<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                                       OR

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

              FOR THE TRANSITION PERIOD FROM _________TO _________

                          COMMISSION FILE NUMBER 1-3410

                          AMERICAN BANKNOTE CORPORATION

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               DELAWARE                                           13-0460520
    (STATE OR OTHER JURISDICTION OF                           (I.R.S. EMPLOYER
    INCORPORATION OR ORGANIZATION)                           IDENTIFICATION NO.)

           560 SYLVAN AVENUE                                     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. [X] YES NO [ ]

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT). YES [X] NO. [ ]

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. [X] YES [ ] NO.

THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK WAS 11,770,815
SHARES, PAR VALUE $.01, OUTSTANDING AS AT NOVEMBER 14, 2003.

<PAGE>

                          AMERICAN BANKNOTE CORPORATION

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                               NO.
<S>                                                                                                           <C>
PART I - FINANCIAL INFORMATION

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

     Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations.....................................              18

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk.........................              34

     Item 4.  Controls and Procedures............................................................              35

PART II - OTHER INFORMATION

     Item 1.  Legal and Other Proceedings........................................................              36

     Item 6.  Exhibits and Reports on Form 8-K...................................................              38
</TABLE>

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

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

<TABLE>
<CAPTION>
                                                            September 30,
                                                                2003             December 31,
                                                             (Unaudited)             2002
                                                            -------------        ------------
<S>                                                         <C>                  <C>
ASSETS
Current assets
 Cash and cash equivalents                                    $   8,051            $  10,769
 Accounts receivable, net of allowance for doubtful
  accounts of $1,422 and $1,120                                  26,095               24,714
 Inventories, net of allowances of $446 and $594                 23,028               16,491
 Prepaid expenses and other                                       5,045                4,184
 Deferred taxes                                                   2,103                1,712
                                                              ---------            ---------
          Total current assets                                   64,322               57,870
                                                              ---------            ---------
Property, plant and equipment
 Land                                                             2,139                1,835
 Buildings and improvements                                       8,901                8,183
 Machinery, equipment and fixtures                               98,754               82,501
 Construction in progress                                             -                   46
                                                              ---------            ---------
                                                                109,794               92,565
 Accumulated depreciation and amortization                      (56,084)             (42,427)
                                                              ---------            ---------

                                                                 53,710               50,138

Other assets                                                      4,636                5,121

Investment in non-consolidated subsidiaries                       6,030                5,035

Goodwill                                                        115,148               99,587
                                                              ---------            ---------
          Total assets                                        $ 243,846            $ 217,751
                                                              =========            =========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                        1
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    September 30,
                                                                        2003         December 31,
                                                                     (unaudited)         2002
                                                                    -------------    ------------
<S>                                                                 <C>              <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
 Current portion of long-term debt                                   $    54,386      $    3,186
 Revolving credit facilities                                               2,251           1,933
 Accounts payable and accrued expenses                                    42,807          38,787
                                                                     -----------      ----------
            Total current liabilities                                     99,444          43,906

Long-term debt                                                            96,905         138,265

Other long-term liabilities                                               16,487          16,921

Deferred taxes                                                             2,342           1,858

Minority interest                                                         30,894          25,582
                                                                     -----------      ----------

            Total liabilities                                            246,072         226,532

Commitments and Contingencies

Stockholders' 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                                                       (45,804)        (39,431)
  Treasury stock, at cost 57,756 shares                                     (103)           (103)
  Accumulated other comprehensive income                                  22,670           9,742
                                                                     -----------      ----------
            Total stockholders' deficit                                  (2,226)          (8,781)
                                                                     -----------      ----------
                                                                     $   243,846      $  217,751
                                                                     ===========      ==========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                     Nine Months Ended                Third Quarter Ended
                                                       September 30,                      September 30,
                                                  2003              2002             2003             2002
                                             (Successor Co)   (Predecessor Co)  (Successor Co)  (Predecessor Co)
                                             --------------   ----------------  --------------  ----------------
<S>                                          <C>              <C>               <C>             <C>
Sales                                           $ 164,341         $ 153,888        $  59,865        $  50,991
                                                ---------         ---------        ---------        ---------
Costs and expenses
 Cost of goods sold                               126,357           110,485           44,783           35,863
 Selling and administrative                        26,025            22,534           10,037            7,250
 Restructuring                                        479             1,829              113               92
 Goodwill and asset impairment                     (1,051)           25,383           (1,051)          25,383
 Depreciation and amortization                      9,156             5,958            3,220            1,784
                                                ---------         ---------        ---------        ---------
                                                  160,966           166,189           57,102           70,372
                                                ---------         ---------        ---------        ---------

                                                    3,375           (12,301)           2,763          (19,381)
                                                ---------         ---------        ---------        ---------
Other expense (income)
 Interest expense                                   9,602            10,087            3,276            3,288
 Gain on senior note repurchases                   (3,393)                -                -                -
 Other, net                                          (866)              630           (1,158)             116
 Reorganization costs                                 347             1,160              243              480
                                                ---------         ---------        ---------        ---------
                                                    5,690            11,877            2,361            3,884
                                                ---------         ---------        ---------        ---------

Income (loss) before  taxes on income
 and minority interest                             (2,315)          (24,178)             402          (23,265)

Taxes on income                                     3,226             2,934            1,350            1,501
                                                ---------         ---------        ---------        ---------

Loss before minority interest                      (5,541)          (27,112)            (948)         (24,766)

Minority interest                                     832             1,473              442              724
                                                ---------         ---------        ---------        ---------

          NET LOSS                              $  (6,373)        $ (28,585)       $  (1,390)       $ (25,490)
                                                =========         =========        =========        =========

Net loss per common share -
 Basic and Diluted
          Net loss                              $   (0.54)              N/A        $   (0.12)             N/A
                                                =========         =========        =========        =========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                       Nine Months Ended                Third Quarter Ended
                                                         September 30,                      September 30,
                                                        -------------                      -------------
                                                   2003             2002             2003             2002
                                              (Successor Co)   (Predecessor Co)  (Successor Co)  (Predecessor Co)
                                              --------------   ----------------  --------------  ----------------

<S>                                           <C>              <C>               <C>             <C>
Net loss                                        $  (6,373)        $ (28,585)       $  (1,390)       $ (25,490)

 Foreign currency translation adjustment           12,928           (19,395)          (2,872)          (9,192)
                                                ---------         ---------        ---------        ---------

Comprehensive income (loss)                     $   6,555         $ (47,980)       $  (4,262)       $ (34,682)
                                                =========         =========        =========        =========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                           Nine Months Ended
                                                                              September 30,
                                                                    --------------------------------
                                                                         2003              2002
                                                                    (Successor Co)   (Predecessor Co)
                                                                    --------------   ----------------
<S>                                                                 <C>              <C>
Net cash provided by operating activities                             $    4,496        $   11,714

Investing Activities
  Capital expenditures                                                    (3,687)           (5,419)
  Proceeds from sale of assets                                                 4               550
                                                                      ----------        ----------
Net cash used in investing activities                                     (3,683)           (4,869)

Financing Activities
  Revolving facilities, net                                                 (162)           (2,808)
  Repayments of long-term debt, net                                          (40)              (36)
  Repurchase of senior notes                                              (2,929)                -
  Dividend to minority shareholder                                          (833)             (979)
                                                                      ----------        ----------
Net cash used in financing activities                                     (3,964)           (3,823)

Effect of foreign currency exchange rate changes
  on cash and cash equivalents                                               433              (658)
                                                                      ----------        ----------

Increase (decrease) in cash and cash equivalents                          (2,718)            2,364

Cash and cash equivalents - beginning of year                             10,769             9,741
                                                                      ----------        ----------
Cash and cash equivalents - end of period                             $    8,051        $   12,105
                                                                      ==========        ==========

Supplemental disclosures of cash flow information
  Taxes                                                               $    3,100        $    3,200
  Interest                                                                 2,200             2,100
  Reorganization items                                                       378               325
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       5
<PAGE>

AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
   AND COMPREHENSIVE INCOME (LOSS) - UNAUDITED
NINE MONTHS ENDED SEPTEMBER 30, 2003
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                    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,
       2003         $   118    $ 20,893    $ (39,431)   $  (103)      $  9,742     $  (8,781)

Net Loss                                      (6,373)                                 (6,373)
Currency

 Translation
 Adjustments                                                            12,928        12,928

                    -------    --------    ---------    -------       --------     ---------
   Balance
September 30,
    2003            $   118    $ 20,893    $ (45,804)   $  (103)      $ 22,670      $ (2,226)
                    =======    ========    =========    =======       ========     =========
</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"), the
US operating subsidiary; American BankNote Ltda ("ABNB"), a 77.5% owned
Brazilian company; ABN Australasia Limited, trading as Leigh-Mardon Pty. Ltd.
("LM"), a 90.4% owned Australian company (see Note F) 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 September 30, 2003 and for the nine months and
third quarter periods ended September 30, 2003 (Successor Company) and September
30, 2002 (Predecessor Company) 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, 2002.
Operating results for the nine months and third quarter ended September 30, 2003
may not be indicative of the results that may be expected for the full year.

On December 8, 1999, the Parent (but not any of its subsidiaries) filed a
petition for reorganization relief under Chapter 11 of the United States
Bankruptcy Code (the "Chapter 11 Proceeding"). Throughout the Chapter 11
Proceeding, each of the Parent's subsidiaries continued to operate in the normal
course of business, and each serviced its debts as and when due. 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. On the
Effective Date, the Parent cancelled all shares of its preexisting common stock
and preferred stock, and commenced the issuance of its new common stock, $.01
par value per share ("New Common Stock"), and certain additional rights,
warrants and options entitling the holders thereof to acquire New Common Stock,
in the amounts and on the terms set forth in the Plan.

In accordance with the AICPA Statement of Position ("SOP") 90-7, Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code, the Company
adopted fresh start reporting ("Fresh Start") as of September 30, 2002. The
Company recorded the effects of the Plan and Fresh Start as of October 1, 2002.
Under Fresh Start, a new reporting entity (the "Successor Company" or the
"Reorganized Company") is deemed to be created as a result of a change in
control of ownership. SOP 90-7 requires, among other things, that the Company's
recorded amounts of assets and liabilities be adjusted to reflect their
reorganization value ("Reorganization Value"), which is defined as the fair
value at the Effective Date, in accordance with Statement of Financial
Accounting Standards No. 141 "Business Combinations" and Staff Accounting
Bulletin No. 54. The reorganized values have been accordingly recorded on the
books and records of the subsidiary companies. Any portion of the Reorganized
Company's assets not attributed to specific tangible ABNB is the Company's

                                       7
<PAGE>
or identified intangible assets of the Reorganized Company were identified as
Reorganization Value in excess of amounts allocable to identified assets and has
been classified as goodwill ("Goodwill"). This Goodwill will be periodically
measured for impairment in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." Goodwill of
the Company was $115.1 million and $99.6 million at September 30, 2003 and
December 31, 2002, respectively. The change in Goodwill between periods was due
to foreign currency translation, in accordance with SFAS No. 52.

As a result of the Company's adoption of Fresh Start accounting, reporting for
the nine months and third quarter ended September 30, 2003 reflects the
financial results of operations and cash flows of the Successor Company, while
reporting for the nine months and third quarter ended September 30, 2002
reflects those of the pre-reorganization Company (the "Predecessor Company"). As
a result of the application of Fresh Start reporting, the financial statements
for the periods after reorganization are not comparable to the financial
statements for the periods prior to reorganization.

The Company has significant operations in Brazil, Australia, Argentina and
France. On a consolidated basis, these operations experienced significant
foreign exchange rate fluctuations against the US Dollar in 2002. Foreign
exchange rate fluctuations on a comparative basis continued to exist in the
first nine months and third quarter of 2003 when compared to the same periods in
2002.

Although, over the last nine months, the Real and the Argentine Peso have each
improved overall, the Company nevertheless experienced an average devaluation of
each of these currencies against the US Dollar when compared to the nine months
of the prior year. Compared to the prior period, the Brazilian and Argentine
currencies devalued by approximately 15% and 7%, respectively. The Australian
and Euro currencies experienced an average appreciation of approximately 17% and
21%, respectively, during the same period.

For the third quarter ended September 30, 2003, the Company experienced an
average appreciation in the Brazilian, Argentine, Australian and Euro currencies
against the US Dollar of approximately 6%, 26%, 20% and 15%, respectively, when
compared to the prior year.

Historically, and to date, the Brazilian Real has experienced tremendous
volatility against the US Dollar. The average exchange rate for the nine months
and third quarter ended September 30, 2003 was R$3.14 and R$2.93 to the US
Dollar, respectively. As of October 28, 2003, the Real had strengthened to
R$2.87 to the US Dollar. Despite its significant improvement in 2003, the Real
still continued to experience exchange rate volatility, as the average exchange
rate devaluation for the nine months ended September 30, 2003 was 15% whereas an
average appreciation of approximately 6% occurred in the third quarter of 2003,
against the US Dollar when compared to the prior year. In 2002, the Real
devalued to its lowest level by over 41% against the US Dollar as of October 22,
2002 (R$3.96), when compared to the beginning of 2002 (R$2.35). The Real ended
2002 at R$3.53 to the US Dollar, a decline of 33% from its rate at the beginning
of that year (R$2.35). Given its historic volatility there is no guarantee that
the Real will either improve or stabilize at any certain level against the US
Dollar.

largest subsidiary, contributing on an annual basis
approximately half of the revenues, operating profit and cash flow of the
consolidated group. Despite the recent strengthening of the Real, the currency's
devaluation over the past two years has severely impacted ABNB's cash flow in US
Dollar terms, and has therefore threatened its ability to pay dividends to the
Parent at the same levels as in the past. Based on current estimates, it is
anticipated that dividends from ABNB (along with those of other subsidiaries)
will be sufficient to fund the Parent's operating 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.

                                       8
<PAGE>

In an effort to end its lengthy recession, in January 2002 Argentina abandoned
its Peso-Dollar currency peg system. Initially the Peso was reset at an official
rate of US $1 = AR $1.40. In February 2002, the official rate was abandoned and
the currency was allowed to float freely on currency markets. At October 28,
2003, the quoted exchange rate for the Peso on freely trading markets was
approximately US$1 = AR$2.88.

The severe and ongoing economic recession in Argentina continues to negatively
impact the carrying value of Transtex. However, despite the economic environment
in Argentina, Transtex has generated positive operating income and cash flow for
the nine months and third quarter ended September 30, 2003. Throughout 2002, the
Argentine government imposed a moratorium on dividend repatriations outside the
country. The government has recently lifted this ban and, as a result, the
Parent was able to receive a $0.3 million and $0.1 million dividend from
Transtex in March and July 2003, respectively. It is anticipated that the Parent
will receive an additional dividend of $0.1 million in the fourth quarter of
2003. However, in addition to the Argentine recession and currency fluctuation,
Argentina has recently experienced increasing inflationary pressures that could
impact the operations and cash flow of Transtex. For all of these reasons there
can be no assurance that the ability to repatriate dividends freely out of the
country will continue on a consistent basis or that Transtex will continue to
generate positive cash flow.

As a result of the devaluation of the Argentine Peso, effective January 1, 2002,
the Company's financial statements include the impact of foreign currency
translation on Transtex in accordance with FASB Statement No. 52, "Foreign
Currency Translation." The Argentine Peso was therefore adopted as the
functional currency for translation purposes. As is the case with the Parent's
other foreign subsidiaries, the balance sheet accounts of Transtex have been
translated using the exchange rates in effect at the balance sheet date, and the
income statement amounts have been translated using the average exchange rate
for the nine months and third quarter ended September 30, 2003 and 2002 (both
Predecessor and Successor Companies).

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

Reference should be made to the Notes to the Company's Consolidated Financial
Statements and to Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's Annual Reports on Form 10-K
for the years ended December 31, 2000, December 31, 2001 and December 31, 2002
for a further discussion of other risk factors.

                                       9
<PAGE>

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

NOTE B - EARNINGS PER SHARE COMPUTATIONS

Amounts used in the calculation of basic and diluted per share amounts for the
nine months and third quarter ended September 30, 2003 were as follows:

<TABLE>
<CAPTION>
                                                     Nine Months Ended     Third Quarter Ended
                                                        September 30,         September 30,
                                                           2003                   2003
                                                           ----                   ----
Numerator for (loss) from continuing operations
<S>                                                  <C>                   <C>
(in thousands)                                           $    (0.54)           $    (0.12)
                                                         ==========            ==========

Denominator for per share computations
Weighted average number of shares outstanding
 (in thousands):
 Common Stock                                                11,771                11,771
                                                         ==========            ==========
</TABLE>

Earnings per share for periods prior to the October 1, 2002 Effective Date have
been omitted as these amounts do not reflect the current capital structure
resulting from the consummation of the Plan and therefore would not be
comparable.

The denominator for computing diluted income per share excludes certain
warrants, equity options and management incentive options issued in accordance
with the Plan, as the exercise prices of such warrants and options were greater
than the market price of the common shares.

NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS

In July 2002, the FASB issued Statement of Financial Accounting Standards No.
146, "Accounting for Costs Associated with Exit or Disposal Activities"("SFAS
146"). SFAS 146 requires companies to recognize costs associated with exit or
disposal activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Examples of costs covered by SFAS 146
include lease termination costs and certain employee severance costs that are
associated with a restructuring, discontinued operation, plant closing or other
exit or disposal activity. SFAS 146 is to be applied prospectively to exit or
disposal activities initiated after September 30, 2002. We do not expect SFAS
146 to have a material effect on our consolidated financial position, results of
operations or liquidity.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 permits two additional
transition methods for companies that elect to adopt the fair-value-based method
of accounting for stock-based employee compensation. The statement also expands
the disclosure requirements for stock-based compensation. The provisions of this
statement apply to financial statements for fiscal years ending after December
15, 2002. The adoption of SFAS No. 148 did not have a material impact on the
financial statements.

                                       10
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                    September 30,     December 31,
                                                        2003             2002
                                                        ----             ----
<S>                                                 <C>              <C>
Finished goods                                        $  5,014         $     613
Work-in-progress                                        11,614             7,294
Raw materials and supplies (net of allowances of
 $446 and $594, respectively)                            6,400             8,584
                                                      --------         ---------
                                                      $ 23,028         $  16,491
                                                      ========         =========
</TABLE>

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

NOTE E - RESTRUCTURING

In the first quarter of 2003, in light of significant stock and bond and food
coupon volume reductions, ABN consolidated its Philadelphia operations into its
Tennessee operation, thereby placing all of ABN's manufacturing operations
within a single location, resulting in the termination of approximately 50
employees. Accordingly, ABN recorded a severance charge in the first and third
quarters of 2003 of approximately $0.4 million and $0.1 million related to
employee terminations. Costs related to equipment relocation were approximately
$0.1 million and were funded through internal cash flow and expensed as incurred
and have been included in cost of goods sold in accordance with SFAS 146. It is
contemplated that the total costs resulting from this restructuring will be
recovered within one year from its execution. Additionally, in the third quarter
of 2003, ABN consolidated its two secure satellite storage and distribution
facilities into a single facility. On October 6, 2003, ABN entered into a
contract to sell its Philadelphia plant for approximately $0.8 million subject
to ordinary closing provisions. The transaction is expected to close before the
end of 2003.

In the first quarter of 2002, LM announced a restructuring program for the
purpose of consolidating its check manufacturing operations. As a result,
approximately 80 employees were terminated at one of its manufacturing
facilities. This resulted in a total restructuring charge of $1.9 million of
which $1.4 million was paid in the first quarter of 2002, $0.3 million in the
second quarter of 2002 and $0.1 million in the third and fourth quarter of 2002,
respectively. The payback on costs incurred on the restructuring was achieved
within approximately one year from date of execution.

NOTE F - GOODWILL AND ASSET IMPAIRMENT

In the third quarter of 2002, the Company recorded a charge for goodwill and
asset impairment of $25.4 million. This charge consisted of a $25.2 million
write-down in goodwill at LM based on the Parent's assessment of LM's net assets
in accordance with SFAS No. 142 and a $0.2 million reserve with respect to the
carrying value of certain equipment at ABN. The events and circumstances used to
evaluate the adjusted carrying value of these assets are set forth below.

In the third quarter of 2002, the Parent's management evaluated the carrying
value of goodwill at LM in accordance with SFAS No. 142. In light of the
Parent's concerns surrounding the potential restructuring, refinancing and/or
re-capitalization of LM's bank debt, which concerns continue to exist today (See
Note H), along with the uncertainty surrounding the availability of additional

                                       11
<PAGE>

internal and external capital funding required to grow significantly and/or
further rationalize the cost structure of LM's business, the Company evaluated
and wrote down the entire carrying value of LM's goodwill of $25.2 million at
September 30, 2002 to more appropriately reflect the Parent's estimation of LM's
fair value in accordance with SFAS No. 142. Moreover, the Parent notes that LM's
capital constraints have caused local management difficulty in upgrading
computer and other systems which, in turn, continue to hamper local management's
ability to effectively and efficiently operate, evaluate and restructure its
business.

In the third quarter of 2002, ABN was notified orally by the USDA that it did
not anticipate the need to place any further purchase orders for the production
of food coupons for the remainder of the term of its requirements contract with
ABN. As a result, ABN recorded a third quarter asset impairment charge of $0.2
million which represented the write-down of the carrying value of certain
equipment specifically dedicated to this contract.

In the third quarter of 2003, the USDA gave ABN final notification and delivery
instructions for the remaining food coupons held in secure storage by ABN
pursuant to its distribution contract with the USDA which expired on September
30, 2003. ABN fully performed and completed the remaining two months of service
pursuant to the terms of this contract, and in the normal course has billed the
USDA approximately $1.6 million in accordance with the contract. The USDA has
orally indicated its intention to dispute the final billings under this
contract. ABN believes it has fully complied with all terms under such contract
and is entitled to full payment for all work performed. However, pursuant to the
revenue recognition rules under Statement of Accounting Bulletin ("SAB") 101,
the Company has not as of this date recognized any of the revenue on these
services as a result of the USDA's oral communication.

The failure by ABN to fully recover its final invoicings from the USDA under its
distribution contract will have a direct and significant effect on the cash flow
of ABN as well as the level of dividends that will be available to the Parent.
Although, based on current estimates, it is anticipated that dividends from ABN
along with those of ABNB will be sufficient to fund the Parent's operating
expense in the future, no assurance can be made that further volatility in the
Real or other business developments will not lead to a contrary result. Please
refer to Item 2, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and "Liquidity and Capital Resources" for further
information.

In light of the above food coupon volume reductions, ABN in the third quarter
evaluated its current facility and capacity needs and further consolidated its
two secure distribution and warehouse facilities in Tennessee into one single
location (See Note E - "Restructuring" for further information).

NOTE G - LONG TERM DEBT

On June 26, 2001, LM's $53.3 million debt facility was amended, extending the
maturity date of the loan for three years, and reducing the interest rate to
approximately 50% of the original interest rate on the borrowings. The amended
agreement required LM to make a $1.2 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 LM's Banking Syndicate ("the Banking Syndicate") in 2000, the Banking
Syndicate received approximately 10% of LM's equity vesting over a period of
time ending on March 31, 2004. As of September 30, 2003, approximately 9.6% of
this equity had vested. As a condition to the amendment, the Parent made a
capital contribution of $1.2 million to LM in June 2001.

In April 2003, as a result of an agreement between the Company, LM and the
Banking Syndicate to place LM up for sale, the Banking Syndicate consented to
defer the June 2003 $1.2 million principal repayment to the June 24, 2004 final
maturity date of the loan. In addition, in the second quarter of 2003, the

                                       12
<PAGE>

Banking Syndicate agreed to suspend all financial covenant testing on a monthly
basis during the sale period. As a result, the total amount of the loan has been
classified as current. (See "Liquidity and Capital Resources and "Ability to
Service Debt" for further information).

In the third quarter of 2003, the Banking Syndicate evaluated the public sale
process conducted by LM's financial advisors. After reviewing all options, the
Banking Syndicate elected not to sell LM but have instead entered into
negotiations with LM and the Company and subsequently orally agreed in principle
to restructure LM's bank debt through a combination of debt forgiveness and a
partial debt for preferred and common equity swap. This transaction  would give
the Banking Syndicate a controlling equity stake in LM and would result in the
Parent relinquishing control and retaining a minority interest position. The
final terms and conditions are expected to be completed in due course. The
exchange is expected to result in a significant non-cash gain to the Company to
the extent of the net discharge of LM's indebtedness upon deconsolidation.

While agreements in principle between the Company, LM and LM's Banking Syndicate
have resulted in satisfactory arrangements in the past, there is no certainty
that the above process will be satisfactorily concluded. In the event that these
discussions are not satisfactorily concluded, there is a possibility LM may not
be able to continue as a going concern absent further accommodation from the
Banking Syndicate. Moreover, LM's capital constraints have caused local
management difficulty in upgrading computer and other systems that, in turn,
continue to hamper their ability to effectively and efficiently operate,
evaluate and restructure the business. Under the terms of the LM Debt, dividends
payable to the Parent are prohibited.

Note H - SUBSEQUENT EVENTS

Chicago Lease

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

Blackstone Claim

In the third quarter of 2003, the Parent and its Chapter 11 investment advisors,
the Blackstone Group ("Blackstone), orally agreed in principle to settle
Blackstone's $1.6 million asserted claim. Such claim arose pursuant to an
unsecured promissory note, which was scheduled to be payable upon consummation
of the Plan. While both parties continue to preserve their respective rights
through the normal procedures of the Bankruptcy Court, the proposed settlement
contemplates that the Parent will pay Blackstone approximately $0.6 million in
cash and give a secured note (the "Note") for approximately $1.3 million, which
would have a security interest (on a pari passu basis) in the collateral
securing the Parent's Senior Notes. The Note would mature simultaneously with
the Senior Notes. It is anticipated that a final settlement will be reached by
the end of 2003. However, there can be no assurance that a successful outcome
between the parties can be achieved.


                                       13
<PAGE>


Lithuania Claim

In October 2003, the Parent notified the Bank of Lithuania ("Lithuania") that it
would not make its scheduled installment settlement payment of $0.5 million due
October 1, 2003 due to its cash flow constraints. The payment is part of a
remaining $1.7 million settlement obligation between the Parent and Lithuania
that was entered into the Bankruptcy Court and became effective upon the October
1, 2002 consummation of the Plan. The parties have entered into discussions in
an attempt to restructure the balance of the obligation to avoid further
litigation. However, counsel for Lithuania has indicated that the Parent's
initial proposal was unacceptable and there can be no assurance that a
successful outcome between the parties can be achieved. As a result of the
default, the entire $1.7 million obligation has been recorded as a current
liability in accounts payable and accrued expenses at September 30, 2003.

                                       14
<PAGE>

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

NOTE I - SEGMENT DATA

Summarized financial information for the nine months ended September 30, 2003
and 2002 concerning the Company's reportable segments is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                Nine Months Ended
                                                      September 30, 2003   September 30, 2002
                                                        (Successor Co)      (Predecessor Co)
                                                      ------------------   ------------------
                                                               Operating             Operating
                                                                Profit                 Profit
                                                       Sales    (Loss)        Sales    (Loss)
                                                      --------  -------    ---------  ---------
<S>                                                   <C>       <C>        <C>        <C>
Brazil                                                $ 72,884  $ 6,019     $ 78,417  $  12,120
Australia (1)                                           59,084     (441)      41,129    (25,701)
United States                                           16,005     (490)      24,476      3,132
France                                                  12,664      545        6,596        374
Argentina                                                3,704      770        3,270        764
Corporate - United States                                    -   (3,028)           -     (2,990)
                                                      --------  -------     --------  ---------
Totals                                                $164,341  $ 3,375     $153,888  $ (12,301)
                                                      ========  =======     ========  =========
</TABLE>

(1) After goodwill write-off of $25.2 million in 2002.

Through its subsidiaries, the Company serves its customers in the regions where
it does business through three principal product lines: Transaction Cards and
Systems ("TCS"), Printing Services and Document Management ("PSDM"), and
Security Printing Solutions ("SPS"). The table below presents the components of
these sales for the nine months ended September 30, 2003 and 2002 as follows
(Dollars in thousands):

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                      September 30, 2003    September 30, 2002
                                                        (Successor Co)       (Predecessor Co)
                                                      ------------------    -------------------
                                                        Sales      %          Sales       %
                                                      --------  --------    --------  ---------
<S>                                                   <C>       <C>         <C>       <C>
Transaction Cards and Systems                         $ 54,644      33.3    $ 48,966       31.8
Printing Services and
  Document Management                                   44,151      26.8      27,809       18.1
Security Printing Solutions                             65,546      39.9      77,113       50.1
                                                      --------  --------    --------  ---------
Total Sales                                           $164,341     100.0    $153,888      100.0
                                                      ========  ========    ========  =========
</TABLE>

                                       15
<PAGE>

NOTE I - SEGMENT DATA (continued)

Summarized financial information for the third quarter ended September 30, 2003
and 2002 concerning the Company's reportable segments is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                  Third Quarter Ended
                                                      September 30, 2003    September 30, 2002
                                                        (Successor Co)       (Predecessor Co)
                                                      -------------------   -------------------
                                                                Operating             Operating
                                                        Net      Profit       Net      Profit
                                                       Sales     (Loss)      Sales     (Loss)
                                                      --------  --------   ---------  ---------
<S>                                                   <C>       <C>        <C>        <C>
Brazil                                                $ 26,709  $  2,641    $ 23,478  $   5,403
Australia (1)                                           21,555       (18)     16,473    (24,368)
United States                                            5,366       593       8,218        289
France                                                   4,794       192       1,918         47
Argentina                                                1,441       307         904        230
Corporate - United States                                    -      (952)          -       (982)
                                                      --------  --------    --------  ---------
Totals                                                $ 59,865  $  2,763    $ 50,991  $ (19,381)
                                                      ========  ========    ========  =========
</TABLE>

(1) After goodwill write-off of $25.2 million in 2002.

The table below presents the principal product line components of these sales
for the third quarter ended September 30, 2003 and 2002 as follows (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                  Third Quarter Ended
                                                      September 30, 2003    September 30, 2002
                                                        (Successor Co)       (Predecessor Co)
                                                      ------------------    -------------------
                                                        Sales      %          Sales       %
                                                      --------  --------    --------  ---------
<S>                                                   <C>       <C>         <C>       <C>
Transaction Cards and Systems                         $ 20,691      34.6    $ 14,883       29.2
Printing Services and
  Document Management                                   17,083      28.5      11,234       22.0
Security Printing Solutions                             22,091      36.9      24,874       48.8
                                                      --------  --------    --------  ---------
Total Sales                                           $ 59,865     100.0    $ 50,991      100.0
                                                      ========  ========    ========  =========
</TABLE>

NOTE J - OTHER EVENTS

State and Local Taxes

The statute of limitations relating to a potential assessment of New York City
Franchise taxes, for tax years ended 1993 through 1997, expired on June 30,
2002. As a result of the expired statute, in the third quarter of 2002, the
Parent reversed $0.4 million of amounts that had been reserved for assessment,
including interest of $0.1 million. The Parent continues to vigorously contest
the NYC Department of Finance formal assessment for additional taxes and
interest of approximately $1.3 million related to tax years up to and including
1992, for which the Parent believes it is adequately reserved. Management
believes that it has meritorious defenses with regard to the assessment for
these years.

                                       16
<PAGE>

Brazil Value Added Taxes

In July 2002, ABNB filed a tax claim with the Brazil federal government to
utilize approximately $3.5 million in certain value added tax credits not
previously claimed. ABNB was permitted to carry forward these credits and fully
utilize them in 2002 against federal taxes. In the third and fourth quarter of
2002, ABNB utilized approximately $2.0 million and $1.5 million, respectively of
these credits.

                                       17
<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 BankNote Ltda ("ABNB"), a 77.5% owned
Brazilian company; ABN Australasia Limited, trading as Leigh-Mardon Pty. Ltd.
("LM"), a 90.4% owned 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").

As a result of the application of Fresh Start Reporting, with respect to the
Company's income statement, the periods before and after reorganization relate
predominantly to interest expense (resulting from the reorganization of the
Parent's debt) and depreciation expense (relating to fair market value
adjustments to property, plant and equipment). Taking these differences into
consideration, the results of the Company's operations for the nine months and
third quarter of 2003 can still be compared to the nine months and third quarter
of 2002 for the purpose of Management's Discussion and Analysis of Financial
Condition and Results of Operations.

RESULTS OF OPERATIONS

Sales by foreign subsidiaries represented approximately 90% and 84% of the
Company's consolidated sales for the nine months ended September 30, 2003
(Successor Company) and September 30, 2002 (Predecessor Company), respectively.
Sales by foreign subsidiaries represented approximately 91% and 84% of the
Company's consolidated sales for the third quarter ended September 30, 2003
(Successor Company) and September 30, 2002 (Predecessor Company), respectively.
The Company has significant operations in Brazil, Australia, Argentina and
France, where currencies have experienced significant foreign exchange rate
fluctuations against the US Dollar.

Although the Real and the Argentine Peso have improved over the last nine
months, the Company nevertheless experienced an average devaluation against the
US Dollar when compared to the nine months of the prior year in the Brazilian
and Argentine currencies of approximately 15% and 7%, respectively. The
Australian and Euro currencies experienced an average appreciation of
approximately 17% and 21%, respectively, during the same period.

For the third quarter ended September 30, 2003, the Company experienced an
average appreciation in the Brazilian, Argentine, Australian and Euro currencies
against the US Dollar of approximately 6%, 26%, 20% and 15%, respectively, when
compared to the prior year.

Historically, and to date, the Brazilian Real has experienced tremendous
volatility against the US Dollar. The average exchange rate for the nine months
and third quarter ended September 30, 2003 was R$3.14 and R$2.93 to the US
Dollar, respectively. As of October 28, 2003, the Real had strengthened to
R$2.87 to the US Dollar. Despite its significant improvement in 2003, the Real
still continued to experience exchange rate volatility, as the average exchange
rate devaluation for the nine months ended September 30, 2003 was 15% whereas an

                                       18
<PAGE>

average appreciation of approximately 6% occurred in the third quarter of 2003,
against the US Dollar when compared to the prior year. In 2002, the Real
devalued to its lowest level by over 41% against the US Dollar as of October 22,
2002 (R$3.96), when compared to the beginning of 2002 (R$2.35). The Real ended
2002 at R$3.53 to the US Dollar, a decline of 33% from its rate at the beginning
of that year (R$2.35). Given its historic volatility there is no guarantee that
the Real will either improve or stabilize at any certain level against the US
Dollar.

ABNB is the Company's largest subsidiary, contributing on an annual basis
approximately half of the revenues, operating profit and cash flow of the
consolidated group. Despite the recent strengthening of the Real, the currency's
devaluation over the past two years has severely impacted ABNB's cash flow in US
Dollar terms, and has therefore threatened its ability to 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.

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

In an effort to end its lengthy recession, in January 2002 Argentina abandoned
its Peso-Dollar currency peg system. Initially the Peso was reset at an official
rate of US $1 = AR $1.40. In February 2002, the official rate was abandoned and
the currency was allowed to float freely on currency markets. At October 28,
2003, the quoted exchange rate for the Peso on freely trading markets was
approximately US$1 = AR$2.88.

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 CURRENT YEAR (NINE MONTHS AND THIRD QUARTER ENDED SEPTEMBER 30, 2003)
REMAINED AT THE SAME LEVELS AS THE PRIOR YEAR (NINE MONTHS AND THIRD QUARTER
ENDED SEPTEMBER 30, 2002).

                                       19
<PAGE>

COMPARISON OF RESULTS OF THE NINE MONTHS ENDED SEPTEMBER 30, 2003 WITH THE NINE
MONTHS ENDED SEPTEMBER 30, 2002.

Sales

Although reported sales increased by $10.5 million or 6.8% from 2002, sales
increased by $12.9 million in constant US dollars, after adding back $2.4
million attributable to foreign currency fluctuations. The adjustments due to
exchange rate fluctuations included a $12.7 million decline in sales
attributable to a devaluation of the Brazilian Real and a $0.3 million decline
attributable to a devaluation of the Argentine Peso, partly offset by an
appreciation in the Australian and Euro (France) currencies that resulted in
increased revenues of $8.4 million and $2.2, respectively. The constant dollar
sales increase of $12.9 million resulted from higher sales in Brazil of $7.2
million, Argentina of $0.7 million, France of $3.9 million and Australia of $9.6
million, partly offset by lower sales in the United States of $8.5 million. The
net increase in sales in constant dollars is discussed in detail by subsidiary
below.

The decrease of $8.5 million in sales in the United States was due to decreased
SPS sales at ABN of food coupons (including distribution sales) of $6.1 million,
stock and bond certificates of $3.0 million, and $0.7 million of lower revenue
generated from ABN's distribution and fulfillment program with the United States
Postal Service (the "USPS") due to the loss of a major customer in 2002 and
lower overall customer demand resulting from a U.S. postal stamp rate increase.
These decreases were partly offset by $1.3 million of increases in secure
commercial and government print sales at lower margins. The continued reduction
in stock and bond certificate sales is due to the trend toward book entry
securities and next day settlement (reducing or eliminating the need for
physical certificates), as well as a decline in new issues of securities. The
elimination in food coupon sales reflects the completion of the United States
Department of Agriculture's (the "USDA's") transition to the electronic benefits
program with respect to ABN's print contract with the USDA, and the USDA's oral
indication that it intends to withhold approximately $1.6 million in final
billings under ABN's fulfillment of its distribution contract. (See Note F to
the Company's Consolidated Financial Statements and Item 2 "Liquidity and
Capital Resources" provided herein for further information). In general, the
overall demand for secure paper-based documents of value that are used in the
public and private sector continues to decline. These trends have and will
continue to have a negative effect on revenues and on the mix of sales and gross
margins at ABN.

Sales in Australia at LM were $9.6 million higher when compared to the prior
year. This increase was due to $11.0 million in higher PSDM sales primarily
resulting from new revenues generated by LM through the introduction of its mail
aggregation business and $0.3 million in higher TCS sales due to increased
transaction card volumes. These increases were partly offset by lower SPS sales
of $1.7 million, of which $1.3 million represents a reduction in passport orders
placed by the Australian government as a result of its decision not to renew the
passport contract with LM and $0.4 million in lower sales due to decreases in
check usage and check prices received from banks.

At Transtex, TCS sales increased by $0.7 million despite the severe and ongoing
economic recession which continues in Argentina. The increase in TCS sales was
primarily due to a higher volume of orders placed in 2003 on prepaid telephone
cards, partly offset by lower prices received on cards due to competitive
pressures. Because of the volatility of Argentine credit markets, however, the
overall trend in card usage remains uncertain. As a result, there can be no
assurance that the volume of TCS sales will continue to grow.

In France, the increase of $3.9 million in TCS sales at CPS was principally due
to an increase in sales on bank cards of approximately $3.0 million. This
increase was primarily due to the banks' requirement that CPS purchase and
charge them for the cost of non-personalized base stock transactions cards. CPS
also received higher pricing for new technological enhancements required by

                                       20
<PAGE>
certain banks to include electronic purse capabilities on cards and acquired a
new banking customer in 2003. In addition, a higher volume of phone card orders
placed in 2003 versus 2002, partly offset by lower prices for such cards,
resulted in a net increase in phone card sales of $0.9 million.

Sales at ABNB in Brazil were $7.2 million higher than in 2002. The net increase
is attributable to higher SPS and PSDM sales of $2.2 million and $5.1 million,
respectively, partly offset by lower TCS sales of $0.1 million. The increase in
SPS sales was primarily due to increased volume levels on electronic print sales
of $1.0 million as ABNB gained market share at lower competitive pricing, and an
increase in driver license revenues of $1.2 million due to an increase in volume
and higher incremental pricing generated from adding fingerprint identification
on driver's licenses. The increase in PSDM sales of $5.1 million was primarily
due to increased sales of printing services predominantly due to two new banking
customers. These increases were partly offset by a reduction in TCS sales due to
lower volumes on sales of phone cards of $1.2 million as a result of the
telephone companies' decision to increase the unit value on card denominations,
partly offset by an increase in credit card sales of $1.1 million due to higher
volume and increased prices.

Cost of Goods Sold

Although reported cost of goods sold increased $15.9 million or 14.4% as
compared to 2002 (with a corresponding decrease in gross margins of $5.4
million), cost of goods sold increased by $17.0 million in constant US dollars,
after adding back $1.1 million attributable to foreign currency fluctuations. As
a result, exchange rate devaluation accounts for decreased gross margins of $1.3
million. The effect of devaluation by country on cost of goods sold and gross
margins respectively was as follows: Brazil - $9.6 million and $3.2 million and
Argentina - $0.2 million and $0.1 million. The devaluation in these countries
was partly offset by exchange rate appreciation in costs of goods sold and gross
margins, respectively, in Australia - $6.8 million and $1.7 million and France -
$1.9 million and $0.3 million.

The constant dollar increase in cost of goods sold resulted primarily from the
increase in sales discussed above, a shift in product mix towards higher volume,
lower margin products, and overall competitive pricing pressures. As a result,
gross margins in constant dollars decreased by approximately $4.1 million when
compared to the prior year. The net increase in cost of goods sold in constant
dollars is discussed in detail by subsidiary below.

As a percentage of sales, cost of goods sold increased to 76.9% in 2003 as
compared to 71.8% in 2002. A comparison of the percentage of cost of goods sold
by each of the Company's geographic locations to the prior year is as follows:

<TABLE>
<CAPTION>
                            Nine Months Ended September 30,
                            -------------------------------
                           2003                       2002
                     (Successor Company)    (Predecessor Company)
                     -------------------    ---------------------
<S>                  <C>                    <C>
Brazil                    75.1%                      73.6%
Australia                 80.5%                      77.1%
United States             69.1%                      58.2%
Argentina                 58.4%                      50.8%
France                    85.4%                      78.2%
</TABLE>

Cost of goods sold at ABNB in Brazil increased by $6.6 million from 2002, with a
corresponding increase in gross margins of $0.6 million. Cost of goods sold as a
percentage of sales increased by 1.5% when compared to 2002. The increase in
cost of goods sold in constant dollar terms was primarily attributable

                                       21
<PAGE>
to the increase in sales discussed above. In addition, there were higher fixed
costs primarily attributable to increased maintenance, rental, and communication
costs with respect to SPS driver's license, electronic print, and PSDM products,
and additional maintenance required on the TCS phone card chemical lines. Also,
PSDM costs in 2002 were lower as a result of the one-time value added tax
credits received from the Brazilian federal government. These increases were
partly offset by a favorable product mix resulting from higher margin sales of
SPS driver's license and intaglio products and TCS magnetic stripe transaction
cards.

Costs of goods sold at LM in Australia increased by $9.1 million and were
accompanied by an increase in gross margins of $0.5 million when compared to the
prior year. As a percentage of sales, cost of goods sold increased by 3.4% when
compared to the prior year. The increase in cost of goods sold in constant
dollar terms is primarily due to a change in product mix resulting from higher
variable costs and lower margins from the introduction of LM's mail aggregation
business. A reduction in volume order levels on higher margin SPS bank checks
and passports contributed to the trend toward lower margins and higher costs as
a percentage of sales.

Cost of goods sold at ABN in the United States decreased by $3.1 million and
gross margins declined $5.4 million when compared to the prior year. As a
percentage of sales, cost of goods sold increased by approximately 10.9%. This
is primarily due to a change in product mix whereby sales of higher margin,
lower cost stock and bond and food coupon products continued to decline and were
partly replaced by sales of lower margin, higher cost direct fulfillment, secure
government and commercial printing products. The reduction in food coupon
products resulted from the termination of both the print and distribution
contracts with the USDA. This trend was partly offset by lower fixed costs as a
result of the consolidation of ABN's Philadelphia operation into its Tennessee
location. (See Note E to the Company's Consolidated Financial Statements
provided herein for further information).

In Argentina, cost of goods sold at Transtex was approximately $0.6 million
higher than in 2002, with an increase in gross margins of $0.1 million,
primarily as a result of increased sales. Cost of goods sold as a percentage of
sales increased by 7.6% over the prior year. This increase was primarily due to
a higher volume of cards produced at significantly lower competitive prices
along with higher imported raw material costs due to the weak Argentine Peso.

At CPS in France, cost of goods sold increased by approximately $3.8 million
when compared to 2002 resulting in an increase in gross margins of $0.1 million.
As a percentage of sales, cost of goods sold increased by approximately 7.2%
from 2002 primarily due to higher costs as a result of the requirement from the
banks that CPS purchase the non-personalized base stock transaction card and
pass the cost along to the banks. In addition, there was a change in product mix
resulting from an increase in lower margin phone card orders beginning in the
second quarter of 2003.

Selling and Administrative Expenses

Reported selling and administrative expenses increased by $3.5 million when
compared to 2002. Exchange rate appreciation resulted in a net increase of $0.6
million in such expenses, attributable to currency appreciation in Australia and
France of approximately $1.6 million and $0.1 million, respectively, partly
offset by currency devaluation in Brazil and Argentina of approximately $1.0
million and $0.1 million, respectively. As a result, the net increase in selling
and administrative expense from the prior year in constant dollars was $2.9
million.

In constant dollars, ABNB's selling expense increased by $1.2 million due to
higher commissions and salaries on increased sales. LM's administrative expense
increased by $2.5 million in constant dollars as a result of professional and
investment advisory fees in connection with the proposed sale and restructuring
of LM and the establishment of a provision to settle the Australian General
Sales Tax office claim. (See Part II Item 1 "Legal Proceedings" for further

                                       22
<PAGE>

information). These increases were partly offset by $0.3 million in lower
commissionable sales at ABN, and lower administrative expenses of $0.4 million
at ABN due to the reduction in personnel expenses related to the closure of its
Philadelphia plant and additional cost cutting initiatives at its Tennessee
location. Administrative expenses were lower in France by approximately $0.1
million as compared to the prior period primarily resulting from the resolution
of a labor dispute that resulted in higher costs in 2002. As a result of the
above, for the Company as a whole, selling and administrative expenses as a
percentage of sales were higher at 15.8 % in 2003 as compared to 14.6% in 2002.

Restructuring

The restructuring charge of $0.5 million in the first nine months of 2003
represents severance payments to employees in connection with ABN's decision to
close its Philadelphia plant and consolidate all of its manufacturing operations
into its Tennessee location. (See Note E to the Company's Consolidated Financial
Statements provided herein for further information).

The restructuring charge of $1.8 million for the first nine months of 2002
represents termination payments to employees in connection with LM's
restructuring program (the "LM Restructuring") for the purpose of consolidating
its manufacturing operations. (See Note E to the Company's Consolidated
Financial Statements provided herein for further information).

Goodwill and asset impairment

Goodwill and asset impairment in 2003, represents a recovery of $1.1 million
resulting from the favorable settlement of ABN's lease with the landlord of its
idle Chicago facility in October 2003. As a result of the settlement, ABN
remeasured its obligation under the lease and in the third quarter recorded a
recovery of a previous impairment provision of approximately $1.1 million. The
previous impairment provision was established in the fourth quarter of 2002
based upon the present value of annual lease payments to the landlord net of
estimated sublease income (See Note H to the Company's Consolidated Financial
Statements and Item 2 "Liquidity and Capital Resources" provided herein for
further information).

Goodwill and asset impairment in 2002 represents the write-down of $25.4 million
consisting of a $25.2 million write-down of LM's entire goodwill balance as of
September 30, 2002 and a $0.2 million reserve with respect to the carrying value
of certain equipment at ABN dedicated to the production of food coupons. The
impairment of goodwill at LM in accordance with SFAS No. 142, was due to the
Parent's concerns surrounding the potential uncertainty of restructuring LM's
high level of indebtedness and the availability of sufficient capital to
significantly grow and/or restructure its business. The equipment impairment at
ABN results from the oral notification received from the USDA that it did not
anticipate that further printing orders would be placed for food coupons. (See
Note G to the Company's Consolidated Financial Statements and Item 2 "Liquidity
and Capital Resources" provided herein for further information).

Depreciation Expense

Reported depreciation and amortization expense for the first nine months of 2003
was $3.2 million higher when compared to the first nine months of 2002. Exchange
rate devaluation accounts for a decrease of approximately $0.8 million,
resulting in a net increase of $4.0 million in constant dollars. This increase
was primarily related to the additional depreciation expense at ABNB resulting
from the fair valuation of fixed assets which resulted in a step-up in basis in
accordance with Fresh Start accounting in the third quarter of 2002.

                                       23
<PAGE>

Interest Expense

Reported interest expense was approximately $0.5 million lower when compared to
2002. Exchange rate appreciation accounts for an increase of approximately $0.3
million, resulting in a net decrease of $0.8 million in constant dollars. This
decrease resulted primarily from lower interest at ABNB of $0.8 million and ABN
of $0.2 million due to lower borrowings partly offset by an increase of $0.2
million in accrued interest on the Parent's Senior Notes which continue to
accrue interest on a pay-in-kind basis.

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 nine months ended September 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 for the third quarter of 2003 reflects a $1.5 million net favorable
gain primarily attributable to the reversal of the remaining pre-petition
liabilities which were determined to no longer be disputed by creditors in the
Chapter 11 proceedings.

Bankruptcy Costs

Bankruptcy costs decreased by $0.8 million from 2002. This decrease resulted
from approximately $0.4 million in administrative wind down costs in 2003,
including an accrual for the additional estimated cost of approximately $0.2
million to settle the Blackstone claim as compared to approximately $1.2 million
required in 2002 in connection with the consummation of the Parent's Fourth
Amended and Restated Plan of Reorganization (the "Plan") Remaining costs to be
incurred will result from the further administrative wind down of the Plan,
which are reasonable and customary to complete the reorganization process and
are not expected to be significant.

Taxes on Income

Taxes on income are calculated using the effective tax rate for each tax
jurisdiction and various assumptions such as state and local taxes and the
utilization of foreign taxes in the U.S. The effective tax rate is further
adjusted for any permanent differences between the book basis and tax basis of
assets and liabilities. In addition, the Company has provided a valuation
allowance against its U.S. and Australia net operating losses and other U.S. and
Australia deferred tax assets due to the uncertainty as to the realization of
taxable income in both jurisdictions in the future. Taxes on income are provided
only in Brazil, France and Argentina which are the jurisdictions that reported
taxable income for the period.

Minority Interest

Minority interest represents the 22.5% minority interest in ABNB held by
Bradesco Vida e Previdencia S.A., a subsidiary of the Bradesco Group.

                                       24
<PAGE>

COMPARISON OF RESULTS OF THE THIRD QUARTER ENDED SEPTEMBER 30, 2003 WITH THE
THIRD QUARTER ENDED SEPTEMBER 30, 2002.

Sales

Although reported sales increased by $8.9 million or 17.4% from 2002, sales
increased by $2.7 million in constant dollars after giving effect to a $6.2
million adjustment resulting from foreign currency exchange rate appreciation.
The adjustments due to exchange rate appreciation are attributable to increases
of $1.6 million in Brazil, $3.7 million in Australia, $0.6 million in France and
$0.3 million in Argentina. The constant dollar sales increase of $2.7 million
resulted from higher sales in Brazil of $1.7 million, Argentina of $0.2 million,
France of $2.3 million and Australia of $1.4 million, partly offset by lower
sales in the United States of $2.9 million. The net increase in sales in
constant dollars is discussed in detail by subsidiary below.

The decrease of $2.9 million in sales in the United States was due to decreased
SPS sales at ABN of food coupons (including distribution sales) of $2.1 million,
stock and bond certificates of $0.6 million, and $0.4 million in lower sales of
secure commercial and government print. These decreases were partly offset by
$0.2 million of higher revenue generated through ABN's distribution and
fulfillment program with the USPS. The continued reduction in stock and bond
certificate sales is due to the trend toward book entry securities and next day
settlement (reducing or eliminating the need for physical certificates), and
fewer new issues. The elimination in food coupon sales reflects the completion
of the USDA's transition to the electronic benefits program with respect to
ABN's print contract with the USDA, and the USDA's oral indication that it
intends to withhold approximately $1.6 million in final billings under ABN's
fulfillment of its distribution contract. (See Note F to the Company's
Consolidated Financial Statements and Item 2 "Liquidity and Capital Resources"
provided herein for further information). In general, the overall demand for
secure paper-based documents of value that are used in the public and private
sector continues to decline. These trends have and will continue to have a
negative effect on the mix of sales and gross margins at ABN.

Sales in Australia at LM were $1.4 million higher when compared to the prior
year. This increase was due to $2.4 million in higher PSDM sales, primarily
resulting from $1.8 million in new revenues generated by LM through the
introduction of its mail aggregation business and $0.6 million in higher
electronic print sales resulting from stronger customer demand. These increases
were partly offset by lower SPS sales of $0.7 million resulting from the
elimination of passport sales of $0.5 million, as a result of the decision by
the Australian government not to renew the passport contract with LM and $0.1
million in lower sales due to decreases in check usage and check prices received
from banks of $0.2 million. An additional decrease of $0.3 million resulted from
lower TCS transaction card volumes.

At Transtex, TCS sales increased by $0.2 million despite the severe and ongoing
economic recession which continues in Argentina. The increase was primarily due
to large orders placed in 2003 on prepaid telephone cards partly offset by lower
prices received on cards due to competitive pressures. Because of the volatility
of Argentine credit markets, however, the overall trend in card usage remains
uncertain and there can be no assurance that the volume of TCS sales will
continue to grow.

In France, the increase of $2.3 million in TCS sales at CPS was principally due
to an increase in bank card sales of $1.3 million as banks required CPS to begin
purchasing and charging them for the cost of non-personalized base stock
transaction cards resulting in a high volume of sales at cost. CPS also received
higher pricing for new technological enhancements required by certain banks to
include electronic purse capabilities on cards and acquired a new banking
customer in 2003. In addition, phone card orders increased by $1.0 million, as
no phone card orders were placed in the third quarter of 2002.

                                       25
<PAGE>

Sales at ABNB in Brazil were $1.7 million higher than in 2002. The net increase
was attributable to higher PSDM sales of $1.5 million and increased TCS sales of
$1.0 million, partly offset by lower SPS sales of $0.8 million. The increase in
PSDM sales was primarily due to increased sales of printing services to two new
banking customers. The increase in TCS sales was due to an increase in credit
card sales of $1.4 million primarily due to increased prices partly offset by
lower sales of phone cards of $0.4 million as a result of the telephone
companies' decision to increase the unit value of the card's denomination. The
increases were partly offset by a decline of $0.8 million in SPS electronic
sales due to lower volumes resulting from the loss of a customer.

Cost of Goods Sold

Although reported cost of goods sold increased $8.9 million or 24.9% as compared
to 2002, with no change in gross margins, cost of good sold increased by $4.2
million in constant dollars, after giving effect to foreign currency exchange
rate appreciation of $4.7 million. As a result, exchange rate appreciation
accounts for increased gross margins of $1.5 million. The effect of exchange
rate appreciation by country on cost of goods sold and gross margins
respectively was as follows: Brazil-- $1.2 million and $0.4 million, Australia--
$2.8 million and $0.9 million, France-- $0.5 million and $0.1 million, and
Argentina-- $0.2 million and $0.1 million.

The constant dollar increase in cost of goods sold resulted primarily from the
increase in sales discussed above and a shift in product mix towards higher
volume, lower margin products. As a result, gross margins in constant dollars
decreased approximately $1.5 million when compared to the prior year. The net
increase in cost of goods sold in constant dollars is discussed in detail by
subsidiary below.

As a percentage of sales, cost of goods sold increased to 74.8% in 2003 as
compared to 70.3% in 2002. A comparison of the percentage of cost of goods sold
by each of the Company's geographic locations to the prior year is as follows:

<TABLE>
<CAPTION>
                            Third Quarter Ended September 30,
                            ---------------------------------
                            2003                       2002
                      (Successor Company)       (Predecessor Company)
                      -------------------       ---------------------
<S>                   <C>                       <C>
Brazil                      73.2%                      65.8%
Australia                   76.8%                      79.2%
United States               68.0%                      65.8%
Argentina                   60.4%                      48.6%
France                      87.2%                      78.9%
</TABLE>

Cost of goods sold at ABNB in Brazil increased by $2.9 million from 2002, with a
corresponding decrease in gross margins of $1.3 million. Cost of goods sold as a
percentage of sales increased by 7.4% when compared to 2002. The increase in
cost of goods sold in constant dollar terms was primarily attributable to the
increase in sales discussed above. In addition, there were higher fixed costs
primarily attributable to increased maintenance, rental and communication costs
with respect to SPS driver's license and PSDM products and additional
maintenance required on the TCS phone card chemical lines. Also, PSDM costs in
2002 were lower as a result of the one-time value added tax credits received by
the Brazilian federal government. These increases were partly offset by a
favorable product mix resulting from higher margin sales of SPS driver's license
and intaglio products and TCS phone cards.

Cost of goods sold at LM in Australia increased by $0.7 million and were
accompanied by an increase in gross margins of $0.8 million when compared to the
prior year. As a percentage of sales, cost of goods sold decreased by 2.4% when
compared to the prior year. This decrease in cost of goods sold as a

                                       26
<PAGE>

percentage of sales was primarily due to lower fixed costs and a favorable
change in product mix as a result of the efficiencies achieved in LM's 2002
restructuring, partly offset by higher variable costs and lower margins from the
introduction of LM's mail aggregation business.

Cost of goods sold at ABN in the United States decreased by $1.7 million while
gross margins decreased by $1.2 million when compared to the prior year. As a
percentage of sales, cost of goods sold increased by approximately 2.2% when
compared to the prior year. The is primarily due to a change in product mix
whereby sales of higher margin, lower cost stock and bond and food coupon
products continued to decline and were partly replaced by sales of lower margin,
higher cost direct fulfillment and secure government and commercial printing
products. The reduction in food coupon products resulted from the termination of
both the print and distribution contracts with the USDA. This trend was partly
offset by lower fixed costs as a result of the consolidation of ABN's
Philadelphia operation into its Tennessee location. (See Note E to the Company's
Consolidated Financial Statements for further information).

In Argentina, cost of goods sold at Transtex was approximately $0.2 million
higher than in 2002, with no corresponding increase in gross margins. As a
result, cost of goods sold as a percentage of sales increased 11.8% over the
prior year. This increase was primarily due to a higher volume of cards produced
at significantly lower competitive prices along with higher imported raw
material costs due to the weak Argentine Peso.

At CPS in France, cost of goods sold increased by approximately $2.1 million
when compared to 2002 resulting in an increase in gross margins of $0.2 million.
As a percentage of sales, cost of goods sold increased by approximately 8.3%
from 2002 primarily due to higher costs as a result of the requirement from the
banks that CPS purchase the non-personalized base stock transaction card and
pass the cost along to the banks. In addition, there was a change in product mix
resulting from an increase in lower margin phone card orders beginning in the
second quarter of 2003.

Selling and Administrative Expenses

Reported selling and administrative expenses increased by $2.8 million when
compared to 2002. Exchange rate appreciation accounted for an approximate $1.0
million increase in expense, resulting from an appreciation in Australia of $0.8
million and Brazil of $0.2 million. The currency effect with respect to the Euro
in France and the Argentine currency was nil. As a result, the net increase in
selling and administrative expense from the prior year in constant dollars was
$1.8 million.

In constant dollars, LM's administrative expense increased by $1.8 million due
primarily to professional and investment advisory fees in connection with the
proposed sale and restructuring of LM. Selling expense at ABNB increased by $0.2
million in constant dollars due to higher commissions on increased sales. These
increases were partly offset by $0.1 million in lower commissionable sales at
ABN, and lower administrative expenses of $0.1 million at ABN due to the
reduction in personnel expenses related to the closure of its Philadelphia plant
and additional cost cutting initiatives at its Tennessee location. As a result
of the above, for the Company as a whole, selling and administrative expenses as
a percentage of sales were higher at 16.8% in 2003 as compared to 14.2% in 2002.

Restructuring

The restructuring charge of $0.1 million in the third quarter of 2003 represents
the balance of severance payments made to ABN employees in connection with the
close of ABN's Philadelphia plant and the further consolidation of its
manufacturing operation into its Tennessee location. (See Note E to the
Company's Consolidated Financial Statements provided herein for further
information).

                                       27
<PAGE>

The restructuring charge of $0.1 million for the third quarter of 2002
represents termination payments to employees in connection with the LM
restructuring for the purpose of consolidating LM's manufacturing operations.
(See Note E to the Company's Consolidated Financial Statements provided herein
for further information).

Goodwill and asset impairment

Goodwill and asset impairment in 2003, represents a recovery of $1.1 million
resulting from the favorable settlement of ABN's lease with the landlord of its
idle Chicago facility in October 2003. As a result of the settlement, ABN
remeasured its obligation under the lease and in the third quarter recorded a
recovery of a previous impairment provision of approximately $1.1 million. The
previous impairment provision was established in the fourth quarter of 2002
based upon the present value of annual lease payments to the landlord net of
estimated sublease income. (See Note H to the Company's Consolidated Financial
Statements and Item 2 "Liquidity and Capital Resources" provided herein for
further information).

Goodwill and asset impairment in 2002 represented the write-down of $25.4
million consisting of a $25.2 million write-down of LM's entire goodwill balance
as of September 30, 2002 and a $0.2 million reserve with respect to the carrying
value of certain equipment at ABN dedicated to the production of food coupons.
The impairment of goodwill at LM in accordance with SFAS No. 142, was due to the
Parent's concerns surrounding the potential uncertainty of restructuring LM's
high level of indebtedness and the availability of sufficient capital to
significantly grow and/or restructure its business. The equipment impairment at
ABN resulted from the oral notification received from the USDA that it did not
anticipate that further printing orders would be placed for food coupons. (See
Note G to the Company's Consolidated Financial Statements and Item 2 "Liquidity
and Capital Resources" provided herein for further information).

Depreciation Expense

Reported depreciation and amortization expense was $1.4 million higher when
compared to 2002. Exchange rate appreciation accounted for approximately $0.2
million of increase, resulting in a net increase of $1.2 million in constant
dollars. This increase was primarily related to the additional depreciation
expense at ABNB resulting from the fair valuation of fixed assets which resulted
in a step-up in basis in accordance with Fresh Start Accounting in the third
quarter of 2002

Interest Expense

Reported interest expense was approximately the same when compared to 2002.
Exchange rate appreciation accounted for approximately $0.1 million of increase,
resulting in a net decrease of $0.1 million in constant dollars. The net
decrease on a constant dollar basis resulted primarily from lower interest at
ABNB of $0.2 million due to lower borrowings partly offset by additional accrued
interest of $0.1 million on the Parent's Senior Notes.

Other, Net

Other, net for the third quarter of 2003 reflects a $1.3 million net favorable
gain primarily attributable to the reversal of the remaining pre-petition
liabilities which were determined to no longer be disputed by creditors in the
Chapter 11 proceedings.


                                       28
<PAGE>
Bankruptcy Costs

Bankruptcy costs in the third quarter ended 2003 decreased by $0.2 million from
the third quarter of 2002. This decrease resulted from $0.3 million in
administrative wind down costs in 2003 including an accrual for the additional
estimated cost of approximately $0.2 million to settle the Blackstone claim as
compared to approximately $0.5 million required in 2002 in connection with the
consummation of the Parent's Plan. Remaining costs to be incurred will result
from the further administrative wind-down of the Plan, which are reasonable and
customary to complete the reorganization process and are not expected to be
significant.

Taxes on Income

Taxes on income are calculated using the effective tax rate for each tax
jurisdiction and various assumptions such as state and local taxes and the
utilization of credits for payment 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 and Australia net operating losses and other
US and Australia deferred tax assets due to the uncertainty as to the
realization of taxable income in both jurisdictions in the future. Taxes on
income are provided only in Brazil, France and Argentina, which are the
jurisdictions that reported taxable income for the period.

Minority Interest

Minority interest represents the 22.5% minority interest in ABNB held by
Bradesco Vida e Previdencia S.A., a subsidiary of the Bradesco Group.

LIQUIDITY AND CAPITAL RESOURCES

Summary of Cash Flows. Cash flow decreased by $2.7 million in the first nine
months of 2003 compared to an increase of $2.4 million in the comparable period
of 2002. This $5.1 million negative cash flow variance resulted principally from
the following:

     -   A $7.2 million net decrease in cash flow from operating activities
         attributable to a $4.5 million unfavorable working capital variance and
         a $2.7 million decrease in net income after non-cash adjustments. The
         unfavorable working capital variance is attributable to the reduced
         collection of receivables at ABN in 2003 principally related to food
         coupon sales, particularly in light of the USDA's dispute of ABN's $1.6
         million final billing under its distribution contract. In addition, an
         unfavorable working capital variance resulted from the increased level
         of receivables and inventory in France when compared to 2002, as a
         result of the banks' requirement that CPS purchase the non-personalized
         base stock transaction card and pass the cost along to the banks. These
         unfavorable working capital variances were partly offset by the
         improved collection of receivables at LM this year versus last year and
         the utilization of one-time value added tax credits in Brazil recovered
         by the end of 2002.

     -   A $1.2 million net increase in cash flow from investing activities
         principally attributable to a reduction in capital expenditures in
         Australia and Brazil of $1.3 million and $0.6 million, respectively in
         2003, partly offset by an increase in capital expenditures at ABN and
         France of $0.1 million and $0.1 million, respectively in 2003, as well
         as the proceeds received from the one-time private sale of certain
         printed materials outside the ordinary course of business by ABN of
         $0.5 million in 2002.

     -   A $0.1 million net decrease in cash from financing activities
         attributable to the Company's use of $2.9 million to buy back its
         Senior Secured Notes in the first nine months of 2003, and

                                       29
<PAGE>

         $1.1 million of decreased borrowings in Australia under its revolving
         credit facility. These net cash flow decreases were partly offset by
         increased cash resulting from lower repayments of $2.9 million related
         to the prior year pay down of the working capital facility at ABN, a
         $0.8 million net reduction in repayments on short-term equipment
         financing in Brazil and a $0.2 million reduction in dividends paid to
         minority shareholders in 2003.

     -   A $1.0 million net increase in cash due to the impact of favorable
         exchange rate valuation in 2003 on cash balances on hand.

Short-Term Borrowings. At September 30, 2003 (Successor Company), the Company's
subsidiaries had outstanding approximately $2.3 million in borrowings (excluding
letters of credit) under their respective short-term credit facilities. The
Company's Australian subsidiary, LM, has a working capital facility of
approximately $3.9 million with a local bank, collateralized by LM's Banking
Syndicate. At September 30, 2003, LM had used approximately $2.3 million for
working capital purposes and $0.2 million for outstanding letters of credit
under the line, leaving approximately $1.4 million available for working capital
purposes. The Company's French subsidiary, CPS, had available approximately $1.2
million at September 30, 2003 under its working capital credit facility with no
borrowings against the facility as of September 30, 2003. The Company's
Brazilian and Argentine subsidiaries had no outstanding short-term borrowings.
As a result of overall credit tightening by the banks in Argentina, no credit
terms are available to Transtex.

The Company's domestic subsidiary, ABN, had a one year $2 million asset-based
working capital facility with a local bank in Tennessee which expired on March
31, 2003. This facility allowed ABN to borrow at a 5.5% short term interest rate
for general working capital and letters of credit purposes. In the second
quarter the local bank performed a credit review, and agreed in June 2003 to
extend the term of this facility for one year through June 19, 2004 subject to
annual compliance with certain net worth to debt covenants. The Company believes
that ABN will need to utilize the line of credit at various times during the
balance of 2003 but should have sufficient cash flow to pay it down by year end.
At September 30, 2003, ABN had no outstanding borrowings under the line, and had
used $0.2 million for outstanding letters of credit, which remain outstanding
and in effect as of November 14, 2003.

Long-Term Debt. The Company's long-term debt consists of (i) the $96.3 million
of the Parent's 10 3/8% Senior Notes due January 31, 2005, which was reinstated
under the Plan and accrues interest in kind, (ii) $54.3 million of LM's senior
and subordinated non-recourse debt due June 2004 (the "LM Debt") all of which is
classified as current at September 30, 2003, and (iii) $0.7 million of mortgage
indebtedness at ABN of which $0.1 million is current.

Pursuant to the Parent's announcement in its Form 8-K filed October 16, 2002,
the Parent's Board of Directors authorized the Parent to repurchase up to $15
million face amount of its outstanding Senior Notes from time to time at a
discount to par value. The Senior Notes were to be repurchased at management's
discretion, either in the open market or in privately negotiated block
transactions.

The decision to buy back any Senior Notes was dependent upon the availability of
cash at the Parent and other corporate developments. On June 26, 2003,
management made a determination to terminate the repurchase program as a result
of its current cash flow concerns. There can be no certainty as to whether the
Parent will resume such purchases at a future date.

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

                                       30
<PAGE>

Major Customer

The Company's major customer, Banco Bradesco which is also a 22.5% minority
shareholder in ABNB, has agreed to extend its supply agreement with ABNB (which
was originally scheduled to expire in June 2003 and was extended to September
2003) for an additional year to September 30, 2004. There can be no assurance
that this supply agreement will be renewed or if renewed, will be based upon the
same prices and conditions that presently exist.

ABILITY TO SERVICE DEBT

The high level of the Parent's Senior Note indebtedness, $96.3 million at
September 30, 2003, poses a high degree of uncertainty as to the Company's
ability to repay this debt upon the January 31, 2005 maturity date. Absent a
significant increase in available free cash flow from operations, it is the
Parent's intention from now until the maturity date to continue to pay in kind
its semi-annual interest payments on the Senior Notes in lieu of cash interest,
as permitted under its revised indenture. There is significant risk that the
Company may not generate sufficient future cash flow from operations to repay
the Senior Notes upon maturity. This factor, combined with the Company's limited
access to capital and financial markets for the purpose of obtaining new
financing (or equity to refinance the Senior Notes) could require a further
restructuring, bankruptcy or partial or total liquidation or sale of the
Company. See the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 for further disclosure relating to these risks.

The Company's Australian subsidiary, LM, is highly leveraged, with approximately
$54.3 million of local bank debt which is non-recourse to the Parent. The Parent
and LM notified LM's Banking Syndicate in December 2000 that LM would be unable
to fully repay the loan by the December 31, 2001 maturity date and therefore
requested that the banks consider a modification, restructuring and extension to
the existing terms of the present banking facility.

On June 26, 2001, the LM Debt was amended, extending the maturity date of the
loan for three years, and reducing the interest rate to approximately 50% of the
original interest rate on the borrowings. The amended agreement required LM to
make a $1.2 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 received approximately 10% of
LM's equity vesting over a period of time ending on March 31, 2004. As of June
30, 2003, approximately 9.4% of this equity had vested. As a condition to the
amendment, the Parent made a capital contribution of $1.2 million to LM in June
2001.

In April 2003, LM and LM's Banking Syndicate agreed in principle on a capital
reorganization of LM's business so that it could be sold debt-free. As a result,
LM's board appointed a local independent investment bank to act as financial
advisors on any sale process to take place. In connection with the sale process,
LM's Banking Syndicate consented to defer the June 2003 $1.2 million principal
repayment to the June 24, 2004 maturity date of the loan. In addition, the
Banking Syndicate agreed to suspend all financial covenant testing on a monthly
basis during the sale period. As a result, the total amount of the loan of $54.3
million at September 30, 2003, has been classified as current.

In the third quarter of 2003, the Banking Syndicate evaluated the public sale
process conducted by LM's financial advisors. After reviewing all options, the
Banking Syndicate elected to not sell LM but have instead entered into
negotiations with LM and the Company and subsequently orally agreed in principle
to restructure LM's bank debt through a combination of debt forgiveness and a
partial debt for preferred and common equity swap. This transaction would give
the Banking Syndicate a controlling equity stake in LM and would result in the
Parent relinquishing control and retaining a minority interest position. The

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final terms and conditions are expected to be completed in due course. The
exchange is expected to result in a significant non-cash gain to the Company to
the extent of the net discharge of LM's indebtedness upon deconsolidation.

While agreements in principle between the Company, LM and LM's Banking Syndicate
have resulted in satisfactory arrangements in the past, there is no certainty
that the above process will be satisfactorily concluded. In the event that these
discussions are not satisfactorily concluded, there is a possibility LM may not
be able to continue as a going concern absent further accommodation from the
Banking Syndicate. Moreover, LM's capital constraints have caused local
management difficulty in upgrading computer and other systems that, in turn,
have hampered their ability to effectively and efficiently operate, evaluate and
restructure the business. Under the terms of the LM Debt, dividends payable to
the Parent are prohibited.

As a holding company, the Parent is dependent on dividends from its subsidiaries
to service its US publicly held debt and to fund its corporate office expenses.
Currently, ABN, ABNB, CPS and Transtex are permitted to pay dividends, although
presently only ABN and ABNB generate sufficient excess cash flow to fund any
material portion of the Parent's overhead and debt 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.

In the third quarter of 2002, the United States Department of Agriculture (the
"USDA") gave notice to ABN that the USDA did not anticipate the need to place
any further purchase orders for the production of food coupons for the remainder
of the term of its requirements contract with ABN. The elimination of food
coupon orders has had a significant impact on the Company's cash flow. While
revenue from food coupons as a percentage of total consolidated sales for 2002,
2001 and 2000 was small (approximately 3.5%, 3.3% and 2.5%), the gross margins
were significant ($4 million in 2002 and 2001 and $3.7 million in 2000).

In the third quarter of 2003, the USDA gave ABN final notification and delivery
instructions for the remaining food coupons held in secure storage by ABN
pursuant to its distribution contract with the USDA which expired on September
30, 2003. ABN fully performed and completed the remaining two months of service
pursuant to the terms of this contract, and in the normal course has billed the
USDA approximately $1.6 million in accordance with the contract. The USDA has
orally indicated its intention to dispute the final billings under this
contract. ABN believes it has fully complied with all terms under such contract
and is entitled to full payment for all work performed. However, pursuant to the
revenue recognition rules under Statement of Accounting Bulletin ("SAB") 101,
the Company has not as of this date recognized any of the revenue on these
services as a result of the USDA's oral communication.

The reduction in operating margins from food coupon sales has had a direct and
significant effect on the cash flow of ABN as well as the level of dividends
that will be available to the Parent. Moreover, the failure by ABN to fully
recover its final invoicings from the USDA under its distribution contract,
could further exacerbate the liquidity of ABN and the Parent. See the Company's
Annual Report on Form 10-K for the year ended December 31, 2002 for further
disclosure relating to the reduction in food coupon revenues at ABN.



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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q, under the captions "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
"Quantitative and Qualitative Disclosures about Market Risk," and "Legal
Proceedings," constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. 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 2003 are subject to
greater uncertainty because of the increased likelihood of changes in underlying
factors and assumptions. Actual results could differ materially from those
anticipated by the forward-looking statements. Among these factors are the
Company's high degree of leverage and history of operating losses, fluctuations
in exchange rates, instability and economic recession in Brazil and Argentina,
the Parent's dependence on dividends from its operating subsidiaries, trends
towards lower margin products, the increasing proportion of sales outside the
United States and other factors affecting the Company's business generally. Such
factors are more fully described in the Company's Annual Report on Form 10-K for
the year ended December 31, 2002, which should be considered in connection with
a review of this report. For a general discussion of risks affecting the
Company's business, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Special Note Regarding-Looking Statements"
in the Company's Annual Report on Form 10-K for the year ended December 31,
2002.

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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, 2001 and 2002. In addition, the Company
operates in Argentina, which 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
domestically manufactured products in US 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.

Although the Real and the Argentine Peso have improved over the last nine
months, the Company nevertheless experienced an average devaluation against the
US Dollar when compared to the nine months of the prior year in the Brazilian
and Argentine currencies of approximately 15% and 7%, respectively. The
Australian and Euro currencies experienced an average appreciation of
approximately 17% and 21%, respectively, during the same period.

For the third quarter ended September 30, 2003, the Company experienced an
average appreciation in the Brazilian, Argentine, Australian and Euro currencies
against the US Dollar of approximately 6%, 26%, 20% and 15%, respectively, when
compared to the prior year.

Historically, and to date, the Brazilian Real has experienced tremendous
volatility against the US Dollar. The average exchange rate for the nine months
and third quarter ended September 30, 2003 was R$3.14 and R$2.93 to the US
Dollar, respectively. As of October 28, 2003, the Real had strengthened to
R$2.87 to the US Dollar. Despite its significant improvement in 2003, the Real
still continues to experience exchange rate volatility, as the average
devaluation for the nine months ended September 30, 2003 was 15% whereas an
average appreciation of approximately 6% occurred in the third quarter ended
September 30, 2003, against the US Dollar when compared to the prior year. In
2002, the Real devalued to its lowest level by over 41% against the US Dollar as
of October 22, 2002 (R$3.96), when compared to the beginning of 2002 (R$2.35).
The Real ended 2002 at R$3.53 to the US Dollar, a decline of 33% from its rate
at the beginning of that year (R$2.35). Given its historic volatility there is
no guarantee that the Real will either improve or stabilize at any certain level
against the US Dollar.

ABNB is the Company's largest subsidiary, contributing on an annual basis
approximately half of the revenues, operating profit and cash flow of the
consolidated group. Despite the recent strengthening of the Real, the currency's
devaluation has over the past two years 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 other
subsidiaries) will be sufficient to fund the Parent's operating expense 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.

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

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

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<PAGE>

28, 2003, the quoted exchange rate for the Peso on freely trading markets was
approximately US$1 = AR$2.88.

ITEM 4. CONTROLS AND PROCEDURES

         Based on their evaluation of the Company's disclosure controls and
procedures, the Chief Executive Officer and Chief Financial Officer have
concluded that such controls and procedures were effective as of the end of the
period covered by this report. There were no changes in the Company's internal
control over financial reporting that occurred during the Company's most recent
fiscal quarter that materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

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<PAGE>

PART II -OTHER INFORMATION

ITEM 1. LEGAL AND OTHER 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 all
claims that it believes have no basis or merit. The Parent's objections included
objections to claims that were duplicative, inconsistent with the Company's
books and records, untimely, already satisfied or resolved under the Plan, or
otherwise without merit. The Bankruptcy Court will consider the Company's
objections to the proofs of claim, and any responses by the affected claimants
thereto, at a hearing scheduled on December 11, 2003, 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.

Dispute with the Blackstone Group L.P. In the third quarter of 2003, the Parent
and its Chapter 11 investment advisors, the Blackstone Group ("Blackstone),
orally agreed in principle to settle Blackstone's $1.6 million asserted claim
pursuant to an unsecured promissory note which was scheduled to be payable upon
consummation of the Plan. While both parties continue to preserve their
respective rights through the normal procedures of the Bankruptcy Court, the
proposed settlement contemplates that the Parent will pay Blackstone
approximately $0.6 million in cash and give a secured note (the "Note") for
approximately $1.3 million which would have a security interest on a pari passu
basis with the Parent's Senior Notes. The Note would mature simultaneously with
the Senior Notes. It is anticipated that a final settlement will be reached by
the end of 2003. However, there can be no assurance that a successful outcome
between the parties can be achieved.

Lithuania Claim. In October 2003, the Parent notified the Bank of Lithuania,
("Lithuania"), that it would not make its scheduled installment settlement
payment of $0.5 million due October 1, 2003 due to its cash flow constraints.
The payment is part of a remaining $1.7 million settlement obligation between
the Parent and Lithuania that was entered into the Bankruptcy Court and became
effective upon the October 1, 2002 consummation of the Plan. Both parties have
entered into a discussion in an attempt to restructure the balance of the
obligation to avoid further litigation. However, counsel for Lithuania has
indicated that the Parent's initial proposal was unacceptable and there can be
no assurance that a successful outcome between the parties can be achieved. As a
result of the default, the entire $1.7 million obligation has been recorded as a
current liability in accounts payable and accrued expenses at September 30,
2003.

Commonwealth of Australia Claim. In January 2003, LM received a repayment
request from the Australian Treasury Department (the "Treasury") related to a
contract under which LM provided services to the General Sales Tax Office (the
"GST"). Services rendered under this contract were provided by LM

                                       36
<PAGE>

to the GST between the years 2000 and 2001. The claim for repayment alleges
that an overpayment of approximately $1.0 million was made by the GST. In order
to resolve this dispute, LM and the GST executed a settlement agreement whereby
LM will pay $0.8 million to be paid upon the earlier of (i) the proceeds
received from LM's sales process if completed by December 31, 2003 or (ii) in
twelve equal installments commencing January 2004 which balance would be
accelerated upon the proceeds from any sale process which takes place after
December 31, 2003. Accordingly, LM has fully reserved this amount as of
September 30, 2003 with respect to the proposed settlement.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) EXHIBIT NUMBER             DESCRIPTION

         Exhibit 31.1*              CEO Certification Pursuant to Section 302 of
                                       the Sarbanes-Oxley Act of 2002.

         Exhibit 31.2*              CFO Certification Pursuant to Section 302 of
                                       the Sarbanes-Oxley Act of 2002.

         Exhibit 32.1*              CEO Certification Pursuant to Section 906 of
                                       the Sarbanes-Oxley Act of 2002.

         Exhibit 32.2*              CFO Certification Pursuant to Section 906 of
                                       the Sarbanes-Oxley Act of 2002.

* Filed herewith

     (b) NONE

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<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                            AMERICAN BANKNOTE CORPORATION

                                            By: /s/ Steven G. Singer
                                            ------------------------------------
                                            Steven G. Singer
                                            Chairman and Chief Executive Officer

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

Dated: November 14, 2003

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