<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 June 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 August 14, 2004, 11,770,815 shares of the Registrant's Common Stock, par
value $.01 per share were outstanding.

<PAGE>

                          AMERICAN BANKNOTE CORPORATION

                                    FORM 10-Q

                                    I N D E X

                                                                            PAGE
                                                                             NO.

PART I - FINANCIAL INFORMATION


      Item 1.  Financial Statements.........................................  1


     Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations................  15


     Item 3.  Quantitative and Qualitative Disclosures about Market Risk....  26


     Item 4.  Controls and Procedures.......................................  26

PART II - OTHER INFORMATION


     Item 1.   Legal Proceedings............................................  28


     Item 6.   Exhibits and Reports on Form 8-K.............................  30

<PAGE>
<TABLE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

                                                          June 30,
                                                            2004        December 31,
                                                         (Unaudited)        2003
                                                         ----------      ----------
<S>                                                      <C>             <C>
ASSETS
Current assets
 Cash and cash equivalents                               $  10,429       $   9,018
 Accounts receivable, net of allowance for doubtful
  accounts of $966 and $1,096                               19,921          19,414
 Inventories, net of allowances of $364 and $314            15,960          16,664
 Prepaid expenses and other                                  4,303           3,427
 Deferred tax assets of subsidiaries                         2,665           2,244
                                                         ----------      ----------
          Total current assets                              53,278          50,767
                                                         ----------      ----------

Property, plant and equipment
 Land                                                        1,964           2,179
 Buildings and improvements                                  6,264           7,811
 Machinery, equipment and fixtures                          80,582          82,632
 Construction in progress                                      526              34
                                                         ----------      ----------
                                                            89,336          92,656
 Accumulated depreciation and amortization                 (49,213)        (48,028)
                                                         ----------      ----------

                                                            40,123          44,628

Other assets                                                 1,118           1,802

Investment in non-consolidated subsidiaries                  7,050         (48,527)

Goodwill                                                    68,274          72,121
                                                         ----------      ----------

          Total assets                                   $ 169,843       $ 120,791
                                                         ==========      ==========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      -1-
<PAGE>
<TABLE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

                                                                     June 30,
                                                                       2004        December 31,
                                                                    (unaudited)        2003
                                                                    ----------      ----------
<S>                                                                 <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
 Current portion of long-term debt                                  $ 105,254       $      29
 Revolving  credit facilities                                             349           1,393
 Accounts payable and accrued expenses                                 27,468          26,754
                                                                    ----------      ----------
            Total current liabilities                                 133,071          28,176

Long-term debt                                                            641         100,667

Other long-term liabilities                                            10,993          13,012

Deferred taxes                                                          2,025           2,196

Minority interest                                                      22,526          24,217
                                                                    ----------      ----------

            Total liabilities                                         169,256         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                                                     (31,916)        (86,013)
 Treasury stock, at cost 57,756 shares                                   (103)           (103)
 Accumulated other comprehensive income                                11,595          17,628
                                                                    ----------      ----------
            Total stockholders' equity (deficit)                          587         (47,477)
                                                                    ----------      ----------
                                                                    $ 169,843       $ 120,791
                                                                    ==========      ==========
</TABLE>

                           See Notes to Consolidated Financial Statements

                                                -2-
<PAGE>
<TABLE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Dollars in thousands)

                                                     Six Months Ended               Second Quarter
                                                          June 30,                      June 30,
                                                    2004           2003           2004           2003
                                                  ---------      ---------      ---------      ---------
<S>                                               <C>            <C>            <C>            <C>
CONTINUING OPERATIONS
Sales                                             $ 75,932       $ 66,947       $ 37,036       $ 36,234
                                                  ---------      ---------      ---------      ---------

Costs and expenses
 Cost of goods sold                                 53,914         50,549         26,202         26,813
 Selling and administrative                         11,279         10,025          5,659          5,112
 Restructuring                                          --            366             --             --
 Depreciation and amortization                       5,743          4,972          2,800          2,639
                                                  ---------      ---------      ---------      ---------
                                                    70,936         65,912         34,661         34,564
                                                  ---------      ---------      ---------      ---------

                                                     4,996          1,035          2,375          1,670
                                                  ---------      ---------      ---------      ---------
Other expense (income)
 Interest expense                                    5,397          5,030          2,688          2,516
 Gain on post-retirement settlement                 (1,411)            --         (1,411)            --
 Gain on senior note repurchase                         --         (3,393)            --         (1,380)
 Other, net                                         (1,055)           358            (53)           109
                                                  ---------      ---------      ---------      ---------
                                                     2,931          1,995          1,224          1,245
                                                  ---------      ---------      ---------      ---------

Income (Loss) before reorganization
  items, taxes on income and
    minority interest                                2,065           (960)         1,151            425

Reorganization costs                                    --            104             --             61
                                                  ---------      ---------      ---------      ---------

Income (loss) before taxes on
  income and minority interest                       2,065         (1,064)         1,151            364

Taxes on income                                      3,049          1,900          1,691          1,118
                                                  ---------      ---------      ---------      ---------

Loss before minority
  interest                                            (984)        (2,964)          (540)          (754)

Minority interest                                      871            390            434            290
                                                  ---------      ---------      ---------      ---------

Loss from continuing operations                     (1,855)        (3,354)          (974)        (1,044)

DISCONTINUED OPERATIONS
 Loss from discontinued operations                    (961)        (1,629)            --         (1,284)
 Gain on disposal of discontinued operations        56,913             --             --             --
                                                  ---------      ---------      ---------      ---------
                                                    55,952         (1,629)            --         (1,284)
                                                  ---------      ---------      ---------      ---------
Net income (loss)                                 $ 54,097       $ (4,983)      $   (974)      $ (2,328)
                                                  =========      =========      =========      =========

Net income (loss) per common share -
 Basic and Diluted
 Continuing operations                            $  (0.15)      $  (0.28)      $  (0.08)      $  (0.09)
 Discontinued operations                              4.75          (0.14)            --          (0.11)
                                                  ---------      ---------      ---------      ---------

Net income (loss)                                 $   4.60       $  (0.42)      $  (0.08)      $  (0.20)
                                                  =========      =========      =========      =========
</TABLE>

                                See Notes to Consolidated Financial Statements

                                                     -3-
<PAGE>
<TABLE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED
 (Dollars in thousands, except per share data)

                                                  Six Months Ended               Second Quarter
                                                       June 30,                      June 30,
                                                 2004           2003           2004           2003
                                               ---------      ---------      ---------      ---------
<S>                                             <C>            <C>           <C>            <C>
Net income (loss)                              $ 54,097       $ (4,983)      $   (974)      $ (2,328)

  Foreign currency translation adjustment        (6,033)        15,799         (5,451)        11,773
                                               ---------      ---------      ---------      ---------

Comprehensive income (loss)                    $ 48,064       $ 10,816       $ (6,425)      $  9,445
                                               =========      =========      =========      =========
</TABLE>



                                See Notes to Consolidated Financial Statements

                                                     -4-
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)

                                                           Six Months Ended
                                                                June 30,
                                                         2004            2003
                                                       ---------      ---------

Net cash provided by operating activities              $  6,529       $  2,155

Investing Activities
  Capital expenditures                                   (4,069)        (2,326)
  Proceeds from sale of assets                            1,267              4
                                                       ---------      ---------
Net cash used in investing activities                    (2,802)        (2,322)

Financing Activities
  Revolving facilities, net                              (1,043)          (141)
  Repayment of long-term debt, net                          (12)           (27)
  Repurchase of senior notes                                 --         (2,929)
  Dividend to minority shareholder                         (869)          (608)
                                                       ---------      ---------
Net cash used in financing activities                    (1,924)        (3,705)

Effect of foreign currency exchange rate changes
  on cash and cash equivalents                             (392)           351
                                                       ---------      ---------

Increase (decrease) in cash and cash equivalents          1,411         (3,521)

Cash and cash equivalents - beginning of year             9,018         10,769
                                                       ---------      ---------
Cash and cash equivalents - end of period              $ 10,429       $  7,248
                                                       =========      =========

Supplemental disclosures of cash flow information
  Taxes                                                $  3,300       $  1,800
  Interest                                                  100            100
  Reorganization items                                      581            359


                 See Notes to Consolidated Financial Statements

                                      -5-
<PAGE>
<TABLE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
       AND COMPREHENSIVE INCOME (LOSS) - UNAUDITED
SIX MONTHS ENDED JUNE 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                                       54,097                                      54,097

Currency
 Translation
 Adjustments                                                                   (6,033)       (6,033)
                 ---------      ---------      ---------      ---------      ---------     ---------
 Balance
 June 30,
  2004           $    118       $ 20,893       $(31,916)      $   (103)      $ 11,595      $    587
                 =========      =========      =========      =========      =========     =========

</TABLE>

                                See Notes to Consolidated Financial Statements

                                                     -6-
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO 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% major 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 H
for further information.

The financial information as of June 30, 2004 and for the six-month and second
quarter periods ended June 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 six months and second quarter ended June 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.

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 six months
and second 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, despite the significant volatility and fluctuations which have
historically plagued both countries' currencies. For the six months ended June
30, 2004 when compared to the six months ended June 30, 2003, the Brazilian and
Argentine currencies experienced an average exchange rate appreciation of
approximately 9% and 3.5%, respectively. The Euro currency experienced an
average appreciation of approximately 11% during the same period.

For the second quarter ended June 30, 2004, the Company experienced an average
exchange rate devaluation of approximately 2% in Brazil and Argentina,
respectively. The Euro currency experienced an average appreciation of
approximately 6% during the same period.

                                      -7-
<PAGE>

The Brazilian Real has experienced, and continues to demonstrate, tremendous
volatility against the US Dollar. The average exchange rate for the six months
ended June 30, 2004 was R$2.97 to the US Dollar. As of August 9, 2004, the Real
had weakened to R$3.03 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.

ABNB is the Parent's largest subsidiary, historically contributing approximately
half of the revenues, operating profit and cash flow of the consolidated group,
which can be expected to grow as a percentage of the Company's total revenues
and operating profit with the deconsolidation of LM, which had historically
reported significant losses. The Real's overall devaluation since its
introduction 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.

In Argentina, despite the economic environment and the abandonment of its
Peso-Dollar currency peg system (which has allowed the currency to float freely
on currency markets), Transtex has generated positive operating income and cash
flow for the first and second 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 a $0.1 million and $0.3 million
dividend from Transtex for the first six months ended June 30, 2004 and 2003,
respectively. However, there can be no assurance that the ability to repatriate
dividends freely out of the country will continue on a consistent basis in light
of the instability of the Argentine credit markets.

                                      -8-
<PAGE>

NOTE B - EARNINGS PER SHARE COMPUTATIONS

Amounts used in the calculation of basic and diluted per share amounts for the
six months and second quarter ended June 30, 2004 and 2003 were as follows:

<TABLE>
                                                           Six Months Ended            Second Quarter Ended
                                                               June 30,                       June 30,
                                                         2004           2003            2004           2003
                                                         ----           ----            ----           ----
<S>                                                    <C>            <C>            <C>            <C>
Numerator for loss from continuing operations          $ (1,855)      $ (3,354)      $   (974)      $ (1,044)
Numerator for income from discontinued operations      $ 55,952       $ (1,629)      $     --       $ (1,284)
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 six months and second quarter
ended 2004. In 2003, the loss from discontinued operations represents the loss
from LM's results of operations for the six months and second quarter of 2003.
(See Note H 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 were 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.

                                      -9-
<PAGE>

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 effective beginning 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 has
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.

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.

                                      -10-
<PAGE>

Note D - Inventories (Dollars in thousands) consisted of the following:

                                                        June 30,    December 31,
                                                          2004         2003
                                                          ----         ----

Finished goods                                          $     7       $     7
Work-in-progress                                          7,175         8,934
Raw materials and supplies (net of allowances of
$364 and $314, respectively)                              8,778         7,723
                                                        -------       -------
                                                        $15,960       $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 $0.4
million for the first six 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.

NOTE F - Long-term debt

Long-term debt at June 30, 2004 of $105.9 million consists of $105.2 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 G - 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).

                                      -11-
<PAGE>

The Parent, due to cash flow constraints, continues not to make any payments to
the remaining participants of the Serp. There is no assurance that successful
negotiated settlements with the remaining participants can be achieved in order
to avoid litigation.

NOTE H - 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 Agreement, 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 June 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 six 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 from the gain on the sale in the second
quarter, as these results would not be meaningful. Furthermore, the results of
operations of LM for the six months and second quarter of 2003 of $1.6 million
and $1.3 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 June 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.

                                      -12-
<PAGE>

NOTE I - SEGMENT DATA

Summarized financial information for the six months ended June 30, 2004 and 2003
concerning the Company's reportable segments is as follows (in thousands):

                                                Six Months Ended
                                                ----------------
                                    June 30, 2004             June 30, 2003
                              -----------------------    -----------------------
                                            Operating                  Operating
                                              Profit                     Profit
                                Sales         (Loss)       Sales         (Loss)
                              ---------     ---------    ---------     ---------

Brazil                        $ 52,437      $  6,459     $ 46,175      $  3,378
Australia (1)                       --            --           --            --
United States                   12,112           524       10,639        (1,083)
France                           7,623          (302)       7,870           353
Argentina                        3,760           782        2,263           463
Corporate - United States           --        (2,467)          --        (2,076)
                              ---------     ---------    ---------     ---------
Totals
                              $ 75,932      $  4,996     $ 66,947      $  1,035
                              ========      ========     ========      ========
-------------
(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 six months ended June 30, 2004 and 2003 as follows (Dollars
in thousands):

                                               Six Months Ended
                                               ----------------
                                      June 30, 2004            June 30, 2003
                                 ---------------------    ----------------------
                                  Sales           %        Sales           %
                                 -------       -------    -------       -------

Transaction Cards & System       $28,680         37.8%    $22,084         33.0%
Printing Services and
Document Management               13,380         17.6%     11,829         17.7%
Security Printing Solutions       33,872         44.6%     33,034         49.3%
                                 -------       -------    -------       -------

Total Sales                      $75,932        100.0%    $66,947        100.0%
                                 =======       =======    =======       =======

                                      -13-
<PAGE>

Summarized financial information for the second quarter ended June 30, 2004 and
2003 concerning the Company's reportable segments is as follows (in thousands):

                                            Second Quarter Ended
                                            --------------------
                                   June 30, 2004               June 30, 2003
                                --------------------       ---------------------
                                           Operating                   Operating
                                 Net         Profit         Net         Profit
                                Sales        (Loss)        Sales        (Loss)
                                -----        ------        -----        ------

Brazil                         $25,233      $ 3,408       $24,778      $ 2,278
Australia (1)                       --           --            --           --
United States                    5,826          155         5,965           78
France                           3,999         (188)        4,335          103
Argentina                        1,978          412         1,156          216
Corporate - United States           --       (1,412)           --       (1,005)
                               --------     --------      --------     --------
Totals                         $37,036      $ 2,375       $36,234      $ 1,670
                               ========     ========      ========     ========
---------
(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 second quarter ended June 30, 2004 and 2003 as follows (dollars in
thousands):

                                              Second Quarter Ended
                                              --------------------
                                      June 30, 2004            June 30, 2003
                                   -------------------     -------------------
                                    Sales         %          Sales        %
                                   -------    --------     --------    -------

Transaction Cards and Systems      $14,164      38.2%      $12,080       33.3%
Printing Services and
  Document Management                6,400      17.3%        7,457       20.6%
Security Printing Solutions         16,472      44.5%       16,697       46.1%
                                   -------    --------     --------    -------
Total Sales                        $37,036      100.0%     $36,234      100.0%
                                   =======    ========     ========    =======

NOTE J - 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 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 8.25 years.


                                      -14-
<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 entered into a series of agreements with LM, its
former 90% owned Australian subsidiary, and the members of the Banking
Syndicate, for the purpose of restructuring LM. As a result of this
restructuring, the Parent exited as the major shareholder of LM and recognized a
non-cash gain on the disposition of LM as a discontinued operation (See Note H
for further information). The operations of LM in 2004 are therefore reflected
as a component of discontinued operations and 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 both the six months ended June 30, 2004 and the six
months ended June 30, 2003 (excluding LM). Sales by foreign subsidiaries also
represented approximately 84% of the Company's consolidated sales for both the
second quarter ended June 30, 2004 and the second quarter ended June 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 six months ended June 30, 2004,
the Company experienced an average exchange rate appreciation in the Brazilian
and Argentine currencies of approximately 9% and 3.5%, respectively, against the
US Dollar when compared to the six months ended June 30, 2003. The Euro currency
experienced an average appreciation of approximately 11% during the same period.
For the second quarter ended June 30, 2004, the Company experienced an average
exchange rate devaluation of approximately 2% in Brazil and Argentina,
respectively when compared to the same period in the prior year. The Euro
currency experienced an average appreciation of approximately 6% 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 six
months ended June 30, 2004 was R$2.97 to the US Dollar, as of August 9, 2004,
the Real had weakened to R$3.03 to the US Dollar, therefore continuing to
experience volatility.

ABNB is the Company's largest subsidiary, historically contributing
approximately half of the revenues, operating profit and cash flow of the
consolidated group, which can be expected to grow as a percentage of the
Company's total revenue and operating profit with the deconsolidation of LM,
which had historically reported significant losses. 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 levels as in
the past. Although, based on current estimates, it is anticipated that dividends
from ABNB (along with those of ABN) will be sufficient to fund the Parent's
operating expenses in the foreseeable future, there can be no assurance 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 contributes to the likelihood that the Company will be unable to
repay its Senior Notes due January 31, 2005. See "Liquidity and Capital
Resources" for further information.

                                      -15-
<PAGE>

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.

SALES

Sales in the first six months of 2004 increased by $9.0 million or 13.4% from
the same period in 2003. Exchange rate appreciation resulted in increased
revenues of approximately $5.2 million: $4.3 million attributable to Brazil,
$0.8 million attributable to France and $0.1 million attributable to Argentina.
After giving effect to exchange rate appreciation, sales increased by $3.8
million in constant dollars, as a result of higher sales in Brazil of $1.9
million, in Argentina of $1.4 million and in the United Sates of $1.5 million,
partly offset by lower sales in France of $1.0 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 increased
SPS sales at ABN in secure commercial and government print of $1.6 million,
primarily attributable to higher volumes sold in vital record sales and gift
certificate printing and related reconciliation and distribution services, as
well as increased sales of stock and bond certificates of $0.4 million. These
increases were partly offset by $0.5 million in reduced revenue resulting from
the termination of the USDA food coupon contract. Although stock and bond
certificate sales were stronger when compared to the first six 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 $1.4 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 guarantee that this
trend will continue as the 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 $1.0 million in TCS sales at CPS was principally due
to a $2.1 million loss of its phone card business to a global tender and $0.1
million in lower sales on non-secure commercial loyalty card personalization.
These decreases were partly offset by $1.2 million in higher bank card sales,
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 $1.9 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 $3.6 million and phone cards of
$0.3 million, and $0.4 million in higher PSDM orders. These increases were
partly offset by lower SPS sales of $2.4 million primarily attributable to $3.1
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
$0.7 million increase in sales primarily resulting from a higher volume of
orders received on secure government and commercial print.

                                      -16-
<PAGE>

COST OF GOODS SOLD

Cost of goods sold increased $3.4 million or 6.7% as compared to 2003, with an
increase in gross margins of $5.6 million. The impact of exchange rate
appreciation accounts for increased cost of goods sold of $3.8 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 - $3.1 million and $1.2 million, France - $0.7 million and
$0.1 million and Argentina - $0.1 million and nil.

In constant dollars, cost of goods sold decreased by $0.4 million when compared
to 2003, despite the increase in sales discussed above, primarily due to 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 $4.2 million when
compared to the prior year. The net decrease 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 71.0% in 2004 as
compared to 75.5% 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:

                                                  Six Months Ended
                                                      June 30,
                                               2004             2003
                                          ---------------- ----------------

Brazil                                              70.7%            76.3%
United States                                       63.6%            69.6%
Argentina                                           61.1%            57.1%
France                                              89.9%            84.3%

Cost of goods sold at ABNB in Brazil decreased by $1.2 million from 2003, with
an increase in gross margins of $3.1 million. Cost of goods sold as a percentage
of sales decreased by 5.6% 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.

Cost of goods sold at ABN increased by $0.3 million and gross margins increased
by $1.2 million when compared to the prior year, primarily resulting from the
increase in sales. Despite the increase in revenue, as a percentage of sales,
cost of goods sold decreased by approximately 6% 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).

                                      -17-
<PAGE>

In Argentina, cost of goods sold at Transtex was approximately $0.9 million
higher than in 2003, with an increase in gross margins of $0.5 million,
primarily as a result of increased sales. Cost of goods sold as a percentage of
sales increased by 4.0% 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 $0.4 million
when compared to 2003 resulting in a decrease in gross margins of $0.6 million,
primarily due to lower sales. As a percentage of sales, cost of goods sold
increased by approximately 5.6% 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 percentage 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 is phone card business.

SELLING AND ADMINISTRATIVE EXPENSES

Selling and administrative expenses increased by $1.2 million when compared to
2003. Exchange rate appreciation resulted in increases in such expenses of
approximately $0.4 million, resulting from exchange rate appreciation increases
of $0.3 million in Brazil, $0.1 million in France and nil in Argentina. As a
result, the net increase in selling and administrative expense from the prior
year in constant dollars was $0.8 million. In constant dollars, ABNB's
administrative expense increased by $0.5 million due to increased professional
fees and higher wages and social charges, partly offset by $0.1 million in lower
selling expenses. In Argentina, selling and administrative expenses increased by
$0.1 million, primarily due to an increase in wages and social charges, and a
bonus provision resulting from the improved operating results. In addition,
Parent Company 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). 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 lower at 14.8 % in 2004 as
compared to 14.9% in 2003 as a result of the increase in sales.

RESTRUCTURING

The restructuring charge of $0.4 million in the first six 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).

DEPRECIATION EXPENSE

Depreciation and amortization expense for the first six months of 2004 was $0.8
million higher when compared to the first six months of 2003. Exchange rate
appreciation accounts for an increase of approximately $0.5 million, resulting
in a net increase of $0.3 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 $0.4 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 1, 2005 (See "Liquidity and
Capital Resources" for further information).

                                      -18-
<PAGE>

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 G Gain on Post-Retirement Settlement).


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 for the six months ended June 30, 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).

OTHER, NET

Other net income increased by approximately $1.4 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 and miscellaneous sales of equipment
and foreign currency transaction gains totaling approximately $0.4 million.

BANKRUPTCY COSTS

Bankruptcy costs were $0.1 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.

                                      -19-
<PAGE>

COMPARISON OF RESULTS OF THE SECOND QUARTER ENDED JUNE 30, 2004 WITH THE SECOND
QUARTER ENDED JUNE 30, 2003

SALES

Sales in the second quarter of 2004 increased by $0.8 million or 2.2% from the
second quarter of 2003. Net exchange rate devaluation resulted in decreased net
revenues of approximately $0.3 million, resulting from decreases of $0.5 million
attributable to Brazil and nil to Argentina, partly offset by exchange rate
appreciation increases of $0.2 million in France. After giving effect to
exchange rate appreciation, sales increased by $1.1 million in constant dollars,
as a result of higher sales in Brazil of $1.0 million, Argentina of $0.9
million, partly offset by lower sales in France of $0.6 million and the United
States of $0.2 million. The net increase in sales in constant dollars is
discussed in detail by subsidiary below.

The decrease of $0.2 million in sales in the United States was due to a net
decrease in SPS sales at ABN of secure, commercial and government print of $0.2
million primarily attributable to lower sales resulting from the timing of $0.7
million in foreign passport orders which were received in the first quarter of
this year versus the second quarter of last year for a single government
customer. This decrease was partly offset by $0.5 million in higher volumes sold
in vital record sales and gift certificate printing and related reconciliation
and distribution services. While stock and bond certificate sales were
approximately the same 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 $0.9 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 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 $0.6 million in TCS sales at CPS was principally due
to a $1.5 million loss of its phone card business to a global tender. These
decreases were partly offset by $0.7 million in higher sales on bank cards
resulting from the addition of new bank customers and a $0.2 million increase in
non-secure commercial loyalty card personalization..

Sales at ABNB in Brazil were $1.0 million higher than in 2003. The net increase
is attributable to higher TCS sales of $1.8 million resulting from higher
volumes and price increases on sales of secure credit cards of $0.4 million and
phone cards of $1.4 million and higher SPS sales of $0.1 million resulting from
a higher volume of orders received on secure government and commercial print of
$0.6 million partly offset by a reduction of $0.5 million in electronic print
volumes resulting form the cancellation of low and negative margin business.
These increases were partly offset by lower PSDM sales of $0.9 million primarily
attributable to a reduction in customer orders.

                                      -20-
<PAGE>

COST OF GOODS SOLD

Cost of goods sold in the second quarter of 2004 decreased $0.6 million or 2.3%
from the second quarter of 2003, with an increase in gross margins of $1.4
million. The impact of net exchange rate devaluation accounts for decreased cost
of goods sold of $0.2 million and decreased gross margins of approximately $0.1
million. The effect of net exchange rate devaluation by country on cost of goods
sold and gross margins, respectively was as follows: Brazil - $0.4 million and
$0.1 million partly offset by exchange rate appreciation in France of $0.2
million and nil. There was no exchange rate impact in Argentina.

After giving effect to the exchange rate appreciation, cost of goods sold in
constant dollars decreased by $0.4 million from the second quarter of 2003,
despite the increase in sales discussed above, primarily due to 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 $1.5 million when compared to the
prior year. The net decrease in cost of goods sold and the resulting effect on
gross margins in constant dollars is discussed in detail by subsidiary blow.

As a percentage of sales, cost of goods sold decreased to 70.7% in 2004 as
compared to 74% 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:

                                                     Second Quarter Ended
                                                           June 30,
                                                    2004             2003
                                               ---------------- ----------------

Brazil                                                   69.7%            74.2%
United States                                            63.9%            66.6%
Argentina                                                61.2%            59.4%
France                                                   92.1%            87.2%

Cost of goods sold at ABNB in Brazil decreased by $0.4 million from 2003, with a
corresponding increase in gross margins of $1.4 million. Cost of goods sold as a
percentage of sales decreased by 4.5% when compared to the prior year. The
decrease in costs 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 and secure government and commercial print.

Cost of goods sold at ABN decreased by $0.2 million from 2003 with no change in
gross margins when compared to the prior year. As a percentage of sales, cost of
goods sold decreased by approximately 6%, 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 $0.5 million
higher than in 2003, which resulted in an increase in gross margins of $0.4
million, primarily due to increased sales. As a percentage of sales, cost of
goods sold increased by 1.8% 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.

                                      -21-
<PAGE>

At CPS in France, cost of goods sold decreased by approximately $0.3 million
when compared to 2003 resulting in a decrease in gross margins of $0.3 million,
primarily due to lower sales. As a percentage of sales, cost of goods sold
increased by approximately 4.9% 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 the cost of goods sold percentage 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 during the second quarter of 2004 increased
by approximately $0.5 million when compared to the second quarter of 2003.
Exchange rate variation was not a factor. Each of the operating subsidiaries
closely approximated the prior year with the exception of $0.4 million in higher
administrative expenses at the Parent primarily due to an increase in legal fees
to defend certain actions, most notably the Lithuania claim (see Legal
Proceedings for further information), and a $0.1 million increase in salaries
and benefits in Argentina. As a percentage of sales, selling and administrative
expenses were comparatively higher (15.3 % in 2004 as compared to 14.1% in
2003).

DEPRECIATION EXPENSE

Depreciation and amortization expense for the second quarter of 2004 was $0.2
million higher when compared to the second 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.

INTEREST EXPENSE

Interest expense for the second quarter of 2004 was approximately $0.2 million
higher when compared to the second quarter of 2003. This increase resulted
primarily from the accrued pay in kind interest on the Parent's Senior Notes
which mature on January 1, 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 G Gain on Post-Retirement Settlement).

GAIN ON SENIOR NOTE REPURCHASE

In the second quarter of 2003, the Parent purchased through privately negotiated
transactions a block of $2.3 million face amount of bonds for an aggregate
purchase price of $0.9 million. The Parent recorded a gain of approximately $1.4
million on the repurchase of these bonds reflecting the difference between the
face amount and the purchase price in the first quarter of 2003. (See "Liquidity
and Capital Resources" for further information).

                                      -22-
<PAGE>

OTHER, NET

Other net income for the second quarter of 2004 increased by approximately $0.2
million primarily resulting from the gain on certain miscellaneous asset sales
and interest income at ABNB and ABN of $0.1 million and foreign currency
transaction gains and interest income in Argentina of $0.1 million.

BANKRUPTCY COSTS

Bankruptcy costs were $0.1 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 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

CASH. At June 30, 2004 and December 31, 2003, the Company had approximately
$10.4 million and $9.0 million in cash and cash equivalents, respectively.

SUMMARY OF CASH FLOWS. Cash and cash equivalents increased by $1.4 million in
the six months of 2004 compared to a decrease of $3.4 million in the comparable
period of 2003. This increase in cash flow of $4.8 million between the periods
resulted from the following:

         o        A $4.4 million net increase in cash flow from operating
                  activities attributable to a $4.0 million increase in net
                  income after non-cash adjustments and a $0.4 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, a lower receivables balance at CPS in France
                  resulting from the loss of its phone card business, and
                  favorable inventory variances at CPS in France 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 slower
                  collection of receivables in Brazil, the higher level of
                  receivables balance at ABN corresponding to increased sales in
                  2004 as compared to 2003, as well as the lower level of
                  payables in 2004 at CPS in France attributable to a reduction
                  in its business.

                                      -23-
<PAGE>

         o        A $0.6 million net decrease in cash flow from investing
                  activities principally attributable to higher capital
                  expenditures in Brazil and CPS in France of $2.0 million and
                  $0.2 million, respectively in 2004 partly offset by lower
                  capital expenditures of $0.4 million at ABN in addition to
                  proceeds received at ABN from the sale of its Philadelphia
                  facility of $0.7 million and the sale of currency equipment of
                  $0.5 million

         o        A $1.8 million net increase in cash from financing activities
                  attributable to the Company's use of $2.9 million in the first
                  half of 2003 to buy back its Senior Notes as well as the $0.2
                  million repayment of short-term equipment financing in Brazil
                  in 2003, partly offset by a $1.0 million repayment of working
                  capital facilities in 2004 at CPS and ABN of $0.6 million and
                  $0.4 million, respectively. In addition, dividends to ABNB's
                  minority shareholder increased by $0.3 million.

         o        A $0.8 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 June 30, 2004, the Company's subsidiaries had
outstanding an aggregate of approximately $0.3 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 to
expire 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 June 30, 2004, ABN
had used approximately $0.6 million of which $0.3 million was for general
working capital purpose and $0.3 million for outstanding letters of credit,
leaving approximately $1.4 million available for borrowing. As of August 11,
2004, ABN's line stood at approximately $0.4 million and it is anticipated that
additional borrowings on the line may be required at various times in 2004. The
Company's French subsidiary, CPS, had available approximately $1.2 million at
June 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%
partly collateralized by certain receivables. At June 30, 2004, CPS has no
borrowings on the line, however, it is anticipated that borrowings on the line
will be required at various times in 2004.

Long-Term Debt. The Company's long-term debt consists of (i) the $105.2 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.

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. The Parent has not made any repurchases to
date.

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 bonds reflecting the difference between the face amount and
the purchase price.

INABILITY TO REPAY DEBT

The high levels of the Parent's Senior Note indebtedness, $105.2 million at June
30, 2004, poses a high degree of uncertainty as to the Company's ability to
repay this debt upon the January 31, 2005 maturity date. Indeed, 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


                                      -24-
<PAGE>

the Company's limited access to capital and financial markets for the purpose of
obtaining new financing or equity 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. 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. 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.

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 US obligations. There can be no assurance 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.

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 report.

                                      -25-
<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 six months
and second 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 six
months ending June 30, 2004, the Company experienced an average exchange rate
appreciation in the Brazilian and Argentine currencies of approximately 9% and
3.5%, respectively, against the US Dollar when compared to the prior year. The
Euro currency experienced an average appreciation of approximately 11% during
the same period.

For the second quarter ended June 30, 2004, the Company experienced an average
exchange rate devaluation of approximately 2% in Brazil and Argentina,
respectively. The Euro currency experienced an average appreciation of
approximately 6% 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 six months
and second quarter ended June 30, 2004 was R$2.97 and R$3.04 to the US Dollar,
respectively. As of August 9, 2004, the Real had weakened to R$3.03 to the US
Dollar. Despite its significant improvement in 2004, the Real continues to
experience exchange rate volatility, as the average exchange rate appreciation
for the six months ended June 30, 2004 was 9%, while the average exchange rate
devaluation for the second quarter ended June 30, 2004 was 2%, against the US
Dollar when compared to the prior year. 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 Parent's largest subsidiary, historically contributing approximately
half of the revenues, operating profit and cash flow of the consolidated group
which can be expected to grow, with the deconsolidation of LM. The Real's
overall devaluation since its introduction 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 expense 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.

                                      -26-
<PAGE>

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
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.

                                      -27-
<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 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 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 October 7, 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
continues 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 is
the outstanding principal, plus the related interest thereon. The Parent is
presently evaluating an appeal of this ruling.

MORRIS WEISSMAN 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. (See Note G for further information).

                                      -28-
<PAGE>

The Parent, due to cash flow constraints, continues not to make any payments to
the remaining participants of the Serp. There is no assurance that a successful
settlement with the remaining participants can be achieved in order to avoid
litigation.

USDA LITIGATION

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.
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
ABN. Payment was received by ABN in the second quarter of 2004 and was
appropriately recognized as revenue in that period. The case on the balance of
the claim (with accrued interest thereon) is still pending before the USDA Board
of Contract Appeals.

OTHER MATTERS

On July 23, 2004, Patrick J. Gentile, Executive Vice President and Chief
Financial Officer of the Parent, executed an Offer of Settlement (the
"Settlement") and a Consent and Undertakings (the "Consent") in connection with
allegations brought by the Securities and Exchange Commission (the "Commission")
surrounding the July 15, 1998 initial public offering of shares in the Parent's
then wholly-owned subsidiary, American Bank Note Holographics, Inc. ("ABNH").
The Commission had alleged that while acting as the Corporate Controller of the
Parent, Mr. Gentile knew or should have known that ABNH had improperly
recognized revenue during fiscal year 1996. The Settlement and the Consent will
become final if and when formally approved by the Commission.

Pursuant to the Consent, Mr. Gentile will accept the entry of a final judgment
in the United States District Court for the District of Columbia, by which the
Commission will settle a Complaint for Civil Penalty (the "Complaint") with
respect to Mr. Gentile. Also pursuant to the Consent, in which Mr. Gentile will
neither admit nor deny the allegations of the Complaint, Mr. Gentile will agree
to pay a civil penalty in the amount of $25,000.

Pursuant to the Settlement, Mr. Gentile will consent to the entry of an Order
Instituting Cease-and-Desist Proceedings, Making Findings and Imposing a
Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 and
21C of the Securities Exchange Act of 1934 (the "Order"). In the Order, Mr.
Gentile will neither admit nor deny the findings contained in the Order.

Within the Order, the Commission finds that Mr. Gentile violated Sections
17(a)(2) and 17(a)(3) of the Securities Act of 1933 (the "Securities Act"), and
caused violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the
Securities Exchange Act of 1934 (the "Exchange Act") and Exchange Act Rules
12b-20 and 13a-1. The Commission orders Mr. Gentile to cease and desist from
committing or causing any violations, and any future violations, of Sections
17(a)(2) and 17(a)(3) of the Securities Act, as well as Sections 13(a),
13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20
and 13a-1.

                                      -29-
<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


                                      -30-
<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: August 14, 2004



                                      -31-