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, 2001

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
(State or other jurisdiction of
Incorporation or organization |  | 13-0460520
(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- |  | -----------------------------------------------

|560 Sylvan Avenue
Englewood Cliffs, New Jersey
(Address of principal executive offices) |  | 07632-3119
(Zip Code)
|--------------------------------------------------------------------------------------- |  | ---------------------

(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   No X

The number of shares outstanding of the issuer's Common Stock
was 25,089,230 shares, par value $.01, outstanding as at December 31,
2001.

AMERICAN BANKNOTE CORPORATION
FORM 10-Q
I N D E X

| | PAGE
NO.
| | --------

PART I - FINANCIAL INFORMATION

| | Item 1. | Financial Statements | 3
| | ------- | -------------------- | -

| | Item 2. | Management's Discussion and Analysis of
Financial Condition and Results of Operations | 16
| | ------- | ------------------------------------------------------------------------------------- | --

| | Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 27
| | ------- | ---------------------------------------------------------- | --

PART II - OTHER INFORMATION

| | Item 1. | Legal proceedings | 28
| | ------- | ----------------- | --

| | Item 6. | Exhibits and Reports on Form 8-K | 29
| | ------- | -------------------------------- | --

PART I  Financial Information

Item 1. Financial Statements

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)

`June 30,
                                                                        2001            December 31,
                                                                    (Unaudited)             2000
                                                                    -------------      --------------

  ASSETS
  Current assets
     Cash and cash equivalents                                       $  6,853           $    8,278
     Accounts receivable, net of allowance for doubtful
       accounts $1,675 and $1,554                                      27,118               34,613
     Inventories, net of allowances
       of $1,189 and $2,037                                            18,735               21,051
     Prepaid expenses and other                                         5,304                3,499
     Deferred tax assets of subsidiaries                                1,307                1,868
                                                                    -------------      ---------------
                 Total current assets                                  59,317                69,309
                                                                    -------------      ---------------

  Property, plant and equipment
     Land                                                               1,322                 1,500
     Buildings and improvements                                        15,101                17,111
     Machinery, equipment and fixtures                                 77,701                84,655
     Construction in progress                                             718                 1,252
                                                                    -------------      ---------------
                                                                       94,842               104,518
     Accumulated depreciation and amortization                        (48,452)              (52,172)
                                                                    -------------      ---------------
                                                                       46,390                52,346

     Other assets                                                       6,368                 8,007

     Investment in non-consolidated subsidiaries                        1,691                 2,405

     Deferred taxes of subsidiaries                                     3,928                 4,341

     Goodwill                                                          37,092                44,690
                                                                    -------------      ---------------
                 Total assets                                        $154,786               $181,098
                                                                    =============      ===============


                 See Notes to Consolidated Financial Statements`

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)

`June 30,
                                                                                    2001           December 31,
                                                                                 (unaudited)          2000
                                                                              ------------------  -----------------

LIABILITIES AND STOCKHOLDERS' DEFICIT
Pre-petition liabilities subject to compromise of parent
   Parent company debt obligation                                               $  163,163        $  163,151
   Accrued interest on parent company debt obligations                              27,000            22,981
   Other liabilities                                                                16,692            17,075
                                                                              ------------------  -----------------
Total pre-petition liabilities subject to compromise                               206,855           203,207

Current liabilities
   Post-petition liabilities of parent                                               2,359             2,701
   Revolving credit facilities of subsidiaries                                       3,772             3,025
   Accounts payable and accrued expenses of subsidiaries                            33,439            40,301
   Current portion of long-term debt of subsidiaries                                    69             1,791
                                                                              ------------------  -----------------
            Total current liabilities                                               39,639            47,818

Long-term debt of subsidiaries                                                      41,989            44,512

Other long-term liabilities of subsidiaries                                         15,230            17,704

Deferred taxes of subsidiaries                                                       3,447             4,077

Minority interest in subsidiary                                                     10,442            12,400
                                                                              ------------------  -----------------
            Total liabilities                                                      317,602           329,718
                                                                              ------------------  -----------------

Commitments and Contingencies

Stockholders' deficit
   Preferred Stock, authorized 2,500.000 shares
     no shares issued or outstanding
   Preferred Stock Series B, par value $.01 per share authorized
     2,500,000 shares, issued and outstanding 2,404,895 shares                          24                24
   Common Stock, par value $.01 per share, authorized 50,000,000
     shares; issued 27,812,281 shares                                                  278               278
   Capital  surplus                                                                 82,525            82,525
   Retained deficit                                                               (198,947)         (191,883)
   Treasury stock, at cost 2,723,051 shares                                         (1,285)           (1,285)
   Accumulated other comprehensive loss                                            (45,411)          (38,279)
                                                                              ------------------  -----------------
            Total stockholders' deficit                                           (162,816)         (148,620)
                                                                              ------------------  -----------------
                                                                                 $ 154,786        $  181,098
                                                                              ==================  =================

            See Notes to Condensed Consolidated Financial Statements`

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

`Six Months Ended                     Second Quarter Ended
                                                      June 30,                              June  30,
                                             2001              2000                     2001           2000
                                       --------------------------------------     --------------------------------

CONTINUING OPERATIONS
Sales                                   $   110,095         $ 137,133             $   52,008        $  67,640
                                       --------------------------------------     --------------------------------

Costs and expenses
 Cost of goods sold                          83,599           100,744                 40,190           49,176
 Selling and administrative                  15,963            18,585                  7,730            9,008
 Goodwill impairment                          1,874               -                    1,874               -
 Depreciation and amortization                5,297             5,904                  2,520            2,729
                                       --------------------------------------    ---------------------------------
                                            106,733           125,233                 52,314           60,913
                                       --------------------------------------    ---------------------------------
                                              3,362            11,900                   (306)           6,727

Other expense (income)
 Interest expense                             7,652             7,987                  3,633            4,054
 Interest and other, net                        638              (532)                   374              226
                                       --------------------------------------    ---------------------------------
                                              8,290             7,455                  4,007            4,280
                                       --------------------------------------    ---------------------------------

Income (loss) before reorganization
 items, taxes on income and
   minority interest                         (4,928)            4,445                 (4,313)           2,447

Reorganization costs                            102             1,265                      7              681
                                       --------------------------------------    ---------------------------------

Income (loss) before taxes on
 income and minority interest                (5,030)            3,180                 (4,320)           1,766

Taxes on income                               1,757             2,595                    711            1,623
                                       --------------------------------------    ---------------------------------

Income (loss) before minority
 interest                                    (6,787)              585                 (5,031)             143

Minority interest                               277             1,079                      2              496
                                       --------------------------------------    ---------------------------------

(Loss) from continuing operations            (7,064)             (494)                (5,033)            (353)

DISCONTINUED OPERATIONS
Income from discontinued operations
   (net of taxes $702  and $326)                 -                989                    -                349
                                       --------------------------------------    ---------------------------------
 NET INCOME (LOSS)                      $    (7,064)        $     495             $   (5,033)       $      (4)
                                       ======================================    =================================

Net income (loss) per common share -
   Basic and Diluted
   Continuing operations                $     (0.26)        $   (0.02)            $    (0.19)       $   (0.02)
   Discontinuted operations                     -                0.04                     -              0.02
                                       --------------------------------------    ---------------------------------
         Net income (loss)              $     (0.26)        $    0.02             $    (0.19)       $      -
                                       ======================================    =================================


                 See Notes to Consolidated Financial Statements`

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

`Six Months Ended                Second Quarter Ended
                                                             June 30,                          June 30,
                                                    2001           2000                  2001              2000
                                                ----------------------------------  ------------------------------------

Net income (loss)                               $   (7,064)    $     495            $   (5,033)         $     (4)

  Foreign currency translation adjustment           (7,132)         (567)               (2,894)           (1,377)
                                                ----------------------------------  ------------------------------------

Comprehensive (loss)                            $  (14,196)    $     (72)           $   (7,927)         $  (1,381)
                                                ==================================  ====================================

                 See Notes to Consolidated Financial Statements`

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

`Six Months Ended
                                                                               June 30,
                                                                        2001                2000
                                                                  ---------------------------------------

 Net cash provided by operating activities                        $     3,725          $   8,789

 Investing Activities

   Capital expenditures                                                (3,911)            (5,105)
   Proceeds from sale of assets                                           -                3,242
                                                                  ---------------------------------------
 Net cash used in investing activities                                 (3,911)            (1,863)

 Financing Activities
   Short-term credit facilities, net                                    2,102                970
   Repayments of long-term debt, net                                   (2,649)            (6,524)
   Dividend to minority shareholder                                      (531)               -
                                                                  ---------------------------------------
 Net cash used in financing activities                                 (1,078)            (5,554)

 Effect of foreign currenty exchange rate changes
   on cash and cash equivalents                                          (161)                64
                                                                  ---------------------------------------

 Increase (decrease) in cash and cash equivalents                      (1,425)             1,436

 Cash and cash equivalents - beginning of year
                                                                        8,278              4,610
                                                                  ---------------------------------------
 Cash and cash equivalents - end of period                        $     6,853          $   6,046
                                                                  =======================================

 Supplemental disclosures of cash flow information
   Taxes                                                          $     1,300          $   1,900
   Interest                                                             2,200              2,900
   Reorganization items                                                   800                200

                 See Notes to Consolidated Financial Statements`

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
     AND COMPREHENSIVE LOSS - UNAUDITED
SIX MONTHS ENDED JUNE 30, 2001
(Dollars in thousands)

`Accumulated
                                                                          Other
                Preferred                                                 Compre-
                  Stock      Common    Capital    Retained   Treasury      hensive       Total
                Series B     Stock     Surplus     Deficit    Stock         Loss        Deficit
Balance -
January 1,
     2001       $   24       $  278    $ 82,525   $(191,883) $ (1,285)   $ (38,279)   $  (148,620)

Net Loss                                             (7,064)                               (7,064)

Currency
 Translation
 Adjustments                                                                (7,132)        (7,132)

                ---------    -------  ---------- ----------- ----------  ----------    -----------
 Balance
 June 30,
 2001          $   24       $  278    $ 82,525    $(198,947) $ (1,285)   $ (45,411)   $  (162,816)
                =========    =======  ========== =========== ==========  ==========    ===========

                 See Notes to Consolidated Financial Statements`

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"), the U.S. operating subsidiary, American Bank Note Grafica e
Servicos, Ltda. ("ABNB"), a 77.5% owned Brazilian company, ABN Australasia
Limited, trading as Leigh-Mardon Pty. Ltd. ("LM"), a 92.5% owned (effective June
30, 2001) Australian company (see Note G) with an operating subsidiary in New
Zealand, CPS Technologies, S.A. ("CPS"), a French company, and Transtex S.A.
("Transtex"), an Argentine company.

The financial information as of June 30, 2001 and for the
six-month and second quarter periods ended June 30, 2001 and 2000 has 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, 2000. Operating results for the six months and second quarter ended
June 30, 2001 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 plan for reorganization relief under Chapter 11 of the United States
Bankruptcy Code (the "Chapter 11 Proceeding"). In November 2000, the Bankruptcy
Court confirmed the Parent's plan of reorganization (the "Plan") in the Chapter
11 Proceeding. The Plan has not yet been consummated.

Management expects to propose to the Bankruptcy Court certain
amendments to the Plan (a) to give the Parent the option to defer cash interest
payments payable under its 11 5/8% Senior Unsecured Notes due August 1, 2002 (the
"Senior Unsecured Notes") if, in the reasonable judgment of management,
sufficient cash is not available to pay such interest in cash and fund all other
working capital needs of the Company, (b) to extend the maturity date of its
Senior Unsecured Notes, and (c) to grant the Parent an option to extend the
maturity date of its 10 3/8% Senior Secured Notes due June 1, 2002 (the "Senior
Secured Notes"). Additional amendments to the Plan may also be proposed. Such
proposals would be subject, in all respects, to the approval of the Bankruptcy
Court, after solicitation or re-solicitation of any affected creditors.

The Company has significant operations in Brazil, Australia, and
France, which had significant foreign exchange rate fluctuations against the
U.S. Dollar in 2001 when compared to 2000. For the six months ended June 30,
2001, the Company experienced an average devaluation in the Brazilian,
Australian and French currencies of 19%, 17% and 6% respectively against the
U.S. Dollar. In particular, the Brazilian Real has experienced tremendous
volatility against the U.S. Dollar with the Real devaluing by over 40% against
the U.S. Dollar as of September 21, 2001 (R$2.79) when compared to the beginning
of 2001 (R$1.95). As of January 31, 2002, the Real had strengthened to R$2.44 to
the Dollar but continues to experience significant volatility particularly in
light of the Argentine crisis discussed below. As ABNB is the Company's largest
subsidiary, contributing more than half of the revenues, operating profit and
cash flow of the consolidated group, the continued threat of currency
devaluation could severely impact the Company's ability to service its U.S. debt
and to fund its corporate operating expenses.

The severe and ongoing economic recession in Argentina continues
to negatively impact the profitability, cash flow and carrying value of
Transtex, such that any further deterioration in the business may impact its
ability to continue as a going concern.

In an effort to end its four-year recession, in January 2002
Argentina abandoned its Peso-Dollar currency peg system. Initially the Peso was
reset at an official rate of US $1 = AR $1.40. In February, 2002, the official
rate was abandoned and the currency was allowed to float freely on currency
markets. Although banks and foreign exchange markets in Argentina have been
closed temporarily by government decree, as of February 4, 2002, it appears that
the Peso has devalued in markets outside of Argentina by approximately 50%
against the Dollar.

Reference should be made to the Company's Annual Report on Form
10-K for the year ended December 31, 2000 and Form 8-K filed on August 16, 2001
for a further discussion of the Chapter 11 Proceeding and other risk factors.

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, 2001 and June 30, 2000 follow:

`Six Months Ended           Second Quarter Ended
                                                          ----------------           --------------------
                                                              June 30,                      June 30,
                                                              --------                      --------
                                                         2001           2000           2001           2000
                                                         ----           ----           ----           ----

Numerator for loss from continuing operations          $ (7,064)    $    495        $ (5,033)     $   (353)
                                                     ===========================   ==========================
Numerator income from discontinued operations         $    -        $    989        $    -        $    349
                                                     ===========================   ==========================

Denominator for per share computations
Weighted average number of shares outstanding
    (in thousands):
   Common Stock                                          25,089       25,089          25,089        25,089
   Series B Preferred Stock                               2,405        2,405           2,405         2,405
                                                     ---------------------------   --------------------------
   Denominator for per share computations                27,494       27,494          27,494        27,494
                                                     ===========================   ==========================`

The Series
B Preferred Stock has all the rights and privileges of the Parent's Common Stock
with the exception of voting rights. As a result, these shares are included in
the denominator for computing basic and diluted per share amounts. The
denominator for computing diluted income per share excludes stock options to
purchase approximately 2.3 million shares of Common Stock, as the exercise
prices of such options were greater than the market price of the common shares.

NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2001, the Company adopted Statement of
Financial Accounting Standards ("FAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by FAS No. 138, "Accounting for
Certain Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments and hedging
activities.

The Company did not engage in any material hedging activities
for the six-month period ending June 30, 2001 and had no material derivative
contracts outstanding as of June 30, 2001. As a result, the adoption of the new
statement did not have any impact on the Company's results of operations or
financial position.

In June 2001, the FASB issued FAS No. 141, "Business
Combinations" and FAS No. 142, "Goodwill and Other Intangible Assets". FAS 141
requires the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. Use of the pooling-of-interests method is
prohibited. FAS 141 also provides new criteria to determine whether an acquired
intangible asset should be recognized separately from goodwill. The Company is
required to adopt FAS 142 as of January 1, 2002. Upon adoption of FAS 142,
amortization of existing goodwill would cease and the remaining book value would
be tested for impairment at least annually at the reporting unit level using a
new two-step impairment test. The Company expects, on a prospective basis, that
the non-amortization of goodwill will have the effect of increasing income by
approximately $1.9 million in the year of adoption.

NOTE D - INVENTORIES (dollars in thousands) consisted of the following:

`June 30,      December 31,
                                                      2001             2000
                                                      ----             ----

     Finished goods                                 $   989        $  1,257
     Work-in-progress (net of allowances of
      $1,189 and $2,037, respectively)                7,140           8,562
     Raw materials and supplies                      10,606          11,232
                                                    -------        ---------
                                                    $18,735         $21,051
                                                    =======        ==========`

Inventories are stated at the lower of cost or market with cost
being determined on the first-in-first-out (FIFO) method.

NOTE E - DISCONTINUED OPERATIONS

In October 2000, the Company sold the entire printing operations
of its French subsidiary, the Sati Group ("Sati"). Income from discontinued
operations for the six months and second quarter ended June 30, 2000 represents
the unaudited net income of the Sati Group.

NOTE F - GOODWILL AND OTHER ASSET IMPAIRMENT

The Company believes that the ongoing economic crisis in
Argentina will continue to have a negative effect on the profitability and cash
flow of Transtex. The Company has therefore determined the remaining goodwill at
Transtex to be impaired, and has provided for a $1.9 million impairment charge
in the second quarter of 2001.

During the third quarter of 2001, ABN exited the currency
printing business. Accordingly, a review of the carrying value of certain
equipment and leases used in this business are estimated to result in a net
pretax charge to earnings of approximately $0.6 million in the third quarter of
2001.

NOTE G - LONG-TERM DEBT OF SUBSIDIARIES

On June 26, 2001, the LM debt was amended, extending the
maturity date of the loan for three years, along with an interest rate reduction
equal to approximately 50% of its original interest rate on the borrowings. The
amended agreement requires LM to make a $1.1 million principal repayment on the
second anniversary of the amendment with the balance of the loan maturing on
June 24, 2004. In exchange for these amendments and the return of a 5% equity
interest granted to the banking syndicate in 2000, the banking syndicate will
receive approximately ten percent (10%) of LM's equity some of which will vest
over a period of time. As of June 30, 2001, 7.5% of this equity had vested to
the banking syndicate. As a condition to the amendment, the Parent made a
capital contribution of $1.2 million to LM in June 2001.

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTE H - SEGMENT DATA (continued)

Summarized financial information for the six months ended June 30, 2001 and 2000
concerning the Company's reportable segments is as follows (in thousands):

`Six Months Ended
                                                             ----------------
                                                June 30, 2001                 June 30, 2000
                                                -------------                  -------------
                                                         Operating                           Operating
                                           Net             Profit             Net              Profit
                                          Sales            (Loss)            Sales             (Loss)
                                          -----            ------            -----             ------

     Brazil                             $  56,846        $   4,340          $  67,846        $  7,925
     Australia                             29,608            1,580             38,932           2,860
     United States                         15,828            1,714             19,584           3,592
     France                                 3,636              180              5,546             105
     Argentina                              4,177           (2,350)             5,225              78
     Corporate - United States                              (2,102)                            (2,660)
                                         ---------       ----------         ---------         --------
           Totals                    $    110,095        $   3,362          $ 137,133         $11,900
                                         =========       ==========         =========         ========`

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, 2001 and 2000 as
follows (dollars in thousands):

`Six Months Ended
                                                       ----------------
                                            June 30, 2001                June 30, 2000
                                            -------------                -------------
                                           Sales         %             Sales          %
                                           -----         -             -----          -

Transaction Cards and Systems          $  35,836        32.5        $  44,309       32.3
Printing Services and
   Document Management                    20,800        18.9           26,312       19.2
Security Printing Solutions               53,459        48.6           66,512       48.5
                                        ---------    ----------      ---------    --------
Total Sales                            $ 110,095       100.0        $ 137,133      100.0
                                        =========    ==========      =========    ========`

NOTE H - SEGMENT DATA  (continued)

Summarized financial information for the three months ended June
30, 2001 and 2000 concerning the Company's reportable segments is as follows (in
thousands):

`Second Quarter Ended
                                                              --------------------
                                                June 30, 2001                 June 30, 2000
                                                -------------                  -------------
                                                         Operating                           Operating
                                           Net             Profit             Net              Profit
                                          Sales            (Loss)            Sales             (Loss)
                                          -----            ------            -----             ------
     Brazil                           $   25,601         $  1,272           $  33,234        $   3,984
     Australia                            14,221              969              19,777             2,737
     United States                         8,290              596               9,337            1,845
     France                                1,798               94               2,937              (72)
     Argentina                             2,098           (2,145)              2,355             (375)
     Corporate - United States                             (1,092)                              (1,392)
                                         ---------       ----------         ---------         --------
     Totals                            $  52,008          $  (306)          $  67,640         $  6,727
                                         =========       ==========         =========         ========`

The table below presents the principal product line components
of these sales for the three months ended June 30, 2001 and 2000 as follows
(dollars in thousands):

`Second Quarter Ended
                                                      --------------------
                                            June 30, 2001                June 30, 2000
                                            -------------                -------------
                                           Sales         %             Sales          %
                                           -----         -             -----          -

Transaction Cards and Systems            $  17,013      32.7         $  21,389        31.6
Printing Services and
   Document Management                       9,575      18.4            13,201        19.5
Security Printing Solutions                 25,420      48.9            33,050        48.9
                                        ---------    ----------      ---------    --------
Total Sales                              $  52,008     100.0         $  67,640       100.0
                                        =========    ==========      =========    ========`

NOTE I - OTHER EVENTS

Defined Benefit Pension Plan Termination

In 2001, the IRS approved the termination of the ABN defined
pension plan. The defined pension plan was terminated in the fourth quarter of
2001, resulting in approximately $0.7 million of excess proceeds reverting to
ABN after all payments required in connection with the termination.

State and Local Taxes

The NYC Department of Finance ("NYC") notified the Parent in the
third quarter of 2001 that it was contesting the Parent's position that it could
file a combined franchise tax return in that jurisdiction. On that basis NYC has
issued a formal assessment for additional taxes and interest of approximately
$1.1 million related to tax years up to and including 1992. Management believes
that it has meritorious defenses to the assessment and intends to vigorously
contest it . Also in the third quarter, the statute of limitations relating to
the potential assessment of certain state taxes, based upon the same premise as
in the aforementioned assessment, expired in 2001. An aggregate reserve of
approximately $3.4 million, including interest, was established in prior years
for potential adjustments that could arise from audits by state and local taxing
authorities. As a result of the expiration of the statute of limitations, the
Parent estimated that approximately $1.8 million of this reserve, including
interest of $0.7 million, was no longer required and was reversed in the third
quarter of 2001. The $1.6 million balance of the reserve will remain on the
Parent's balance sheet to cover remaining potential adjustments, including the
NYC assessment noted above. The extent of the Parent's actual liability will
depend upon what other assessments, if any, are asserted and the outcome of the
Parent's defense of its position in connection with the NYC assessment.

Brazil Equity

As a result of the delay in consummating the Parent's Plan, and
the decreased value in the Real, the Parent and Brazil's local management agreed
on January 4, 2002 to terminate the agreement to sell a 2% interest in ABNB to
local management.

Under a separate agreement dated December 12, 2001, ABNB agreed
to an incentive bonus arrangement with Sidney Levy, President of ABNB, which
will entitle Mr. Levy to a cash bonus in the event that ABNB is sold by the
Parent during Mr. Levy's employment as President of ABNB.

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

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 U.S. operating subsidiary, American Bank Note Grafica e
Servicos, Ltda. ("ABNB"), a 77.5% owned Brazilian company, ABN Australasia
Limited, trading as Leigh-Mardon Pty. Ltd. ("LM"), a 92.5% owned (effective June
30, 2001) Australian company (see "Liquidity and Capital Resources") with an
operating subsidiary in New Zealand, CPS Technologies, S.A. ("CPS"), a French
company, and Transtex S.A. ("Transtex"), an Argentine company.

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").

General

Sales by foreign subsidiaries represent approximately 86% of the
Company's consolidated sales for both the six months ended June 30, 2001 and
June 30, 2000. Sales by foreign subsidiaries represent approximately 84% and 86%
of the Company's consolidated sales for the Second Quarter ended June 30, 2001
and June 30, 2000, respectively. The Company's operations in Brazil, Australia,
and France have experienced in 2001, and continue to experience, significant
exchange rate devaluation against the U.S. Dollar, when compared to 2000. In
particular, Brazil's currency, the Real, continues to demonstrate high degrees
of volatility against the U.S. Dollar, with the Real devaluing by over 40%
against the U.S. Dollar as of September 21, 2001 (R$2.79) when compared to the
beginning of 2001(R$1.95). While the Brazilian Real has strengthened as of
January 31, 2002 to R$2.44 to the U.S. Dollar, the currency continues to
experience significant volatility and there can be no certainty that it will
stabilize at any particular level. The average exchange rate devaluation in the
Brazilian, Australian and French currencies for the first six months of 2001 was
approximately 19%, 17% and 6%, respectively, when compared to the first six
months of 2000 and, in comparing the second quarter of 2001 to the second
quarter of 2000, the average exchange rate devaluation in these currencies was
approximately 28%, 16% and 7% respectively.

Transtex has been, and continues to be, negatively impacted by
Argentina's ongoing economic recession, political instability, extremely high
levels of unemployment and interest rates, and default on the government debt
such that any further deterioration may impact Transtex's ability to continue as
a going concern.

In an effort to end its four-year recession, in January 2002
Argentina abandoned its Peso-Dollar currency peg system. Initially the Peso was
reset at an official rate of US $1 = AR $1.40. In February, 2002, the official
rate was abandoned and the currency was allowed to float freely on currency
markets.  Although banks and foreign exchange markets in Argentina have been
closed temporarily by government decree, as of February 4, 2002, it appears that
the Peso has devalued in markets outside of Argentina by approximately 50%
against the Dollar. The financial information for Transtex contained herein
does not include the effect of any devaluation which occurred in 2002.
For illustrative purposes, however, a 50% devaluation at June 30, 2001, would
have decreased consolidated equity as of such date by approximately $1.7
million.

The comparisons below isolate and quantify the effect 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 U.S. constant dollar terms ("constant dollars").

Comparison Of Results Of The Six Months Ended June 30, 2001
With The Six Months Ended June 30, 2000.

Sales

Sales decreased by $27.0 million or 19.7% from 2000. Exchange
rate devaluation accounts for approximately $16.2 million of this decrease, of
which $11.1 million is attributable to Brazil, $4.9 million to Australia and
$0.2 million to France. The remaining net decrease in sales of $10.8 million in
constant dollars is the result of lower sales of $3.8 million in the United
States, $4.4 million in Australia, $1.0 million in Argentina and $1.7 million in
France. Sales in Brazil increased slightly by $0.1 million when compared to the
prior year. The net decrease in sales in constant dollars is discussed in detail
by subsidiary below.

The decrease of $3.8 million in sales in the United States was
principally due to the elimination of $1.7 million in revenues resulting from
the sale of American Banknote Card and Merchant Services ("ABNCMS"), the
Company's former card and merchant processing business, in September 2000 and
$2.1 million in lower SPS sales at ABN. The decrease in SPS sales at ABN was
caused by the declining demand for stock and bond certificates due to the
continued trend toward next day settlement and the decreasing overall demand for
secure paper-based documents of value that are used in the public and private
sectors, such as traveler's checks, postal commemorative panels and secure
commercial print. This decline in demand resulted in diminished revenues at ABN
of approximately $4 million and were partly offset by $1.9 million of new
revenue generated from lower margin distribution and fulfillment programs.

Sales in Australia at LM were $4.4 million lower when compared
to the prior year as sales in all three principal product lines experienced
negative trends when compared to the prior year. SPS sales were $2.4 million
lower mainly due to $3.4 million in reduced volumes on bank checks resulting
from the loss of a customer to a competitor and an overall downward trend in
check usage. This decrease was partly offset by an increase in passport orders
from the Australian government of $1.0 million. Sales of PSDM products were $1.4
million lower due mainly to a one-time increase in sales in 2000 under a
contract with the Australian government in 2000 resulting from the introduction
of its general sales tax program. TCS sales were lower by $0.6 million due to
the elimination of $2.0 million in revenues resulting from LM's sale of its
transaction card equipment business in December 2000, partly offset by an
increase in demand for credit and debit card personalization of $0.8 million and
an increase in driver license issuances of $0.6 million.

In Argentina, the severe and ongoing economic recession
continued to negatively impact Transtex. As a result, the TCS product line at
Transtex experienced a significant decline in transaction card personalization
and transaction card equipment sales due to an overall weakness in the banking
sector as credit markets continued to tighten. In addition, the mix of
production in base stock cards whereby larger volumes of lower priced bank debit
and phone cards replaced higher margin credit cards further reduced Transtex's
profitability. As a result of these factors, sales were $1.0 million lower when
compared to the prior year.

In France, the decrease of $1.7 million in TCS sales at CPS was
primarily due to a decline in demand for phone cards of $1.9 million partly
offset by an increase in sales of bank cards of $0.2 million. The decrease in
sales of phone cards was principally a result of the overall weakness
experienced in the French telecommunications sector.

Sales at ABNB in Brazil were $0.1 million higher than in 2000.
The net increase was the result of a $1.9 million increase in TCS sales due to
greater demand for stored value telephone cards. This increase was almost
entirely offset by a decrease in SPS sales of $1.8 million, as sales of checks
and intaglio security print declined by $3.2 million due to lower customer usage
and a weakening security print market while driver license issuances increased
by $1.4 million.

Cost of Goods Sold

Cost of goods sold decreased $17.1 million or 17.0% from 2000,
with a corresponding decrease in gross margins of $9.9 million. Exchange rate
devaluation accounts for approximately $12.8 million and $3.4 million of such
decreases, respectively. The effect of devaluation by country on cost of goods
sold and gross margins respectively was as follows: Brazil - $8.8 million and
$2.2 million, Australia - $3.8 million and $1.1 million, and France - $0.2
million and $0.1 million.

The remaining net decrease in cost of goods sold of $4.3 million
in constant dollars was primarily the result of the $10.8 million decrease in
sales discussed above. As a result, gross margins in constant dollars were
unfavorable by approximately $6.5 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 increased to 75.9%
in 2001 as compared to 73.5% in 2000. 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
                                    ---------------------
                                   2001               2000
                                   ----               ----

         Brazil                    79.8%              76.0%
         Australia                 77.1%              76.1%
         United States             58.9%              57.1%
         Argentina                 79.4%              69.7%
         France                    75.9%              84.9%`

Cost of goods sold at ABNB in Brazil increased by $2.6 million
with a corresponding reduction in gross margins of $2.5 million. As a percentage
of sales, cost of goods sold at ABNB was 3.8% higher than in 2000. The increase
as both a percentage of sales and in U.S. Dollar terms is predominantly
attributable to an increase in chemical costs and higher than normal waste
factors, as ABNB was required to adopt a new manufacturing process mandated by
the Brazilian telephone companies in connection with the production of
stored-value telephone cards.

Costs of goods sold at LM in Australia decreased by $3.0 million
and resulted in a corresponding reduction in gross margins of $1.4 million when
compared to the prior year. The decrease in cost of goods sold in U.S. Dollar
terms is primarily attributable to lower variable costs of $2.2 million directly
related to the lower sales discussed above. The balance of the decrease of $0.8
million results from an overall reduction in fixed overhead. Despite the
reductions in fixed overhead, cost of goods sold as a percentage of sales rose
slightly by approximately 1% when compared to the prior year as the decrease in
fixed expenses could not be reduced commensurate with the overall decrease in
sales.

The net decrease of $1.8 million in cost of goods sold in the
United States was principally due to the elimination of $1.4 million in expenses
resulting from the sale of ABNCMS in September 2000. The remaining reduction in
cost of goods sold of $0.4 million was due to lower fixed overhead of
approximately $1.0 million as a result of the cost and efficiency savings
programs implemented at ABN during the latter part of 1999 and early 2000,
partly offset by an increase of $0.6 million in variable costs due to a change
in product mix whereby higher margin, lower cost security print products were
replaced by value added fulfillment and printing services which bear higher
costs and provide lower gross margins. As a result, the Company's U.S. segment
experienced a reduction in gross margins of $2.0 million and a 1.8% net increase
in the cost of goods sold as a percentage of sales when compared to 2000.

At Transtex in Argentina, cost of goods sold was approximately
$0.3 million lower than in 2000 on a significantly lower sales base due
primarily to a change in sales mix, resulting from higher margin credit and
deficit cards replacing lower margin phone cards. This resulted in a reduction
in gross margins of $0.7 million when compared to the prior year. As a
percentage of sales, cost of goods sold increased by 9.7% as the continuing
economic crisis resulted in declining prices and excess capacity due to lower
transaction card and card personalization volume levels.

At CPS in France, cost of goods sold decreased by $1.8 million
from 2000 with gross margins up approximately $0.1 million. As a percentage of
sales, cost of goods sold improved by approximately 9.0% from 2000 primarily due
to a change in product mix with higher margin bank card volumes replacing the
reduced volumes on lower margin phone cards.

Selling and Administrative Expenses

Selling and administrative expenses decreased by $2.6 million
when compared to the prior year. The impact of exchange rate devaluation on
selling and administrative expenses accounts for approximately $1.5 million of
this decrease, of which $0.9 million is attributable to Brazil and $0.6 million
to Australia. As a result, the net decrease in selling and administrative
expenses from the prior year in constant dollar terms was $1.1 million. This
decrease was principally due to the elimination of $0.4 million in expenses
related to the sale of ABNCMS in September 2000, and personnel reductions and
lower professional fees at LM in Australia and at the U.S. corporate office of
approximately $0.6 million and $0.5 million, respectively. The remaining
operating subsidiaries closely approximated the prior year with the exception of
ABN, which had an increase of $0.4 million due to startup and consulting fees
necessary to set up its new fulfillment operations. As a percentage of sales,
selling and administrative expenses were slightly higher at 14.5 % in 2001 as
compared to 13.6% in 2000. This percentage increase was directly attributable to
the fixed component of selling and administrative expenses which could not be
reduced commensurate with the overall decrease in sales.

Goodwill Impairment

Goodwill impairment represents the remaining write down of
goodwill on the books of Transtex as a result of operating losses and the
economic uncertainties in Argentina.

Depreciation Expense

Depreciation and amortization expense was $0.6 million lower
when compared to the prior year. This decrease was primarily attributable to the
impact of exchange rate devaluation of approximately $0.8 million which resulted
in a net increase of $0.2 million in constant dollars. This increase was the
result of slightly higher depreciation on plant and equipment at LM of $0.2
million, ABNB of $0.1 million and CPS of $0.1 million, partly offset by the
elimination of goodwill amortization of $0.2 million resulting from the write
down of $9.5 million of goodwill at Transtex in December 2000.

Bankruptcy Costs

Bankruptcy costs decreased $1.2 million or 81% from 2000
principally due to the reduction in administrative costs associated with the
Bankruptcy Court confirming the Parent's plan of reorganization in November
2000.

Interest Expense

Interest expense decreased by $0.3 million from 2000. The impact
of exchange rate devaluation on interest expense resulted in a decrease of
approximately $0.4 million thereby resulting in a constant dollar increase of
approximately $0.1 million when compared to the prior year. This increase was
the direct result of approximately $0.3 million in additional accrued interest
payable in kind on the Parent's U.S. dollar denominated public debt to be
restructured upon consummation of the Parent's plan of reorganization offset by
a net $0.2 million decrease in interest expense resulting from slightly lower
local borrowings at the operating subsidiaries.

Other Income and Expense, Net

Other income and expense decreased by $1.2 million from the
prior year principally due to the gain on the sale of ABN's Pennsylvania
facility in 2000 of $0.7 million and an increase in other miscellaneous expenses
of approximately $0.5 million in 2001, of which approximately $0.3 million
resulted from the equity loss on the Company's interest in a joint venture with
Gemplus SA in Brazil.

Discontinued Operations

In October 2000, the Company sold the entire printing operations
of its French subsidiary, the Sati Group ("Sati"). Discontinued operations
represents the net income of $1.0 million of the Sati Group for the six months
ended June 30, 2000.

Taxes on Income

Taxes on income are calculated using the effective tax rate for
each tax jurisdiction and various assumptions such as state and local taxes and
the utilization of foreign taxes in the 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 Banco Bradesco.

Comparison Of Results Of The Three Months Ended June 30, 2001
With The Three Months Ended June 30, 2000.

Sales

Sales decreased by $15.6 million or 23.1% from 2000. Exchange
rate devaluation accounts for approximately $9.7 million of this decrease, of
which $7.2 million is attributable to Brazil, $2.3 million to Australia and $0.2
million to France. The remaining net decrease in sales of $5.9 million in
constant dollars was the result of lower sales of $1.0 million in the United
States, $3.2 million in Australia, $0.3 million in Argentina, $0.9 million in
France and $0.5 million in Brazil. The net decrease in sales in constant dollars
is discussed in detail by subsidiary below.

The decrease of $1.0 million in sales in the United States was
due to the elimination of revenues resulting from the sale of ABNCMS in
September 2000. While SPS sales at ABN approximated the prior year, the mix of
sales was adversely impacted as revenue generated from new lower margin
distribution and fulfillment programs replaced that from higher margin products
such as stock and bond certificates, traveler's checks, postal commemorative
panels and secure commercial print. The continued trend toward next day
settlement and the decreasing overall demand for secure paper-based documents of
value that are used in the public and private sector have and will continue to
have a negative effect on the mix of sales and gross margins at ABN.

Sales in Australia at LM were $3.2 million lower when compared
to the prior year as sales in the SPS and PSDM product lines experienced
negative trends when compared to the prior year. SPS sales were $2.3 million
lower mainly resulting from reduced volumes on bank checks due to the loss of a
customer to a competitor and an overall downward trend in check usage. Sales of
PSDM products were $1.3 million lower due mainly to a one-time increase in sales
in 2000 under a contract with the Australian government resulting from
the introduction of its general sales tax program. These decreases were partly
offset by higher net TCS sales of $0.4 million due to an overall increase in
demand for credit and debit card base stock and personalization of $1.2 million
and an increase in driver license issuances of $0.2 million. These increases in
TCS sales were partly offset by the elimination of $1.0 million in TCS revenues
resulting from LM's sale of its transaction card equipment business in December
2000.

In Argentina, the severe and ongoing economic recession
continued to negatively impact Transtex. As a result, the TCS product line at
Transtex experienced a significant decline in transaction card personalization
and transaction card equipment sales due to an overall weakness in the banking
sector as credit markets continued to tighten. In addition, the mix of
production in base stock cards whereby larger volumes of lower priced bank debit
and phone cards replaced higher margin credit cards further reduced Transtex's
profitability. As a result of these factors, sales were $0.3 million lower when
compared to the prior year.

In France, the decrease of $0.9 million in TCS sales at CPS was
due to a decline in demand for phone cards principally as a result of the
overall weakness experienced in the telecommunications sector.

Sales at ABNB in Brazil were $0.5 million lower than in 2000.
The net decrease was the result of lower SPS sales of $1.1 million, as checks
and intaglio security print declined by $1.3 million due to lower customer usage
and a weakening security print market partly offset by an increase in driver
license issuances of $0.2 million. This decrease was offset by an increase of
$0.6 million in TCS sales due to greater demand for stored value telephone
cards.

Cost of Goods Sold

Cost of goods sold decreased $9.0 million or 18.3% from 2000,
with a corresponding decrease in gross margins of $6.6 million. The impact of
exchange rate devaluation accounts for approximately $7.9 million and $1.8
million of such decreases, respectively. The effect of devaluation by country on
cost of goods sold and gross margins respectively was as follows: Brazil - $5.9
million and $1.3 million, Australia - $1.8 million and $0.5 million, and France
- $0.2 million and nil.

The remaining net decrease in cost of goods sold of $1.1 million
in constant dollars was the direct result of the $5.9 million decrease in sales
discussed above. As a result, gross margins in constant dollars decreased by
approximately $4.8 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 was higher at 77.3% in 2001 as
compared to 72.7% in 2000. 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:

`Three Months Ended June
                                       -----------------------
                                      2001                 2000
                                      ----                 ----

            Brazil                    82.4%                75.9%
            Australia                 76.8%                72.3%
            United States             62.7%                54.3%
            Argentina                 79.3%                82.8%
            France                    73.2%                88.9%`

Cost of goods sold at ABNB in Brazil increased by $1.7 million
from 2000, with a corresponding reduction in gross margins of $2.2 million. As a
percentage of sales, cost of goods sold at ABNB was 6.5% higher than in 2000.
The increase as both a percentage of sales and in U.S. Dollar terms was
predominantly attributable to an increase in chemical costs and higher than
normal waste factors, as ABNB was required to adopt a new manufacturing process
mandated by the Brazilian telephone companies in connection with the production
of stored-value telephone cards.

Costs of goods sold at LM in Australia decreased by $1.6 million
and resulted in a corresponding reduction in gross margins of $1.6 million when
compared to the prior year. The decrease in cost of goods sold in U.S. Dollar
terms was primarily attributable to lower variable costs of $1.5 million
directly related to the lower sales discussed above, with fixed overhead only
marginally lower by $0.1 million when compared to 2000. As a result of fixed
overhead remaining relatively constant over a lower sales base, cost of goods
sold as a percentage of sales increased by approximately 4.5% as compared to the
prior year.

The net increase of $0.1 million in cost of goods sold in the
United States was principally due to the elimination of $0.9 million in expenses
resulting from the sale of ABNCMS in September 2000 offset by an increase in
cost of goods sold of $1.0 million at ABN. With respect to ABN, the increase in
cost of goods sold in both Dollars and as a percentage of sales when compared to
2000 was directly related to a change in product mix whereby higher margin and
lower cost security print products were replaced by lower margin and higher cost
direct fulfillment and printing services. Consequently, gross margins in the
Company's U.S. segment decreased by $1.1 million.

In Argentina, cost of goods sold at Transtex was approximately
$0.3 million lower than in 2000, which completely offset the effect of lower
sales and resulted in no change in gross margins. This was primarily the result
of cost cutting steps taken to achieve an overall reduction in labor and fix
costs in an effort to continue to operate Transtex on a going concern basis in
light of the severe ongoing economic crisis in Argentina. As a result, cost of
goods sold as a percentage of sales improved by 3.5% over the prior year.

At CPS in France, cost of goods sold decreased by $0.9 million
from 2000 which completely offset the effect of lower sales and resulted in no
change in gross margins. As a percentage of sales, cost of goods sold was down
by approximately 15.7% from 2000 primarily due to a change in product mix with
higher margin bank card volumes replacing the reduced volumes on lower margin
phone cards.

Selling and Administrative Expenses

Selling and administrative expenses decreased by $1.3 million
when compared to the prior year. The impact of exchange rate devaluation on
selling and administrative expenses accounts for approximately $0.8 million of
this decrease, of which $0.6 million is attributable to Brazil and $0.2 million
to Australia. As a result, the net decrease in selling and administrative
expenses from the prior year in constant dollar terms was $0.5 million. This
decrease was principally due to the elimination of $0.2 million in expenses
related to the sale of ABNCMS in September 2000, personnel reductions and lower
professional fees at LM in Australia, CPS in France and at the U.S. corporate
office of approximately $0.1 million, $0.1 million and $0.4 million,
respectively. The remaining operating subsidiaries closely approximated the
prior year with the exception of ABN, which had an increase of $0.3 million due
to startup and consulting fees necessary to set up its new fulfillment
operations. As a percentage of sales, selling and administrative expenses were
higher at 14.9 % in 2001 as compared to 13.8% in 2000. This percentage increase
was directly attributable to the fixed component of selling and administrative
expenses which could not be reduced commensurate with the overall decrease in
sales.

Goodwill Impairment

Goodwill impairment represents the remaining write down of
goodwill on the books of Transtex as a result of operating losses and the
economic uncertainties in Argentina.

Depreciation Expense

Depreciation and amortization expense was $0.2 million lower
when compared to the prior year. This decrease was primarily attributable to the
impact of exchange rate devaluation of approximately $0.5 million which resulted
in a net increase of $0.3 million in constant dollars. This increase was the
result of slightly higher depreciation on plant and equipment at ABNB of $0.2
million, LM of $0.1 million and CPS of $0.1 million partly offset by the
elimination of goodwill amortization of $0.1 million resulting from the write
down of $9.5 million of goodwill at Transtex in December 2000.

Bankruptcy Costs

Bankruptcy costs decreased by $0.7 million from 2000 principally
due to the reduction in administrative costs associated with the Bankruptcy
Court confirming the Parent's plan of reorganization in November 2000.

Interest Expense

Interest expense decreased by $0.4 million from 2000. The impact
of exchange rate devaluation on interest expense resulted in a decrease of
approximately $0.2 million thereby resulting in a constant dollar decrease of
approximately $0.2 million when compared to the prior year. This decrease was
the direct result of a net $0.4 million decrease in interest expense resulting
from slightly lower local borrowings at the operating subsidiaries partly offset
by approximately $0.2 million in additional accrued interest payable in kind on
the Parent's U.S. Dollar denominated public debt to be restructured upon
consummation of the Parent's plan of reorganization.

Other Income and Expense, Net

Other income and expense closely approximates the prior year.

Discontinued Operations

In October 2000, the Company sold the entire printing operations
of Sati. Discontinued operations represents the net income of $0.3 million of
Sati for the three months ended June 30, 2000.

Taxes on Income

Taxes on income are calculated using the effective tax rate for
each tax jurisdiction and various assumptions such as state and local taxes and
the utilization of foreign taxes in the 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 Banco Bradesco.

Liquidity and Capital Resources

Summary of Cash Flows. Cash flow decreased by $1.4
million in the six months of 2001 compared to an increase of $1.4 million in the
comparable period of 2000. This $2.8 million negative variance resulted
principally from the following:

| |  | A $5.1 million net decrease in cash flow from operating activities attributable
to $7.2 million in lower net income after non-cash adjustments partly offset by
$2.1 million in favorable working capital variances. The favorable working
capital variances are the result of payments made in 2000 to bring suppliers in
line with normal payment terms in the U.S., payment delays by Brazilian
government agencies in 2000 which were subsequently collected, and the build up
of inventory and receivables in 2000 at CPS in France in order to meet an
increase in card personalization demand, as offset by certain payments made in
2001 by LM in Australia to bring creditors in line with normal payment terms and
the deferral of payment of administrative fees in 2000 associated with the
Parent's Chapter 11 plan of reorganization that were paid in December 2000
subsequent to confirmation.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A $2.0 million net decrease in cash flow from investing activities attributable
to $3.2 million of cash generated from the sale of ABN's Pennsylvania
facility in 2000 partly offset by decreased capital expenditures of $1.2 million
in 2001.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A $4.3 million net increase in cash from financing activities is attributable to
net decreased debt payments in 2001 of $5.0 million (principally in Brazil)
offset by $0.5 million of increased dividends paid in 2001 to the minority
shareholder of ABNB. The impact of exchange rate devaluation in 2001 on cash
balances on hand accounted for the remaining $0.2 million decrease in cash.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Short-Term Borrowings. At June 30, 2001, the Company's
subsidiaries had outstanding approximately $3.8 million under their respective
short-term credit facilities. The Company's domestic subsidiary, ABN, has a
three-year asset based revolving credit facility, which matures on July 7, 2002,
(the "Credit Facility") for general working capital and letters of credit
purposes. ABN had approximately $1.0 million of availability under the Credit
Facility of which $0.7 million was used for working capital purposes and the
balance of $0.3 million was used for outstanding letters of credit resulting in
no availability under its line at June 30, 2001. Although ABN expects to replace
the Credit Facility upon its maturity, management believes that ABN's operations
and working capital are sufficient to satisfy its operating requirements without
any credit facility. The Company's Brazilian subsidiary, ABNB had $2.3 million
of short-term borrowing at June 30, 2001 in connection with various equipment
purchases. The Company's French subsidiary, CPS, had available approximately
$0.9 million under its working capital revolving credit facility at June 30,
2001, with no borrowing against the facility since that date. In addition, the
Company's Australian subsidiary, LM, has a working capital facility of
approximately $2.8 million with a local bank collateralized by LM's banking
syndicate. At June 30, 2001, LM had used approximately $0.4 million for
outstanding letters of credit under the line, leaving approximately $2.4 million
available with no material change occurring in such levels since then. The
Company's Argentine subsidiary, Transtex, had available at June 30, 2001
short-term financing arrangements totaling $0.7 million with several local banks
primarily secured by specific accounts receivable. As a result of overall credit
tightening by the banks in Argentina, no further credit terms are available to
Transtex.

Long-Term Debt. The Parent's long-term debt subject to
compromise (excluding accrued interest) consists of $56.5 million on its 10 3/8%
Senior Notes due June 1, 2002 (the "Senior Secured Notes"), $95.0 million on its
11 1⁄4% Senior Subordinated Notes due December 1, 2007 (the "Senior
Subordinated Notes"), $8.0 million on its Senior Unsecured Notes due August 1,
2002 (the "Senior Unsecured Notes"), and $3.7 million on its Zero Coupon
Convertible Subordinated Notes due August 2, 2002 and November 25, 2002 (the
"Convertible Subordinated Noteholders"). Long-term debt of subsidiaries includes
$40.8 million of LM's senior and subordinated non-recourse debt (the "LM debt"),
and $0.8 million of mortgage and other indebtedness.

On June 26, 2001, the LM debt was amended, extending the
maturity date of the loan for three years, along with an interest rate reduction
equal to approximately 50% of its original interest rate on the borrowings. The
amended agreement requires LM to make a $1.1 million principal repayment on the
second anniversary of the amendment with the balance of the loan maturing on
June 24, 2004. In exchange for these amendments and the return of a 5% equity
interest granted to the banking syndicate in 2000, the banking syndicate will
receive approximately ten percent (10%) of LM's equity which will vest over a
period of time. As of June 30, 2001, 7.5% of this equity has vested to the
banking syndicate. As a condition to the amendment, the Parent made a capital
contribution of $1.2 million to LM in June 2001.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q, under the captions,
"Business," and "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," "Plan of Reorganization," "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 2001 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, 2000, which should be considered in
connection with a review of this report.

Item 3. Quantitative and Qualitative Disclosures
About Market Risk

Foreign Operations and Foreign Currency

The Company operates in Brazil, Australia, and France, which had
significant foreign exchange fluctuations in 2000 and 2001. In addition, the
Company operates in Argentina, which has recently defaulted on its government
debt and has devalued its currency in an effort to end the country's four-year
recession.

The Company's foreign exchange exposure policy generally calls
for selling its domestic manufactured product in U.S. Dollars and, in the case
of LM, 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, 2001, the Company
experienced an average devaluation in the Brazilian, Australian and French
currencies of 19%, 17% and 6% respectively. In particular, the Brazilian Real
has experienced tremendous volatility against the U.S. Dollar with the Real
devaluing by over 40% against the U.S. Dollar as of September 21, 2001 (R$2.79)
when compared to the beginning of 2001 (R$1.95). As of January 31, 2002, the
Real has since improved to R$2.44 to the U.S. Dollar but continues to experience
significant volatility, particularly in light of the Argentine crisis discussed
below. As ABNB is the Company's largest subsidiary, contributing more than half
of the revenues, operating profit and cash flow of the consolidated group, the
continued threat of currency devaluation could severely impact the Company's
ability to service its U.S. debt and to fund its corporate operating expenses.

The severe and ongoing economic recession in Argentina continues
to negatively impact the profitability, cash flow and carrying value of
Transtex, such that any further deterioration in the business may impact its
ability to continue as a going concern.

In an effort to end its four-year recession, in January 2002
Argentina abandoned its Peso-Dollar currency peg system. Initially the Peso was
reset at an official rate of US $1 = AR $1.40. In February, 2002, the official
rate was abandoned and the currency was allowed to float freely on currency
markets. Although banks and foreign exchange markets in Argentina have been
closed temporarily by government decree, as of February 4, 2002, it appears that
the Peso has devalued in markets outside of Argentina by approximately 50%
against the Dollar.

PART II -OTHER INFORMATION
Item 1. Legal proceedings

Status of Chapter 11 Proceeding. In December 1999 the
Parent (but none of its subsidiaries) filed a plan for reorganization relief
under Chapter 11 of the United States Bankruptcy Code (the "Chapter 11
Proceeding"). In November 2000, the Bankruptcy Court confirmed the Parent's plan
of reorganization (the "Plan") in the Chapter 11 Proceeding. The Plan has not
yet been consummated.

In the intervening period since the Bankruptcy Court's
confirmation of the Plan, the Company has been adversely affected by: (a) a
significant and continuing devaluation of the Brazilian Real relative to the
U.S. Dollar, which has negatively impacted the flow of dividends to the Parent
from its Brazilian subsidiary; (b) a diminishing market for many of the
Company's maturing security paper products; and (c) the severe and ongoing
economic recession in Argentina. In addition, although it appears to have
lessened recently, the Company continues to monitor any potential impact that
may result from Brazil's ongoing energy crisis.

As a result, the Parent has increasing concerns about its
ability to meet its payment obligations to creditors as contemplated under the
Plan, both upon consummation of the Plan and in the near term following
consummation. Consequently, management expects to propose to the Bankruptcy
Court certain amendments to the Plan (a) to give the Parent the option to defer
cash interest payments payable under its Senior Unsecured Notes if, in the
reasonable judgment of management, sufficient cash is not available to pay such
interest in cash and fund all other working capital needs of the Company, (b) to
extend the maturity date of its Senior Unsecured Notes, and (c) to grant the
Parent an option to extend the maturity date of its Senior Secured Notes.
Additional amendments to the Plan may also be proposed. Such proposals would be
subject, in all respects, to the approval of the Bankruptcy Court, after
solicitation or re-solicitation of any affected creditors.

As of the date of this filing, there can be no assurance that
the Plan will be consummated. In addition, lower than anticipated operating
income in 2001 has increased the risk that the Plan may require further
amendment prior to consummation. Furthermore, additional administrative expenses
will be required to consummate the Plan, the full effects of which can not be
readily determined. Reference should be made to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000 for a further discussion of the
Chapter 11 Proceeding.

State and Local Taxes

The NYC Department of Finance ("NYC") notified the Parent in the
third quarter of 2001 that it was contesting the Parent's position that it could
file a combined franchise tax return in that jurisdiction. On that basis NYC has
issued a formal assessment for additional taxes and interest of approximately
$1.1 million related to tax years up to and including 1992. Management believes
that it has meritorious defenses to the assessment and intends to vigorously
contest it . Also in the third quarter, the statute of limitations relating to
the potential assessment of certain state taxes, based upon the same premise as
in the aforementioned assessment, expired in 2001. An aggregate reserve of
approximately $3.4 million, including interest, was established in prior years
for potential adjustments that could arise from audits by state and local taxing
authorities. As a result of the expiration of the statute of limitations, the
Parent estimated that approximately $1.8 million of this reserve, including
interest of $0.7 million, was no longer required and was reversed in the third
quarter of 2001. The $1.6 million balance of the reserve will remain on the
Parent's balance sheet to cover remaining potential adjustments, including the
NYC assessment noted above . The extent of the Parent's actual liability will
depend upon what other assessments, if any, are asserted and the outcome of the
Parent's defense of its position in connection with the NYC assessment.

Item 6. Exhibits and Reports on Form 8-K

|(a) | Exhibit 10.1 | Correspondence between the Parent and Mr. Sydney Levy, dated as of January 2,
2002 and January 4, 2002, terminating that certain Stock Purchase and Sale
Agreement, dated January 9, 2001, by and between the Parent, ABN Equities Inc.,
ABNB and Mr. Levy.
|--- | ------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Exhibit 10.2 | Correspondence between the Parent and Mr. Jose Domingos Sidrim Bastos,
dated as of January 2, 2002 and January 4, 2002, terminating that certain Stock
Purchase and Sale Agreement, dated January 9, 2001, by and between the Parent,
ABN Equities Inc., ABNB and Mr. Sidrim Bastos.
| | ------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Exhibit 10.3 | Agreement between ABNB and Mr. Sidney Levy, dated December 12, 2001, regarding
payment of bonus to Mr. Levy upon sale of ABNB shares by the Parent.
| | ------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Form 8-K filed August 16, 2001
          - Item 5 - Other Events
Form 8-K filed July 23, 2001
          - Item 5 - Other Events
          - Item 7 - Financial Statement,
Pro Forma Financial Information and Exhibits
Form 8-K filed April 6, 2001
          - Item 4 - Changes in Registrant's Certifying Accountant
          - Item 7 - Financial Statement,
Pro Forma Financial Information and Exhibits
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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
Chief Financial Officer
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated:  February 14, 2002