supplemental Indenture to 10-3/8% Senior Notes due January 31,
             2005 between the Parent and Chemical Bank, N.A., dated as of May 23,
             1994 is incorporated herein by reference to Exhibit 4.1 to the Parent's
             Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 (the
             "June 30, 1994 10-Q").

 4.4         First Amendment to the Pledge Agreement dated as of May 26, 1992
             between the Parent and Chemical Bank, N.A., dated as of May 23, 1994 is
             incorporated herein by reference to Exhibit 4.2 to the June 30, 1994
             Form 10-Q.

 4.5         Pledged Share Amendment dated as of June 23, 1993 between the Parent
             and Chemical Bank, N.A., as Trustee, relating to the 10-3/8% Senior
             Notes due January 31, 2005 is incorporated herein by reference to
             Exhibit 4.5 to the Parent's Annual Report on Form 10-K for the year
             ended December 31, 1997 (the "1997 10-K").

 4.6         Pledged Share Amendment dated as of July 19,1993 between the Parent and
             Chemical Bank, N.A., as Trustee, relating to the 10-3/8% Senior Notes
             due January 31, 2005 is incorporated herein by reference to Exhibit 4.6
             to the 1997 10-K.

 4.7         Pledged Share Amendment dated as of August 1, 1994 between the Parent
             and Chemical Bank, N.A., as Trustee, relating to the 10-3/8% Senior
             Notes due January 31, 2005 is incorporated herein by reference to
             Exhibit 4.7 to the 1997 10-K.
</TABLE>

<PAGE>

<TABLE>
<S>          <C>
 4.8         Pledged Share Amendment dated as of July 31, 1995 between the Parent
             and Chemical Bank, N.A., as Trustee, relating to the 10-3/8% Senior
             Notes due January 31, 2005 is incorporated herein by reference to
             Exhibit 4.5 to the Parent's Annual Report on Form 10-K for the year
             ended December 31, 1995 (the "1995 10-K").

 4.9         Pledged Share Amendment dated as of August 15, 1997 between the Parent
             and Chemical Bank, N.A., as Trustee, relating to the 10-3/8% Senior
             Notes due January 31, 2005 is incorporated herein by reference to
             Exhibit 4.9 to the 1997 10-K.

 4.10        Pledged Share Amendment dated as of August 27, 1997 between the Parent
             and Chemical Bank, N.A., as Trustee, relating to the 10-3/8% Senior
             Notes due January 31, 2005 is incorporated herein by reference to
             Exhibit 4.10 to the 1997 10-K.

 4.11        Pledged Share Amendment dated as of December 1, 1997 between the Parent
             and Chemical Bank, N.A., as Trustee, relating to the 10-3/8% Senior
             Notes due January 31, 2005 is incorporated herein by reference to
             Exhibit 4.11 to the 1997 10-K.

 4.12        Pledged Share Amendment dated as of December 11, 1997 between the
             Parent and Chemical Bank, N.A., as Trustee, relating to the 10-3/8%
             Senior Notes due January 31, 2005 is incorporated herein by reference
             to Exhibit 4.12 to the 1997 10-K.

 4.13        Pledged Share Amendment dated as of December 23, 1997 between the
             Parent and Chemical Bank, N.A., as Trustee, relating to the 10-3/8%
             Senior Notes due January 31, 2005 is incorporated herein by reference
             to Exhibit 4.13 to the 1997 10-K.

 4.14        Second Supplemental Indenture, dated as of October 1, 2002, between the
             Parent and HSBC Bank USA, in its capacity as Successor Trustee,
             relating to the 10-3/8% Senior Notes due January 31, 2005, is
             incorporated herein by reference to Exhibit 4.1 to the October 16, 2002
             Form 8-K.

 4.15        Warrant Agreement, dated as of October 1, 2002, between the Parent and
             American Stock Transfer & Trust Company, as Warrant Agent, is
             incorporated herein by reference to Exhibit 4.2 to the October 16, 2002
             Form 8-K.

 4.16        Registration Rights Agreement, dated as of October 1, 2002, by and
             among the Parent and the Holders of Registrable Securities (as named
             therein) is incorporated herein by reference to Exhibit 4.3 to the
             October 16, 2002 Form 8-K.

 4.17        Forms of Series 1 Warrant and Series 2 Warrant Certificates issued
             pursuant to the Fourth Amended Reorganization Plan of the Parent is
             incorporated herein by reference to Exhibit 4.5 to the October 16, 2002
             Form 8-K.

 4.18        Form of 10 3/8% Senior Notes due January 31, 2005 is incorporated
             herein by reference to Exhibit 4.1 to the Parent's Quarterly Report on
             Form 10-Q for the quarter ended September 30, 2002 (the "September 30,
             2002 10-Q").

 4.19        Forms of Equity Option Certificates issued pursuant to the Fourth
             Amended Reorganization Plan of the Parent is incorporated herein by
             reference to Exhibit 4.2 to the September 30, 2002 10-Q.

 10.1        Second Amended and Restated Employment Agreement dated as of October 1,
             1993, between the Parent, American Bank Note Company and Morris
             Weissman is incorporated herein by reference to Exhibit 10.1 to the
             Parent's Annual Report on From 10-K (as amended) for the year ended
             December 31, 1993 (the "1993 10-K").

 10.2        Employment Agreement dated July 24, 1990 between the Parent and John T.
             Gorman is incorporated herein by reference to Exhibit (c)(32) to
             Amendment No. 3 to the Parent's Rule 13E-3 Transaction Statement on
             Schedule 13E-3 dated July 31, 1990 (the "Schedule 13E-3").

 10.3        Employment Agreement Amendment Number 2 dated September 3, 1996 between
             the Parent and John T. Gorman is incorporated herein by reference to
             Exhibit 10.1 to the September 30, 1996 10-Q.
</TABLE>

<PAGE>

<TABLE>
<S>          <C>
 10.4        Settlement Agreement dated as of October 30, 2000 between the Parent
             and John T. Gorman is incorporated herein by reference to Exhibit 10.4
             to the Parent's Annual Report on Form 10-K for the year ended December
             31, 2000 (the "2000 10-K").

 10.5        Supplemental Executive Retirement Plan of the Parent effective as of
             April 1, 1994, is incorporated herein by reference to Exhibit 10.22 to
             Amendment No. 2 to the Parent's Registration Statement on Form S-4
             (File No. 33-79726) filed July 18, 1994.

 10.6        Amendments to Supplemental Executive Retirement Plan of the Parent
             effective April 1, 1994 is incorporated herein by reference to Exhibit
             10.12 to the 1995 10-K.

 10.7        Amendment to Supplemental Executive Retirement Plan of the Parent
             effective July 1, 1997 is incorporated herein by reference to Exhibit
             10.8 to the 1997 10-K.

 10.8        Form of severance agreement for designated officers is incorporated
             herein by reference to Exhibit 10.25 to the Parent's Annual Report on
             Form 10-K for the year ended December 31, 1994 (the "1994 10-K").

 10.9        Real Estate Rental Agreement, dated February 29, 1996, between Walter
             Torre Junior LTDA and American Bank Note Company Grafica E Servicos
             Ltda for property located in Barueri, Sao Paulo, Brazil is incorporated
             herein by reference to Exhibit 10.18 to the 1995 10-K.

 10.10       Amended and Restated Senior Debt Facility Agreement dated June 26, 2001
             between American Banknote Corporation, American Banknote Australasia
             Holdings, Inc., and Chase Securities Australasia Limited, as Agent and
             Security Trustee, is incorporated herein by reference to Exhibit 10.18
             to the 2000 10-K.

 10.11       Amending and Restatement Deed (Senior Debt Facility) dated June 2001
             between ABN Australasia Limited, ABN Australasia Holdings Pty Ltd,
             American Banknote Pacific Pty Ltd., American Banknote Australasia PTY
             Ltd, Leigh-Mardon Payment Systems Pty Limited and American Banknote New
             Zealand Limited and Chase Securities Australasia Limited, as Agent and
             Security Trustee, is incorporated herein by reference to Exhibit 10.19
             to the 2000 10-K.

 10.12       Shareholders Agreement dated June 2001 between American Banknote
             Australasia Holdings, Inc., Chase Securities Australasia Limited, as
             Security Trustee for the Participants and ABN Australasia Limited is
             incorporated herein by reference to Exhibit 10.20 to the 2000 10-K.

 10.13       Banco Bradesco S.A. and American Bank Note Company Grafica e Servicos
             Ltda agreements as follows: Supply Agreement For Continuous And Plain
             Forms, Promotional Printings, Spools And Envelopes Agreement No. 001978
             dated 04/03/00; Agreement For The Rendering of Printing Services
             Agreement No. 001979 dated 03/01/00 (portions omitted pursuant to a
             request for confidential treatment); and Contract To Furnish Assets,
             Render Services And Other Agreements Agreement No. 001989 dated
             04/03/00, are incorporated herein by reference to Exhibit 10.22 to the
             2000 10-K.

 10.14       Form of Separation Agreement by and between the Parent and American
             Bank Note Holographics, Inc. is incorporated herein by reference to
             Exhibit 10.1 to the Parent's Quarterly Report on Form 10-Q for the
             quarter ended June 30, 1998 (the "June 30, 1998 10-Q").

 10.15       American Bank Note Holographics, Inc. Form of Underwriting Agreement
             dated June 1998 is incorporated herein by reference to Exhibit 10.2 to
             the June 30, 1998 10-Q.

 10.16       Post-Retirement Welfare Benefit Trust made and entered into as of
             December 29, 1989 by International Banknote Company, Inc. and Mr.
             Edward H. Weitzen and Mr. Eugene Jonas (Trustees) is incorporated by
             reference to Exhibit 10.25 to the 2000 10-K.

 10.17       Settlement Agreement dated as of September 22, 2000 by and between the
             Parent and Lietuvos Bankas is incorporated by reference to Exhibit
             10.26 to the 2000 10-K.
</TABLE>

<PAGE>

<TABLE>
<S>          <C>
 10.18       Consulting, Non-Competition and Termination Agreement, dated as of
             March 13, 2000 by and between the Parent and Morris Weissman, is
             incorporated herein by reference to Exhibit B to the Fourth Amended
             Reorganization Plan of the Parent, filed as Exhibit 2.2 to the
             September 3, 2002 Form 8-K/A.

 10.19       Employment Agreement entered into as of the 1st day of December, 2000
             by and between the Parent and Steven G. Singer is incorporated herein
             by reference to Exhibit 10.32 to the 2000 10-K.

 10.20       Consulting Agreement entered into as of the 1st day of February, 2001
             by and between the Parent and Gary A. Singer is incorporated herein by
             reference to Exhibit 10.33 to the 2000 10-K.

 10.21       Letter Agreement dated January 29, 1999 by and between the Parent and
             Patrick Gentile is incorporated herein by reference to Exhibit to 10.34
             to the 2000 10-K.

 10.22       Letter Agreement dated November 13, 2000 by and between the Parent and
             Patrick Gentile is incorporated herein by reference to Exhibit to 10.35
             to the 2000 10-K.

 10.23       Employment Agreement dated December 1998 by and between the American
             Bank Note Company Grafica e Servicos Ltda and Sidney Levy is
             incorporated herein by reference to Exhibit 10.36 to the 2000 10-K.

 10.24       Consulting Agreement dated December 1998 by and between the Parent and
             Sidney Levy is incorporated herein by reference to Exhibit 10.37 to the
             2000 10-K.

 10.25       Stock Purchase and Sale Agreement dated the 9th day of January 2001 by
             and between the Parent and Sidney Levy is incorporated herein by
             reference to Exhibit 10.38 to the 2000 10-K.

 10.26       Agreement between ABNB and Mr. Sidney Levy, dated December 12, 2001,
             regarding payment of bonus to Mr. Levy upon sale of ABNB shares by the
             Parent is incorporated herein by reference to Exhibit 10.3 to the
             Parent's Quarterly Report on Form 10-Q for the quarter ended June 30,
             2001.

 10.27       The Parent's 2002 Management Incentive Plan adopted by the Compensation
             Committee on March 4, 2002 is incorporated herein by reference to
             Exhibit 10.39 to the Parent's Annual Report on Form 10-K for the year
             ended December 31, 2001 (the "2001 10-K").

 10.28       The Parent's Equity and Cash Improvement Program adopted by the
             Compensation Committee on March 4, 2000 is incorporated herein by
             reference to Exhibit 10.40 to the 2001 10-K.

 10.29       Global Stipulation and Settlement Agreement Among the Parent, American
             Bank Note Holographics, Inc. and Parties to the ABN and ABNH Securities
             Actions, is incorporated herein by reference to Exhibit M to the Fourth
             Amended Reorganization Plan of the Parent, filed as Exhibit 2.2 to the
             September 3, 2002 Form 8-K/A.

 10.30       Settlement Agreement, dated as of September 17, 2002, between the
             Parent and American Bank Note Holographics, Inc. is incorporated herein
             by reference to Exhibit 10.1 to the October 16, 2002 Form 8-K.

 10.31       Consultant Option Agreement, dated as of October 1, 2002, between the
             Parent and Morris Weissman is incorporated herein by reference to
             Exhibit 10.2 to the October 16, 2002 Form 8-K.

 16.1        Letter of Deloitte & Touche LLP dated January 18, 2000 is incorporated
             herein by reference to Exhibit 16.1 to the Parent's Current Report on
             Form 8-K dated December 30, 1999, as amended.

 16.2        Letter of Ernst & Young LLP dated April 6, 2001 is incorporated herein
             by reference to Exhibit 16.1 to the Parent's Current Report on Form 8-K
             dated April 5, 2001.

 21.1        Subsidiaries of the Registrant is incorporated herein by reference to
             Exhibit 21.1 to the 2000 10-K.

 31.1*       CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
             2002.
</TABLE>

<PAGE>

<TABLE>
<S>          <C>
 31.2*       CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
             2002.

 32.1*       CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2*       CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 99.1        Memorandum of Understanding Between Plaintiffs in the ABN and ABNH
             Securities Actions and the Equity Committee, is incorporated herein by
             reference to Exhibit N to the Fourth Amended Reorganization Plan of the
             Parent, filed as Exhibit 2.2 to the September 3, 2002 Form 8-K/A.

 99.2        Court order dated July 20, 2001, approving settlement with the United
             States Securities and Exchange Commission, Plaintiff versus and
             American Banknote Corporation, Defendant. Final Judgment as to
             Defendant American Banknote Corporation is incorporated herein by
             reference to Exhibit 99.3 to the 2000 10-K.
</TABLE>

*        Filed herewith

         A signed original of this written statement required by Section 906 has
         been provided by the Company and will be retained by the Company and
         furnished to the Securities and Exchange Commission or its staff upon
         request.



<PAGE>





                                    EXHIBIT D
                                       TO
         AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
         PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

                                    _______


                       FORM 10-Q FOR THE DEBTOR FOR FISCAL
                        QUARTER ENDED SEPTEMBER 30, 2004


<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              FOR THE TRANSITION PERIOD FROM _________TO _________


                          COMMISSION FILE NUMBER 1-3410


                          AMERICAN BANKNOTE CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                    DELAWARE                                13-0460520
        (STATE OR OTHER JURISDICTION OF                  (I.R.S. EMPLOYER
         INCORPORATION OR ORGANIZATION)                 IDENTIFICATION NO.)

               560 SYLVAN AVENUE                             07632-3119
          ENGLEWOOD CLIFFS, NEW JERSEY                       (ZIP CODE)
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (201) 568-4400
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH FILING FOR THE
PAST 90 DAYS. YES [X] NO [ ].

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT). YES [ ] NO [X].

INDICATE BY A CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT. YES [X] NO [ ].

AS OF NOVEMBER 12, 2004, 11,770,815 SHARES OF THE REGISTRANT'S COMMON STOCK, PAR
VALUE $.01 PER SHARE WERE OUTSTANDING.


<PAGE>

<TABLE>
                                      AMERICAN BANKNOTE CORPORATION

                                                FORM 10-Q

                                                I N D E X

                                                                                                    PAGE
                                                                                                     NO.
                                                                                                    ----
<S>     <C>
PART I - FINANCIAL INFORMATION

     Item 1.  Financial Statements..............................................................      1

     Item 2.  Management's Discussion and Analysis of
                Financial Condition and Results of Operations...................................     17

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk........................     30

     Item 4.  Controls and Procedures...........................................................     30

PART II - OTHER INFORMATION

     Item 1.   Legal Proceedings................................................................     32

     Item 6.   Exhibits and Reports on Form 8-K.................................................     33


                                                   i
</TABLE>

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

<TABLE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)


                                                          September 30,
                                                               2004           December 31,
                                                           (Unaudited)            2003
                                                          --------------     --------------
<S>                                                       <C>                <C>

ASSETS
Current assets
   Cash and cash equivalents                              $      13,979      $       9,018
   Accounts receivable, net of allowance for doubtful
     accounts of $1,727 and $1,096                               26,158             19,414
   Inventories, net of allowances of $159 and $314               16,892             16,664
   Prepaid expenses and other                                     4,488              3,427
   Deferred tax assets of subsidiaries                            3,578              2,244
                                                          --------------     --------------
            Total current assets                                 65,095             50,767
                                                          --------------     --------------

Property, plant and equipment
   Land                                                           2,103              2,179
   Buildings and improvements                                     6,711              7,811
   Machinery, equipment and fixtures                             88,299             82,632
   Construction in progress                                          33                 34
                                                          --------------     --------------
                                                                 97,146             92,656
   Accumulated depreciation and amortization                    (55,526)           (48,028)
                                                          --------------     --------------

                                                                 41,620             44,628

Other assets                                                        462              1,802

Investment in non-consolidated subsidiaries                       7,987            (48,527)

Goodwill                                                         72,459             72,121
                                                          --------------     --------------
            Total assets                                  $     187,623      $     120,791
                                                          ==============     ==============


                  See Notes to Condensed Consolidated Financial Statements

                                             1
</TABLE>

<PAGE>

<TABLE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)


                                                           September 30,
                                                               2004           December 31,
                                                            (unaudited)           2003
                                                          --------------     --------------
<S>                                                       <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
   Current portion of long-term debt                      $     107,056      $          29
   Revolving  credit facilities                                   1,364              1,393
   Accounts payable and accrued expenses                         31,077             26,754
                                                          --------------     --------------
            Total current liabilities                           139,497             28,176

Long-term debt                                                      634            100,667

Other long-term liabilities                                      10,600             13,012

Deferred taxes                                                    2,136              2,196

Minority interest                                                24,693             24,217
                                                          --------------     --------------

            Total liabilities                                   177,560            168,268

Commitments and Contingencies

Stockholders' equity (deficit)
   Common Stock, par value $.01 per share, authorized
     20,000,000 shares; issued 11,828,571 shares                    118                118
   Capital surplus                                               20,893             20,893
   Retained deficit                                             (29,153)           (86,013)
   Treasury stock, at cost 57,756 shares                           (103)              (103)
   Accumulated other comprehensive income                        18,308             17,628
                                                          --------------     --------------
            Total stockholders' equity (deficit)                 10,063            (47,477)
                                                          --------------     --------------
                                                          $     187,623      $     120,791
                                                          ==============     ==============


                  See Notes to Condensed Consolidated Financial Statements

                                             2
</TABLE>

<PAGE>

<TABLE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
 (Dollars in thousands, except per share data)


                                                          Nine Months Ended                        Third Quarter
                                                             September 30,                         September 30,
                                                        2004               2003               2004               2003
                                                   --------------     --------------     --------------     --------------
<S>                                                <C>                <C>                <C>                <C>
CONTINUING OPERATIONS
Sales                                              $     118,084      $     105,257      $      42,152      $      38,310
                                                   --------------     --------------     --------------     --------------

Costs and expenses
   Cost of goods sold                                     83,092             78,787             29,178             28,238
   Selling and administrative                             17,865             15,532              6,586              5,507
   Depreciation and amortization                           8,637              7,694              2,894              2,722
   Restructuring                                              --                479                 --                113
   Gooodwill and asset impairment                             --             (1,051)                --             (1,051)
                                                   --------------     --------------     --------------     --------------
                                                         109,594            101,441             38,658             35,529
                                                   --------------     --------------     --------------     --------------

                                                           8,490              3,816              3,494              2,781
                                                   --------------     --------------     --------------     --------------
Other expense (income)
   Interest expense                                        8,183              7,633              2,786              2,603
   Gain on post-retirement settlement                     (1,411)                --                 --                 --
   Gain on senior note repurchase                           (294)            (3,393)              (294)                --
   Gain on sale of archives                               (3,004)                --             (3,004)                --
   Other, net                                             (1,976)              (762)              (921)            (1,120)
                                                   --------------     --------------     --------------     --------------
                                                           1,498              3,478             (1,433)             1,483
                                                   --------------     --------------     --------------     --------------

Income before reorganization items,
  taxes on income and minority interest                    6,992                338              4,927              1,298

Reorganization costs                                          --                347                 --                243
                                                   --------------     --------------     --------------     --------------

Income (loss) before taxes on income
  and minority interest                                    6,992                 (9)             4,927              1,055

Taxes on income                                            4,603              3,226              1,554              1,326
                                                   --------------     --------------     --------------     --------------

Income (loss) before minority interest                     2,389             (3,235)             3,373               (271)

Minority interest                                          1,481                832                610                442
                                                   --------------     --------------     --------------     --------------

Income (loss) from continuing operations           $         908      $      (4,067)     $       2,763      $        (713)

DISCONTINUED OPERATIONS
   Loss from discontinued operations                        (961)            (2,306)                --               (677)
   Gain on disposal of discontinued operations            56,913                 --                 --                 --
                                                   --------------     --------------     --------------     --------------
                                                          55,952             (2,306)                --               (677)
                                                   --------------     --------------     --------------     --------------
Net income (loss)                                  $      56,860      $      (6,373)     $       2,763      $      (1,390)
                                                   ==============     ==============     ==============     ==============

Net income (loss) per common share -
   Basic and Diluted
   Continuing operations                           $        0.08      $       (0.35)     $        0.23      $       (0.06)
   Discontinued operations                                  4.75              (0.19)                --              (0.06)
                                                   --------------     --------------     --------------     --------------

Net income (loss)                                  $        4.83      $       (0.54)     $        0.23      $       (0.12)
                                                   ==============     ==============     ==============     ==============


                                 See Notes to Condensed Consolidated Financial Statements

                                                            3
</TABLE>

<PAGE>

<TABLE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) - UNAUDITED
 (Dollars in thousands)


                                                    Nine Months Ended                Third Quarter Ended
                                                       September 30,                    September 30,
                                                       -------------                    -------------
                                                   2004            2003             2004            2003
                                               ------------    ------------     ------------    ------------
<S>                                            <C>             <C>              <C>             <C>
Net income (loss)                              $    56,860     $    (6,373)     $     2,763     $    (1,390)

   Foreign currency translation adjustment             680          12,928            6,713          (2,872)
                                               ------------    ------------     ------------    ------------

Comprehensive income (loss)                    $    57,540     $     6,555      $     9,476     $    (4,262)
                                               ============    ============     ============    ============


                          See Notes to Condensed Consolidated Financial Statements

                                                     4
</TABLE>

<PAGE>

<TABLE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)


                                                             Nine Months Ended
                                                               September 30,
                                                          2004               2003
                                                      -------------     -------------
<S>                                                   <C>               <C>
Net cash provided by operating activities             $      8,352      $      4,279

Investing Activities
   Capital expenditures                                     (5,938)           (3,218)
   Proceeds from sale of assets                              4,296                 4
                                                      -------------     -------------
Net cash used in investing activities                       (1,642)           (3,214)

Financing Activities
   Revolving facilities, net                                   (28)             (348)
   Repayment of long-term debt, net                            (15)              (40)
   Repurchase of senior notes                                 (590)           (2,929)
   Dividend to minority shareholder                         (1,287)             (833)
                                                      -------------     -------------
Net cash used in financing activities                       (1,920)           (4,150)

Effect of foreign currency exchange rate changes
  on cash and cash equivalents                                 171               320
                                                      -------------     -------------

Increase (decrease) in cash and cash equivalents             4,961            (2,765)

Cash and cash equivalents - beginning of period              9,018            10,673
                                                      -------------     -------------
Cash and cash equivalents - end of period             $     13,979      $      7,908
                                                      =============     =============

Supplemental disclosures of cash flow information
   Taxes                                              $      5,200      $      3,100
   Interest                                                    200               200
   Reorganization items                                        597               378


              See Notes to Condensed Consolidated Financial Statements

                                         5
</TABLE>

<PAGE>

<TABLE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
   AND COMPREHENSIVE INCOME (LOSS) - UNAUDITED
NINE MONTHS ENDED SEPTEMBER 30, 2004
(Dollars in thousands)


                                                                                                     Accumulated
                                                                                                        Other
                                                                                                        Compre-           Total
                                   Common          Capital          Retained          Treasury          hensive           Equity
                                   Stock           Surplus          Deficit            Stock            Income           (Deficit)
                               -------------    -------------    -------------     -------------     -------------    -------------
<S>                            <C>              <C>              <C>               <C>               <C>              <C>
Balance - January 1, 2004      $        118     $     20,893     $    (86,013)     $       (103)     $     17,628     $    (47,477)

Net Income                               --               --           56,860                --                --           56,860

Currency
   Translation Adjustments               --               --               --                --               680              680

                               -------------    -------------    -------------     -------------     -------------    -------------
Balance - September 30,
  2004                         $        118     $     20,893     $    (29,153)     $       (103)     $     18,308     $     10,063
                               =============    =============    =============     =============     =============    =============


                                      See Notes to Condensed Consolidated Financial Statements

                                                                 6
</TABLE>

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


NOTE A - Basis of presentation

American Banknote Corporation is a holding company. All references to the
"Parent" are meant to identify the legal entity American Banknote Corporation on
a stand-alone basis. All references to the "Company" are to the Parent and all
of its subsidiaries, as a group.

The Parent's principal subsidiaries are: American Bank Note Company ("ABN"), a
US operating subsidiary, American Bank Note, Ltda. ("ABNB"), a 77.5% owned
Brazilian company, CPS Technologies, S.A. ("CPS"), a French company, and
Transtex S.A. ("Transtex"), an Argentine company.

On April 6, 2004, the Parent exited as the 90% shareholder of its former
Australian subsidiary, ABN Australasia Limited (trading as the Leigh Mardon
Group ("LM")), by entering into a series of agreements with LM and the members
of LM's senior lending syndicate, ("the Banking Syndicate"). Although the Parent
continues to own a minority interest in LM, the disposal of this segment has
been recorded as a discontinued operation of the Company's business. See Note I
for further information.

The financial information as of September 30, 2004 and for the nine-month and
third quarter periods ended September 30, 2004 and 2003 have been prepared
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) necessary for a fair presentation of the
consolidated financial position, results of operations and cash flows for each
period presented have been made on a consistent basis. Certain information and
footnote disclosures normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. It is suggested that these financial statements be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 2003. Operating results for the nine months and third quarter ended
September 30, 2004 may not be indicative of the results that may be expected for
the full year.

In December 1999, the Parent (but none of its subsidiaries) filed a petition for
reorganization relief under Chapter 11 of the United States Bankruptcy Code (the
"Chapter 11 Proceeding"). On August 22, 2002, the United States Bankruptcy Court
for the Southern District of New York (the "Bankruptcy Court") confirmed the
Parent's Fourth Amended Plan of Reorganization (the "Plan") in the Chapter 11
Proceeding. On October 1, 2002 (the "Effective Date"), all conditions required
for the effectiveness of the Plan were achieved and the Plan became effective.

As a holding company, the Parent is dependent on dividends from its subsidiaries
to repay its Senior Notes and to fund its corporate overhead. Currently, ABN,
ABNB, CPS and Transtex are permitted to pay dividends. Only ABN and ABNB can
reasonably be expected to generate sufficient excess cash flow to fund any
material portion of the Parent's current operating expenses. However, such cash
flows are not currently sufficient to repay the high level of the Parent's
Senior Note indebtedness ($107.0 million principal amount at September 30, 2004)
while at the same time fund the Parent's corporate overhead. Further, the
Company is not currently able to obtain additional capital or borrow additional
funds. Therefore, the Company has determined that it will be unable to repay the
Senior Notes upon the January 31, 2005 maturity date. Accordingly, it is
virtually certain that the Company will undergo further restructuring, through a
negotiated transaction with holders of the Senior Notes, bankruptcy protection,
or a partial or total liquidation. As a result, the Parent is presently working
toward a restructuring plan to propose to the holders of the Senior Notes that
reduces its total indebtedness to a level that can be adequately serviced and
eventually repaid. However, we cannot assure that the Parent will be able to
reach a satisfactory agreement with the holders of the Senior Notes, or that it
will be able to satisfy its obligations under any such agreement. Due to the
severe cash flow constraints described above, it is the Parent's intention to
continue to pay "in kind" the semi-annual interest payments on the Senior Notes
in lieu of cash interest.


                                       7

<PAGE>

AMERICAN BANKNOTE CORPORATION AND
SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


Based upon the foregoing, the Parent has engaged an independent valuation
advisor and counsel with restructuring expertise to work with the Company to
propose and negotiate a consensual restructuring of the Parent's capital
structure, including its Senior Note indebtedness, which will likely require a
bankruptcy court proceeding.

However, because each of the Parent's subsidiaries is a self-funded stand-alone
entity, it is anticipated that each subsidiary will continue to operate its
business in the normal course, on a stand-alone basis, irrespective of any
restructuring of the Parent. See the Company's Annual Report on Form 10-K for
the year ended December 31, 2003 for further disclosure relating to these risks.

The Company has significant operations in Brazil, Argentina and France. On a
consolidated basis, these operations experienced significant foreign exchange
rate fluctuations against the US Dollar in 2003. Foreign exchange rate
fluctuations on a comparative basis continued to exist in the nine months and
third quarter of 2004 when compared to the same period in 2003.

Over the past year, the Brazilian Real and the Argentine Peso have each improved
overall, relative to the US Dollar despite the significant volatility and
fluctuations which have historically plagued both countries' currencies. For the
nine months ended September 30, 2004 when compared to the nine months ended
September 30, 2003, the Brazilian and Argentine currencies experienced an
average exchange rate appreciation of approximately 5.5% and 1%, respectively.
The Euro currency experienced an average appreciation of approximately 10%
during the same period.

For the third quarter ended September 30, 2004, the Company experienced an
average exchange rate devaluation relative to the US Dollar of approximately
1.5% in Brazil and approximately 4% in Argentina when compared to the third
quarter ending September 30, 2004. The Euro currency experienced an average
appreciation of approximately 8% relative to the US Dollar during the same
period.

The Brazilian Real has experienced, and continues to demonstrate, tremendous
volatility against the US Dollar. The average exchange rate for the nine months
ended September 30, 2004 was R$2.97 to the US Dollar. As of November 4, 2004,
the Real had strengthened to R$2.83 to the US Dollar. However, at certain times
in 2003, the Real traded as poorly as R$3.80 to the US Dollar, and at certain
times in 2004, the Real has traded at nearly $3.20 to the US Dollar. Given such
volatility, there can be no assurance that the Real will stabilize at any
certain level against the US Dollar.

ABNB is the Parent's largest subsidiary, contributing in the nine months ended
September 30, 2004, approximately 70% of the revenues and approximately 84% of
the operating profit of the consolidated group (excluding Parent company
expense). This share has grown as a percentage of the Company's total revenues
and operating profit in 2004 with the deconsolidation of LM. The Real's
approximately two-thirds overall devaluation since it was permitted to trade
freely in 1999 (prior to which the Real had a fixed relationship to the US
dollar and traded at approximately R$1 to the Dollar) has severely impacted
ABNB's cash flow in US Dollar terms, and has therefore threatened its ability to
pay dividends to the Parent at the same levels as in the past. Based on current
estimates, it is anticipated that dividends from ABNB (along with those of other
subsidiaries) will be sufficient to fund the Parent's operating expenses in the
foreseeable future. There can be no assurance, however, that further devaluation
of the Real or other business developments will not lead to a contrary result.


                                       8

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


In Argentina, despite the poor economic environment and the Peso's devaluation
since it was permitted to trade freely in 2002 (prior to which the Peso had a
fixed relationship to the US Dollar and traded at approximate AR$1 to the
Dollar), Transtex has generated positive operating income and cash flow for the
first, second and third quarters of 2004 and 2003 as well as all of 2003. While
throughout 2002, the Argentine government imposed a moratorium on dividend
repatriations outside the country, the government, in 2003, lifted this ban, and
as a result, the Parent was able to receive $0.3 million and $0.4 million in
dividends from Transtex for the nine months ended September 30, 2004 and 2003,
respectively. However, there can be no assurance that the ability to repatriate
dividends freely out of Argentina will continue nor that further devaluation of
the Peso or other business developments will not limit or terminate the ability
of Transtex to pay dividends in the future.


                                       9

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


NOTE B - EARNINGS PER SHARE COMPUTATIONS

Amounts used in the calculation of basic and diluted per share amounts for the
nine months and third quarter ended September 30, 2004 and 2003 were as follows:

<TABLE>
                                                                  Nine Months Ended               Third Quarter Ended
                                                                     September 30,                    September 30,
                                                                 2004            2003             2004            2003
                                                             ------------    ------------     ------------    ------------
<S>                                                          <C>             <C>              <C>             <C>
Numerator for income (loss) from continuing operations       $       908     $    (4,067)     $     2,763     $      (713)

Numerator for income (loss) from discontinued operations     $    55,952     $    (2,306)     $        --     $      (677)

Denominator for per share computations
Weighted average number of shares outstanding
(in thousands)
   Common Stock                                                   11,771          11,771           11,771          11,771
</TABLE>


In 2004, income from discontinued operations represents the one-time non-cash
gain resulting from the disposition of the Company's Australian subsidiary LM in
April 2004 and LM's loss from operations for the nine months and third quarter
ended 2004. In 2003, the loss from discontinued operations represents the loss
from LM's results of operations for the nine months and third quarter of 2003.
(See Note I for further information.)

The denominator for computing diluted income per share excludes certain
warrants, equity options and management incentive options issued in accordance
with the Plan, as the exercise prices of such warrants and options are greater
than the market price of the common shares.

NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS

SFAS 150 - In May 2003, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 150 (SFAS 150), Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity. SFAS 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. The adoption of SFAS 150 in the third quarter of 2003 did not have a
material impact on the Company's results of operations or financial position.

SFAS 132(R) - In December 2003, the FASB issued SFAS 132(R), Employers'
Disclosures about Pensions and Other Postretirement Benefits. The provisions of
this statement do not change the measurement and recognition provisions of SFAS
87, Employers' Accounting for Pensions, SFAS 88, Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits, and SFAS 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions. SFAS 132(R) replaces SFAS 132 and adds disclosures
of plan assets by category, investment policies and strategies for these
categories, estimated future benefit payments and contributions and improves
quarterly disclosures. This statement is effective for financial statements with
fiscal years ending after December 15, 2003, except for the disclosure of
estimated future benefit payments which is effective for fiscal years ending
after June 15, 2004. The interim-period disclosures required by this statement
are effective for interim periods beginning after December 15, 2003. The Company
adopted the provisions of this statement in 2003.


                                       10

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


FIN 46R - In January 2003, the FASB issued FASB Interpretation (FIN) No. 46R,
Consolidation of Variable Interest Entities (revised December 2003), an
interpretation of Accounting Research Bulletin No. 51, Consolidated Financial
Statements. FIN 46R requires variable interest entities (VIEs) to be
consolidated by the primary beneficiary of the entity. VIEs are entities that
lack sufficient equity to finance its activities without additional subordinated
financial support or whose equity investors do not have the characteristics of a
controlling financial interest. All VIEs, with which the Company is involved,
must be evaluated to determine the primary beneficiary of the risks and rewards
of the VIE. The provisions of FIN 46R must be applied to all entities subject to
this Interpretation effective beginning in the first quarter of 2004. However,
prior to the required application of this Interpretation, FIN 46R must be
applied to those entities that are considered to be special-purpose entities no
later than as of the end of the first reporting period that ends after December
15, 2003. The adoption of FIN 46R does not have a material effect on the
Company's results of operations or financial position.

SAB 104 - In December 2003, the Staff of the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 104 (SAB 104), "Revenue Recognition"
which supersedes and further clarifies certain provisions of SAB 101, "Revenue
Recognition in Financial Statements." SAB 104's primary purpose is to rescind
accounting guidance contained in SAB 101 related to multiple-element revenue
arrangements and to rescind the SEC's "Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers" (FAQ) issued with SAB 101.
Selected portions of the FAQ have been incorporated into SAB 104. The adoption
of SAB 104 did not have a material impact on the Company's revenue recognition
policies.

Note D - Inventories (in thousands) consisted of the following:

                                                   September 30,    December 31,
                                                       2004             2003
                                                   ------------    ------------

Finished goods                                     $         7     $         7
Work-in-progress                                         8,124           8,934
Raw materials and supplies (net of allowances
  of $159 and $314, respectively)                        8,761           7,723
                                                   ------------    ------------
                                                   $    16,892     $    16,664
                                                   ============    ============

Inventories are stated at the lower of cost or market with cost being determined
either on the first-in-first-out or average cost method.

NOTE E - RESTRUCTURING

In the first quarter of 2003, ABN consolidated its Philadelphia operations into
its Tennessee operation, thereby placing all of ABN's manufacturing operations
within a single location, resulting in the termination of approximately 50
employees. Accordingly, ABN recorded a one-time restructuring charge of $0.5
million for the first nine months of 2003 related primarily to employee
terminations. One-time costs related to plant wind down and equipment relocation
were funded through internal cash flow and expensed as incurred and have been
included in cost of goods sold in accordance with SFAS 146. The total costs
resulting from this restructuring were recovered within one year from its
execution. Additionally, in the third quarter of 2003, ABN consolidated its two
secure satellite storage and distribution facilities into a single facility.


                                       11

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


In January 2004, ABN sold its Philadelphia plant for approximately $0.7 million,
resulting in a $0.4 million gain. Please refer to Item 2, "Managements
Discussion and Analysis of Financial Condition and Results of Operations" for
further information.

NOTE F - Goodwill and Asset Impairment

In October 2003, ABN entered into a settlement agreement on its lease with the
landlord of its idle Chicago facility. Pursuant to the terms of the settlement,
ABN and the landlord agreed to terminate the lease scheduled to expire in
December 2009 in exchange for the following consideration from ABN: (i) ABN
agreed to pay rent through December 31, 2003, (ii) ABN relinquished its security
deposit in the amount of $0.2 million, (iii) ABN assigned to the landlord an
early termination payment of $0.4 million owed by a sublessee of the facility,
and (iv) ABN used reasonable commercial efforts to assure that the sublessee
complied with its existing legal obligations. As a result of the settlement, ABN
remeasured its obligation under the lease and in the third quarter of 2003
recorded a recovery of a previous impairment provision of approximately $1.1
million which was established in the fourth quarter of 2002 based upon the
difference between the present value of annual lease payments to the landlord
net of the estimated sublease income.

NOTE G - Long-term debt

Long-term debt at September 30, 2004 of $107.1 million consists of $107.0
million of the Parent's Senior Notes due January 31, 2005 which is classified as
current on the balance sheet, and $0.7 million of mortgage indebtedness secured
by properties owned by ABN.

NOTE H - Gain on Post Retirement Settlement

In May 2004, the Parent renegotiated the terms of its supplemental executive
retirement plan ("the Serp") with Morris Weissman, the Company's former Chairman
and CEO. Under the terms of the settlement, Mr. Weissman agreed to forego his
annual Serp payment of $297,000 per year for the following: (i) a lump sum
one-time cash payment of $235,000; (ii) a reduced annual benefit in the amount
of $196,000 per year from January 2005 to June 2011; (iii) a further reduced
annual benefit in the amount of $144,000 per year commencing July 2011 and
continuing until Weissman's death ( unless he is survived by his current spouse,
in which case the payments will continue to her until her death); (iv) a twenty
five percent partial funding of Weissman's medical and dental insurance premiums
through August 2006 and (v) an extension on the forgiveness of Weissman's
corporate loan through December 31, 2012.

As a result of the settlement and the change in certain actuarial assumptions,
the Company recognized a $1.4 million non-cash gain which was recorded as a
separate component of other expense (income).

The Parent, due to cash flow constraints, continues not to make any payments to
the remaining participants of the Serp. The Parent has been in negotiation with
the remaining participants and has been working toward possible resolutions of
these negotiations in order to avoid litigation. In October 2004, the Parent was
able to settle its SERP obligation with one former executive in exchange for a
one-year payment of benefits. There can be no assurance that the other
participants can be settled on the same terms.


                                       12

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


NOTE I - Discontinued Operations

On April 6, 2004, the Parent entered into a series of agreements with LM, the
subsidiary's Banking Syndicate and with a newly-formed company owned by the
members of the Banking Syndicate, for the purpose of restructuring LM and to
enable the Company to exit as the major shareholder of LM.

Under the terms of the agreements, LM's capital structure was reorganized such
that the Banking Syndicate forgave approximately $47.4 million of LM's $64.7
million of total senior non-recourse bank debt (inclusive of LM's working
capital facility). In exchange, the Parent relinquished its 90% controlling
equity stake in LM for approximately (i) 11% of approximately $20 million face
amount of newly-issued preference stock and (ii) "deferred common equity" of up
to 40% of LM, which will be issued in stages if and when the restructured senior
bank debt and the preference stock of reorganized LM are fully repaid or
redeemed. The Company has not ascribed a value to the common equity because
events that define its issuance are uncertain and may not occur.

This exchange resulted in a non-cash gain from discontinued operations of $56.0
million to the Company as a result of the Company relinquishing its controlling
equity interest in exchange for (i) the net discharge of the Company's carrying
value of LM's equity deficit, which was approximately $53.9 million at September
30, 2004 (which included a $1.0 million loss from operations for the first
quarter of 2004) plus (ii) the value of the newly-issued preference shares
received by the Company, which is estimated to be approximately $2.1 million.

As a result of this transaction, effective January 1, 2004, the Company recorded
the gain on the disposition of LM as a discontinued operation and reflected LM's
loss from operations for the nine months of 2004 of $1.0 million as a component
of discontinued operations. The Company did not break out LM's results of
operations for the six days in April, as these results would not be meaningful.
Furthermore, the results of operations of LM for the nine months and third
quarter of 2003 of $2.3 million and $0.7 million, respectively were
deconsolidated and reflected as a component of discontinued operations for
comparative purposes. The Company recorded its remaining preference stock
investment in LM valued at approximately $2.1 million under the cost method, as
it will have a non-controlling interest in LM and reflected this amount as a
component of investment in non-consolidated subsidiaries on the Company's
consolidated balance sheet at September 30, 2004. For comparative purposes, the
Company deconsolidated LM from the Company's consolidated balance sheet at
December 31, 2003, which resulted in a negative investment of $53.8 million and
is reflected as a component of investment in non-consolidated subsidiaries.


                                       13

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


NOTE J - SEGMENT DATA

Summarized financial information for the nine months ended September 30, 2004
and 2003 concerning the Company's reportable segments is as follows (in
thousands):

<TABLE>
                                                    Nine Months Ended
                                                    -----------------
                                    September 30, 2004             September 30, 2003
                               ---------------------------     ----------------------------
                                               Operating                         Operating
                                                 Profit                           Profit
                                  Sales          (Loss)           Sales           (Loss)
                              ------------    ------------     ------------    ------------
<S>                           <C>             <C>              <C>             <C>
Brazil                        $    81,541     $    10,018      $    72,884     $     6,019
Australia (1)                          --              --               --              --
United States                      18,945           1,003           16,005            (490)
France                             12,030            (205)          12,664             545
Argentina                           5,568           1,142            3,704             770
Corporate - United States              --          (3,468)              --          (3,028)
                              ------------    ------------     ------------    ------------
Totals
                              $   118,084     $     8,490      $   105,257     $     3,816
                              ============    ============     ============    ============
</TABLE>

(1) LM was disposed of in April 2004. For comparative purposes, its results of
operations are reflected as a component of discontinued operations.

Through its subsidiaries, the Company serves its customers in the regions where
it does business through three principal product lines: Transaction Cards and
Systems ("TCS"), Printing Services and Document Management ("PSDM"), and
Security Printing Solutions ("SPS"). The table below presents the components of
these sales for the nine months ended September 30, 2004 and 2003 as follows (in
thousands):

<TABLE>
                                                      Nine Months Ended
                                                      -----------------
                                       September 30, 2004            September 30, 2003
                                  ---------------------------   ---------------------------
                                      Sales            %            Sales            %
                                  ------------   ------------   ------------   ------------
<S>                               <C>                 <C>       <C>                 <C>
Transaction Cards and Systems     $    45,139          38.2%    $    36,601          34.8%
Printing Services and
  Document Management                  20,367          17.3%         19,137          18.2%
Security Printing Solutions            52,578          44.5%         49,519          47.0%
                                  ------------   ------------   ------------   ------------

Total Sales                       $   118,084         100.0%    $   105,257         100.0%
                                  ============   ============   ============   ============
</TABLE>

                                               14

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Summarized financial information for the third quarter ended September 30, 2004
and 2003 concerning the Company's reportable segments is as follows (in
thousands):

<TABLE>
                                                   Third Quarter Ended
                                                   -------------------
                                   September 30, 2004               September 30, 2003
                              ----------------------------     ----------------------------
                                                Operating                       Operating
                                  Net            Profit            Net            Profit
                                  Sales          (Loss)            Sales          (Loss)
                              ------------    ------------     ------------    ------------
<S>                           <C>             <C>              <C>             <C>
Brazil                        $    29,104     $     3,559      $    26,709     $     2,641
Australia (1)                          --              --               --              --
United States                       6,833             479            5,366             593
France                              4,407              97            4,794             192
Argentina                           1,808             360            1,441             307
Corporate - United States              --          (1,001)              --            (952)
                              ------------    ------------     ------------    ------------
Totals                        $    42,152     $     3,494      $    38,310     $     2,781
                              ============    ============     ============    ============
</TABLE>

(1) LM was disposed of in April 2004. For comparative purposes, its results of
operations are reflected as a component of discontinued operations.

The table below presents the principal product line components of these sales
for the third quarter ended September 30, 2004 and 2003 as follows (in
thousands):

<TABLE>
                                                    Third Quarter Ended
                                                    -------------------
                                       September 30, 2004            September 30, 2003
                                  ---------------------------   ---------------------------
                                      Sales            %            Sales            %
                                  ------------   ------------   ------------   ------------
<S>                               <C>                 <C>       <C>                 <C>
Transaction Cards and Systems     $    16,459          39.0%    $    14,517          37.9%
Printing Services and
  Document Management                   6,987          16.6%          7,308          19.1%
Security Printing Solutions            18,706          44.4%         16,485          43.0%
                                  ------------   ------------   ------------   ------------
Total Sales                       $    42,152         100.0%    $    38,310         100.0%
                                  ============   ============   ============   ============
</TABLE>

NOTE K - STOCK BASED COMPENSATION PLANS

As permitted by Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), which establishes a fair
value based method of accounting for stock-based compensation plans, the Company
elected to follow Accounting Principles Board Opinion No. 25 "Accounting for
Stock Issued to Employees" ("APB No. 25") for recognizing stock-based
compensation expense for financial statement purposes. Under ("APB No. 25"), the
Company elected the intrinsic value method of accounting and therefore has not
recognized compensation expense for options granted. The options were granted
with an exercise price of $2.50 which was substantially higher than the


                                       15

<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


negligible trading market price of the Company's common stock on the date of
grant. The Company has determined that this factor, combined with the lack of
liquidity for the Company's common stock, results in an insignificant value for
these options and therefore there is no proforma compensation to be measured.

In 2002 the Parent granted 780,000 Management Options which are currently
two-thirds vested, and 88,531 Consultant Options and 177,061 Equity Options
which are both totally vested. All options were granted at an exercise price of
$2.50 per share. No options were granted in 2003 or 2004. At the date of grant,
the expiration date of the options was 10 years and currently the remaining
contractual life of the options is approximately 8 years.


                                       16

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

GENERAL

American Banknote Corporation is a holding company. All references to the
"Parent" are meant to identify the legal entity American Banknote Corporation on
a stand-alone basis. All references to the "Company" are to the Parent and all
of its subsidiaries, as a group.

The Parent's principal subsidiaries are: American Bank Note Company ("ABN"), the
US operating subsidiary, American Bank Note Ltda. ("ABNB"), a 77.5% owned
Brazilian company, CPS Technologies, S.A. ("CPS"), a French company and Transtex
S.A. ("Transtex"), an Argentine company.

On April 6, 2004, the Parent exited as the 90% shareholder of its former
Australian subsidiary, ABN Australasia Limited (trading as the Leigh Mardon
Group ("LM") by entering into a series of agreements with LM and the members of
LM's senior lending syndicate, ("the Banking Syndicate"). Although the Parent
continues to own a minority interest in LM, the disposal of this segment has
been recorded as a discontinued operation of the Company's business. (See Note I
for further information). As a result, the following management's discussion of
results of operations will exclude any comparison of LM's operations..

Through its subsidiaries, the Company serves its customers in the regions where
it does business through three principal product lines: Transaction Cards and
Systems ("TCS"), Printing Services and Document Management ("PSDM"), and
Security Printing Solutions ("SPS").

RESULTS OF OPERATIONS

Sales by foreign subsidiaries represented approximately 84% of the Company's
consolidated sales for the nine months ended September 30, 2004 and
approximately 85% of the Company's consolidated sales for the nine months ended
September 30, 2003 (excluding LM). Sales by foreign subsidiaries also
represented approximately 84% of the Company's consolidated sales for the third
quarter ended September 30, 2004 and approximately 86% of the Company's
consolidated sales for the third quarter ended September 30, 2003 (excluding
LM). The Company has significant operations in Brazil, Argentina and France,
where currencies have experienced significant foreign exchange rate fluctuations
against the U.S. Dollar. For the nine months ended September 30, 2004, the
Company experienced an average exchange rate appreciation in the Brazilian and
Argentine currencies of approximately 5.5% and 1%, respectively, against the US
Dollar when compared to the nine months ended September 30, 2003. The Euro
currency experienced an average appreciation of approximately 10% against the US
Dollar during the same period. For the third quarter ended September 30, 2004,
the Company experienced an average exchange rate devaluation of approximately
1.5% in Brazil and 4% in Argentina, respectively, against the US Dollar when
compared to the same period in the prior year. The Euro currency experienced an
average appreciation of approximately 8% against the US Dollar during the same
period. In particular, the Brazilian Real continues to experience tremendous
volatility against the US Dollar. Although the average exchange rate for the
nine months ended September 30, 2004 was R$2.98 to the US Dollar, as of November
4, 2004, the Real had strengthened to R$2.83 to the US Dollar, therefore
continuing to experience volatility.

ABNB is the Parent's largest subsidiary, contributing in the nine months ended
September 30, 2004, approximately 70% of the revenues and approximately 84% of
the operating profit of the consolidated group (excluding Parent company
expense). This share has grown as a percentage of the Company's total revenues
and operating profit in 2004 with the deconsolidation of LM, which had
historically reported significant losses. The Real's approximately two-thirds
overall devaluation since it was permitted to trade freely in 1999 (prior to
which the Real had a fixed relationship to the US dollar and traded at


                                       17

<PAGE>

approximately R$1 to the Dollar) has severely impacted ABNB's cash flow in US
Dollar terms, and has therefore threatened its ability to pay dividends to the
Parent at the same levels as in the past. Based on current estimates, it is
anticipated that dividends from ABNB (along with those of other subsidiaries)
will be sufficient to fund the Parent's operating expenses in the foreseeable
future. There can be no assurance, however, that further devaluation of the Real
or other business developments will not lead to a contrary result. Furthermore,
the continued long-term threat of currency devaluation has contributed to the
fact that the Company will be unable to repay its Senior Notes due January 31,
2005. See "Liquidity and Capital Resources" for further information.

THE COMPARISONS THAT FOLLOW ISOLATE AND QUANTIFY THE EFFECT THAT CHANGES IN
FOREIGN EXCHANGE RATES HAVE HAD ON THE RESULTS OF OPERATIONS OF THE COMPANY,
THEREBY ENABLING COMPARISON OF OPERATING RESULTS OF THE COMPANY'S SUBSIDIARIES
IN US CONSTANT DOLLAR TERMS ("CONSTANT DOLLARS"). IN PERFORMING THIS COMPARISON,
THE COMPANY UTILIZES A CONSTANT DOLLAR EXCHANGE RATE AS IF THE EXCHANGE RATE FOR
THE MOST RECENT PERIOD REMAINED AT THE SAME LEVELS AS THE PRIOR PERIOD FOR WHICH
THE COMPARISON IS BEING PERFORMED.

COMPARISON OF RESULTS OF THE NINE MONTHS ENDED STEPTEMBER 30, 2004 WITH THE NINE
MONTHS ENDED SEPTEMBER 30, 2003

SALES

Sales in the first nine months of 2004 increased by $12.8 million or 12.2% from
the same period in 2003. Exchange rate appreciation resulted in increased
revenues of approximately $5.4 million of which $4.2 million was attributable to
Brazil, $1.1 million was attributable to France and $0.1 million was
attributable to Argentina. After giving effect to exchange rate appreciation,
sales increased by $7.4 million in constant dollars, as a result of higher sales
in Brazil of $4.4 million, in Argentina of $1.8 million and in the United Sates
of $2.9 million, partly offset by lower sales in France of $1.7 million. The net
increase in sales in constant dollars is discussed in detail by subsidiary
below.

The increase of $2.9 million in sales in the United States was due to increased
SPS sales at ABN in secure commercial and government print of $3.1 million,
primarily attributable to higher volumes sold in foreign passports, vital record
sales and gift certificate printing and related reconciliation and distribution
services, as well as increased sales of stock and bond certificates of $0.5
million. These increases were partly offset by $0.5 million in reduced revenue
resulting from the termination of the USDA food coupon contract and $0.2 million
in lower sales resulting from reduced volumes under ABN's Stamps on Consignment
program with the US Postal Service. Although stock and bond certificate sales
were stronger in 2004 when compared to the first nine months of 2003, management
believes the continued trend toward next day settlement, the overall slow growth
in the capital markets and the decreasing overall demand for secure paper-based
documents of value that are used in the public and private sector will continue
to have a negative effect on the mix of sales and gross margins at ABN.

At Transtex, TCS sales increased by $1.8 million. The increase in TCS sales was
primarily due to a higher volume of orders placed in 2004 on prepaid telephone
cards, bank cards and non-secure commercial loyalty cards, partly offset by
lower prices received on these cards due to competitive pressures. Despite the
continued improvement in sales at Transtex, there is no assurance that this
trend will continue as the Argentine political and economic environment remain
unsettled, credit markets continue to remain highly volatile, and the overall
trend in card usage remains uncertain.

In France, the decrease of $1.7 million in TCS sales at CPS was principally due
to a $3.3 million loss of its phone card business to a global tender and $0.4
million in lower sales on non-secure commercial loyalty card personalization.
These decreases were partly offset by $2.0 million in higher bank card sales,


                                       18

<PAGE>

primarily due to new customer orders and to the banks' requirement that CPS
purchase and charge them for the cost of non-personalized base stock
transactions cards which began in March 2003.

Sales at ABNB in Brazil were $4.4 million higher than in 2003. The net increase
is attributable to higher TCS sales resulting from higher volume and price
increases on sales of secure credit cards of $3.4 million and phone cards of
$2.4 million, and $0.2 million in higher PSDM orders. These increases were
partly offset by lower SPS sales of $1.6 million primarily attributable to $2.4
million in lower sales due to a reduction in electronic print volumes resulting
from the cancellation of low and negative margin business, partly offset by a
$0.8 million increase in sales primarily resulting from a higher volume of
orders received on secure government and commercial print.

COST OF GOODS SOLD

Cost of goods sold for the nine months ended September 30, 2004 increased $4.3
million or 5.5% as compared to the corresponding period of 2003, with an
increase in gross margins of $8.5 million. The impact of exchange rate
appreciation accounts for increased cost of goods sold of $4.0 million and
increased gross margins of $1.4 million. The effect of exchange rate
appreciation by country on cost of goods sold and gross margins, respectively
was as follows: Brazil - $3.0 million and $1.2 million, France - $1.0 million
and $0.1 million and Argentina - nil and $0.1 million.

In constant dollars, cost of goods sold increased by $0.3 million when compared
to 2003, primarily due to the increase in sales discussed above, and a shift in
product mix towards higher margin products, the elimination of low and negative
margin contracts (most notably in Brazil), and the reduction of fixed expenses
at ABN resulting from plant and labor consolidations. As a result, gross margins
in constant dollars increased by approximately $7.1 million when compared to the
prior year. The net increase in cost of goods sold in constant dollars is
discussed in detail by subsidiary below.

As a percentage of sales, cost of goods sold decreased to 70.4% in 2004 as
compared to 74.9% in 2003. A comparison of the percentage of cost of goods sold
by each of the Company's geographic locations to the prior year is as follows:

                                                      Nine Months Ended
                                                        September 30,
                                                   2004               2003
                                               -------------     -------------

   Brazil                                           70.1%            75.1%
   United States                                    63.0%            69.1%
   Argentina                                        61.1%            58.4%
   France                                           88.3%            85.4%

Cost of goods sold at ABNB in Brazil decreased by $0.6 million from 2003, with
an increase in gross margins of $5.0 million. Cost of goods sold as a percentage
of sales decreased by 5.0% when compared to 2003. The decrease in cost of goods
sold in constant dollar terms was primarily attributable to the favorable change
in product mix resulting from increased sales of higher margin TCS secure bank
card and phone card sales and SPS secure government and commercial print
products and the elimination of low or negative margin contracts on SPS
electronic print orders. These decreases in cost of goods sold were partly
offset by higher fixed costs primarily attributable to increased maintenance,
salaries and communication costs with respect to SPS driver's license, secure
government and commercial print, and electronic print and PSDM products, and
additional maintenance required on the TCS phone card chemical lines.


                                       19

<PAGE>

Cost of goods sold at ABN increased by $0.9 million and gross margins increased
by $2.0 million when compared to the prior year, primarily resulting from the
increase in sales and lower fixed costs. Despite the increase in revenue, cost
of goods sold as a percentage of sales decreased by approximately 6.1% when
compared to the prior year, primarily due to the full year effect of lower fixed
costs resulting from the consolidation of ABN's Philadelphia operation into its
Tennessee facility in 2003 (See Note E to the Company's Consolidated Financial
Statements provided herein for further information).

In Argentina, cost of goods sold at Transtex was approximately $1.2 million
higher than in 2003, with an increase in gross margins of $0.6 million,
primarily as a result of increased sales. Cost of goods sold as a percentage of
sales increased by 2.7% over the prior year. This increase was primarily due to
a higher volume of cards produced at lower prices, along with an increase in raw
material costs.

At CPS in France, cost of goods sold decreased by approximately $1.2 million
when compared to 2003 resulting in a decrease in gross margins of $0.5 million,
primarily due to lower sales. As a percentage of sales, cost of goods sold
increased by approximately 2.9% from 2003 primarily due to higher costs as a
result of the requirement from the banks that CPS purchase the non-personalized
base stock transaction card and pass the cost along to the bank and an increase
in fixed costs for security, quality control and inventory management. In
addition, the increase in costs of goods sold as a percentage of sales was
further impacted by the inability of CPS to further reduce its fixed costs
despite the reduction in sales volume, principally due to the loss of its phone
card business.

SELLING AND ADMINISTRATIVE EXPENSES

Selling and administrative expenses increased by $2.3 million when compared to
2003. Exchange rate appreciation resulted in increases in such expenses of
approximately $0.5 million, resulting from exchange rate appreciation increases
of $0.4 million in Brazil and $0.1 million in France. As a result, the net
increase in selling and administrative expense from the prior year in constant
dollars was $1.8 million. In constant dollars, ABNB's selling and administrative
expenses increased by $1.1 million due to a provision established in the third
quarter of 2004 for certain disputed accounts receivable from a government
customer. In addition, administrative expenses were higher due to increases in
wages and social charges, a bonus provision resulting from improved operating
results, higher rent and moving costs for a new office location and a provision
established in 2004 for a series of potential labor disputes. Selling expenses
were higher in 2004 as a result of increased sales, partly offset by penalties
paid to a customer in 2003. In France, selling and administrative expenses
increased by $0.1 million resulting from an increase in headcount in order to
develop and expand export sales. In Argentina, selling and administrative
expenses increased by $0.2 million, primarily due to an increase in wages and
social charges, and a bonus provision resulting from the improved operating
results. In addition, Parent expenses were $0.4 million higher primarily due to
an increase in legal fees to defend certain actions, most notably the Lithuania
claim (see Legal Proceedings for further information) and an increase in the
bonus provision resulting from improved operating results. These increases were
partly offset by a $0.1 million decrease at ABN due to a net reduction in
personnel. Selling and administrative expenses as a percentage of sales were
higher at 15.1 % in 2004 as compared to 14.8% in 2003.

RESTRUCTURING

The restructuring charge of $0.5 million in the first nine months of 2003
represented severance payments to employees in connection with ABN's decision to
close its Philadelphia plant and consolidate all of its manufacturing operations
into its Tennessee facility. (See Note E to the Company's Consolidated Financial
Statements provided herein for further information).


                                       20

<PAGE>

GOODWILL AND ASSET IMPAIRMENT

The positive variance in goodwill and asset impairment in 2003 represented a
recovery of $1.1 million resulting from the favorable settlement of ABN's lease
with the landlord of its idle Chicago facility in October 2003. As a result of
the settlement, ABN remeasured its obligation under the lease, and in the third
quarter of 2003 recorded a recovery of a previous impairment provision of
approximately $1.1 million. The previous impairment provision was established in
the fourth quarter of 2002 based upon the present value of annual lease payments
to the landlord net of estimated sublease income. (See Note F to the Company's
Consolidated Financial Statements provided herein for further information).

DEPRECIATION EXPENSE

Depreciation and amortization expense for the first nine months of 2004 was $0.9
million higher when compared to the first nine months of 2003. Exchange rate
appreciation accounted for approximately $0.4 million of this increase,
resulting in a net increase of $0.5 million in constant dollars. This increase
was primarily related to additional depreciation expense at ABNB and to a lesser
extent ABN and CPS, resulting from an increase in capital expenditures for
assets placed in service in 2004 and the latter part of 2003.

INTEREST EXPENSE

Interest expense was approximately $0.6 million higher when compared to 2003.
This increase resulted primarily from the accrued pay in kind interest on the
Parent's Senior Notes, which mature on January 31, 2005 (See "Liquidity and
Capital Resources" for further information).

GAIN ON POST-RETIREMENT SETTLEMENT

The $1.4 million non-cash gain with respect to the Parent's Serp represents the
actuarial gain resulting from the settlement with the Company's former Chairman
and CEO, Morris Weissman (See Note H Gain on Post-Retirement Settlement).

GAIN ON SALE OF ARCHIVES

In August 2004, ABN sold, in a one-time private sale, certain archival materials
outside the ordinary course of business for $3.0 million, net of expenses,
resulting in a gain in the same amount.

GAIN ON SENIOR NOTE REPURCHASE

In September 2004, through privately negotiated transactions the Parent
purchased $0.9 million face amount of Senior Notes for an aggregate purchase
price of $0.6 million, resulting in a gain of $0.3 million reflecting the
difference between the face amount and the purchase price. (See "Liquidity and
Capital Resources" for further information").

In 2003, through privately negotiated transactions, the Parent purchased $6.3
million face amount of Senior Notes for an aggregate purchase price of $2.9
million. The Parent recorded a gain for the nine months ended September 30, 2003
of approximately $3.4 million on the repurchase of these Senior Notes reflecting
the difference between the face amount and the purchase price. (See "Liquidity
and Capital Resources" for further information).

OTHER, NET

Other net income increased by approximately $1.2 million when compared to 2003,
primarily resulting from a $0.4 million gain on the sale of ABN's Philadelphia
plant in January 2004, a $0.6 million sale by ABN of certain idle currency
equipment which was impaired in prior years, an increase of $0.3 million of


                                       21

<PAGE>

interest income in Brazil, and an increase of $0.3 million in foreign currency
transaction gains in Argentina. These net increases were partly offset by the
reversal in the third quarter of 2003 of $0.8 million of the remaining
pre-petition liabilities which were determined to no longer be disputed by
creditors in the Chapter 11 proceedings as compared to a $0.4 million reversal
of such liabilities in the comparable period of 2004, which resulted in a net
decrease of $0.4 million.

BANKRUPTCY COSTS

Bankruptcy costs were $0.3 million in 2003, and represented the wind down of
administrative costs which were reasonable and customary to complete the
reorganization process. Any further potential costs in 2004 related to the
October 2002 consummated Plan are not expected to be material.

TAXES ON INCOME

Taxes on income are calculated using the effective tax rate for each tax
jurisdiction and various assumptions such as state and local taxes and the
utilization of foreign taxes in the U.S. The effective tax rate is further
adjusted for any permanent differences between the book basis and tax basis of
assets and liabilities. In addition, the Company has provided a valuation
allowance against its U.S. net operating losses and other U.S. deferred tax
assets due to the uncertainty as to the realization of U.S. taxable income in
the future.

MINORITY INTEREST

Minority interest represents the 22.5% minority interest in ABNB held by
Bradesco Vida e Previdencia S.A., a subsidiary of the Bradesco Group.


                                       22

<PAGE>

COMPARISON OF RESULTS OF THE THIRD QUARTER ENDED SEPTEMBER 30, 2004 WITH THE
THIRD QUARTER ENDED SEPTEMBER 30, 2003

SALES

Sales in the third quarter of 2004 increased by $3.8 million or 10.0% from the
third quarter of 2003. Net exchange rate devaluation resulted in decreased net
revenues of approximately $0.2 million, resulting from decreases of $0.4 million
attributable to Brazil and $0.1 to Argentina, partly offset by exchange rate
appreciation increases of $0.3 million in France. After giving effect to
exchange rate devaluation, sales increased by $4.0 million in constant dollars,
as a result of higher sales in Brazil of $2.8 million, Argentina of $0.4
million, and the United States of $1.5 million, partly offset by lower sales in
France of $0.7 million. The net increase in sales in constant dollars is
discussed in detail by subsidiary below.

The increase of $1.5 million in sales in the United States was due to a net
increase in SPS sales at ABN of secure, commercial, and government print of $1.4
million primarily attributable to higher volumes sold in state title and vital
record sales of $0.7 million, as well as $0.7 million of foreign passport sales
in the third quarter of 2004 compared to no foreign passport sales in the prior
year quarter. In addition, stock and bond certificate sales increased by $0.1
million. While stock and bond certificate sales slightly increased when compared
to the prior year, management believes the continued trend toward next day
settlement, the overall slow growth in the financial markets and the decreasing
overall demand for secure paper-based documents of value that are used in the
public and private sector will continue to have a negative effect on the mix of
sales and gross margins at ABN.

At Transtex, TCS sales increased by $0.4 million. The increase was primarily due
to a higher volume of orders placed in 2004, particularly on prepaid telephone
cards, bank cards and non-secure commercial loyalty cards. These volume
increases were partly offset by competitive price decreases, particularly in
bank cards. Despite the continued improvement in sales at Transtex, there is no
assurance that this trend will continue as the Argentine political and economic
environment remain unsettled, credit markets continue to remain highly volatile,
and the overall trend in card usage remains uncertain.

In France, the decrease of $0.7 million in TCS sales at CPS was principally due
to the $1.1 million loss of its phone card business to a global tender as well
as a $0.2 million decrease in non-secure commercial loyalty card personalization
resulting from volume decreases from major customers. These decreases were
partly offset by $0.6 million in higher sales on bank cards resulting from the
addition of new bank customers.

Sales at ABNB in Brazil were $2.8 million higher than in 2003. The net increase
is attributable to higher TCS sales of $2.1 million resulting from higher
volumes and price increases on sales of phone cards of $1.9 million and secure
credit cards of $0.2 million, and higher SPS sales of $0.9 million resulting
from increased electronic print volumes at higher margins. These increases were
partly offset by lower PSDM sales of $0.2 million primarily attributable to a
reduction in customer orders.

COST OF GOODS SOLD

Cost of goods sold in the third quarter of 2004 decreased $0.9 million or 3.3%
from the third quarter of 2003, with an increase in gross margins of $2.9
million. The impact of net exchange rate devaluation accounts for decreased cost
of goods sold of $0.1 million and decreased gross margins of approximately $0.1
million. The effect on cost of goods sold and gross margins, of net exchange
rate devaluation, by country, was as follows: Brazil - $0.3 million and $0.1
million; Argentina - $0.1 million and nil, partly offset by exchange rate
appreciation in France of $0.3 million and nil.


                                       23

<PAGE>

After giving effect to the exchange rate devaluation, cost of goods sold in
constant dollars increased by $1.0 million from the third quarter of 2003,
primarily resulting from the $4.0 million increase in sales discussed above, a
favorable shift in product mix towards higher margin products, the elimination
of low and negative margin contracts (most notably in Brazil) and the reduction
of fixed expenses at ABN resulting from plant and labor consolidations. As a
result, gross margins in constant dollars increased by approximately $3.0
million when compared to the prior year. The net increase in cost of goods sold
and the resulting effect on gross margins in constant dollars is discussed in
detail by subsidiary below.

As a percentage of sales, cost of goods sold decreased to 69.1% in 2004 as
compared to 73.7% in 2003. A comparison of the percentage of cost of goods sold
by each of the Company's geographic locations to the prior year is as follows:

                                                     Third Quarter Ended
                                                        September 30,
                                                   2004               2003
                                               -------------     -------------

   Brazil                                          69.0%             73.2%
   United States                                   61.9%             68.0%
   Argentina                                       61.1%             60.4%
   France                                          85.4%             87.2%

Cost of goods sold at ABNB in Brazil increased by $0.8 million from 2003, with
an increase in gross margins of $2.0 million. Cost of goods sold as a percentage
of sales decreased by 4.2% when compared to 2003 primarily attributable to the
favorable change in product mix resulting from increased sales of higher margin
TCS secure bank card and phone card sales and the elimination of low and
negative margin contracts on SPS electronic print orders. The increase in cost
of goods sold in constant dollar terms was primarily attributable to the
increase in sales discussed above. In addition, there were higher fixed costs
primarily attributable to increased maintenance, salary and communication costs
with respect to SPS driver's license sales.

Cost of goods sold at ABN increased by $0.6 million from 2003 with an increase
in gross margins of $0.9 million when compared to the prior year. Cost of goods
sold as a percentage of sales, decreased by approximately 6.1%, when compared to
the prior year, primarily due to the full year effect of lower fixed costs
resulting from the consolidation of ABN's Philadelphia operation into its
Tennessee facility in 2003 (See Note E to the Company's Consolidated Financial
Statements provided herein for further information).

In Argentina, cost of goods sold at Transtex was approximately $0.3 million
higher than in 2003, with an increase in gross margins of $0.1 million,
primarily due to increased sales. As a percentage of sales, cost of goods sold
increased by 0.7% over the prior year primarily due to a higher volume of cards
produced at lower prices, along with an increase in raw material costs. In light
of the severe ongoing economic crisis in Argentina, there is no guarantee that
this improved trend in gross margins will continue.

At CPS in France, cost of goods sold decreased by approximately $0.7 million
when compared to 2003 with no change in gross margins, primarily due to lower
sales and a favorable change in product mix. Cost of goods sold as a percentage
of sales decreased by approximately 1.8% from 2003, primarily due to a decrease
in fixed costs for facility supplies and maintenance.


                                       24

<PAGE>

SELLING AND ADMINISTRATIVE EXPENSES

Selling and administrative expenses increased by approximately $1.1 million for
the third quarter of 2004 when compared to the third quarter of 2003. Exchange
rate variation was not a factor. ABNB's selling expenses increased by $0.8
million as a result of higher sales as well as a provision established for a
potential uncollectible accounts receivable resulting from an ongoing dispute
with a government customer and a provision established for a series of potential
labor disputes. In addition, ABNB's administrative expenses increased by $0.1
million due to higher wages and social charges, partly offset by lower
professional fees. In Argentina, selling and administrative expenses increased
by $0.1 million primarily due to an increase in wages and social charges. At CPS
in France, selling and administrative expenses were $0.1 million higher from the
addition of a salesperson in order to develop and expand export sales.
Administrative expenses at all other locations were approximately the same when
compared to the third quarter of 2003. As a percentage of sales, selling and
administrative expenses were comparatively higher (15.6% in 2004 versus 14.4% in
2003).

DEPRECIATION EXPENSE

Depreciation and amortization expense for the third quarter of 2004 was $0.2
million higher when compared to the third quarter of 2003. Exchange rate
variation was not a factor. This increase was primarily related to the
additional depreciation expense at ABNB resulting from an increase in capital
expenditures for assets placed in service in 2004 and the latter part of 2003.

RESTRUCTURING

The restructuring charge of $0.1 million in the third quarter of 2003 represents
the balance of severance payments made to ABN employees in connection with the
close of ABN's Philadelphia plant and the further consolidation of its
manufacturing operation into its Tennessee location. (See Note E to the
Company's Consolidated Financial Statements provided herein for further
information).

GOODWILL AND ASSET IMPAIRMENT

Goodwill and asset impairment in 2003, represented a recovery of $1.1 million
resulting from the favorable settlement of ABN's lease with the landlord of its
idle Chicago facility in October 2003. As a result of the settlement, ABN
remeasured its obligation under the lease and in the third quarter of 2003
recorded a recovery of a previous impairment provision of approximately $1.1
million. The previous impairment provision was established in the fourth quarter
of 2002 based upon the present value of annual lease payments to the landlord
net of estimated sublease income. (See Note F to the Company's Consolidated
Financial Statements provided herein for further information).

INTEREST EXPENSE

Interest expense for the third quarter of 2004 was approximately $0.2 million
higher when compared to the third quarter of 2003. This increase resulted
primarily from the increase in accrued pay in kind interest of $0.3 million on
the Parent's Senior Notes which mature on January 1, 2005 (See "Liquidity and
Capital Resources" for further information), partly offset by $0.1 million in
lower interest expense at ABNB due to reduced borrowings for equipment
financing.


                                       25

<PAGE>

GAIN ON SENIOR NOTE REPURCHASE

In the third quarter of 2004, the Parent purchased through privately negotiated
transactions a block of $0.9 million face amount of Senior Notes for an
aggregate purchase price of $0.6 million. The Parent recorded a gain of
approximately $0.3 million on the repurchase of these Senior Notes reflecting
the difference between the face amount and the purchase price in the third
quarter of 2004. (See "Liquidity and Capital Resources" for further
information).

GAIN ON SALE OF ARCHIVES

In August 2004 ABN sold, in a one-time private sale, certain archival materials
outside the ordinary course of business for $3.0 million net of expenses
resulting in a gain in the same amount.

OTHER, NET

Other net income for the third quarter of 2004 decreased by approximately $0.2
million as compared to the third quarter of 2003. This decrease was primarily
due to the reversal in the third quarter of 2003 of $0.8 million of the
remaining pre-petition liabilities which were determined to no longer be
disputed by creditors in the Chapter 11 proceedings as compared to a $0.4
million reversal of such liabilities in the comparable period of 2004 which
resulted in a net decrease of $0.4 million. This net decrease was partly offset
by an increase in interest income at ABNB of $0.1 million and an increase in
foreign currency transaction gains in Argentina of $0.1 million.

BANKRUPTCY COSTS

Bankruptcy costs were $0.2 million in 2003, and represented the wind down of
administrative costs which were reasonable and customary to complete the
reorganization process. Costs in 2004 related to the October 2002 consummated
Plan were not material.

TAXES ON INCOME

Taxes on income are calculated using the effective tax rate for each tax
jurisdiction and various assumptions, such as state and local taxes and the
utilization of foreign taxes in the US. The effective tax rate is further
adjusted for any permanent differences between the book basis and tax basis of
assets and liabilities. In addition, the Company has provided a valuation
allowance against its US net operating losses and other US deferred tax assets
due to the uncertainty as to the realization of US taxable income in the future.

MINORITY INTEREST

Minority interest represents the 22.5% minority interest in ABNB held by
Bradesco Vida e Previdencia S.A., a subsidiary of the Bradesco Group.

LIQUIDITY AND CAPITAL RESOURCES

SUMMARY OF CASH FLOWS. Cash increased by $4.9 million over the first nine months
of 2004 compared to a decrease of $2.8 million over the nine months of 2003. The
positive change in cash flow of $7.7 million between the periods resulted from
the following:

    o    A $4.1 million net increase in cash flow from operating activities
         attributable to a $3.4 million increase in net income after non-cash
         adjustments and a $0.7 million favorable working capital variance. The
         favorable working capital variance was principally attributable to
         higher payables in Brazil and Argentina due to higher levels of
         business activity and favorable inventory variances at CPS in France


                                       26

<PAGE>

         and at ABN. The favorable inventory variance at CPS was attributable to
         its first-time build-up in 2003 of inventory related to the purchase of
         base stock cards for its bank customers as well as a lower inventory
         balance in 2004 due to the loss of its phone card business. The
         favorable inventory variance at ABN was due to the loss of its food
         coupon business. These favorable working capital variances were partly
         offset by the higher level of receivable balances at both Brazil and
         ABN corresponding to increased sales in 2004 as compared to 2003, a
         change in payment terms negotiated with one of ABNB's phone card
         customers and the Parent's payment of its Lithuania settlement
         obligation (refer to LITHUANIA CLAIM in Part II - Other Information).

    o    A $1.6 million net increase in cash flow from investing activities
         principally attributable to $4.2 million of proceeds received at ABN in
         2004 from the sale of assets partly offset by a $2.6 million net
         increase in capital expenditures in 2004. The $4.2 million of proceeds
         received at ABN included $3.0 million from the one-time private sale of
         certain archival materials outside the ordinary course of business,
         $0.7 million from the sale of its Philadelphia facility, and $0.5
         million from the sale of currency equipment. Of the $2.6 million net
         increase in capital expenditures in 2004, $3.1 million and $0.1 million
         of the increase were attributable to Brazil and Argentina,
         respectively, partly offset by a decrease of $0.6 million at ABN.

    o    A $2.2 million net increase in cash from financing activities
         attributable to the Company's use of $2.9 million in the first nine
         months of 2003 to buy back its Senior Notes versus $0.6 million used in
         the comparable period of 2004 as well as the $0.3 million repayment of
         short-term equipment financing in Brazil in 2003 and $0.4 million of
         borrowing by ABN under its working capital facility in 2004, partly
         offset by the $0.4 million repayment in 2004 by CPS in France of its
         working capital facility. In addition, dividends to ABNB's minority
         shareholder increased by $0.4 million.

    o    A $0.2 million net decrease in cash due to the impact of unfavorable
         exchange rate valuation in 2004 as compared to 2003 on cash balances on
         hand.

SHORT-TERM BORROWINGS. At September 30, 2004, the Company's subsidiaries had
outstanding an aggregate of approximately $1.4 million (excluding letters of
credit) under their short-term credit facilities. The Company's domestic
subsidiary, ABN, has a one year $2 million asset-based working capital facility
with a local bank in Tennessee which expired on June 23, 2004 and was extended
for thirty days and subsequently renewed for a one year additional term and
expiring on July 23, 2005 under the same terms and conditions. Under its present
terms, ABN is allowed to borrow at a rate of .75% over the US prime rate for
general working capital and letters of credit purposes. At September 30, 2004,
ABN had used approximately $1.4 million of which $1.1 million under this
facility was for general working capital and $0.3 million was used for
outstanding letters of credit, leaving approximately $0.6 million available for
borrowing. As of November 12, 2004, ABN's line stood at approximately $0.3
million which represented outstanding letters of credit, and it is anticipated
that additional borrowings on the line may be required at various times in 2004
for working capital. The Company's French subsidiary, CPS, had available
approximately $1.3 million at September 30, 2004 under its working capital
credit facility with several different local banks, which allows it to borrow at
an average rate of approximately 3.5%, and is partly collateralized by certain
receivables. At September 30, 2004, CPS had outstanding borrowings under this
facility of approximately $0.2 million, leaving it with approximately $1.1
million available for borrowing. It is anticipated that borrowings under this
facility will be required at various times in 2004.

Long-Term Debt. The Company's long-term debt consists of (i) the $107.0 million
of the Parent's 10 3/8% Senior Notes due January 31, 2005, which accrues
interest in kind and is classified as current, and (ii) $0.7 million of mortgage
indebtedness at ABN.


                                       27

<PAGE>

On July 15, 2004, the Board of Directors approved a resolution to authorize the
Parent to repurchase from time to time, at the discretion of management,
directly or through one or more of its subsidiaries up to $5 million face amount
of its outstanding Senior Notes at a discount to par value in either open market
or privately negotiated transactions.

In the third quarter of 2004, through privately negotiated transactions, the
Parent purchased $0.9 million face amount of Senior Notes for an aggregate
purchase price of $0.6 million resulting in a gain of $0.3 million reflecting
the difference between the face amount and the purchase price. Subsequent face
amount purchases of Senior Notes of $1.5 million were made to date in the fourth
quarter of 2004 for an aggregate purchase price of $1.0 million resulting in a
gain of approximately $0.5 million reflecting the difference between the face
amount and the purchase price.

In 2003, the Parent purchased, through privately negotiated transactions, a
block of $6.3 million face amount of Senior Notes for an aggregate purchase
price of $2.9 million. The Parent recorded a gain of approximately $3.4 million
on the repurchase of these Senior Notes reflecting the difference between the
face amount and the purchase price.

INABILITY TO REPAY DEBT

As a holding company, the Parent is dependent on dividends from its subsidiaries
to repay its Senior Notes and to fund its corporate overhead. Currently, ABN,
ABNB, CPS and Transtex are permitted to pay dividends. Only ABN and ABNB can
reasonably be expected to generate sufficient excess cash flow to fund any
material portion of the Parent's current operating expenses. However, such cash
flows are not currently sufficient to repay the high level of the Parent's
Senior Note indebtedness ($107.0 million principal amount at September 30, 2004)
while at the same time fund the Parent's corporate overhead. Further, the
Company is not currently able to obtain additional capital or borrow additional
funds. Therefore, the Company has determined that it will be unable to repay the
Senior Notes upon the January 31, 2005 maturity date. Accordingly, it is
virtually certain that the Company will undergo further restructuring, through a
negotiated transaction with holders of the Senior Notes, bankruptcy protection,
or a partial or total liquidation. As a result, the Parent is presently working
toward a restructuring plan to propose to the holders of the Senior Notes that
reduces its total indebtedness to a level that can be adequately serviced and
eventually repaid. However, we cannot assure that the Parent will be able to
reach a satisfactory agreement with the holders of the Senior Notes, or that it
will be able to satisfy its obligations under any such agreement. Due to the
severe cash flow constraints described above, it is the Parent's intention to
continue to pay "in kind" the semi-annual interest payments on the Senior Notes
in lieu of cash interest.

Based upon the foregoing, the Parent has engaged an independent valuation
advisor and counsel with restructuring expertise to work with the Company to
propose and negotiate a consensual restructuring of the Parent's capital
structure, including its Senior Note indebtedness, which will likely require a
bankruptcy court proceeding.

However, because each of the Parent's subsidiaries is a self-funded stand-alone
entity, it is anticipated that each subsidiary will continue to operate its
business in the normal course, on a stand-alone basis, irrespective of any
restructuring of the Parent. See the Company's Annual Report on Form 10-K for
the year ended December 31, 2003 for further disclosure relating to these risks.

The Company has significant operations in Brazil, Argentina and France. On a
consolidated basis, these operations experienced significant foreign exchange
rate fluctuations against the US Dollar in 2003. Foreign exchange rate
fluctuations on a comparative basis continued to exist in the nine months and
third quarter of 2004 when compared to the same period in 2003.


                                       28

<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q, under the caption, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in
certain documents incorporated by reference herein constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act"). Such forward-looking statements involve unknown and
uncertain risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements are identified by the use of forward looking words or phrases such as
"anticipates," "intends," "expects," "believes," "estimates," or words or
phrases of similar import. These forward-looking statements are subject to
numerous assumptions, risks, and uncertainties, and the statements looking
forward beyond 2004 are subject to greater uncertainty because of the increased
likelihood of changes in underlying factors and assumptions. Actual results
could differ materially from those anticipated by the forward-looking
statements. Such factors are more fully described in the Company's Annual Report
on Form 10-K for the year ended December 31, 2003, which should be considered in
connection with a review of this quarterly report.


                                       29

<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

FOREIGN OPERATIONS AND FOREIGN CURRENCY

The Company has significant operations in Brazil, Argentina and France. On a
consolidated basis, these operations experienced significant foreign exchange
rate fluctuations against the US Dollar in 2003. Significant foreign exchange
rate fluctuations on a comparative basis continued to exist in the nine months
and third quarter of 2004, when compared to the same periods in 2003.

The Company's foreign exchange exposure policy generally calls for selling its
domestic manufactured product in US Dollars and, in the case of ABNB, Transtex
and CPS, selling in their national currencies, in order to minimize transactions
occurring in currencies other than those of the originating country. For the
nine months ending September 30, 2004, the Company experienced an average
exchange rate appreciation in the Brazilian and Argentine currencies of
approximately 5.5% and 1.0%, respectively, against the US Dollar when compared
to the prior year. The Euro currency experienced an average appreciation of
approximately 10% against the US Dollar during the same period.

For the third quarter ended September 30, 2004, the Company experienced an
average exchange rate devaluation of approximately 1.5% in Brazil and
approximately 4% in Argentina, respectively. The Euro currency experienced an
average appreciation of approximately 8% during the same period.

The Brazilian Real has experienced, and continues to demonstrate, tremendous
volatility against the US Dollar. The average exchange rate for the nine months
ended September 30, 2004 was R$2.97 to the US Dollar. As of November 4, 2004,
the Real had strengthened to R$2.83 to the US Dollar. However, at certain times
in 2003, the Real traded as poorly as R$3.80 to the US Dollar, and at certain
times in 2004, the Real has traded at nearly $3.20 to the US Dollar. Given such
volatility, there can be no assurance that the Real will either improve or
stabilize at any certain level against the US Dollar.

ABNB is the Parent's largest subsidiary, contributing in the nine months ended
September 30, 2004, approximately 70% of the revenues and approximately 84% of
the operating profit of the consolidated group (excluding Parent company
expense). This share has grown as a percentage of the Company's total revenues
and operating profit in 2004 with the deconsolidation of LM. The Real's
approximately two-thirds overall devaluation since it was permitted to trade
freely in 1999 (prior to which the Real had a fixed relationship to the US
dollar and traded at approximately R$1 to the Dollar) has severely impacted
ABNB's cash flow in US Dollar terms, and has therefore threatened its ability to
pay dividends to the Parent at the same levels as in the past. Based on current
estimates, it is anticipated that dividends from ABNB (along with those of other
subsidiaries) will be sufficient to fund the Parent's operating expenses in the
foreseeable future. There can be no assurance, however, that further devaluation
of the Real or other business developments will not lead to a contrary result.


ITEM 4.  CONTROLS AND PROCEDURES

Based on their evaluation of the Company's disclosure controls and procedures as
of a date within 90 days of the filing of this report, the Chief Executive
Officer and Chief Financial Officer have concluded, subject to the following
paragraph, that such controls and procedures are effective. There were no
significant changes in the Company's internal controls or in other factors that
could significantly affect such controls subsequent to the date of their
evaluation.

The Company's management, including the Parent's Chief Executive Officer and
Chief Financial Officer, have concluded that the Company's disclosure controls
and procedures, though effective, are not guaranteed to prevent all error and
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control


                                       30

<PAGE>

system are met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any system of controls is also based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any control will succeed in achieving its stated goals
under all potential future conditions. Over time, a control may become
inadequate because of changes in conditions, or the degree of compliance with
the policies or procedures related to the control may deteriorate. Because of
the inherent limitations in a cost-effective control system, misstatements due
to error or fraud may occur and not be detected.


                                       31

<PAGE>

PART II -OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

On December 8, 1999 (the "Petition Date"), the Parent (but none of its
subsidiaries) filed a petition for reorganization relief under Chapter 11 of the
United States Bankruptcy Code. On that date, the Parent also filed its initial
plan of reorganization which set forth the manner in which claims against and
interests in the Parent would be treated following its emergence from Chapter
11. Only the Parent filed a petition for reorganization relief under Chapter 11.
None of the Parent's subsidiaries were a party to the Chapter 11 Proceeding or
any other insolvency or similar proceeding.

The Parent's plan of reorganization was subsequently amended four times and on
May 24, 2002, the Parent submitted its Final Disclosure Statement with respect
to its proposed Fourth Amended Reorganization Plan to the Bankruptcy Court. On
August 22, 2002, the Bankruptcy Court confirmed the Plan. On October 1, 2002,
the Effective Date, all conditions required for the consummation of the Plan
were achieved and the Plan became effective.

On January 29, 2003, in accordance with the standard procedures of the
Bankruptcy Court, the Parent filed final omnibus objections to expunge any
claims that it believes have no basis or merit. The Parent's objections included
objections to claims that were duplicative, inconsistent with the Company's
books and records, untimely, already satisfied or resolved under the Plan, or
otherwise without merit. The Bankruptcy Court will consider the Company's
objections to the proofs of claim, and any responses by the affected claimants
thereto, at a hearing scheduled on December 2, 2004, or on such other adjourned
dates as may be scheduled by the Bankruptcy Court. The Company has reinstated
all known creditor claims that were recorded as pre-petition liabilities net of
any negotiated settlements.

LITHUANIA CLAIM

In October 2003, the Parent notified the Bank of Lithuania, ("Lithuania"), that
it would not make its scheduled installment settlement payment of $0.5 million
due October 1, 2003 due to its cash flow constraints. The payment was part of a
remaining $1.7 million settlement obligation between the Parent and Lithuania
that was entered into the Bankruptcy Court and became effective upon the October
1, 2002 consummation of the Plan. Both parties initially entered into a
discussion in an attempt to restructure the balance of the obligation to avoid
further litigation. However, counsel for Lithuania indicated that the Parent's
initial proposal was unacceptable and issued a notice of default. As a result of
the default, the entire $1.7 million obligation was recorded as a current
liability in accounts payable and accrued expenses at December 31, 2003 and
continued to accrue default interest at the prevailing rate. On May 21, 2004,
the United States District Court, Southern District of New York granted summary
judgment in favor of Lithuania ordering the Parent to pay $1.7 million, which
was the outstanding principal, plus the related interest thereon. On August 31,
2004, the Parent paid the $1.7 million principal plus accrued interest to the
Bank.

ANATEL FINE

On September 22, 2004, the Brazilian Telecommunications Commission ("Anatel"),
levied a $0.8 million fine against ABNB, citing ABNB's failure to comply with
new product material specifications in connection with inductive phone cards
that are sold to the local telephone company. ABNB has reviewed the claim with
legal counsel and believes that it has meritorious defenses against the
assessment.


                                       32

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) EXHIBIT NUMBER                 DESCRIPTION

         Exhibit 99.1*         CEO Certification Pursuant to Section 302 of the
                                    Sarbanes-Oxley Act of 2002.

         Exhibit 99.2*         CFO Certification Pursuant to Section 302 of the
                                    Sarbanes-Oxley Act of 2002.

         Exhibit 99.3*         CEO Certification Pursuant to Section 906 of the
                                    Sarbanes-Oxley Act of 2002.

         Exhibit 99.4*         CFO Certification Pursuant to Section 906 of the
                                    Sarbanes-Oxley Act of 2002.

* Filed herewith


     (b) NONE


                                       33

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                            AMERICAN BANKNOTE CORPORATION

                                            By: /s/ Steven G. Singer
                                            ------------------------------------
                                            Steven G. Singer
                                            Chairman and Chief Executive Officer



                                            By: /s/ Patrick J. Gentile
                                            ------------------------------------
                                            Patrick J. Gentile
                                            Executive Vice President
                                               and Chief Financial Officer

Dated: November 15, 2004


                                       34




<PAGE>





                                    EXHIBIT E
                                       TO
          AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
         PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

                                    _______


                              LIQUIDATION ANALYSIS


<PAGE>


                         AMERICAN BANKNOTE CORPORATION
                          LIQUIDATION ANALYSIS SUMMARY

                                                                     RECOVERIES
                                           RECOVERIES               HYPOTHETICAL
                                         CURRENT PLAN(%)            CHAPTER 7(%)
                                         ---------------------------------------

Administrative Claims                        100.00%                   100.00%
Priority Tax Claims                          100.00%                   100.00%
Class 1 (Other Priority Claims)              100.00%                   100.00%
Class 2 (Miscellaneous Secured Claims)       100.00%                   100.00%
Class 3 (Note Claims)                         95.00%                    72.00%
Class 4 (Note Convenience Claims)            100.00% (note)/            72.00%
                                              60.00% (cash)
Class 5 (Miscellaneous Unsecured Claims)     100.00%                     0.00%
Class 6 (SERP Claims)                        undetermined                0.00%
Class 7 (Equity Interests)                   Approx. $0.63 per share     0.00%
Class 8 (De Minimis Equity Holders)          Approx. $0.63 per share     0.00%
Class 9 (Other Equity Interests)               0.00%                     0.00%

<PAGE>
<TABLE>

                                          AMERICAN BANKNOTE CORPORATION
                                              LIQUIDATION ANALYSIS
                                                 (In thousands)
<CAPTION>
                                                                    31-Dec-04       Estimated        Estimated
                                                                    Estimated      Liquidation        Recovery
                                                                     Balance    Proceeds/Recovery        %
                                                                   ------------    ------------     ------------
<S>                                                                <C>
PROCEEDS FROM LIQUIDATION

Cash                                                                       140             140              100%
Prepaid expenses and other current assets                                  288              --                0%
Property, plan and equipment                                                16               2               13%
Investment in subsidiaries                                             113,000          90,400               80%
Other assets and deferred charges                                          978             140               14%
                                                                   ------------    ------------     ------------
     Gross Assets Available for Distribution                           114,422          90,682               79%
                                                                   ------------    ------------     ------------

ALLOCATION OF PROCEEDS

Secured Claims
10 3/8% Senior Note Claims                                             107,673          77,215               72%
                                                                   ------------    ------------     ------------
     Total Secured Claims                                              107,673          77,215               72%
                                                                   ------------    ------------     ------------

Proceeds available for payment of Unsecured Claims & Interests                               0               0%

----------------------------------------------------------------------------------------------------------------
Proceeds available for payment of
administrative and priority claims                                                      13,467
----------------------------------------------------------------------------------------------------------------

Chapter 7 Liquidation Costs
Trustee and professional fees (based on gross proceeds)                  8,712           8,712              100%
Winddown costs - 6 months                                                3,255           3,255              100%
                                                                   ------------    ------------     ------------
     Total Chapter 7 Liquidation Costs                                  11,967          11,967              100%

Chapter 11 Administrative and Priority Claims
Chaper 11 and 7 Accrued Professional Fees                                1,500           1,500              100%
                                                                   ------------    ------------     ------------
     Total Chapter 11 & 7 Administrative & Priority Claims               1,500           1,500              100%


</TABLE>

<PAGE>
A. FOOTNOTES TO LIQUIDATION ANALYSIS

     1.   Cash

     Cash consists of all cash in banks or operating accounts and liquid
investments with maturities of three months or less and is assumed to be fully
recoverable.


     2.   Prepaid Expenses And Ohter Current Assets

     Prepaid expenses and other current assets of $0.3 million consists of
prepaid liability insurance and other miscellaneous assets. These assets are
assumed to generate no net proceeds.

     3.   Property, Plant And Equipment

     Property, Plant and Equipment includes fixtures, equipment and leasehold
improvements.

     o    Fixtures and Equipment: Fixtures and Equipment include miscellaneous
          office assets, the value of which was based upon management's review
          of these assets.

     o    Leasehold Improvements: No separate value has been ascribed in
          liquidation to leashold improvements as the value of these
          improvements will either revert to the purchaser or lessor upon the
          sale or rejection of the leases.

     4.   Investments In Subsidiaries

     Investments in Subsidiaries represents the value of the equity ABN holds in
its operating Subsidiaries. Estimates of liquidation value were based upon the
valuation prepared by the Company's financial advisor, adjusted for the assumed
effects of a forced sale atmosphere. Gross estimated proceeds from the
liquidation of stock in the Subsidiaries were then adjusted by (i) taxes which
would be payable upon such a sale, net of the benefit of any net operating loss
carryforwards, and (ii) the impact of minority interests, if any.

     5.   Other Assets And Deferred Charges

     Other Assets and Deferred Charges consist of a minimum pension asset on the
SERP ($0.8 million) and other notes receivable ($0.2 million). The other notes
receivable are expected to be recovered.

     6.   Trustee And Professional Fees

     Trustee fees are estimated at 3.0% of the proceeds available for
distribution (gross liquidation proceeds), or approximately $2.7 million.
Professional fees represent the costs in a Chapter 7 case of attorneys,
accountants, appraisers, investment bankers and other professionals retained by
the trustee, as well as professional costs related to the divestment of
operating subsidiaries. Based upon management's review of the nature of these
costs and the outcomes of similar liquidations, professional fees are estimated
at approximately $6.0 million over the course of the liquidation period, due to
the complication related to the sale of the various operating subsidiaries and
multi-jurisdictional nature of the liquidation.

<PAGE>
     7.   Wind Down Costs

     Wind down costs consist of corporate overhead, occupancy and employee costs
to be incurred during the Chapter 7 liquidatin period. Management assumes that
the liquidation would occur over a six-month period and that such expenses,
costs and overhead would decrease over time. Wind down costs include employee
retention bonuses which are designed to motivate employees and to replace
certain pre-petition employment contracts that will be rejected on a
post-petition basis.

     8.   Chapter 11 Administrative and Priority Claims

     Chapter 11 Administrative and Priority Claims include costs incurred during
the Chapter 11 case, including unpaid professional fees, that are assumed
allowed in the Chapter 7 case.



<PAGE>

                                    EXHIBIT F
                                       TO
          AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
           PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY
                                      CODE

                                    _______


                         PROJECTED FINANCIAL INFORMATION


<PAGE>

                         PROJECTED FINANCIAL INFORMATION

A.       INTRODUCTION

         ABN CAUTIONS THAT NO REPRESENTATION CAN BE MADE AS TO THE ACCURACY OF
THE PROJECTED FINANCIAL INFORMATION OR THE ABILITY TO ACHIEVE THE PROJECTED
RESULTS. MANY OF THE ASSUMPTIONS UPON WHICH THESE PROJECTIONS ARE BASED ARE NOT
DERIVED FROM HISTORICAL RESULTS AND ARE SUBJECT TO SIGNIFICANT ECONOMIC AND
COMPETITIVE UNCERTAINTIES. IT IS LIKELY THAT SOME ASSUMPTIONS WILL NOT
MATERIALIZE BECAUSE OF UNANTICIPATED EVENTS AND CIRCUMSTANCES. ACCORDINGLY, THE
ACTUAL RESULTS ACHIEVED THROUGHOUT THE PROJECTION PERIOD ARE LIKELY TO VARY FROM
THE PROJECTED RESULTS. THE VARIATIONS MAY BE MATERIAL AND ADVERSE.

         The financial projections were prepared by ABN's management and are
based on the accompanying assumptions and should be read in conjunction with
such assumptions.

         The financial projections present, to the best of ABN's knowledge and
belief, the expected financial position, results of operations and cash flows of
ABN for the periods shown. Accordingly, these projections reflect ABN's
judgment, as of the date of this Disclosure Statement, of expected future
operating conditions and future business decisions, which are subject to change.
The assumptions disclosed herein are those that ABN believes are significant to
the projections.

         ABN does not intend to revise the projections to reflect circumstances
existing after the date of this Disclosure Statement or to reflect the
occurrence of unanticipated events. ABN assumes no responsibility to advise
users of the projections about any subsequent changes.

         ALTHOUGH ABN BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE PROJECTIONS,
WHEN CONSIDERED ON AN OVERALL BASIS, ARE REASONABLE IN LIGHT OF CURRENT
CIRCUMSTANCES, NO ASSURANCE CAN BE GIVEN THAT THE PROJECTIONS WILL BE REALIZED.
ABN URGES HOLDERS OF CLAIMS AND INTERESTS TO CONSIDER CAREFULLY THE UNDERLYING
ASSUMPTIONS IN EVALUATING THE PLAN.

B.       SUMMARY OF SIGNIFICANT ASSUMPTIONS

         ABN has developed the Projections (summarized below) to assist both
Creditors and Equity Interest holders in their evaluation of the Plan and to
analyze its feasibility. The financial statements have been shown on a fully
consolidated basis. THE PROJECTIONS ARE BASED UPON A NUMBER OF SIGNIFICANT
ASSUMPTIONS DESCRIBED BELOW. ACTUAL OPERATING RESULTS AND VALUES MAY AND WILL
VARY FROM THOSE PROJECTED.

         1.       Fiscal Years.

                  ABN's fiscal year ends on December 31 of each year.

         2.       Plan Terms And Consummation.

The projections assume an Effective Date of April 15, 2005. The projections also
assume that Allowed Claims and Equity Interests will be treated in accordance
with the treatment provided in the Plan. If the Effective Date of the Plan does
not occur by April 15, 2005, additional bankruptcy expenses will be incurred
until such time as a plan of reorganization is consummated. These expenses could
significantly affect ABN's results of operations and cash flows.

          3.       Assumptions Preceding The Effective Date.

                   As a basis for the projections, management has estimated its
operating results on the basis that for the duration of the Chapter 11 case,
trade vendors will continue to provide ABN and its subsidiaries with goods on
customary terms and credit. A significant reduction in terms for ABN's
subsidiaries could potentially affect the subsidiaries' ability to make
available cash to ABN.

          4.       General Economic Conditions.

                   The projections were prepared assuming that economic
conditions in the markets served by ABN and its subsidiaries do not differ
significantly or deteriorate over the next four years from current economic
conditions. Domestic inflation in revenues and costs are assumed to remain
relatively low. It has been assumed that the foreign exchange rates in the
countries in which ABN's subsidiaries operate will remain relatively stable and
that inflation rates will not have a material impact on the US Dollar
projections. There can be no assurance, however, that a significant change in
exchange rates or general economic climate in the countries where ABN's
subsidiaries operate would not have a material affect on cash available to ABN.

          5.       Revenues.

                   All revenues of ABN are projected at the operating subsidiary
level. As a holding company, ABN does not book any sales or receive direct
revenues from the sale of products and services of its subsidiary companies.

         UNITED STATES. Revenues in 2005 are projected to increase by
approximately 13% from 2004 levels, due to anticipated growth in new products
such as gift cards, secure distribution, reconciliation, print and electronic
print management, rebate and other types of fulfillment programs, and potential
growth in new passport orders that may come to tender in 2005. Revenues are
projected to remain stable thereafter as projected growth from these new product
offerings will be offset by the steep decline in stock and bond sales,
commercial secure gift checks and other secure documents of value.

                                       2

<PAGE>

         BRAZIL. Revenue in 2005 is projected to grow by 6% from 2004 levels,
driven primarily by the continued growth in phone and magnetic cards, driver's
license issuances and electronic print. Revenues are projected to grow in 2006
and 2007 by 17% and 9%, respectively, resulting from the introduction of hybrid
mail revenues and the continued increase in phone and magnetic card growth.

         FRANCE. A revenue increase of 3% each year is driven by continued
modest growth in demand for bank and other financial and loyalty cards.

         ARGENTINA. Revenues in 2005 are projected to remain flat when compared
with 2004 but are projected to increase by 20% and 33%, respectively, in 2006
and 2007 as a plant expansion to increase card production is completed to meet a
projected demand in export card sales.

          6.       Cost Of Goods Sold.

                   Cost of goods sold as a percentage of revenues are expected
to increase slightly by 2.5% between 2004 and 2005 and remain relatively stable
thereafter. Cost of goods as a percentage of revenues are expected to be 70.6%
in 2004, 73.1% in 2005, 73.8% in 2006, and 73.1% in 2007. The increase of this
percentage relates mainly to i) a shift in product mix from the Company's higher
margin, mature businesses to higher volume, lower margin businesses; and ii)
competitive pricing pressures on existing product lines.

          7.       Selling And Administrative Expenses.

                   Selling and Administrative Expenses are expected to decline
from 15.3% in 2004 to 12.4% in 2007 primarily from fixed cost leverage resulting
from projected sales growth.

          8.       Depreciation And Amortization.

                   Depreciation and amortization as a percentage of sales is
projected to be 7.2% in 2004 and is projected to remain steady as a percentage
of sales until 2007 when a decline in depreciation resulting from the complete
depreciation of certain assets in Brazil occurs.

          9.       Interest Expense.

                   Interest expense reflects interest on $10.0 million of the
New Notes at an interest rate of 7% assuming none of the Convenience Note
holders elect the cash option.

          10.      Income Taxes.

                   Income taxes reflect taxes at both ABN and subsidiary level.
Tax rates for each operating entity reflect the tax regime of its country of
operations. At the ABN level, the projections assume that, upon the Effective
Date, Reorganized ABN will be able to utilize net operating loss carryforwards
on a limited basis in accordance with Section 382 L (6) of the Internal Revenue
Code. Deferred tax assets created by the existence of the loss carryforwards
have been partially reserved. The combined US federal, state, and local income
tax rate, before taking into account the benefit from the utilization of tax
loss carryforwards, is estimated at 35%.

                                       3
<PAGE>

          11.      Minority Interest.

                   Reflects the net income related to Banco Bradesco S.A.'s
22.5% interest in the Brazilian operations.

          12.      EBITDA.

                   EBITDA is defined for purposes of the projections as earnings
before interest expense, income tax provisions, depreciation and amortization,
goodwill and asset impairment unusual items, reorganization items, and
extraordinary items.

          13.      Working Capital.

                   Working capital is projected primarily on the basis of
historic patterns, consistent with the patterns during the bankruptcy, applied
to projected levels of operations. It has been assumed that vendor trade terms
remain at normal levels in the post-Effective Date period. Working capital uses
in 2005 are higher than in subsequent years due to the startup of the Hybrid
Mail project in Brazil.

          14.      Capital Expenditures.

                   Capital expenditures are primarily for the purchases of
equipment to drive revenue and cash flow growth consistent with the Company's
operating strategies at the various Subsidiaries. Capital expenditures in 2005
are higher than in subsequent years due to the startup of the Hybrid Mail
project in Brazil

          15.      Dividends / Distributions.

                   The operations of ABN are funded primarily through dividends
and distributions from its various operating subsidiaries, including its
Brazilian subsidiary. "Dividends/ Distributions" on the consolidated statement
of cash flows reflects payments to Banco Bradesco S.A. on account of its 22.5%
interest in the dividends from ABNB and a potential 5% dividend paid commencing
in 2005 to ABN's reorganized equity holders.

                                       4
<PAGE>

          16.      Reorganization Value.

                   For purposes of this Disclosure Statement and to prepare the
projections, management has estimated the reorganization value of Reorganized
ABN as of December 31, 2004 to be approximately $114 million based upon the
appraisal prepared by its advisors.

C.       SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Except for historical information, statements contained in this
Disclosure Statement and incorporated by reference, including the projections in
this section, may be considered "forward-looking statements" within the meaning
of federal securities laws. Such forward-looking statements are subject to
risks, uncertainties, and other factors that could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, general economic and business conditions, the competitive
environment in which ABN and its Subsidiaries operate and will operate, the
success or failure of ABN in implementing its current business and operational
strategies, the level of vendor trade support, labor relations and labor costs,
the ability of ABN to maintain and improve its revenues and margins, and the
liquidity of ABN on a cash flow basis (including the ability to comply with the
financial covenants of its credit arrangements and to fund capital expenditure
program of ABN Subsidiaries). For additional information about ABN and relevant
risk factors, see "Certain Risk Factors To Be Considered."

                                       5
<PAGE>

D.       FINANCIAL PROJECTIONS

         The financial projections prepared by management are summarized in the
following tables. Specifically, the attached tables include:

         a.       Pro forma consolidated Reorganized ABN balance sheet at
                  December 31, 2004, including all reorganization and
                  fresh-start adjustments.

         b.       Projected consolidated balance sheets for fiscal years ending
                  in 2004, 2005, 2006 and 2007.

         c.       Projected consolidated income statements for fiscal years
                  ending in 2004, 2005, 2006 and 2007.

         d.       Projected consolidated statements of cash flow for fiscal
                  years ending in 2004, 2005, 2006 and 2007.

         All captions in the attached projections do not correspond exactly to
ABN's historical external reporting; some captions have been combined for
presentation purposes.

                                       6
<PAGE>


                               AMERICAN BANKNOTE CORPORATION
                      PRO FORMA CONSOLIDATED REORGANIZED BALANCE SHEET
                                     DECEMBER 31, 2004
                                        (UNAUDITED)
                                       (IN THOUSANDS)

<TABLE>

                                               Estimated                        Restated
                                              December 31, Reorganization     December 31,
                                                2004        Adjustments           2004
                                              -----------  --------------    -------------
<S>                                             <C>           <C>                <C>

ASSETS
Current assets:
   Cash                                        $  13,730        9,400 (b)    $  23,130
   Accounts Receivable                            22,635           --           22,635
   Inventories                                    21,222           --           21,222
   Prepaid expenses and other current assets       6,436           --            6,436
                                               ---------    -------------    -------------
                                                  64,023        9,400           73,422

Goodwill                                          77,016       (6,089)(c)       70,927
Property, Plant and equipment, net                42,040           --           42,040
Other assets and deferred charges, net             8,842           --            8,842
                                               ---------    -------------    -------------
Total Assets                                   $ 191,920    $   3,311        $ 195,232

LIABILITIES AND STOCKHOLDERS'
   EQUITY
Current liabilities:
Current maturities of long-term debt             106,785     (106,757)(a)           28
Payables and accrued expenses                     34,122           --           34,122
                                               ---------    -------------    -------------
                                                 140,907     (106,757)          34,150

Noncurrent liabilities:
Long term debt                                       626       10,023 (a)       10,649
Other liabilities                                  9,645           --            9,645
Minority Interest                                 26,787           --           26,787
                                                                                96,734(a)
                                                                                 9,400(b)
                                                                                (6,089)(c)
                                               ---------    -------------    -------------
Total stockholders equity                         13,955      100,045          114,000
                                               ---------    -------------    -------------
Total liabilities and stockholders' equity .   $ 191,920    $   3,311        $ 195,232
                                               =========    =============    =============


NUMBERS MAY NOT TOTAL DUE TO ROUNDING.


</TABLE>

                                             7
<PAGE>


NOTES TO PRO FORMA CONSOLIDATED REORGANIZED BALANCE SHEET
---------------------------------------------------------

(a)      Reflects the exchange of Senior Note claims for its ratable position of
         newly issued common stock and the exchange of note convenience claims
         for $10 million in new notes.

(b)      Includes $9.4 million net cash generated from the $16 million of exit
         financing less $5 million paid to Class 7 and Class 8 equity holders
         less $1.6 million of projected bankruptcy related fees for
         professional, advertising and printing services rendered.

(c)      Represents the adjustment to goodwill to reflect the $114 million
         appraised value of the reorganized company.

                                       8

<PAGE>


                               AMERICAN BANKNOTE CORPORATION
                           PROJECTED CONSOLIDATED BALANCE SHEETS
                           FISCAL YEARS ENDING 2004 THROUGH 2007
                                        (UNAUDITED)
                                       (IN THOUSANDS)

<TABLE>

                                                       Fiscal Year Ending December 31,
                                                ------------------------------------------
                                                  2004       2005       2006       2007
                                                ---------  ---------  ---------  ---------
<S>                                                <C>       <C>        <C>         <C>
ASSETS
Current assets:
    Cash                                        $ 13,730   $ 10,962   $ 10,022   $  9,614
    Accounts Receivable                           22,635     25,284     28,436     30,780
    Inventories                                   21,222     28,920     33,116     35,835
    Prepaid expenses and other current assets      6,436      6,349      6,349      6,349
                                                --------   --------   --------   --------
                                                  64,023     71,515     77,923     82,578

Goodwill                                          77,016     69,536     69,536     69,536
Property, Plant and Equipment                     42,040     43,422     40,079     39,962
Other assets and deferred charges, net             8,842      8,841      8,841      8,841
                                                --------   --------   --------   --------
Total Assets                                    $191,920   $193,314   $196,379   $200,917
                                                ========   ========   ========   ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current maturities of long-term debt         106,785         28         28         28
    Payables and accrued expenses                 34,122     38,480     42,582     45,408
                                                --------   --------   --------   --------
                                                 140,907     38,508     42,610     45,436

Noncurrent liabilities:
    Long Term Debt                                   626     10,621     10,593     10,565
    Other Liabilities                              9,645      8,765      8,585      8,585
    Minority Interests                            26,787     26,448     26,947     27,951
                                                --------   --------   --------   --------
                                                 177,965     84,342     88,735     92,537


Total Stockholders' Equity                        13,955    108,972    107,644    108,380
                                                --------   --------   --------   --------
Total Liabilities and Stockholders' Equity .    $191,920   $193,314   $196,379   $200,917
                                                ========   ========   ========   ========

NUMBERS MAY NOT TOTAL DUE TO ROUNDING.
</TABLE>
                                             9
<PAGE>


                                  AMERICAN BANKNOTE CORPORATION
                            PROJECTED CONSOLIDATED INCOME STATEMENTS
                                 FISCAL YEARS 2004 THROUGH 2007
                                           (UNAUDITED)
                                         (IN THOUSANDS)

<TABLE>

                                                        Fiscal Year Ending December 31,
                                               ------------------------------------------------
                                                  2004         2005         2006        2007
                                               ----------   ----------   ----------  ----------
<S>                                               <C>        <C>              <C>       <C>

TOTAL REVENUES                                 $ 162,544    $ 164,041    $ 182,952   $ 198,518
COST AND OPERATING EXPENSES
Cost of Goods Sold                               114,796      119,828      134,958     145,034
Selling and Administrative expenses               24,905       21,714       22,011      24,770
Depreciation and Amortization                     11,755       11,729       13,205      10,680
Goodwill impairment                                   --        7,480           --          --
Restructuring                                        159        1,600           --          --
                                               ----------   ----------   ----------  ----------
    OPERATING INCOME                              10,929        1,690       12,778      18,034

Interest expense                                  10,774          772          700         700
Other, Net                                        (7,330)          81           --          --
                                               ----------   ----------   ----------  ----------
    INCOME BEFORE INCOME TAXES                     7,485          837       12,078      17,334
Provision for income taxes                         6,554        6,262        5,577       8,191
                                               ----------   ----------   ----------  ----------
    Income (loss) before Minority Interest           931       (5,425)       6,501       9,143
Minority Interest                                  1,889        1,361        2,199       2,704
                                               ----------   ----------   ----------  ----------
    Income (loss) before discontinued
     operations                                     (958)      (6,786)       4,302       6,439
Discontinued Operations                          (55,952)          --           --          --
                                               ----------   ----------   ----------  ----------
    Net Income/(Loss)                          $  54,994    $  (6,786)   $   4,302   $   6,439
                                               ==========   ==========   ==========  ==========

SUPPLEMENTAL DATA:
EBITDA                                         $  22,843    $  22,499    $  25,983   $  28,714


NUMBERS MAY NOT TOTAL DUE TO ROUNDING
</TABLE>

                                               10
<PAGE>


                                 AMERICAN BANKNOTE CORPORATION
                             CONSOLIDATED STATEMENT OF CASH FLOWS
                                FISCAL YEARS 2004 THROUGH 2007
                                          (UNAUDITED)
                                        (IN THOUSANDS)

<TABLE>

                                                        Fiscal Year Ending December 31,
                                                ---------------------------------------------
                                                    2004        2005        2006        2007
                                                ---------   ---------   ---------   ---------
<S>                                               <C>             <C>       <C>       <C>
OPERATING ACTIVITIES
   Net (loss) income                            $   (958)   $ (7,017)   $  4,302    $  6,440
   Discontinued operations                        55,952          --          --          --
                                                ---------   ---------   ---------   ---------
                                                  54,994      (7,017)      4,302       6,440
                                                ---------   ---------   ---------   ---------
Adjustments to reconcile net (loss) income to
net cash provided by (used for) operating
activities:
   Depreciation and amortization                  11,755      11,729      13,205      10,680
   Goodwill and asset impairment                    (547)      7,480          --          --
   Gain on sale of assets                        (59,379)         --          --          --
   Other non-cash                                 (3,370)         --          --          --
   Accounts Receivable                            (1,427)     (2,649)     (3,152)     (2,344)
   Inventories                                    (3,269)     (7,698)     (4,196)     (3,719)
   Prepaid Expenses                                  557          87          --          --
   Payables and Accrued Expenses                   1,624       4,358       4,102       2,826
   Accrued Interest                                7,899          --          --          --
   Other Liabilities                               1,541        (880)       (180)         --
   Minority Interest                               1,889       1,361       2,199       3,703
                                                ---------   ---------   ---------   ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES         12,267       6,771      16,280      17,586

INVESTING ACTIVITIES
   Capital expenditures                           (7,076)    (13,111)     (9,862)    (10,562)
   Proceeds from asset sales                       4,296          --          --          --
                                                ---------   ---------   ---------   ---------
NET CASH USED IN INVESTING ACTIVITIES             (2,780)    (13,111)     (9,862)    (10,562)

FINANCING ACTIVITIES
   Proceeds from exit financing, net                  --    $ 11,000          --          --
   Net proceeds (repayments) of revolver          (1,420)        (28)        (28)        (28)
   Distributions/Dividends                        (1,514)     (7,400)     (7,330)     (7,404)
   Senior Notes Repurchased                       (2,496)         --          --          --
                                                ---------   ---------   ---------   ---------
NET CASH (USED) PROVIDED BY FINANCING
   ACTIVITIES                                     (5,430)      3,572      (7,358)     (7,432)

INCREASE IN CASH AND CASH EQUIVALENTS              4,057      (2,768)       (940)       (408)
EFFECT OF FX ON CASH                                 804          --          --          --
CASH AND CASH EQUIVALENTS AT BEGINNING OF
     YEAR                                       $  8,869    $ 13,730    $ 10,962    $ 10,022
                                                ---------   ---------   ---------   ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR        $ 13,730    $ 10,962    $ 10,022    $  9,614
                                                =========   =========   =========   =========
</TABLE>


NUMBERS MAY NOT TOTAL DUE TO ROUNDING

                                              11



<PAGE>




                                    EXHIBIT G
                                       TO
          AMENDED DISCLOSURE STATEMENT WITH RESPECT TO DEBTOR'S AMENDED
           PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY
                                      CODE

                                    _______


                              EMPLOYMENT CONTRACTS
<PAGE>


                              EMPLOYMENT AGREEMENT


         THIS AGREEMENT is made and entered into as of the 1st day of April ,
2001 by and between American Banknote Corporation, a Delaware corporation
(hereinafter referred to as the "Company"), and Steven G. Singer, an individual
(hereinafter referred to as the "Executive").

         WHEREAS, the Company wishes to retain the services of the Executive in
the capacities herein set forth, and the Executive wishes to be employed by the
Company in such capacities;

         WHEREAS, by resolution of the Board of Directors dated March 22, 2001
the undersigned directors are authorized to enter into this Employment Agreement
on behalf of the Company;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Executive hereby agree as follows:

         SECTION 1. EMPLOYMENT. The Company hereby employs the Executive, and
the Executive hereby accepts employment with the Company, upon the terms and
conditions hereinafter set forth.

         SECTION 2. TERM. Subject to the provisions for earlier termination
hereinafter set forth, the term of employment hereunder (the "Term") shall
commence on April 1, 2001 and shall continue for a period of three (3) years,
terminating on April 1, 2004. Such three-year period or any subsequent Renewal
Period (as defined below) is referred to herein as the "Employment Period".

         SECTION 3. RENEWAL of Agreement. At the end of any Employment Period,
this Agreement will be automatically renewed for an additional period of two (2)
years (each a "Renewal Period") unless: (i) the Company, by written notice to
the Executive informs the Executive that it will not renew this Agreement or
(ii) the Executive, by written notice to the Company, informs the Company that
he will not renew this Agreement. Such notice shall be provided to the Executive
or to the Company, as the case may be, at least thirty (30) days prior to the
end of the relevant Employment Period.


                                       -1-


<PAGE>


         SECTION 4. COMPENSATION. the Company agrees to provide the Executive
with salary and other benefits and perquisites for all services rendered by the
Executive under this Agreement in accordance with Schedule A attached hereto.

         SECTION 5. DUTIES. During the Term, the Executive shall serve as
Chairman of the Board of Directors and Chief Executive Officer of the Company
and each of its major operating subsidiaries.

         SECTION 6. EXTENT OF SERVICE. During the Term, the Executive shall be
required to devote the equivalent of substantially full-time efforts to the
business and affairs of the Company and its affiliates, and to use his best
efforts to perform faithfully and efficiently his responsibilities hereunder.
Notwithstanding the foregoing, the Company acknowledges that the Executive shall
be entitled, from time to time, to attend to-other, pre-existing and
non-competitive business interests. The Company further agrees to allow
Executive the use of one extra office space at its principal location for the
use of support staff for such other business interests, but all other costs of
such support staff shall be borne solely by Executive.Section 7. TERMINATION OF
EMPLOYMENT.

         SECTION 7.1. The Company may immediately terminate the Executive's
employment at any time during the Employment Period for Cause. For purposes of
this Agreement,- "Cause" shall mean the Executive having engaged, in the written
opinion of independent counsel, in gross misconduct against the Company, which
misconduct has caused substantial injury to the business and affairs of the
Company or an affiliate, monetary or otherwise.

         Section 7.3. NOTICE OF TERMINATION. Any termination by the Company for
Cause shall be communicated by Notice of Termination to the Executive given in
accordance with Section 11.5 hereof. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment hereunder, (ii) provides a copy of the opinion of
independent counsel stating that Cause exists, and (iii) specifies the
termination date.

         SECTION 8. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

         SECTION 8.1. If the Executive's employment is terminated for Cause
during the Employment Period, this Agreement shall terminate without further
obligation by the Company to the Executive under this Agreement other than (a)
the Company shall pay the compensation set forth in Schedule A attached hereto
accrued up to the effective date of such termination, and (b) the Executive



                                       -2-


<PAGE>


shall be permitted to retain and exercise unimpaired any stock options (or any
portion thereof) which shall have vested prior to up to the effective date of
such termination

         SECTION 8.2. If the Executive's employment is terminated for any reason
other than for Cause, if the Company fails to renew this agreement pursuant to
Article 3, or if the Executive shall terminate his employment for Good Reason
(as hereinafter defined), then the Company shall pay to the Executive a lump sum
severance payment in an amount equal to 3 years of the Base Salary in effect on
the date of termination, the Company shall continue to provide all medical,
dental, life and other insurance coverage called for under this agreement for a
period of 3 years from the effective date of such termination, and all stock
options issued to Executive shall immediately become vested -and exercisable.

         SECTION 8.3. The Executive may, at any time upon written notice to the
Company, terminate his employment for Good Reason in the event that the Company
shall at any time during the Employment Period (a) assign him to any position or
duties other than those set forth in Article 5, (b) fail to re-elect him to the
Board of Directors, (c) require the Executive to report to any person or entity
other than the Board of Directors, (d) relocate the Company's corporate offices
to any location other than Manhattan, New York; Westchester County, New York, or
Bergen County, New -Jersey, unless approved in writing by the Executive, or (e)
reduce or otherwise materially alter the Executive's Base Salary, bonus or other
benefits hereunder.

         SECTION 9. COVENANTS OF EXECUTIVE.

         SECTION 9.1 NOTICE OF RETIREMENT, RESIGNATION OR TERMINATION OF
EMPLOYMENT. The Executive agrees that he will not voluntarily retire, resign or
otherwise terminate his employment relationship with Company, except in
connection with a notice given pursuant to Section 3 below, without first giving
the Company at least 120 days' prior written notice of the effective date
thereof.

         SECTION 9.2 EXECUTIVE Cooperation. The Executive agrees to assist and
cooperate with the Company in connection with the defense or prosecution of any
claim that may be made against or by the Company, or in connection with any
investigation or dispute or claim of any kind involving the Company.

         Section 9.3 RIGHTS AND REMEDIES UPON BREACH. The Executive agrees that
any breach of this Agreement would cause irreparable harm to the Company and
that, in the event of such breach, the Company shall have, in addition to all



                                       -3-


<PAGE>


other remedies at law, the right to seek an injunction, specific performance or
other equitable relief to prevent or redress the violation of Executive's
obligations hereunder.

         SECTION 10. Restrictive COVENANTS.

         SECTION 10.1 COMPANY PROPERTY. The Executive agrees that all client,
supplier and distributor lists, client data, financial or other data, computer
software programs, source codes, plans, contracts, agreements, literature,
manuals, catalogs, brochures, books, records, research, charts, maps,
correspondence and other materials furnished to the Executive by the Company or
any of its affiliates, or secured through the efforts of the Executive and
relating to the business conducted by the Company or any of its affiliates, are
and shall remain the property of the Company, and/or its affiliates, and the
Executive agrees to deliver all such materials, including all copies thereof, to
the Company upon the termination of the Executive's employment hereunder, or at
any other time at the Company's request.

         SECTION 10.2 CONFIDENTIALITY. Except for the benefit of the Company or
any of its affiliates, the Executive agrees that the Executive will not at any
time during or after the Executive's employment with the Company use, reveal,
divulge or make known to any person, firm or corporation any trade secrets or
confidential information relating to the business of the Company or any of its
affiliates, and will retain all such knowledge and information in trust in a
fiduciary capacity for the sole benefit of the Company, its affiliates and their
respective successors and assigns. Such information shall include, but is not
limited to: (a) confidential Company, affiliate and customer financial and other
information; marketing strategies and plans, personnel strategies, plans and
information; affiliation strategies and plans; cost and pricing strategies,
plans and data; new product and service offerings; regulatory matters; legal
matters; and internal investigations; (b) client lists, phone numbers,
electronic mail addresses, electronic mail messages (sent and received),
facsimile numbers, call lists, processes, techniques, diagrams, telephone
records, computer software and other data; (c) memoranda, notes, procedural
guidelines, fee and compensation structure, and other technical data of the
Company or its affiliates or their respective clients; (d) trade secrets,
business practices and procedures, research and development data, business,
financial, marketing and economic plans, business models, systems and
methodologies, computer output, program listings, simulated results,
mathematical models, programs, algorithms, numerical techniques1 and elliptical
results, diaries, calendars, and rolodexes of the Company or its affiliates or
their respective clients; and (e) all information pertaining to any assignments
performed for or on behalf of the Company during the course of Executive's
employment.



                                       -4-


<PAGE>



         SECTION 10.3 PROVISIONS SURVIVE TERMINATION OF AGREEMENT. Except as
expressly provided in any other written agreement between the Company and the
Executive the provisions of this Section 10 (and Sections 8, 9 and 11) shall
survive the termination of this Agreement and the Executive's employment with
the Company hereunder.

         SECTION 11. GENERAL.

         SECTION 11.1 SUPERSEDES PRIOR AGREEMENTS. This Agreement supersedes all
prior agreements and understandings between the Executive and the Company or any
of Its affiliates, directors, officers, shareholders, employees, or their
respective attorneys, agents or representatives, and constitutes the entire
Agreement between the parties, respecting the subject matter hereof and there
are no representations, warranties or commitments other than those expressed
herein.

         SECTION 11.2 OTHER AGREEMENTS. The Executive represents and wan-ants to
the Company that the Executive is not a party to or bound by, and the employment
of the Executive by the Company or the Executive's disclosure of any information
to the Company or its utilization of such information will not violate or breach
any, employment, retainer, consulting, license, non-competition, non-disclosure,
trade secrets or other agreement between the Executive and any other person,
partnership, corporation, joint venture, association or other entity.

         SECTION 11.3 AMENDMENT. No modification or amendment of, or waiver
under, this Agreement shall be valid unless in writing and signed by the
Executive and an officer of the Company pursuant to express authority granted by
the Company.

         SECTION 11.4 WAIVER. The waiver by the Company or the Executive of a
breach of any provision of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach.

         Section 11.5 NOTICES. Each notice, request, demand, approval or other
communication which may be or is required to be given under this Agreement shall
be in writing and shall be deemed to have been property given when received
personally at the address set forth below for the intended party during normal
business hours at such address, when received by facsimile or other electronic
transmission at the respective facsimile transmission numbers of the parties set
forth below, or when received by recognized overnight courier or by' United
States registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:


                                       -5-


<PAGE>



         If to the Company:

         American Banknote Corporation
         200 Park Avenue
         New York, New York 10166-4999
         Attn:  Patrick Gentile

         with a copy to:

         Solomon, Zauderer, Ellenhorn, Frischer & Sharp
         45 Rockefeller Plaza, 7k" Floor
         NewYork, New York 10111
         Attn:  Robert L Mazzeo
         Tel:   (212) 956-3700
         Fax:   (212) 9564068


         If to the Executive:

         Steven G. Singer
         10 Loman Court
         Cresskill, New Jersey 07626

         or such other address as he may from time to time designate to the
         Company.

         Notices may be given to such other address or addresses or by way of
such other facsimile transmission number, as a particular party may from time to
time designate by written notice to the other party hereto. Each notice,
request, demand, approval or other communication which is sent in accordance
with this Section shall not be deemed delivered, given and received for all
purposes of this Agreement until actually received by the other party.

         SECTION 11.6 SUCCESSORS; ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the Company and the Executive and their
respective heirs, personal representatives, permitted assignees and successors.
Neither party may assign this Agreement; provided, however, that the Company
may, without the prior consent of the Executive, assign this Agreement to an


                                       -6-


<PAGE>


affiliate or to an entity to which the Company has sold all or substantially all
of its assets. The Company shall obtain an agreement from a successor who
purchases all or substantially all of the assets of the Company to assume and
agree to perform this Agreement.

         SECTION 11.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of laws provisions thereof. The parties agree that the personal
jurisdiction and venue of any action brought under this Agreement shall be in
the state or federal courts located in New York State.

         SECTION 11.8 HEADINGS. The headings in this Agreement are for reference
only and shall not affect the interpretation of this Agreement.

         SECTION 11.9 UNENFORCEAB1E TERMS. In the event any term or provision of
this Agreement shall for any reason be invalid, illegal, or unenforceable in any
respect, this Agreement shall be interpreted and construed as if such term or
provision had never been included herein and the validity and enforceability of
any other provision hereof shall be unaffected thereby.

         Section 11.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one and the same
agreement.

                           [Signature Page to Follow]













                                       -7-


<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.




AMERICAN BANKNOTE CORPORATION:


By:__________________________________________
      C. Gerald Goldsmith
      Chairman Emeritus and Director


By: _____________________________________
      Raymond L. Steele
      Director


EXECUTIVE:



STEVEN G. SINGER

















                                       -8-


<PAGE>


                                   SCHEDULE A
                                       TO
                              EMPLOYMENT AGRE EMENT
           BETWEEN STEVEN G. SINGER AND AMERICAN BAN KNOTE CORPORATION

                                  COMPENSATION

1. Salary. During the Term, the Company shall pay to the Executive a monthly
salary ("Base Salary~) of no less than $32,500. payable in equal installments
twice per month.

2. Salary Increases. On September 1 of each year during the Term, the Board of
Directors shall review the Base Salary for appropriate increases; provided that
in no event will the Board of Directors reduce the Base Salary then in effect.
In the event of any increase in the Base Salary for any reason, the increased
amount shall automatically become the Base Salary.

3. Bonus. In each year during the Term, the Company shall pay to the Executive a
bonus in an amount equal to 50% of the Base Salary at the end of such year,
based upon achieving budgeted annual EBITDA targets. Each year the Compensation
Committee of the Board of Directors shall establish a bonus plan, which plan
shall provide for partial bonus upon partial achievement of EBITDA targets and
excess bonus upon exceeding E BITDA targets. For FY 2001, it is understood that
the following plan was adopted by the Board of Directors:

        ~ 85% of Budgeted EBITDA                        0% of 50% (i.e. 0)
        85 to 90% of Budgeted EBITDA                    25% of 50% (i.e. 12.5%)
        90 to 95% of Budgeted EBITDA                    50% of 50% (i.e. 25%)
        95% to ~100% of Budgeted EBITDA                 75% of 50% (i.e. 37.5%)
        j 000/a to 11 0% of Budgeted EBITDA             100% of 50% (i.e. 50%)
        110% to 120% of Budgeted EBITDA                 125% of 50% (i.e. 52.5%)
        > 120 % of Budgeted EBITDA.                     150% of 50% (i.e. 75%)

3. Other Benefits. The Executive shall be entitled to participate in and receive
the benefits of any and all stock option, pension, retirement, vacation, profit
sharing, health, disability, insurance and other benefit plans, programs and
policies, if any, which may be maintained by the Company from time to time
during the Term, or may elect to receive the cash value thereof in lieu of
participation.

                                       -9-
<PAGE>


4. Life Insurance. In addition to the other benefits and perquisites offered to
key executives of the Company, the Company shall obtain and pay for a life
insurance policy insuring against the death of the Executive in the amount of at
least $1 3000,000 and naming such beneficiaries as the Executive shall designate
from time to time.

5. Automobile. The Company shall provide Executive with a Company-owned or
Company-leased automobile of a make and model appropriate to his level of
employment.

6. Expenses. The Company shall advance to or reimburse the Executive for all
reasonable out-of-pocket expenses incurred in connection with his employment
hereunder, in accordance with Company policy, provided, however, that
notwithstanding any policy to the contrary, all air or rail travel by Executive
may be in First Class.








                                      -10-


<PAGE>


                                                   American Banknote Corporation
                                                                 410 Park Avenue
                                                         New York, NY 10022-4407
                                                                  (212) 593-5700
                                                              FAX (212) 593-9615



January 29, 1999

Patrick Gentile
34 Red Rose Circle
Darren, CT 06820

Dear Pat,

          This letter confirms your compensation and benefits package as of the
date of this letter.

          You will continue to hold the position of Senior Vice President,
Finance and Chief ACCOUNTING Officer of American Banknote Corporation ("ABN"). -
Your present base compensation is SI 85,000 annually, subject to annual reviews
in accordance with Company policy. YOU will continue to participate in the
Company's Executive Incentive and Benefits programs in effect for senior
employees at your level. Your targeted bonus opportunities under Challenge 2000
or a similar based program are benchmarked at 37.5% of your annual base salary
measured against specific corporate financial results, to a maximum of 50% of
base salary if the Company exceeds such results by 120%. In addition, you are
eligible to receive a bonus of 37.5% of your base salary to a maximum of 50%,
depending on whether you meet or exceed your individual performance goals. 1998s
minimum bonus will be 50% of base.

          You are eligible to continue to participate in the Company's Long-Term
Incentive, the various Employee Stock Option Plans (and by this letter we are
confirming the awards previous made to you under those plans), the Challenge
2000 Program and the Supplemental Employee Retirement Plan, according to the
terms and conditions of the respective plans.

          In addition to the above, the Company shall reimburse you for you car
lease payments, insurance and the maintenance thereof until the end of your
current lease. These reimbursements will be grossed-up to take into account
personal income taxes. At the end of this lease, the Company will lease a car of
your choice (no longer than 2 years lease) with a retail value of up to $30,000.



<PAGE>


American Banknote Corporation


         Further, we agree that upon termination of your employment by the
Company for any reasons other than "For Cause", including death and disability
or following a "Change of Control" or at your own initiative anytime after June
30, 1999, the Company will continue your base salary then in effect (subject to
withholding taxes) for a period of 24 months and continue your employee health
and dental benefits (subject to applicable employee contributions) for a period
of 24 months from date of your termination or at employee's option a 2 year
payment without benefits from the date of your termination.

         "For Cause" means that your termination of employment is based solely
upon (1) materially breaching or failing to materially perform your immediate
duties under applicable law and such breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness, (2) committing an act of
dishonesty in the performance of your duties, or (3) being convicted of felony
involving moral turpitude.

         "Change in Control" means the consummation by the Company of (A) any
consolidation or merger of the Company in which neither (i) the holders of the
voting stock of the Company immediately before such consolidation or merger will
in the aggregate own 40% or more of voting stock of the continuing or surviving
corporation immediately after such event, nor (ii) persons serving as directors
of the Corporation immediately before such merger or consolidation will
constitute a majority of the directors of the continuing or surviving
corporation immediately after such event, or (B) the sale, lease, exchange or
other transfer (in one or a series of related transactions) of all or
substantially all of the assets of the Company.


                                                AMERICAN BANKNOTE CORPORATION




                                                By:_____________________________
                                                       Morris Weissman
                                                       Chairman and CEO


AGREED AND ACCEPTED:



By:___________________________
       Patrick Gentile





                                        2