##### Table of Contents





UNITED STATES
  SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C. 20549
 Form 10-K
   (Mark One)x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from
    to   Commission File Number
    333-133253
  HARLAND CLARKE HOLDINGS
    CORP.
 (formerly Clarke American Corp.)
   Delaware(State or other jurisdiction of
    incorporation or organization)2939 Miller Road, Decatur, GA(Address of principal executive offices)

84-1696500(I.R.S. Employer Identification No.)30035(Zip code)  770-981-9460
  Securities registered pursuant to Section 12(b) of the
    Act: None
 Securities registered pursuant to Section 12(g) of the
    Act: None
  o x
  o x
  x o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. x
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer x
    Smaller
    reporting
    company o   Rule 12b-2 o x
    *
    The registrant is not subject to the filing requirements of
    Section 13 or 15(d) of the Securities Exchange Act of 1934.
    The registrant is a voluntary filer.




---



##### 





HARLAND
    CLARKE HOLDINGS CORP.
  INDEX TO
    ANNUAL REPORT ON
    FORM 10-K
  For the
    Year Ended December 31, 2009
   
 PagePART IItem 1.


Business


1Item 1A.


Risk Factors


8Item 1B.


Unresolved Staff Comments


22Item 2.


Properties


22Item 3.


Legal Proceedings


24Item 4.


Submission of Matters to a Vote of Security
    Holders


24PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


25Item 6.


Selected Financial Data


25Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risks


48Item 8.


Financial Statements and Supplementary Data


49Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


49Item 9A(T).


Controls and Procedures


49Item 9B.


Other Information


50PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


51Item 11.


Executive Compensation


53Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


67Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


68Item 14.


Principal Accounting Fees and Services


70PART IVItem 15.


Exhibits, Financial Statement Schedules


72EX-10.21EX-10.22EX-10.23EX-10.24EX-21.1EX-31.1EX-31.2   i




---



##### Table of Contents



PART I  Item 1.
    Business            e-mail
     1




---



##### Table of Contents



Company
    Overview
  Harland
    Clarke
    Products
    and Services
  Checks
    and Related Products
        Marketing
    Services
  business-to-consumer business-to-business
  
    marketing strategies such as acquisition, lead generation and
    nurturing, retention, activation, cross-selling and up-selling;
    data management and analytics;
    database design, development and hosting;
    print production and lettershop;
    teleservices; and
    online and
    e-mail
    marketing with advanced filtering to deliver targeted messages,
    social media and web analytics integration, and tools to manage
    complex enterprise and channel programs.  Customized
    Business and Home Office Products
   2




---



##### Table of Contents



Sales
    and Marketing
    e-mail
  Clients
      Competition
  Harte-Hanks,
  Environmental
    Matters
       3




---



##### Table of Contents



and/or
  Harland
    Financial Solutions
    Products
    and Services
    Pro Suite CreditQuest Interlinq
  Backlog
    Sales
    and Marketing
    Clients
    Competition
   4




---



##### Table of Contents



Scantron
    Products
    and Services
  Education-Related
    Products
    Achievement Series Performance Series
  Achievement Series Performance Series Achievement Series Performance Series
      Commercial,
    Healthcare, and Government  Related
    Products
     5




---



##### Table of Contents



Field
    Maintenance Services
    Backlog
    Sales,
    Marketing and Product Support
  on-site
  Clients
    Competition
    The
    Companys Suppliers
      The
    Companys Foreign Sales
   6




---



##### Table of Contents



The
    Companys Employees
    The
    Companys Intellectual Property
    Governmental
    Regulation Related to the Company
    direct-to-consumer
    e-commerce and/or
 7




---



##### Table of Contents



Non-Operating
    Contingent Claims, Indemnification and Insurance
    Matters
  Honeywell
    Indemnification
    Other
  LaserPro
      Availability
    of Reports
  Form 10-K, Form 10-Q, Form 8-K,
  Item 1A.
    Risk
    Factors  Risks
    Related to Our Substantial Indebtedness
  We
    have substantial indebtedness, which may adversely affect our
    ability to operate our business and prevent us from fulfilling
    our obligations under our debt agreements.
  and/or
 8




---



##### Table of Contents




    make it more difficult for us to satisfy our obligations with
    respect to our indebtedness;
    increase our vulnerability to general adverse economic and
    industry conditions;
    require us to dedicate a substantial portion of our cash flow
    from operations to payments on our indebtedness, thereby
    reducing the availability of our cash flow to fund working
    capital, capital expenditures, research and development efforts
    and other general corporate purposes;
    limit our flexibility in planning for, or reacting to, changes
    in our businesses and the industries in which we
    operate; and
    limit our ability to borrow additional funds.  Our
    ability to make payments on our indebtedness depends on our
    ability to generate sufficient cash in the future.
        Despite
    our current indebtedness levels, we may still be able to incur
    substantially more debt. Additional indebtedness could
    exacerbate the risks associated with our substantial
    leverage.
  and/or
 9




---



##### Table of Contents



Covenant
    restrictions under our indebtedness may limit our ability to
    operate our business.
    
    incur or guarantee additional indebtedness;
    make certain investments;
    make restricted payments;
    pay certain dividends or make other distributions;
    incur liens;
    enter into transactions with affiliates; and
    merge or consolidate or transfer and sell assets.      Risks
    Related to Our Business
  Weak
    economic conditions and further acceleration of check unit
    declines may continue to have an adverse effect on the
    Companys revenues and profitability and could result in
    additional impairment charges.
  Form 10-K.
      
    the continued adverse economic environment, which may negatively
    affect future revenue and margins as a result of lower demand
    and pricing pressure; and 10




---



##### Table of Contents




    check unit declines that have continued at a higher rate than in
    the past and are expected to continue to decline at higher rates
    than in recent years, which may negatively affect future revenue
    for our Harland Clarke segment.      Difficult
    conditions in the financial markets and a general economic
    downturn may adversely affect the business and results of
    operations of the Company and we cannot determine if these
    conditions will improve or worsen in the near
    future.
  and/or and/or
  Account
    data breaches involving stored client data or misuse of such
    data could adversely affect our reputation, revenues, profits
    and growth.
   11




---



##### Table of Contents



and/or
  Legislation
    and contracts relating to protection of personal data could
    limit or harm our future business.
          e-commerce and/or
 12




---



##### Table of Contents



We may
    experience processing errors or software defects that could harm
    our business and reputation.
    
    loss of clients;
    additional development costs;
    diversion of technical and other resources;
    negative publicity; or
    exposure to liability claims.  We may
    not successfully implement any or all components of our business
    strategies or realize all of our continued cost savings, which
    could reduce our revenues and profitability.
      We may
    be unable to protect our rights in intellectual property, and
    third-party infringement or misappropriation may materially
    adversely affect our profitability.
   13




---



##### Table of Contents



We may
    be unable to maintain our licenses to use third-party
    intellectual property on favorable terms.
    Third
    parties may claim we infringe on their intellectual property
    rights.
  and/or
  We are
    dependent upon third-party providers for significant information
    technology needs, and an interruption of services from these
    providers could materially and adversely affect our
    operations.
    We
    depend upon the talents and contributions of a limited number of
    individuals, many of whom would be difficult to replace, and the
    loss or interruption of their services could materially and
    adversely affect our business, financial condition and results
    of operations.
    We
    face uncertainty with respect to future acquisitions, and
    unsuitable or unsuccessful acquisitions could materially and
    adversely affect our business, prospects, results of operations
    and financial condition.
   14




---



##### Table of Contents



Our
    business is exposed to changes in interest rates.
    We are
    dependent on the success of our research and development and the
    failure to develop new and improved products could adversely
    affect our business.
    
    accurately anticipate and properly identify our customers
    needs and industry trends;
    price our products competitively;
    innovate, develop and commercialize new products and
    applications in a timely manner;
    obtain necessary regulatory approvals;
    differentiate our products from competitors
    products; and
    use our research and development budget efficiently.    We may
    be subject to sales and other taxes, which could have adverse
    effects on our business.
  out-of-state
 15




---



##### Table of Contents



We may
    be subject to environmental risks, and liabilities for
    environmental compliance or cleanup could have a material,
    adverse effect on our profitability.
      and/or
  M &
    F Worldwide, our indirect parent company, and its principal
    stockholder have significant influence over us.
    Risks
    Related to our Harland Clarke Segment
  The
    paper check industry overall is a mature industry and check
    usage is declining. Our business will be harmed if check usage
    declines faster than expected.
   16




---



##### Table of Contents



period-over-period and/or
  Consolidation
    among financial institutions may adversely affect our
    relationships with our clients and our ability to sell our
    products and may therefore result in lower revenues and
    profitability.
  and/or
  We are
    dependent on a few large clients, and adverse changes in our
    relationships with these highly concentrated clients may
    adversely affect our revenues and profitability.
     17




---



##### Table of Contents



We
    face intense competition and pricing pressures in certain areas
    of our business, which could result in lower revenues, higher
    costs and lower profitability.
    Interruptions
    or adverse changes in our vendor or supplier relationships or
    delivery services could have a material adverse effect on our
    business.
    Increased
    production and delivery costs, such as fluctuations in paper
    costs, could materially adversely affect our
    profitability.
    Softness
    in direct mail response rates could have an adverse impact on
    our operating results.
  direct-to-consumer and/or
  direct-to-consumer
 18




---



##### Table of Contents



Risks
    Related to our Harland Financial Solutions and Scantron
    Segments
  If we
    fail to continually improve our Harland Financial Solutions and
    Scantron products, effectively manage our product offerings and
    introduce new products and service offerings, our business may
    suffer.
    
    continue to enhance and expand existing Harland Financial
    Solutions and Scantron products and services;
    make Harland Financial Solutions and Scantron products
    compatible with future and existing operating systems and
    applications that achieve popularity within the business
    application marketplace, including current and future versions
    of Windows, Unix and IBM iSeries;
    engage in new business initiatives; and
    develop and introduce new products and new services that satisfy
    increasingly sophisticated client requirements, keep pace with
    technological and regulatory developments, provide client value
    and are attractive to customers.    The
    revenues, cash flows and results of operations of our Harland
    Financial Solutions segment may be reduced if we need to lower
    prices or offer other favorable terms on our products and
    services to meet competitive pressures in the software
    industry.
    Consolidation
    among financial institutions may adversely affect our
    relationships with Harland Financial Solutions clients and our
    ability to sell our products and may therefore result in lower
    revenues and profitability.
   19




---



##### Table of Contents



and/or
  Downturns
    in general economic and industry conditions, enhanced regulatory
    burdens and reductions in information technology budgets could
    cause decreases in demand for our software and related services
    which could negatively affect our revenues, cash flows and
    results of operations.
    As our
    software offerings increase in number, scope and complexity, our
    need to prevent any undetected errors and to correct any
    identified errors may increase our costs, slow the introduction
    of new products and we may become subject to warranty or product
    liability claims which could be costly to resolve and result in
    negative publicity.
    Errors,
    defects or other performance problems of our products could
    result in harm or damage to our clients and expose us to
    liability, which may adversely affect our business and operating
    results.
     20




---



##### Table of Contents



Failure
    to hire and retain a sufficient number of qualified information
    technology professionals could have a material adverse effect on
    our business, results of operations and financial
    condition.
    We may
    not receive significant revenues from our current research and
    development efforts.
    Our
    Harland Financial Solutions segment provides services to clients
    that are subject to government regulations that could constrain
    its operations.
    We may
    not be able to successfully develop new products and services
    for our Scantron segment, and those products and services may
    not receive widespread acceptance. As a result, the business,
    prospects, results of operations and financial condition of
    Scantron could be materially and adversely
    affected.
   21




---



##### Table of Contents



Budget
    deficits may reduce funding available for Scantron products and
    services and have a negative impact on our
    revenue.
    If we
    are not able to obtain paper and other supplies at acceptable
    quantities and prices, our revenue could be adversely
    affected.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Harland
    Clarke
  Approximate FloorLocation

Use

Space (Square Feet)

Leased/Owned StatusAtlanta, GA

Holding Company Headquarters and Harland Clarke Administration,
    Sales and Marketing


96,400



OwnedAtlanta, GA

Information Technology


36,000



OwnedAtlanta,
    GA(a)

Closed


54,000



OwnedAtlanta,
    GA(a)

Closed


132,300



OwnedAtlanta, GA

Tech Center


14,294



LeasedAtlanta, GA

Operations Support


9,665



LeasedBoulder City, NV

Administration and Production


4,000



LeasedBraintree, MA

Marketing Services and Production


102,000



LeasedCharlotte, NC

Administration


4,906



LeasedClayton, MO

Services


1,803



LeasedColorado Springs, CO

Services


22,665



LeasedDes Moines, IA

Printing


65,250



LeasedGlen Burnie, MD

Marketing Services and Production


120,000



LeasedGrapevine, TX

Printing


83,282



LeasedGreensboro,
    NC(a)

Closed


66,250



Owned 22




---



##### Table of Contents



Approximate FloorLocation

Use

Space (Square Feet)

Leased/Owned StatusHato Rey, Puerto Rico

Printing


22,125



LeasedHato Rey, Puerto Rico

Sales


2,356



LeasedHigh Point, NC

Printing


135,000



LeasedJeffersonville, IN

Printing


141,332



LeasedKansas City, MO

Marketing Services


5,401



LeasedLisle, IL

Marketing Services


7,050



LeasedLouisville, KY

Printing


50,000



LeasedMilton, WA

Printing


87,640



LeasedNashville, TN

Administration


21,309



LeasedNew Braunfels, TX

Administration, Printing and Contact Center


98,030



OwnedPhoenix, AZ

Printing


64,000



LeasedRedwood City, CA

Administration


10,000



LeasedSalt Lake City, UT

Printing, Distribution and Contact Center


129,100



OwnedSan Antonio, TX

Printing


166,000



LeasedSan Antonio, TX

Contact Center


68,000



LeasedSan Antonio, TX

Contact Center


42,262



LeasedSan Antonio, TX

Corporate Headquarters


90,000



LeasedSan Antonio, TX

Administration


1,936



LeasedSan Antonio, TX

Warehouse


16,166



LeasedSan Antonio, TX

Warehouse


18,675



Leased     (a)

    
    Held for sale.  Harland
    Financial Solutions
  Approximate FloorLocation

Use

Space (Square Feet)

Leased/Owned StatusAtlanta, GA

Development and Support


7,098



LeasedBirmingham, AL

Development and Support


5,500



LeasedBothell, WA

Development and Support


20,784



LeasedCarmel, IN

Development and Support


5,931



LeasedCincinnati, OH

Administration and Service Bureau


63,901



LeasedClive, IA

Service Bureau


36,466



LeasedCotuit, MA

Development and Support


3,200



LeasedEnglewood, CO

Development and Support


28,800



LeasedFargo, ND

Development and Support


18,371



LeasedGrand Rapids, MI

Development and Support


5,703



LeasedLake Mary, FL

Corporate Headquarters, Development and Support


80,390



LeasedMiamisburg, OH

Development and Support


15,286



LeasedOrlando, FL

Processing


14,800



LeasedPleasanton, CA

Development and Support


49,115



LeasedPortland, OR

Administration, Development and Support


79,089



LeasedTel Aviv, Israel

Development and Support


4,693



Leased  23




---



##### Table of Contents



Scantron
  Approximate FloorLocation

Use

Space (Square Feet)

Leased/Owned StatusColumbia, PA

Printing


121,370



OwnedEagan, MN

Corporate Headquarters, Development and Support


109,500



OwnedIrvine, CA

Development and Support


110,000



LeasedLawrence, KS

Administration


21,000



LeasedOmaha, NE

Field Services, Administration and Support


50,000



OwnedSan Diego, CA

Development and Support


10,175



Leased   Item 3.
    Legal
    Proceedings  LaserPro
        Item 4.
    Submission
    of Matters to a Vote of Security Holders   24




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  over-the-counter
  Item 6.
    Selected
    Financial Data      Form 10-K.
  Predecessor


PredecessorSuccessor


Successor


Successor


Successor



Successor


(Honeywell)


(Novar)Year Ended


Year Ended


Year Ended


Year Ended



Dec 15 to


Apr. 1 to


Jan 1 toDec. 31,


Dec. 31,


Dec. 31,


Dec. 31,



Dec. 31,


Dec. 14,


Mar. 31,(In millions)


2009(a)


2008(b)


2007(c)


2006



2005


2005


2005Statement of Operations Data:Net revenues


$
1,712.3


$
1,794.6


$
1,369.9


$
623.9



$
24.1


$
439.9


$
154.4Cost of revenues



997.7



1,066.9



833.8



388.4




17.4



285.6



91.1Gross profit



714.6



727.7



536.1



235.5




6.7



154.3



63.3Selling, general and administrative expenses



387.4



445.9



333.2



145.2




6.0



99.0



38.8Asset impairment charges



44.4



2.4



3.1
















Restructuring costs



32.5



14.6



5.6



3.3








1.8



0.4Operating income



250.3



264.8



194.2



87.0




0.7



53.5



24.1Gain (loss) on early extinguishment of debt



65.0







(54.6
)















Interest expense, net



(135.9
)


(184.2
)


(159.9
)


(60.0
)



(2.8
)


(2.4
)


(5.6
)Other income (expense), net



0.1



(0.4
)


(0.5
)















Income (loss) before income taxes



179.5



80.2



(20.8
)


27.0




(2.1
)


51.1



18.5Provision (benefit) for income taxes



67.4



33.0



(5.4
)


7.5




(0.8
)


20.1



7.5Net income (loss)


$
112.1


$
47.2


$
(15.4
)

$
19.5



$
(1.3
)

$
31.0


$
11.0   25




---



##### Table of Contents



December 31,(In millions)

2009(a)


2008(b)


2007(c)


2006



2005Balance Sheet Data:Total assets

$
3,252.0


$
3,391.8


$
3,447.6


$
1,118.3



$
1,149.9Long-term debt, including current portion and short-term
    borrowings(d)


2,238.8



2,390.6



2,409.9



603.8




626.2Stockholders equity


246.0



166.3



190.5



219.3




201.2     (a)
    
    Includes the financial position and results of operations of
    Transaction Holdings from the date of its acquisition on
    December 31, 2008, the financial position and results of
    operations of Protocol IMS from the date of its acquisition on
    December 4, 2009 and the financial position of
    SubscriberMail from the date of its acquisition on
    December 31, 2009. See Note 3 to our consolidated
    financial statements included elsewhere in this Annual Report on
    Form 10-K.(b)
    
    Includes the financial position and results of operations of
    Data Management from the date of its acquisition on
    February 22, 2008. See Note 3 to our consolidated
    financial statements included elsewhere in this Annual Report on
    Form 10-K.(c)
    
    Includes the financial position and results of operations of
    Harland from the date of its acquisition on May 1, 2007.
    See Note 3 to our consolidated financial statements
    included elsewhere in this Annual Report on
    Form 10-K.(d)
    
    Includes capital leases of $5.7 million, $2.6 million,
    and $3.4 million at December 31, 2009, 2008 and 2007,
    respectively.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion should be read in conjunction with
    Item 6. Selected Financial Data and the Harland
    Clarke Holdings consolidated financial statements and notes
    thereto included elsewhere in this Annual Report on
    Form 10-K.
  Overview
    of Business
      e-mail
   26




---



##### Table of Contents



The
    SubscriberMail and Protocol IMS Acquisitions
    The
    Transaction Holdings Acquisition
    The Data
    Management Acquisition
    The
    Harland Acquisition
      
    The Company entered into a $1,800.0 million senior secured
    term loan facility and a $100.0 million revolving credit
    facility; and
    The Company issued $305.0 million aggregate principal
    amount of senior floating rate notes due 2015 and
    $310.0 million aggregate principal amount of
    9.50% senior fixed rate notes due 2015. 27




---



##### Table of Contents



Economic
    and Other Factors Affecting the Businesses of the
    Company
  Harland
    Clarke
  period-over-period and/or
  Harte-Hanks,
  and/or
  Harland
    Financial Solutions
  and/or
   28




---



##### Table of Contents



Scantron
    Critical
    Accounting Policies and Estimates
    Revenue Recognition
   29




---



##### Table of Contents



percentage-of-completion
      and/or
    Income Taxes
    Long-Lived Assets
 30




---



##### Table of Contents




    Significant underperformance relative to expected historical or
    projected future operating results;
    Significant changes in the manner of use of these assets or the
    strategy for the Companys overall business; and
    Significant negative industry or economic trends.    Goodwill and Acquired Intangible
    Assets
    and/or
     31




---



##### Table of Contents



Contingencies and Indemnification
    Agreements
  Form 10-K.
  Postretirement Benefits
    Derivative Financial
    Instruments
   32




---



##### Table of Contents



Accounting
    Guidance
  Form 10-K
  Off-Balance
    Sheet Arrangements
  and/or
    Asset
    Impairments
    Restructuring
    Consolidated
    Operating Results
      Year
    Ended December 31, 2009 Compared to Year Ended
    December 31, 2008
   33




---



##### Table of Contents



Form 10-K).
  Net
    Revenues:
  Year Ended December 31,2009


2008Consolidated Net Revenues:Harland Clarke segment

$
1,226.0


$
1,290.4Harland Financial Solutions segment


278.9



293.7Scantron segment


208.0



211.3Eliminations


(0.6
)


(0.8
)Total

$
1,712.3


$
1,794.6           Cost
    of Revenues:
  Year Ended December 31,2009


2008Consolidated Cost of Revenues:Harland Clarke segment

$
764.3


$
822.5Harland Financial Solutions segment


119.6



124.1Scantron segment


114.4



121.1Eliminations


(0.6
)


(0.8
)Total

$
997.7


$
1,066.9      34




---



##### Table of Contents



Selling,
    General and Administrative Expenses:
  Year Ended December 31,2009


2008Consolidated Selling, General and Administrative Expenses:Harland Clarke segment

$
206.6


$
240.1Harland Financial Solutions segment


112.1



131.6Scantron segment


55.9



59.4Corporate


12.8



14.8Total

$
387.4


$
445.9          35




---



##### Table of Contents



Asset
    Impairment Charges
      Form 10-K
  Restructuring
    Costs
    Form 10-K).
  Interest
    Income
    Interest
    Expense
    Gain
    (Loss) on Early Extinguishment of Debt
   36




---



##### Table of Contents



Form 10-K).
  Other
    Income (Expense), Net
  other-than-temporary
  Provision
    for Income Taxes
    Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
  Form 10-K).
  Net
    Revenues:
  Year Ended December 31,2008


2007Consolidated Net Revenues:Harland Clarke segment

$
1,290.4


$
1,104.5Harland Financial Solutions segment


293.7



183.0Scantron segment


211.3



83.6Eliminations


(0.8
)


(1.2
)Total

$
1,794.6


$
1,369.9          37




---



##### Table of Contents



Cost of Revenues:
  Year Ended December 31,2008


2007Consolidated Cost of Revenues:Harland Clarke segment

$
822.5


$
711.8Harland Financial Solutions segment


124.1



75.7Scantron segment


121.1



47.5Eliminations


(0.8
)


(1.2
)Total

$
1,066.9


$
833.8          38




---



##### Table of Contents



Selling,
    General and Administrative Expenses:
  Year Ended December 31,2008


2007Consolidated Selling, General and Administrative Expenses:Harland Clarke segment

$
240.1


$
202.9Harland Financial Solutions segment


131.6



90.5Scantron segment


59.4



23.7Corporate


14.8



16.1Total

$
445.9


$
333.2             Asset
    Impairment Charges
   39




---



##### Table of Contents



Form 10-K
  Restructuring
    Costs
    Form 10-K).
  Interest
    Income
    Interest
    Expense
    Gain
    (Loss) on Early Extinguishment of Debt
  Form 10-K).
  Other
    Income (Expense), Net
   40




---



##### Table of Contents



Provision
    (Benefit) for Income Taxes
    Related
    Party Transactions
  Notes
    Receivable
    Form 10-K.
  Other
      Form 10-K,
   41




---



##### Table of Contents



Liquidity
    and Capital Resources
  Cash
    Flow Analysis
        The
    Companys Consolidated Contractual
    Obligations
    Payments Due by PeriodLess than








AfterTotal


1 year


1-3 years


4-5 years


5 years(In millions)Revolving credit
    facilities(1)(7)

$



$



$



$



$
Senior secured term
    loans(2)(7)


1,755.0



18.0



36.0



1,701.0



Senior
    notes(3)(7)


478.1















478.1Interest on long-term
    debt(4)(7)


455.5



104.9



190.3



146.0



14.3Capital lease obligations and other indebtedness


6.4



1.8



2.8



1.8



Operating lease obligations


131.0



27.1



46.5



30.8



26.6Raw material purchase obligations


17.9



17.9











Other long-term liabilities


25.5



0.6



16.9



1.8



6.2Client incentive
    payments(5)


58.6



24.5



25.2



8.9



Other purchase
    obligations(6)


24.7



11.1



5.5



8.1



Postretirement benefits payments


12.4



1.2



2.5



2.4



6.3Total

$
2,965.1


$
207.1


$
325.7


$
1,900.8


$
531.5     (1)

    
    Consists of our $100.0 million revolving credit facility,
    which will mature on June 28, 2013. See Note 11 to the
    accompanying consolidated financial statements included
    elsewhere in this Annual Report on Form
    10-K.(2)

    
    $1,800.0 million senior secured term loan, which will
    mature on June 30, 2014. The Company is required to make
    payments of principal in the amount of $18.0 million per
    year in equal quarterly installments. See 42




---



##### Table of Contents



Note 11 to the accompanying consolidated financial
    statements included elsewhere in this Annual Report on
    Form 10-K.(3)

    
    The senior notes will mature in 2015 and include
    $271.3 million of fixed rate notes and $206.8 million
    of floating rate notes. See Note 11 to the accompanying
    consolidated financial statements included elsewhere in this
    Annual Report on
    Form 10-K.(4)

    
    Interest on long-term debt assumes that all floating rates of
    interest remain the same as those in effect at December 31,
    2009 and includes the effect of the Companys interest rate
    derivative arrangements on future cash payments for the
    remaining period of those derivatives. The payments noted above
    also assume that the level of borrowing under the revolving
    credit facility remains at zero, as it was on December 31,
    2009, and all mandatory payments are made.(5)

    
    Represents unpaid amounts under existing client contracts.(6)

    
    Purchase obligations include amounts due under contracts with
    third-party service providers. Such contracts are primarily for
    information technology services including license rights for
    mainframe software usage, voice and network data services and
    telecommunication services. We routinely issue purchase orders
    to numerous vendors for the purchase of inventory and other
    supplies. These purchase orders are generally cancelable with
    reasonable notice to the vendor. As such, these purchase orders
    are not included in the purchase obligations presented in the
    table above.(7)

    
    The credit facilities and senior notes include early repayment
    provisions if certain events occur, including excess cash flow
    payments with respect to the senior secured credit facilities.
    See Note 11 to the accompanying consolidated financial
    statements included elsewhere in this Annual Report on
    Form 10-K.
    Payments in the table above assume that only mandatory principal
    payments will be made and that there will be no prepayments.    The
    Companys Credit Agreement
       43




---



##### Table of Contents




    a rate per annum equal to the higher of (a) the prime rate
    of Credit Suisse and (b) the Federal Funds rate plus 0.50%,
    in each case plus an applicable margin of 1.50% per annum for
    revolving loans and for term loans; or
    a rate per annum equal to a reserve-adjusted LIBOR rate, plus an
    applicable margin of 2.50% per annum for revolving loans and for
    term loans.          The
    Companys Senior Notes
     44




---



##### Table of Contents



Impact of
    Inflation
    Liquidity
    Assessment
  Form 10-K)
    
    Capital Expenditures.  The Companys
    capital expenditures are primarily related to infrastructure
    investments, internally developed software, cost reduction
    programs, marketing initiatives and other projects that support
    future revenue growth. During the years ended December 31,
    2009, 2008 and 2007, the Company incurred $42.2 million,
    $48.2 million, and $25.5 million of capital
    expenditures and $0.3 million, $0.7 million, and
    $0.4 million of capitalized interest, respectively. Capital
    expenditures for the years ended December 31, 2009 and 2008
    include $11.8 million and $21.7 million, respectively
    related to integration projects. Capital expenditures related to
    Harland operations are not included in periods prior to
    May 1, 2007, the date of the Harland Acquisition.
    Contract Acquisition Payments.  During the
    years ended December 31, 2009, 2008 and 2007, the Company
    made $42.9 million, $43.8 million and
    $15.6 million of contract acquisition payments to its
    clients, respectively. Payments related to Harland operations
    are not included in periods prior to May 1, 2007, the date
    of the Harland Acquisition.
    Restructuring/Cost Reductions.  Restructuring
    accruals and purchase accounting reserves have been established
    for anticipated severance payments, costs related to facilities
    closures and other expenses related to the planned restructuring
    or consolidation of some of the Companys historical
    operations, as well as related to the Harland Acquisition, the
    Data Management Acquisition and the Transaction Holdings
    Acquisition. During the years ended December 31, 2009, 2008
    and 2007, the Company made $33.6 million,
    $19.2 million and $15.3 million of payments for
    restructuring, respectively. Periods prior to May 1, 2007,
    the date of the Harland Acquisition, do not include payments
    related to the acquired Harland operations.    Cash Flow
    Risks
   45




---



##### Table of Contents



Honeywell
    Indemnification
    Other
  LaserPro
     46




---



##### Table of Contents



Forward-Looking
    Statements
  Form 10-K Form 10-K, Form 10-K. Form 10-K
    
    our substantial indebtedness;
    further adverse changes in or worsening of general economic and
    industry conditions, including the depth and length of the
    economic recession and higher unemployment, which could result
    in more rapid declines in product sales of
    and/or
    pricing pressure on the Harland Clarke and Scantron segments,
    and reductions in information technology budgets, which could
    result in adverse impacts on the Harland Financial Solutions
    segment;
    weak economic conditions and declines in the financial
    performance of our business that may result in material
    impairment charges, which could have a negative effect on the
    Companys earnings, total assets and market prices of the
    Companys outstanding securities;
    our ability to generate sufficient cash in the future that
    affects our ability to make payments on our indebtedness;
    our ability to incur substantially more debt that could
    exacerbate the risks associated with our substantial leverage;
    covenant restrictions under our indebtedness that may limit our
    ability to operate our businesses and react to market changes;
    increases in interest rates;
    the maturity of the paper check industry, including a faster
    than anticipated decline in check usage due to increasing use of
    alternative payment methods, decreased consumer spending and
    other factors and our ability to grow non-check-related product
    lines;
    consolidation among financial institutions;
    adverse changes or failures or consolidation of the large
    financial institution clients on which we depend, resulting in
    decreased revenues
    and/or
    pricing pressure;
    intense competition in all areas of our businesses;
    our ability to successfully manage future acquisitions;
    our ability to implement any or all components of our business
    strategy;
    interruptions or adverse changes in our vendor or supplier
    relationships; 47




---



##### Table of Contents




    increased production and delivery costs;
    fluctuations in the costs of raw materials and other supplies;
    our ability to attract, hire and retain qualified personnel;
    technological improvements that may reduce any advantage over
    other providers in our respective industries;
    our ability to protect customer or consumer data against data
    security breaches;
    changes in legislation relating to consumer privacy protection
    that could increase our costs or limit our future business
    opportunities;
    contracts with our clients relating to consumer privacy
    protection that could restrict our business;
    our ability to protect our intellectual property rights;
    our reliance on third-party providers for certain significant
    information technology needs;
    software defects or cyber attacks that could harm our businesses
    and reputation;
    sales and other taxes that could have adverse effects on our
    businesses;
    environmental risks;
    the ability of our Harland Financial Solutions segment to
    achieve organic growth;
    regulations governing the Harland Financial Solutions segment;
    our ability to develop new products for our Scantron segment;
    future warranty or product liability claims which could be
    costly to resolve and result in negative publicity;
    government and school clients budget deficits, which could
    have an adverse impact on our Scantron segment;
    softness in direct mail response rates;
    lower than expected cash flow from operations;
    unfavorable foreign currency fluctuations;
    the loss of one of our significant customers;
    work stoppages and other labor disturbances; and
    unanticipated internal control deficiencies or weaknesses.    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risks     48




---



##### Table of Contents



Form 10-K.
      Item 8.
    Financial
    Statements and Supplementary Data  page F-1 Regulation S-X Form 10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A(T).
    Controls
    and Procedures  Rules 13(a)-15(e) 15d-15(e)
  Rules 13a-15(f) 15d-15(f)
  Managements
    Report on Internal Control over Financial Reporting
      
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Company;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and 49




---



##### Table of Contents



expenditures of the Company are being made only in accordance
    with authorizations of management and directors of the
    Company; and  
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.          Item 9B.
    Other
    Information   50




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Organizational
    Structure
      Name

Age

PositionCharles T. Dawson


60


President and Chief Executive Officer, Harland Clarke Holdings
    Corp.; Chief Executive Officer, Harland Clarke; DirectorPeter A. Fera, Jr.


41


Executive Vice President and Chief Financial Officer, Harland
    Clarke Holdings Corp. and Harland ClarkeJames D. Singleton


50


President and Chief Operating Officer, Harland ClarkeRaju M. Shivdasani


59


President, Harland Financial SolutionsWilliam D. Hansen


50


President, ScantronPaul G. Savas


46


DirectorBarry F. Schwartz


60


Director   Charles T. Dawson
  Peter A. Fera, Jr.
  James D. Singleton
 51




---



##### Table of Contents



Raju M. Shivdasani
  William D. Hansen
  Paul G. Savas
  Barry F. Schwartz
  Code of
    Ethics
    Board of
    Directors
   52




---



##### Table of Contents



Board
    Committees
    Item 11.
    Executive
    Compensation  Compensation
    Discussion and Analysis
  Organizational
    Structure
    Named
    Executive Officers
    
    Mr. Charles T. Dawson, President and CEO of the Company;
    Mr. Peter A. Fera, Jr., CFO of the Company;
    Mr. James D. Singleton, President and COO of Harland Clarke;
    Mr. Raju M. Shivdasani, President of Harland Financial
    Solutions;
    Mr. William D. Hansen, President of Scantron, since
    July 13, 2009;
    Mr. David W. Porter, former President of Scantron from
    March 16, 2009 to June 1, 2009; and
    Mr. Jeffrey D. Heggedahl, President and CEO of Scantron,
    from May 2, 2007 to February 17, 2009.  Compensation
    Decision-Makers
  Compensation
    Committee
      Role
    of Executive Officers in the Compensation Process
   53




---



##### Table of Contents



Compensation
    Consultants and Benchmarking
    Compensation
    Philosophy
        and/or
 54




---



##### Table of Contents



Material
    Compensation Elements
  Overview
    of Compensation Components
    Pay Element

What the Pay Element Rewards

Purpose of the Pay ElementBase Salary

     Recognized leadership skills

     Provides base level of monthly income
    not subject to performance risk     Experience and expertise in the
    position

     Makes overall pay package more
    competitive     Demonstrated prior achievement of
    Company and personal goalsAnnual Executive Bonus Plan

     Executives contributions towards
    our achievement of annual performance targets

     Focuses executive on achievement of
    annual goal most important to the Company and investors     Recognizes executives direct
    responsibility for our annual performance targets

     Exposes executive to risk of not
    receiving pay or receiving diminished pay if Company
    underperforms     Gives executive direct motivation to
    help Company achieve annual performance targets with significant
    upside for achieving exceptional resultsLong-Term Incentive Compensation Plan

     Achievement of sustained growth

     Keeps executive focused on long term
    growth of the Company     Achievement of cumulative performance
    targets over a 3-year period

     Keeps executive personally invested in
    the implementation of the Companys long term growth planExecutive Employment Contract

     Continued service with the Company

     Keeps executive focused on job and
    performance401(k) and Deferred Compensation Plan

     Long-term service with the Company

     Helps executive prepare for retirement     Provides retention incentive

     Makes overall pay package more
     competitiveAdditional Benefits and Perquisites

     Continued service with the Company

     Makes overall pay package more
    competitive     Payments in-kind may foster added
    Company loyalty in a way added cash pay does notTermination Benefits

     Continued service in circumstances
    under which executives job is at risk

     Keeps executive focused on job and
    performance in best interest of Company even if executive works
    himself or herself out of a job   Elements
    of Compensation
  Base
    Salary
   55




---



##### Table of Contents



The
    Annual Executive Bonus Plan
        AdjustedEBITDA for





Actual 2009Base Salary

Compensation

Bonus as

Actual 2008

Bonus to beNEO

for 2009

Purposes Target %

a % of Base Salary

Bonus Paid

Paid in 2010Charles T. Dawson

$
1,000,000



90-145.1+



90-175


$
1,250,000


$
1,250,000Peter A. Fera, Jr.

$
450,000



90-145.1+



90-150


$
450,000


$
450,000James D. Singleton

$
500,000



90-145.1+



90-150


$
500,000


$
500,000Raju M. Shivdasani

$
375,000



90-125.1+



52-80


$
240,000


$
225,000William D. Hansen

$
425,000



90-145.1+



65-112.50


$
N/A


$
150,205David W. Porter

$
350,000



90-145.1+



54-90


$
220,500


$
91,825Jeffrey D. Heggedahl

$
600,000



90-125.1+



65-100


$
450,000


$
51,288   Adjusted
    EBITDA for Compensation Purposes Targets as a Performance
    Measure
  expense-net,
 56




---



##### Table of Contents



Performance
    Targets (Adjusted EBITDA for Compensation Purposes
    Targets)
    The 2008
    M & F Worldwide Long Term Incentive Compensation Plan
    (the LTIP)
    Post
    Employment Compensation
   57




---



##### Table of Contents



gross-ups
    Other
    Benefits and Perquisites
    Tax
    Considerations Relating to Executive Compensation
  Section 162(m)
    of the Internal Revenue Code
    Report
    of the Board of Directors
  Form 10-K
  Submitted by:

Charles T. DawsonPaul G. SavasBarry F. Schwartz, Chairman  58




---



##### Table of Contents



SUMMARY
    COMPENSATION TABLE FOR FISCAL YEAR 2009
  NonqualifiedNon-Equity

DeferredIncentive Plan

Compensation

All OtherSalary

Bonus

Compensation

Earnings

Compensation

TotalName and Principal Position

Year

($)(i)

($)

($)(v)

($)(vi)

($)(vii)

($)Charles T. Dawson
    President & Chief
    Executive Officer


2009



1,038,462







1,250,000







166,914



2,455,3762008



993,654







1,250,000







248,682



2,492,3362007



840,192







5,085,508



40



151,820



6,077,560Peter A. Fera, Jr.
    Executive Vice President &
    Chief Financial Officer


2009



467,308







450,000







54,674



971,9822008



445,769







450,000







63,937



959,7062007



348,077







1,115,738



5



47,228



1,511,048James D. Singleton
    President of Harland Clarke


2009



519,231







500,000







65,333



1,084,5642008



493,654







500,000







71,999



1,065,653Raju M. Shivdasani
    President of Harland
    Financial Solutions


2009



389,423







255,075







40,200



684,6982008



375,000







270,075







31,347



676,422William D. Hansen
    (ii)President of Scantron


2009



196,154







150,205







14,927



361,286David W.
    Porter(ii)

    (iii)Former President of Scantron


2009



250,385















290,311



540,696Jeffrey D.
    Heggedahl(ii)Former President of Scantron


2009



96,923







105,263







595,698



797,8842008



565,385







555,263







91,281



1,211,9292007



326,384



1,079,568
(iv)


252,404







134,480



1,792,836     (i)
    
    Fiscal 2009 contained twenty seven
    pay periods instead of the standard twenty six, therefore actual
    pay is slightly more than the annual rate.(ii)
    
    Mr. Hansen has been the
    President of Scantron since July 13, 2009 with a base pay
    of $425,000. Mr. Porter was President from March 16,
    2009 until June 1, 2009, and also held an executive
    position in Harland Clarke from January 1, 2009 to
    March 15, 2009. Mr. Heggedahl was President of
    Scantron from May 2, 2007 until February 17, 2009.(iii)
    
    Mr. Porters salary
    includes a one-time transitional services payment of $87,500.  (iv)
    
    Mr. Heggedahl received a
    payment equal to three times his base salary at the time of the
    Harland acquisition which was paid in May 2007 pursuant to his
    previous employment agreement in effect with The John H. Harland
    Company.  (v)
    
    The compensation in this column for
    2009 consists of amounts earned during 2009, and anticipated to
    be paid by March 12, 2010, under the Annual Executive Bonus
    Plan. Additionally, on May 8, 2009, Messrs. Shivdasani
    and Heggedahl each received payments under the legacy John H.
    Harland 2007 Long-Term Cash Incentive Plan. Such amounts are
    included in this table and are as follows: Mr. Shivdasani,
    $30,075; and Mr. Heggedahl, $105,263. An additional $30,075
    will be paid to Mr. Shivdasani under the legacy John H.
    Harland 2007 Long-Term Cash Incentive Plan on each of the two
    anniversaries of April 25, 2009, subject to
    Mr. Shivdasanis continued employment on each of the
    payout dates.With respect to Messrs. Dawson
    and Fera, this column for 2007 also consists of amounts paid out
    in connection with the early termination and payout of the 2005
    M & F Long Term Incentive Compensation Plan, which
    amounts are as follows: Mr. Dawson, $4,184,474, and
    Mr. Fera, $836,894.In addition, Messrs. Porter
    and Heggedahl, as a result of their terminations of employment,
    and as required by their respective employment agreements,
    Messrs. Porter and Heggedahl will receive payments of
    $91,825 and $51,288, respectively, anticipated to be paid by
    March 12, 2010, with respect to the pro-rata annual bonus
    for 2009, provided they continue to comply with the
    post-employment restrictive covenants and other provisions of
    their agreements. This amount is not included in the column for
    2009. In addition, Mr. Porter was paid a bonus of $220,500
    on March 12, 2009, which was earned in 2008, as a result of
    his former executive position with Harland Clarke. This amount
    is not included in the column for 2009.  (vi)
    
    Represents the above-market
    interest, if any, credited under our Benefits Equalization Plan
    (the BEP). We determined the above-market interest
    credited by determining the difference between the interest on
    BEP accounts calculated using the actual rate used in the plan,
    and 120% of the applicable federal long-term rate, with
    quarterly compounding for January of the applicable year, as
    prescribed under section 1274(d) of the Internal Revenue
    Code. Interest rates credited to the BEP accounts were 3.5%,
    5.0%, and 6.0% for 2009, 2008, and 2007, respectively. 59




---



##### Table of Contents



(vii)
    
    See details of Other Compensation
    in the All Other Compensation table below:  All Other
    Compensation
  EmployerTerm Life


Contributions to& Exec


401(k) plan andCountry


AD&D


SupplementalCar


Relocation


Club


Insurance


Excess Benefit


Tax


OtherAllowance


Costs


Fees


Premiums


Plan


Gross-Up


Compensation


Severance


TotalName

Year


($)(i)


($)


($)(ii)


($)(iii)


($)(iv)


($)(v)


($)(vi)


$(vii)


($)Charles T. Dawson


2009



33,501







5,765



2,365



92,191



22,437



10,655







166,914Peter A. Fera, Jr.


2009



5,940







4,051



651



36,692



1,941



5,399







54,674James D. Singleton


2009



7,960







5,340



651



40,769



3,444



7,169







65,333Raju M. Shivdasani


2009



4,000











4,542



25,177



3,819



2,662







40,200William D. Hansen


2009



4,000















6,055



1,569



3,303







14,927David W. Porter


2009



2,970











168



16,195



4,645



64,410



201,923



290,311Jeffrey D. Heggedahl


2009



990











531



24,769



335



107,535



461,538



595,698     (i)
    
    Comprised of (1) car allowance
    in the case of Messrs. Fera, Singleton, Shivdasani, Hansen,
    Porter, and Heggedahl; and (2) the aggregate incremental
    cost to the Company of the leased vehicle in the case of
    Mr. Dawson, which is calculated as the total cost of the
    lease payments on the car, the insurance relating to the car,
    gasoline used in the car, and cleaning and maintenance of the
    car. Messrs. Fera, Singleton, Shivdasani, and Hansen are
    eligible to receive a pre-set amount per month as a car
    allowance.(ii)
    
    The Company reimburses each
    executives monthly country club dues.(iii)
    
    Amounts include (1) executive
    life premiums and (2) executive AD&D premiums.(iv)
    
    Consists of (1) employer
    contributions to the 401(k) plan of $9,800 for each NEO except
    Mr. Hansen, due to his employment for a partial year; and
    (2) employer contributions to a supplemental non-qualified
    excess benefit plan, the Benefits Equalization Plan described
    below and in the Nonqualified Deferred Compensation Table, in
    the following amounts: Mr. Dawson $82,391, Mr. Fera
    $26,892, Mr. Singleton $30,969, Mr. Shivdasani
    $15,377, Mr. Porter $6,395, and Mr. Heggedahl $14,969.(v)
    
    Consists of (1) the tax
    gross-up on
    the personal use of a company vehicle by Mr. Dawson of
    $16,326 and gross-up on spousal travel of $6,111; (2) the
    tax gross-up on the Executive long term disability for
    Messrs. Shivdasani and Heggedahl; and (3) the tax
    gross-up on the COBRA subsidy for Mr. Porter and
    (4) the tax gross-up for the spousal travel for
    Messrs. Fera, Singleton, Shivdasani, and Hansen.(vi)
    
    Consists of (1) spousal travel
    for Messrs. Dawson, Fera, Singleton, Shivdasani and Hansen;
    (2) outplacement services of $30,000, unused vacation of
    $18,005, COBRA subsidy of $12,916, and reimbursement for
    Minnesota tax withholding of $3,489 for Mr. Porter; and
    (3) unused vacation of $72,314, outplacement services of
    $30,000, and a one time payment of $5,221 in lieu of COBRA for
    Mr. Heggedahl.  (vii)
    
    Consists of severance paid in 2009.
    Additional severance under their respective agreements of
    $323,077 for Mr. Porter and $738,462 for Mr. Heggedahl
    remains payable, payment of which is contingent on the
    executives continued adherence to certain post employment
    restrictive covenants and obligations.    Employment
    Contracts
  Mr. Dawson
   60




---



##### Table of Contents



Change-in-Control
  Mr. Fera
  Change-in-Control
  Mr. Singleton
  Change-in-Control
  Mr. Shivdasani
  Change-in-Control
 61




---



##### Table of Contents



Mr. Hansen
  Change-in-Control
  Former
    Executive Officers
  Mr. Porter
    Mr. Heggedahl
   62




---



##### Table of Contents



GRANTS OF
    PLAN-BASED AWARDS
 FOR FISCAL YEAR 2009
  Threshold

Target

Maximum(iv)Name

Award
    Type(i),(ii)

($)

($)

($)Charles T. Dawson

Annual Bonus


900,000




1,250,000



1,750,0002008-2010
    Segment
    LTIP


787,500




1,575,0002008-2010
    Consolidated
    LTIP


787,500




1,575,0002008-2010
    Consolidated
    LTIP (iii)


300,000




600,000Peter A. Fera, Jr.

Annual Bonus


405,000




450,000



675,0002008-2010
    Segment
    LTIP


247,500




495,0002008-2010
    Consolidated
    LTIP


247,500




495,000James D. Singleton

Annual Bonus


450,000




500,000



750,0002008-2010
    Segment
    LTIP


322,500




645,0002008-2010
    Consolidated
    LTIP


322,500




645,000Raju M. Shivdasani

2009 Bonus


195,000




225,000



300,000Annual Bonus
    after 2009


276,250




318,750



478,1252008-2010
    Segment
    LTIP


281,250




562,5002008-2010
    Consolidated
    LTIP


281,250




562,500William D. Hansen

2009 Bonus


130,178




150,205



225,308Annual Bonus
    after 2009


276,250




318,750



478,1252008-2010
    Segment
    LTIP


106,250




212,5002008-2010
    Consolidated
    LTIP


206,389




412,777David W. Porter

2009 Bonus


78,707




91,825



131,1782008-2010
    Segment
    LTIP


53,131




106,2612008-2010
    Consolidated
    LTIP


53,131




106,261Jeffrey D. Heggedahl

Annual Bonus


51,288




59,178



78,9042008-2010
    Segment
    LTIP


169,982




339,9632008-2010
    Consolidated
    LTIP


169,982




339,963     (i)
    
    The amounts listed as Annual Bonus
    represent the threshold, target and maximum amount which may be
    payable to each NEO pursuant to the annual executive bonus plan,
    as described in more detail above under Elements of
    Compensation  The Annual Executive Bonus Plan. 63




---



##### Table of Contents



(ii)
    
    The amounts listed as LTIP
    represent the threshold and target amount which may be payable
    in 2011 to each NEO at the end of the three year performance
    period
    (2008-2010)
    pursuant to the LTIP, as described in more detail above under
    Elements of Compensation  The 2008
    M & F Worldwide Long Term Incentive Compensation Plan
    (the LTIP). The first row labeled LTIP represents
    the amount of the LTIP attributable to the performance of each
    NEOs individual business segment at the end of the three
    year performance period and the second row represents the amount
    attributable to consolidated performance at the end of the three
    year performance period.(iii)
    
    Mr. Dawson received an
    additional grant under the LTIP which represents the amount
    attributable to consolidated performance at the end of the three
    year performance period as a result of increased
    responsibilities for the Company after taking the additional
    position of President and Chief Executive Officer of Harland
    Clarke Holdings.(iv)
    
    The LTIP, which was designed to
    meet the requirements of Section 162(m) of the Internal
    Revenue Code was approved by the shareholders of M & F
    Worldwide in 2008 for an aggregate maximum of
    $16.5 million. Under the terms of the LTIP, the maximum
    Payout to any participant is $10 million. The actual payout
    to any participant is expected to be substantially lower than
    the maximum potential payout, which was provided for purposes of
    Section 162(m) of the Internal Revenue Code.
    Mr. Porter and Mr. Heggedahl, as a result of their
    termination, and in accordance with their agreements have a
    minimum LTIP award payment in 2011 of $0 and $0, respectively,
    and a maximum LTIP award payment in 2011 of $106,261 and
    $446,224, respectively.  NONQUALIFIED
    DEFERRED COMPENSATION TABLE FOR FISCAL YEAR 2009
  Executive

Registrant

Aggregate

Aggregate

AggregateContributions

Contributions

Earnings

Withdrawals/

Balancein Last FY

in Last FY

in Last FY

Distributions

at Last FYEName

($)

($)(i)

($)

($)(ii)

($)(iii)Charles T. Dawson






82,391



17,583







529,795Peter A. Fera, Jr.






26,892



3,578







111,625James D. Singleton






30,969



3,894







121,640Raju M. Shivdasani






15,377



882







31,706David W. Porter






6,395



1,256







37,579Jeffrey D. Heggedahl






14,969



762



(44,080
)


     (i)
    
    The amounts reported are included as part of All Other
    Compensation in the Summary Compensation Table.(ii)
    
    Mr. Heggedahls balance was paid out on
    September 11, 2009.(iii)
    
    Reflects the total balance of the executives account as of
    the end of the Companys 2009 fiscal year.  Material
    Features of the Deferred Compensation Plan
      10-Year
   64




---



##### Table of Contents



Potential
    Payments upon Termination or
    Change-in-Control
        ,
    
    continued participation in applicable welfare benefit plans for
    12 months after termination; and
    employer-subsidized welfare plan benefits for a period of
    12 months after termination.           65




---



##### Table of Contents



Changes-in-Control
  TERMINATION
    WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON
    AS OF DECEMBER 31, 2009
  ExecutiveHealth/

Annual



DeferredSeparation



Welfare

Bonus

Outplacement

CompensationName &

Pay(i)

Vacation(ii)

Plans(iii)

Plan(iv)

Assistance(v)

Plan
    Balance(vi)

TotalPrincipal Position

($)

($)

($)

($)

($)

($)

($)Charles T. Dawson,
    President & CEO


2,000,000



11,077



9,728



1,250,000



30,000



529,795



3,830,600Peter A. Fera, Jr.
    EVP & CFO


675,000







12,044



450,000



30,000



111,625



1,278,669James D. Singleton,
    President of Harland Clarke


750,000







12,044



500,000



30,000



121,640



1,413,684Raju M. Shivdasani,
    President of Harland Financial Solutions


562,500







9,973



225,000



30,000



31,706



859,179William D. Hansen,
    President of Scantron


637,500







11,524



318,750



30,000







997,774     (i)
    
    For each NEO, upon termination of
    the executive without cause or resignation for good reason (each
    as defined in each employment agreement), the executive is
    entitled to receive continued payment of base salary for the
    following periods: 24 months in the case of
    Messrs. Dawson; and 18 months in the case of
    Messrs. Fera, Singleton, Shivdasani, and Hansen.(ii)
    
    Upon termination, the executive is
    entitled to his earned and unused vacation for the current year.
    Effective January 1, 2008, we established a policy pursuant
    to which up to 40 hours of vacation may be carried over
    from year to year. Mr. Dawson is also entitled to his
    balance of frozen vacation of $11,077.(iii)
    
    For each NEO, upon termination of
    the executive without cause, or resignation for good reason, the
    executive is entitled to continued participation in applicable
    welfare benefit plans for 12 months after the termination
    and continued contribution by the Company to the employer
    portion of the employee premiums of welfare benefit plans for
    12 months after the termination. The employer portion
    reflects employer cost for 2009 based on the employees
    enrollment in dental, medical, and vision plans as of
    December 31, 2009.  (iv)
    
    For each NEO, upon termination of
    the executive without cause, due to death or disability, or in
    the event the NEO resigns for good reason, the executive is
    entitled to receive a prorated annual bonus for the year in
    which the termination occurred if the executive would have been
    eligible to receive such bonus hereunder (including due to
    satisfaction of the Company of performance milestones) had the
    executive been employed at the time such annual bonus is
    normally paid. The amounts provided in this column assume that
    the bonus is paid at a level at which 100% of the target is
    achieved.(v)
    
    Upon termination, each executive is
    entitled to standard outplacement assistance for the key
    executive level of up to $30,000 which would be paid to a
    mutually agreed provider of outplacement services for a
    12-month
    outplacement program.(vi)
    
    Upon termination, retirement,
    death, or disability, the executives total balance in the
    BEP is to be paid in a single lump sum on the first day of the
    seventh month following the occurrence of such an event. These
    amounts reflect the executives account balance as of
    December 31, 2009.     66




---



##### Table of Contents



DIRECTORS
    COMPENSATION TABLE FOR FISCAL YEAR 2009
  Change inPension Valueand NonqualifiedNon-Equity

DeferredFees Earned

Stock

Option

Incentive Plan

Compensation

All OtherName

or Paid in Cash

Awards

Awards

Compensation

Earnings

Compensation

TotalBarry F.
    Schwartz(i)


























Paul G.
    Savas(i)


























Charles T.
    Dawson(ii)


























Jeffrey D.
    Heggedahl(ii)


























     (i)
    
    Messrs. Schwartz and Savas received no compensation
    directly or indirectly from the Company. They provided services
    to the Company under the terms of a Second Amended and Restated
    Management Services Agreement between M & F Worldwide
    and MacAndrews & Forbes. Pursuant to the Second
    Amended and Restated Management Services Agreement,
    M & F Worldwide paid to MacAndrews & Forbes
    a fee of $2.5 million per calendar quarter, beginning
    May 1, 2007. The total amount paid to
    MacAndrews & Forbes in 2009, 2008 and 2007 pursuant to
    the Second Amended and Restated Management Services Agreement
    was $10.0 million, $10.0 million and
    $8.3 million. In addition, M & F Worldwide paid
    to MacAndrews & Forbes fees of $2.0 million and
    $10.0 million in 2008 and 2007, respectively, for services
    related to sourcing, analyzing, negotiating and executing the
    Data Management Acquisition and the Harland Acquisition,
    respectively.(ii)
    
    Messrs. Dawson and Heggedahl did not receive any
    compensation for their service as directors in 2009, 2008 or
    2007. Mr. Heggedahl resigned as a director and an employee
    effective February 17, 2009.  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   67




---



##### Table of Contents



Number of Shares

Percent ofName of Beneficial Owner

Beneficially Owned

Outstanding SharesMFW Holdings One LLC
    35 East 62 St., New York, NY 10065


7,248,000
(1)


37.5
%Dimensional Fund Advisors LP
    Palisades West, Building One
    6300 Bee Cave Road, Austin, TX 78746


1,646,912
(2)


8.5
%MFW Holdings Two LLC
    35 East 62 St., New York, NY 10065


1,012,666
(1)


5.2
%Ronald O. Perelman


133,334
(1)


1.0
%Barry F. Schwartz


5,000



0.0
%Charles T. Dawson






0.0
%Paul G. Savas


1,000



0.0
%James D. Singleton






0.0
%Raju M. Shivdasani






0.0
%All directors and executive officers as a group (8 persons)


8,400,000
(3)


43.4
%     (1)
    
    All of such shares of common stock are beneficially owned by
    Ronald O. Perelman. MFW Holdings One LLC and MFW Holdings Two
    LLC are wholly owned subsidiaries of MacAndrews &
    Forbes Holdings Inc., of which Mr. Perelman owns 100%. In
    addition, MacAndrews & Forbes Holdings Inc. may be
    deemed to share beneficial ownership of the
    8,194,000 shares of common stock beneficially owned by MFW
    Holdings One LLC and MFW Holdings Two LLC and the
    133,334 shares of common stock deemed beneficially owned by
    Mr. Perelman as a result of Mr. Perelmans grant
    of restricted stock (an aggregate of 8,400,000 shares of
    common stock, representing approximately 43.4% of the common
    stock outstanding or deemed outstanding under the rules of the
    SEC), by virtue of MacAndrews & Forbes Holdings
    Inc.s ownership of 100% of the common stock of MFW
    Holdings One LLC and MFW Holdings Two LLC and
    Mr. Perelmans 100% ownership of
    MacAndrews & Forbes Holdings Inc.s common stock.
    The shares so owned and shares of intermediate holding companies
    are, or may from time to time be, pledged to secure obligations
    of MacAndrews & Forbes Holdings Inc. or its affiliates.(2)
    
    Beneficial ownership is based on a statement on
    Schedule 13G filed by Dimensional Fund Advisors LP on
    February 8, 2010.(3)
    
    Includes shares of common stock indirectly owned by
    Mr. Perelman through MacAndrews & Forbes Holdings
    Inc.  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence  Related
    Person Transactions Policy
   68




---



##### Table of Contents



Form 10-K
  Management
    Services Agreement
          Insurance
   69




---



##### Table of Contents



Tax
    Sharing Agreement
      Allocations
    Director
    Independence
    Item 14.
    Principal
    Accounting Fees and Services    Audit Fees. Form 10-Q Form 10-Q.
  Audit-Related Fees.
 70




---



##### Table of Contents



Tax Fees.
  All Other Fees.
   71




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    page F-1
    ExhibitNumber

Description2
.1

Stock Purchase Agreement by and between M & F
    Worldwide Corp. and Honeywell International Inc., dated
    October 31, 2005 (incorporated by reference to
    Exhibit 2.1 of M & F Worldwide Corp.s
    Current Report on
    Form 8-K
    dated October 31, 2005).2
.2

Membership Interest Purchase Agreement by and among
    M & F Worldwide Corp., NCS Pearson Inc. and Pearson
    Inc., dated as of February 13, 2008 (incorporated by
    reference to Exhibit 2.1 of M & F Worldwide
    Corp.s Current Report on
    Form 8-K,
    dated February 14, 2008).2
.3

Agreement and Plan of Merger by and among John H. Harland
    Company, M & F Worldwide Corp. and H Acquisition
    Corp., dated as of December 19, 2006 (incorporated by
    reference to Exhibit 2.1 of M & F Worldwide
    Corp.s Current Report on
    Form 8-K,
    dated December 20, 2006).3
.1

Certificate of Incorporation of Harland Clarke Holdings Corp.,
    as amended (incorporated by reference to Exhibit 3.1(i) of
    Harland Clarke Holdings Corp.s Registration Statement on
    Form S-4,
    Commission File
    No. 333-133253).3
.2

By-laws of Harland Clarke Holdings Corp. (incorporated by
    reference to Exhibit 3.1(ii) of Harland Clarke Holdings
    Corp.s Registration Statement on
    Form S-4,
    Commission File
    No. 333-133253).4
.1

Indenture dated as of May 1, 2007 among Harland Clarke
    Holdings Corp., the co-issuers and guarantors party thereto and
    Wells Fargo Bank, N.A., as trustee. (incorporated by reference
    to Exhibit 4.1 to Harland Clarke Holdings Corp.
    Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.2

Registration Rights Agreement (relating to the initial notes)
    dated as of May 1, 2007 by and among Harland Clarke
    Holdings Corp., the Guarantors (listed therein), Credit Suisse
    Securities (USA) LLC, Bear, Stearns & Co., Inc.,
    Citigroup Global Markets Inc. and J.P. Morgan Securities
    Inc. (incorporated by reference to Exhibit 4.4 to Harland
    Clarke Holdings Corp. Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.3

Credit Agreement, dated as of April 4, 2007 among Harland
    Clarke Holdings Corp., the Subsidiary Borrowers (listed
    therein), the Lenders (listed therein) and Credit Suisse, Cayman
    Islands Branch, as administrative agent. (incorporated by
    reference to Exhibit 4.5 to Harland Clarke Holdings Corp.
    Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.4

First Amendment to Credit Agreement, dated as of May 4,
    2007, by and among Harland Clarke Holdings Corp., the lender
    parties (listed therein) and Credit Suisse, Cayman Islands
    Branch, as administrative and collateral agent. (incorporated by
    reference to Exhibit 4.6 to Harland Clarke Holdings Corp.
    Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.5

Guarantee and Collateral Agreement, dated as of May 1,
    2007, by and among Harland Clarke Holdings Corp. and certain
    subsidiaries in favor of Credit Suisse, Cayman Islands Branch.
    (incorporated by reference to Exhibit 4.7 to Harland Clarke
    Holdings Corp. Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.6

Assumption Agreement, dated as of May 1, 2007 by and among
    Harland Clarke Corp., Harland Checks and Services, Inc.,
    Scantron Corporation, Harland Financial Solutions, Inc., HFS
    Core Systems, Inc., Centralia Holding Corp. and John H. Harland
    Company of Puerto Rico in favor of Credit Suisse, Cayman Islands
    Branch, as administrative and collateral agent. (incorporated by
    reference to Exhibit 4.8 to Harland Clarke Holdings Corp.
    Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717). 72




---



##### Table of Contents



ExhibitNumber

Description4
.7

Intellectual Property Security Agreement, dated as of
    May 1, 2007, by and among B(2)Direct, Inc., Checks in the
    Mail, Inc. and Clarke American Checks, Inc., the Grantors, in
    favor of Credit Suisse, Cayman Islands Branch, as administrative
    and collateral agent. (incorporated by reference to
    Exhibit 4.9 to Harland Clarke Holdings Corp. Registration
    Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.8

Intellectual Property Security Agreement, dated as of
    May 1, 2007, by and among Harland Clarke Corp., Harland
    Checks and Services, Inc., Scantron Corporation, Harland
    Financial Solutions, Inc. and HFS Core Systems, Inc., the
    Grantors, in favor of Credit Suisse, Cayman Islands Branch, as
    administrative and collateral agent. (incorporated by reference
    to Exhibit 4.10 to Harland Clarke Holdings Corp.
    Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.9

Joinder Agreement, dated as of May 1, 2007, by and among
    B(2)Direct, Inc., Checks in the Mail, Inc., Clarke American
    Checks, Inc., New CS, Inc., New SCSFH, Inc., H Acquisition
    Corp., New SCH, Inc., New SFH, Inc. and Credit Suisse, Cayman
    Islands Branch. (incorporated by reference to Exhibit 4.11
    to Harland Clarke Holdings Corp. Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.10

Joinder Agreement, dated as of May 1, 2007, by and among
    Harland Clarke Corp., Harland Checks and Services, Inc.,
    Scantron Corporation, Harland Financial Solutions, Inc., HFS
    Core Systems, Inc. and Credit Suisse, Cayman Islands Branch.
    (incorporated by reference to Exhibit 4.12 to Harland
    Clarke Holdings Corp. Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.11

Deed to Secure Debt by Harland Clarke Corp. to Credit Suisse,
    Cayman Islands Branch (5096 Panola Industrial Blvd, Decatur,
    Georgia and
    2933-2939
    Miller Road, Decatur, Georgia). (incorporated by reference to
    Exhibit 4.14 to Harland Clarke Holdings Corp. Registration
    Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.12

Deed of Trust, Security Agreement, Assignment of Rents and
    Leases and Fixture Filing by Scantron Corporation in favor of
    First American Title Insurance Company, as trustee for the
    benefit of Credit Suisse, Cayman Islands Branch (2020 South 156
    Circle, Omaha, Nebraska). (incorporated by reference to
    Exhibit 4.15 to Harland Clarke Holdings Corp. Registration
    Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.13

Mortgage by Clarke American Checks, Inc. to Credit Suisse,
    Cayman Islands Branch (124 Metropolitan Avenue, Salina, New
    York). (incorporated by reference to Exhibit 4.16 to
    Harland Clarke Holdings Corp. Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.14

Deed of Trust, Security Agreement, Assignment of Rents and
    Leases and Fixture Filing by Checks In The Mail Inc. in favor of
    Peter Graf, Esq., as trustee for the benefit of Credit
    Suisse, Cayman Islands Branch (2435 Goodwin Lane, New Braunfels,
    Texas). (incorporated by reference to Exhibit 4.18 to
    Harland Clarke Holdings Corp. Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.15

Deed of Trust, Security Agreement, Assignment of Rents and
    Leases and Fixture Filing by Clarke American Checks, Inc. in
    favor of Peter Graf, Esq., as trustee for the benefit of
    Credit Suisse, Cayman Islands Branch (5734 Farinon Drive,
    San Antonio, Texas). (incorporated by reference to
    Exhibit 4.19 to Harland Clarke Holdings Corp. Registration
    Statement on
    Form S-4,
    Commission File
    No. 333-143717).4
.16

Deed of Trust, Security Agreement, Assignment of Rents and
    Leases and Fixture Filing by Harland Clarke Corp. in favor of
    First American Title Insurance Agency, LLC, as trustee for
    the benefit of Credit Suisse, Cayman Islands Branch
    (4867-4883 West
    Harold Gatty Road, Salt Lake City, Utah). (incorporated by
    reference to Exhibit 4.20 to Harland Clarke Holdings Corp.
    Registration Statement on
    Form S-4,
    Commission File
    No. 333-143717).10
.1

Tax Sharing Agreement, dated as of December 15, 2005, by
    and among M & F Worldwide Corp., Harland Clarke
    Holdings Corp. and PCT International Holdings Inc. (incorporated
    by reference to Exhibit 10.15 of M & F Worldwide
    Corp.s Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005).10
.2+

M & F Worldwide Corp. 2005 Long Term Incentive Plan
    (incorporated by reference to Exhibit 10.1 to M &
    F Worldwide Corp.s
    Form 8-K
    filed on May 24, 2006). 73




---



##### Table of Contents



ExhibitNumber

Description10
.3+

M & F Worldwide Corp. 2005 Long Term Incentive
    Plan  Form of Award Agreement for Participating
    Executives of Clarke American Corp. (incorporated by reference
    to Exhibit 10.2 to M & F Worldwide Corp.s
    Form 8-K
    filed on May 24, 2006).10
.4+

M & F Worldwide Corp. 2008 Long Term Incentive Plan
    (incorporated by reference to Exhibit 10.15 to
    M & F Worldwide Corp.s Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2007).10
.5+

Amendment No. 1 to the M & F Worldwide Corp. 2008
    Long Term Incentive Plan, dated as of December 31, 2008
    (incorporated by reference to Exhibit 10.2 to M &
    F Worldwide Corp.s Current Report on
    Form 8-K
    filed on January 7, 2009).10
.6+

M & F Worldwide Corp. 2008 Long Term Incentive
    Plan  Award Agreement for Participating Executives
    (incorporated by reference to Exhibit 10.16 to
    M & F Worldwide Corp.s Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2007).10
.7+

Employment Agreement, dated as of February 13, 2008,
    between Harland Clarke Holdings Corp. and Charles T. Dawson
    (incorporated by reference to Exhibit 10.1 to Harland
    Clarke Holdings Corp.s Current Report on
    Form 8-K
    filed on February 15, 2008).10
.8+

Amendment, dated as of December 31, 2008, to the Employment
    Agreement, dated as of February 13, 2008, between Harland
    Clarke Holdings Corp. and Charles T. Dawson (incorporated by
    reference to Exhibit 10.2 to M & F Worldwide
    Corp.s Current Report on
    Form 8-K
    filed on January 7, 2009).10
.9+

Employment Agreement dated February 13, 2008 between
    Harland Clarke Corp. and Peter A. Fera, Jr. (incorporated by
    reference to Exhibit 10.2 to Harland Clarke Holdings
    Corp.s Current Report on
    Form 8-K
    filed on February 15, 2008).10
.10+

Amendment, dated as of December 31, 2008, to the Employment
    Agreement, dated as of February 13, 2008, between Harland
    Clarke Corp. and Peter A. Fera, Jr. (incorporated by reference
    to Exhibit 10.3 to Harland Clarke Holdings Corp.s
    Current Report on
    Form 8-K
    filed on January 7, 2009).10
.11+

Employment Agreement dated as of May 29, 2007 among Harland
    Clarke Holdings Corp., Harland Financial Solutions and John
    OMalley (incorporated by reference to Exhibit 10.2 to
    M & F Worldwide Corp.s Current Report on
    Form 8-K
    filed on June 1, 2007).10
.12+

Employment Agreement, dated as of May 5, 2008, among
    Harland Clarke Holdings Corp., Scantron Corporation and Jeffrey
    Heggedahl.10
.13+

Amendment, dated as of December 31, 2008, to the Employment
    Agreement, dated as of May 5, 2008, among Harland Clarke
    Holdings Corp., Scantron Corporation and Jeffrey Heggedahl
    (incorporated by reference to Exhibit 10.4 to Harland
    Clarke Holdings Corp.s Current Report on
    Form 8-K
    filed on January 7, 2009).10
.14+

Employment Agreement, dated as of February 7, 2008, between
    Harland Clarke Holdings Corp. and Daniel Singleton.10
.15+

Employment Agreement, dated as of May 5, 2008, between
    Harland Clarke Holdings Corp., Harland Financial Solutions and
    Raju M. Shivdasani.10
.16+

Employment Agreement, dated as of May 5, 2008, between
    Harland Clarke Holdings Corp., Harland Financial Solutions and
    A. O. Clemons, Jr.10
.17

Second Amended and Restated Management Services Agreement, dated
    as of June 30, 2007, by and between MacAndrews &
    Forbes Inc. and M & F Worldwide Corp. (incorporated by
    reference to Exhibit 10.1 to M & F Worldwide
    Corp.s Current Report on
    Form 8-K
    dated June 25, 2007).10
.18+

Amendment, dated as of December 31, 2008, to the Employment
    Agreement, dated as of February 7, 2008, between Harland
    Clarke Holdings Corp. and Daniel Singleton.10
.19+

Amendment, dated as of December 31, 2008, to the Employment
    Agreement, dated as of May 5, 2008, among Harland Clarke
    Holdings Corp., Harland Financial Solutions and Raju Shivdasani.10
.20+

Amendment, dated as of December 31, 2008, to the Employment
    Agreement, dated as of May 5, 2008, among Harland Clarke
    Holdings Corp., Harland Financial Solutions and A. O. Clemons,
    Jr. 74




---



##### Table of Contents



ExhibitNumber

Description10
.21+*

Amendment, dated as of February 2, 2010, to the Employment
    Agreement, dated as of February 13, 2008, between Harland
    Clarke Holdings Corp. and Charles T. Dawson.10
.22+*

Amendment, dated as of February 14, 2010, to the Employment
    Agreement, dated as of February 7, 2008, between Harland
    Clarke Holdings Corp. and Daniel Singleton.10
.23+*

Amendment, dated as of February 2, 2010, to the Employment
    Agreement, dated as of February 13, 2008, between Harland
    Clarke Holdings Corp. and Peter A. Fera, Jr.10
.24+*

Amendment, dated as of February 22, 2010, to the Employment
    Agreement, dated as of May 5, 2008, among Harland Clarke
    Holdings Corp., Harland Financial Solutions and Raju Shivdasani.21
.1*

Subsidiaries of Harland Clarke Holdings Corp.31
.1*

Certification of Charles T. Dawson, Chief Executive Officer,
    dated February 26, 2010.31
.2*

Certification of Peter A. Fera, Jr., Chief Financial Officer,
    dated February 26, 2010     *
    
    Filed herewith.+
    
    Denotes management contract or compensatory plan or arrangement
    required to be filed as an exhibit hereto. 75




---



##### Table of Contents



SIGNATURES
     HARLAND CLARKE HOLDINGS CORP.Dated: February 26, 2010

By: /s/  Charles
    T. DawsonCharles T. DawsonPresident, Chief Executive Officer and Director(Principal Executive Officer)Dated: February 26, 2010

By: /s/  Peter
    A. Fera, Jr.Peter A. Fera, Jr.Executive Vice President and Chief Financial Officer(Principal Financial Officer)Dated: February 26, 2010

By: /s/  J.
    Michael RileyJ. Michael Riley
    Vice President and Controller
    (Principal Accounting Officer)  76




---



##### Table of Contents



Signature

Title

Date/s/  Charles
    T. DawsonCharles
    T. Dawson

President, Chief Executive Officer and Director

February 26, 2010/s/  Paul
    G. SavasPaul
    G. Savas

Director

February 26, 2010/s/  Barry
    F. SchwartzBarry
    F. Schwartz

Director

February 26, 2010  77




---



##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
    AND FINANCIAL STATEMENT SCHEDULE
    YEAR ENDED DECEMBER 31, 2009
      PagesReport of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets


F-2Consolidated Statements of Operations


F-3Consolidated Statements of Stockholders
    Equity


F-4Consolidated Statements of Cash Flows


F-5Notes to Consolidated Financial Statements


F-6Schedule II  Valuation and
    Qualifying Accounts and Reserves


F-43




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               F-1




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and SubsidiariesConsolidated Balance Sheets(in millions, except share data)
  December 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
63.9


$
64.6Accounts receivable (net of allowances of $3.0 and $2.8 at
    December 31, 2009 and 2008)


119.7



128.8Investments in marketable securities


24.6



Inventories


32.5



38.4Income taxes receivable


13.5



8.0Deferred tax assets


18.6



21.0Prepaid expenses and other current assets


66.1



42.6Total current assets


338.9



303.4Property, plant and equipment, net


161.1



177.6Goodwill


1,473.2



1,465.5Other intangible assets, net


1,187.9



1,328.3Contract acquisition payments, net


28.6



39.8Other assets


62.3



77.2Total assets

$
3,252.0


$
3,391.8LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
33.9


$
54.4Deferred revenues


116.1



103.8Current maturities of long-term debt


19.5



19.8Accrued liabilities:Salaries, wages and employee benefits


52.6



68.4Income and other taxes payable


15.4



13.9Customer incentives


23.5



25.7Payable to parent






0.7Other current liabilities


30.8



54.7Total current liabilities


291.8



341.4Long-term debt


2,219.3



2,370.8Deferred tax liabilities


415.3



435.7Other liabilities


79.6



77.6Commitment and contingenciesStockholders equity:Common stock  200 shares authorized; par value
    $0.01; 100 shares issued and outstanding at
    December 31, 2009 and 2008






Additional paid-in capital


157.0



157.0Retained earnings


98.0



27.2Accumulated other comprehensive (loss) income, net of taxes:Derivative fair-value adjustments


(8.6
)


(16.8
)Currency translation adjustments


0.3



(0.4
)Funded status of benefit plans


(1.6
)


(0.7
)Unrealized gains on investments, net


0.9



Total accumulated other comprehensive loss, net of taxes


(9.0
)


(17.9
)Total stockholders equity


246.0



166.3Total liabilities and stockholders equity

$
3,252.0


$
3,391.8    F-2




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and SubsidiariesConsolidated Statements of Operations(in millions)
  Year Ended December 31,2009


2008


2007Product revenues, net

$
1,417.8


$
1,491.8


$
1,199.3Service revenues, net


294.5



302.8



170.6Total net revenues


1,712.3



1,794.6



1,369.9Cost of products sold


846.6



910.4



753.1Cost of services provided


151.1



156.5



80.7Total cost of revenues


997.7



1,066.9



833.8Gross profit


714.6



727.7



536.1Selling, general and administrative expenses


387.4



445.9



333.2Asset impairment charges


44.4



2.4



3.1Restructuring costs


32.5



14.6



5.6Operating income


250.3



264.8



194.2Interest income


1.0



2.2



6.0Interest expense


(136.9
)


(186.4
)


(165.9
)Gain (loss) on early extinguishment of debt


65.0







(54.6
)Other income (expense), net


0.1



(0.4
)


(0.5
)Income (loss) before income taxes


179.5



80.2



(20.8
)Provision (benefit) for income taxes


67.4



33.0



(5.4
)Net income (loss)

$
112.1


$
47.2


$
(15.4
)    F-3




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and SubsidiariesConsolidated Statements of Stockholders
    Equity(in millions, except share data)
  AccumulatedShares of


Additional


Retained


OtherCommon


Paid-In


Earnings


ComprehensiveStock


Capital


(Deficit)


(Loss) Income


TotalBalance, December 31, 2006


100


$
202.5


$
16.7


$
0.1


$
219.3Net loss










(15.4
)






(15.4
)Foreign currency translation adjustments, net of taxes of $0.0














1.7



1.7Derivative fair-value adjustment, net of taxes of $8.9














(14.1
)


(14.1
)Change in unrecognized amounts included in postretirement
    obligations, net of taxes of $0.7














0.8



0.8Unrealized losses on investments, net of taxes of $0.3














(0.5
)


(0.5
)Reclassification for investment write-down included in net
    income, net of taxes of $0.3














0.5



0.5Total comprehensive loss


















(27.0
)Dividend paid to parent










(1.8
)






(1.8
)Balance, December 31, 2007


100


$
202.5


$
(0.5
)

$
(11.5
)

$
190.5Net income










47.2







47.2Foreign currency translation adjustments, net of taxes of $0.0














(2.1
)


(2.1
)Derivative fair-value adjustment, net of taxes of $2.0














(2.7
)


(2.7
)Change in unrecognized amounts included in postretirement
    obligations, net of taxes of $0.9














(1.6
)


(1.6
)Unrealized losses on investments, net of taxes of $0.3














(0.5
)


(0.5
)Reclassification for investment write-downs included in net
    income, net of taxes of $0.3














0.5



0.5Total comprehensive income


















40.8Dividend paid to parent






(45.5
)


(19.5
)






(65.0
)Balance, December 31, 2008


100


$
157.0


$
27.2


$
(17.9
)

$
166.3Net income










112.1







112.1Foreign currency translation adjustments, net of taxes of $0.0














0.7



0.7Derivative fair-value adjustment, net of taxes of $5.2














8.2



8.2Change in unrecognized amounts included in postretirement
    obligations, net of taxes of $0.7














(0.9
)


(0.9
)Unrealized gains on investments, net of taxes of $0.6














0.9



0.9Total comprehensive income


















121.0Dividend paid to parent










(41.3
)






(41.3
)Balance, December 31, 2009


100


$
157.0


$
98.0


$
(9.0
)

$
246.0    F-4




---



##### Table of Contents



Harland
    Clarke Corp. and SubsidiariesConsolidated Statements of Cash Flows(in millions)
  Year Ended December 31,2009


2008


2007Operating activitiesNet income (loss)

$
112.1


$
47.2


$
(15.4
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation


57.9



66.6



58.5Amortization of intangible assets


104.2



97.9



67.7Amortization of deferred financing fees and original discount


7.3



7.8



7.0(Gain) loss on early extinguishment of debt


(65.0
)






54.6Deferred income taxes


(23.2
)


(31.9
)


(7.6
)Asset impairments


44.4



2.4



3.1Changes in operating assets and liabilities, net of effect of
    businesses acquired:Accounts receivable


11.8



(13.1
)


3.5Inventories


6.0



0.6



4.9Prepaid expenses and other assets


(19.3
)


1.9



(11.6
)Contract acquisition payments, net


11.2



11.8



20.6Accounts payable and accrued liabilities


(54.4
)


(14.4
)


1.8Deferred revenues


11.1



11.2



12.1Income and other taxes


(3.5
)


12.7



7.0Payable to parent


(0.7
)


(1.4
)


2.1Other, net


5.4



1.4



1.6Net cash provided by operating activities


205.3



200.7



209.9Investing activitiesPurchase of businesses, net of cash acquired


(11.4
)


(234.4
)


(1,453.2
)Investment in marketable securities


(24.6
)






Investment in related party notes receivable






(14.4
)


Net repayments of related party notes receivable


5.2



1.8



Proceeds from sale of property, plant and equipment


0.7



5.7



3.3Capital expenditures


(42.2
)


(48.2
)


(25.5
)Capitalized interest


(0.3
)


(0.7
)


(0.4
)Other, net


(4.2
)


(0.6
)


(0.7
)Net cash used in investing activities


(76.8
)


(290.8
)


(1,476.5
)Financing activitiesDividend to parent


(41.3
)


(65.0
)


(1.8
)Issuance of notes










615.0Redemption of notes


(67.6
)






(175.0
)Borrowings on credit agreements






62.0



1,800.0Repayments of credit agreements and other borrowings


(20.3
)


(82.0
)


(664.6
)Premiums, penalties and consent payments related to
    extinguishment of debt










(41.2
)Debt issuance cost










(56.6
)Net cash (used in) provided by financing activities


(129.2
)


(85.0
)


1,475.8Net (decrease) increase in cash and cash equivalents


(0.7
)


(175.1
)


209.2Cash and cash equivalents at beginning of period


64.6



239.7



30.5Cash and cash equivalents at end of period

$
63.9


$
64.6


$
239.7Supplemental disclosure of cash paid for:Interest, net of amounts capitalized

$
138.0


$
171.2


$
152.5Income taxes, net of refunds


95.5



54.9



(4.3
)    F-5




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements
    (dollars in millions)  1.
    Description
    of the Business and Basis of Presentation            e-mail
   F-6




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
        Subsequent
    Events
    2.
    Summary
    of Significant Accounting Policies  Use of
    Estimates
    Revenue
    Recognition
  and/or
     F-7




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    percentage-of-completion percentage-of-completion
        Customer
    Incentives
    Shipping
    and Handling
    Cash
    and Cash Equivalents
    Investments
  available-for-sale
 F-8




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Accounts
    Receivable and Allowance for Doubtful Accounts
    Inventories
  first-in,
  Contract
    Acquisition Payments
    Advertising
        Property,
    Plant and Equipment
   F-9




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      Machinery and equipment

3  15 yearsComputer software and hardware

3  5 yearsLeasehold improvements

1  20 yearsBuildings and improvements

20  30 yearsFurniture, fixtures and transportation equipment

5  8 years   Software
    and Other Development Costs
    product-by-product
    Goodwill
    and Acquired Intangible Assets
   F-10




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    and/or
            Long-Lived
    Assets
   F-11




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Income
    and Other Taxes
      Pensions
    and Other Postretirement Benefits
      Translation
    of Foreign Currencies
    Self-Insurance
   F-12




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  Derivative
    Financial Instruments
      Deferred
    Financing Fees
    Restructuring
    Charges
    Reclassifications
     F-13




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Recently
    Adopted Accounting Guidance
            Recently
    Issued Accounting Guidance
     F-14




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    3.
    Acquisitions  Acquisition
    of Data Management
      Accounts receivable





$
15.9Inventories






7.5Property, plant and equipment






25.5Goodwill






116.2Other intangible assets:Customer relationships

$
65.4Trademarks and tradenames


2.4Patented technology and software


7.5Total other intangible assets






75.3Other assets






0.6Total assets acquired






241.0Deferred revenues






7.6Other liabilities






10.1Net assets acquired





$
223.3      F-15




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
        Pro
    Forma Financial Information
    Unaudited Pro FormaYear EndedDecember 31, 2008Net revenues

$
1,811.9Operating income


266.4Net income


48.2Depreciation and amortization (excluding amortization of
    deferred financing fees)


166.2         Acquisition
    of Protocol IMS and SubscriberMail
   F-16




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      Acquisition
    of Transaction Holdings
      Peldec
    Assets Purchase
      Acquisition
    of Harland and Related Financing Transactions
   F-17




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      $1,800.0 Senior Secured Term Loan

$
1,800.0Senior Floating Rate Notes due 2015


305.09.50% Senior Fixed Rate Notes due 2015


310.0$
2,415.0     Cash





$
23.8Accounts receivable






84.4Property, plant and equipment






125.6Goodwill






992.7Other intangible assets:Customer relationships

$
675.2Trademarks and tradenames


114.7Patented technology


12.2Software


50.8Total other intangible assets






852.9Other assets






144.7Total assets acquired






2,224.1Deferred revenues






77.9Long-term debt






229.1Deferred tax liabilities






267.0Other liabilities






184.6Net assets acquired





$
1,465.5        F-18




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    4.
    Inventories    December 31,2009


2008Finished goods

$
9.8


$
13.3Work-in-progress


9.5



9.5Raw materials


13.2



15.6$
32.5


$
38.4   5.
    Property,
    Plant and Equipment    December 31,2009


2008Machinery and equipment

$
110.3


$
115.8Computer software and hardware


134.0



102.1Leasehold improvements


28.5



22.4Buildings and improvements


33.6



36.8Furniture, fixtures and transportation equipment


15.2



15.7Land


10.1



10.8Construction-in-progress


13.9



15.1345.6



318.7Accumulated depreciation


(184.5
)


(141.1
)$
161.1


$
177.6     Construction-in-progress
  6.
    Assets
    Held For Sale    Location

Former Use

Year ClosedAtlanta, GA

Operations support


2008Atlanta, GA

Printing


2008Greensboro, NC

Printing


2009Syracuse, NY

Printing


2009  F-19




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      December 31,2009


2008Land

$
1.4


$
1.0Buildings and improvements


3.5



1.7$
4.9


$
2.7     7.
    Goodwill
    and Other Intangible Assets    HarlandHarland


FinancialClarke


Solutions


Scantron


TotalBalance as of December 31, 2007

$
768.4


$
425.9


$
152.6


$
1,346.9Data Management acquisition










115.9



115.9Transaction Holdings acquisition


2.8











2.8Adjustments to goodwill


1.1



(0.5
)


(0.2
)


0.4Effect of exchange rate changes






(0.4
)


(0.1
)


(0.5
)Balance as of December 31, 2008


772.3



425.0



268.2



1,465.5Protocol IMS acquisition


0.9











0.9SubscriberMail acquisition


6.3











6.3Adjustments to goodwill


(0.1
)






0.3



0.2Effect of exchange rate changes






0.2



0.1



0.3Balance as of December 31, 2009

$
779.4


$
425.2


$
268.6


$
1,473.2  F-20




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Gross Carrying Amount


Accumulated AmortizationUseful Life


December 31,


December 31,


December 31,


December 31,(in years)


2009


2008


2009


2008Amortized intangible assets:Customer relationships


3-30


$
1,233.4


$
1,230.6


$
260.5


$
170.2Trademarks and tradenames


2-25



154.5



8.3



3.4



1.1Software and other


2-10



65.1



60.6



28.2



18.2Patents and patents pending


3-20



20.0



19.6



4.0



2.31,473.0



1,319.1



296.1



191.8Indefinite-lived intangible assets:Trademarks and tradenames






11.0



201.0







Total other intangible assets





$
1,484.0


$
1,520.1


$
296.1


$
191.8         2010

$
108.82011


101.82012


94.42013


84.52014


77.4    F-21




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
        8.
    Income
    Taxes    Year Ended December 31,2009


2008


2007Income (loss) before income taxes:Domestic

$
184.0


$
88.4


$
(16.4
)Foreign


(4.5
)


(8.2
)


(4.4
)Total income (loss) before income taxes

$
179.5


$
80.2


$
(20.8
)Provision (benefit) for income taxes:Current:Federal

$
76.0


$
58.1


$
State and local


14.5



6.7



2.2Foreign


0.1



0.1



90.6



64.9



2.2Deferred:Federal


(20.8
)


(29.5
)


(5.9
)State and local


(3.2
)


(0.9
)


(1.7
)Foreign


0.8



(1.5
)


(23.2
)


(31.9
)


(7.6
)Total provision (benefit) for income taxes

$
67.4


$
33.0


$
(5.4
)  F-22




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    December 31,2009


2008Current:Prepaid advertising

$
(1.3
)

$
(1.5
)Deferred revenues


6.8



6.6Net operating loss carryforwards


0.3



0.8Accrued expenses and other liabilities


14.7



17.5Net current deferred tax asset


20.5



23.4Valuation allowance


(1.9
)


(2.4
)18.6



21.0Long-term:Property, plant and equipment


(7.7
)


(11.1
)Postretirement benefits obligation


7.9



7.5Deferred compensation


3.0



2.9Intangible assets


(414.2
)


(459.5
)Net operating loss carryforwards


5.1



5.6Interest rate swap liability


3.1



10.2Deferred gain on debt repurchases


(24.9
)


Other


15.5



12.3Net long-term tax liability


(412.2
)


(432.1
)Valuation allowance


(3.1
)


(3.6
)(415.3
)


(435.7
)Net deferred tax liabilities

$
(396.7
)

$
(414.7
)     2011-2019
   F-23




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Year Ended December 31,2009


2008


2007Statutory rate


35.0
%


35.0
%


35.0
%State and local taxes


3.4
%


3.9
%


0.5
%Foreign rate differential


0.4
%


2.1
%


Foreign loss for which no benefit was recorded


1.0
%






(7.4
)%Uncertain tax positions


(2.0
)%






Other


(0.3
)%


0.1
%


(2.1
)%37.5
%


41.1
%


26.0
%        F-24




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    2009


2008


2007Balance at January 1

$
18.6


$
19.3


$
9.9Additions from acquisitions










9.6Additions based on tax positions related to the current year










Additions for tax positions for prior years


1.7







Reductions for tax positions for prior years


(6.7
)


(0.7
)


(0.2
)Settlements










Balance at December 31

$
13.6


$
18.6


$
19.3         9.
    Retirement
    Plans      10.
    Other
    Postretirement Benefit Plans   F-25




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      2009


2008APBO at beginning of year

$
17.5


$
15.6Changes in APBO:Interest cost


1.0



0.9Benefits paid


(2.4
)


(2.7
)Retiree contributions


1.1



1.2Health benefits subsidy


0.1



Actuarial loss


1.6



2.5APBO at end of year

$
18.9


$
17.5Included in accrued salaries, wages and employee benefits

$
1.2


$
1.1Included in other liabilities


17.7



16.4APBO at end of year

$
18.9


$
17.5     2009


2008Fair value of plan assets at beginning of year

$



$
Employer contributions


1.2



1.5Retiree contributions


1.1



1.2Health benefits subsidy


0.1



Benefits paid


(2.4
)


(2.7
)Fair value of plan assets at end of year

$



$
Funded status

$
(18.9
)

$
(17.5
)Unrecognized actuarial net loss


2.6



1.0Cumulative (charge) to other comprehensive income


(2.6
)


(1.0
)Benefit obligation at end of year

$
(18.9
)

$
(17.5
)     2009


2008Unrecognized actuarial net loss

$
2.6


$
1.0  F-26




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Year Ended December 31,2009


2008


2007Interest on accumulated postretirement benefit obligation

$
1.0


$
0.9


$
0.6Net amortization










Net postretirement benefit cost


1.0



0.9



0.6Other changes in benefit obligations recognized in other
    comprehensive loss (income):Unrecognized actuarial net loss (gain)


1.6



2.5



(1.5
)Total recognized in net periodic benefit cost and other
    comprehensive loss (income)

$
2.6


$
3.4


$
(0.9
)       1 Percentage

1 PercentagePoint Increase

Point DecreaseEffect on total interest cost for 2009

$
0.1


$
(0.1
)Effect on postretirement benefit obligation at December 31,
    2009


1.3



(1.1
)     2010

$
1.22011


1.22012


1.22013


1.22014


1.22015-2019


6.3    F-27




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
   11.
    Long-Term
    Debt  December 31,2009


2008$1,900.0 Senior Secured Credit Facilities

$
1,755.0


$
1,773.0Senior Floating Rate Notes due 2015


206.8



305.09.50% Senior Fixed Rate Notes due 2015


271.3



310.0Capital lease obligations and other indebtedness


5.7



2.62,238.8



2,390.6Less: current maturities


(19.5
)


(19.8
)Long-term debt, net of current maturities

$
2,219.3


$
2,370.8   $1,900.0
    Senior Secured Credit Facilities
    and/or
    
    A rate per annum equal to the higher of (a) the prime rate
    of Credit Suisse and (b) the Federal Funds rate plus 0.50%,
    in each case plus an applicable margin of 1.50% per annum for
    revolving loans and for term loans; or
    A rate per annum equal to a reserve-adjusted LIBOR rate, plus an
    applicable margin of 2.50% per annum for revolving loans and for
    term loans.     F-28




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
            Senior
    Notes due 2015
   F-29




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      Prior
    Credit Facilities
      Senior
    Notes due 2013
    Gain
    on Early Extinguishment of Debt
    Loss
    on Early Extinguishment of Debt
   F-30




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Capital
    Lease Obligations and Other Indebtedness
    Annual
    Maturities
    2010

$
19.52011


19.32012


19.02013


19.02014


1,683.8   12.
    Derivative
    Financial Instruments  Interest
    Rate Hedges
         F-31




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      Derivatives Designatedas Cash Flow



December 31,Hedging Instruments:

Balance Sheet Classification

2009

2008Interest rate swaps

Other current liabilities

$
6.3


$
13.8Other liabilities


7.9



13.7       Year Ended December 31, 2009Loss Reclassified fromAccumulated OtherDerivatives Designated

Loss Recognized in

Comprehensive Lossas Cash Flow

Other Comprehensive

into InterestHedging Instruments:

Income

ExpenseInterest rate swaps

$
18.3


$
31.6       Balances and Net Changes:

2009Balance at the beginning of the period

$
16.8Loss reclassified from accumulated other comprehensive loss into
    interest expense, net of taxes of $12.2


(19.4
)Net change in fair value of interest rate swaps, net of taxes of
    $7.1


11.2Balance at end of period

$
8.6   13.
    Fair
    Value Measurements   F-32




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  Nonrecurring
    Fair Value Measurements
    Fair Value atNovember 1,







Impairment2009

(Level 1)

(Level 2)

(Level 3)

ChargesIndefinite-lived trademarks and tradenames

$
156.8










$
156.8


$
44.2     Recurring
    Fair Value Measurements
    Balance atDecember 31, 2009

(Level 1)

(Level 2)

(Level 3)Marketable securities

$
26.5


$
26.5


$



$
Liability for interest rate swaps


14.2







14.2



   Balance atDecember 31, 2008

(Level 1)

(Level 2)

(Level 3)Marketable securities

$
0.2


$
0.2


$



$
Liability for interest rate swaps


27.5







27.5



     Fair
    Value of Financial Instruments
     F-33




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    14.
    Marketable
    Securities  available-for-sale
  Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueBalance at December 31, 2009:United States treasury securities

$
24.6


$



$



$
24.6Equity securities


0.3



1.7



(0.1
)


1.9Total

$
24.9


$
1.7


$
(0.1
)

$
26.5Balance at December 31, 2008:Equity securities

$
0.3


$
0.1


$
(0.2
)

$
0.2       Less than 12 Months

More than 12 MonthsFair

Unrealized

Fair

UnrealizedValue

Losses

Value

LossesAt December 31, 2009:Equity securities

$



$



$
0.1


$
0.1At December 31, 2008:Equity securities

$
0.1


$
0.2


$



$
   other-than-temporary other-than-temporarily
  15.
    Restructuring  Harland
    Clarke and Corporate
     F-34




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
           F-35




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Established inBeginning


Purchase








Non-cash


EndingBalance


Accounting


Expensed


Paid in Cash


Utilization


BalanceYear Ended December 31, 2009:Severance and severance-related

$
7.4


$



$
18.1


$
(23.0
)

$



$
2.5Facilities closures and other costs


2.3







7.6



(2.8
)


(4.6
)


2.5Total

$
9.7


$



$
25.7


$
(25.8
)

$
(4.6
)

$
5.0Year Ended December 31, 2008:Severance and severance-related

$
8.5


$
1.8


$
7.0


$
(9.9
)

$



$
7.4Facilities closures and other costs


2.9



0.8



1.3



(1.7
)


(1.0
)


2.3Total

$
11.4


$
2.6


$
8.3


$
(11.6
)

$
(1.0
)

$
9.7Year Ended December 31, 2007:Severance and severance-related

$
1.7


$
13.0


$
2.9


$
(9.1
)

$



$
8.5Facilities closures and other costs


1.0



1.4



2.7



(1.1
)


(1.1
)


2.9Total

$
2.7


$
14.4


$
5.6


$
(10.2
)

$
(1.1
)

$
11.4     Harland
    Financial Solutions
       F-36




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Established inAcquisitionBeginning


Purchase








EndingBalance


Accounting


Expensed


Paid in Cash


BalanceYear Ended December 31, 2009:Severance and severance-related

$
1.4


$



$
3.3


$
(3.7
)

$
1.0Facilities and other costs


0.7







0.5



(1.1
)


0.1Total

$
2.1


$



$
3.8


$
(4.8
)

$
1.1Year Ended December 31, 2008:Severance and severance-related

$
0.7


$
(0.1
)

$
3.9


$
(3.1
)

$
1.4Facilities and other costs


1.7



(0.4
)






(0.6
)


0.7Total

$
2.4


$
(0.5
)

$
3.9


$
(3.7
)

$
2.1Year Ended December 31, 2007:Severance and severance-related

$



$
5.2


$



$
(4.5
)

$
0.7Facilities and other costs






2.3







(0.6
)


1.7Total

$



$
7.5


$



$
(5.1
)

$
2.4   Scantron
       F-37




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Established inAcquisitionBeginning


Purchase








Non-Cash


EndingBalance


Accounting


Expensed


Paid in Cash


Utilization


BalanceYear Ended December 31, 2009:Severance and severance-related

$
1.0


$



$
2.7


$
(3.0
)

$
(0.2
)

$
0.5Facilities and other costs










0.3







(0.3
)


Total

$
1.0


$



$
3.0


$
(3.0
)

$
(0.5
)

$
0.5Year Ended December 31, 2008:Severance and severance-related

$



$
2.5


$
2.3


$
(3.8
)

$



$
1.0Facilities and other costs










0.1



(0.1
)






Total

$



$
2.5


$
2.4


$
(3.9
)

$



$
1.0       16.
    Commitments
    and Contingencies  Lease
    and Purchase Commitments
    2010

$
27.12011


25.22012


21.32013


16.62014


14.3Thereafter


26.6         Honeywell
    Indemnification
   F-38




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Other
  LaserPro
      17.
    Transactions
    with Related Parties   F-39




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  Notes
    Receivable
      Other
          18.
    Significant
    Customers    19.
    Business
    Segment Information   F-40




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    
    Harland Clarke segment  Provides checks and
    related products, direct marketing services and customized
    business and home products to financial, retail and software
    providers, as well as consumers and small businesses. This
    segment operates in the United States and Puerto Rico.
    Harland Financial Solutions segment  Provides
    technology products and services to financial services clients
    worldwide. This segment operates primarily in the United States,
    Israel and Ireland.
    Scantron segment  Provides data management
    solutions and related services to educational, commercial,
    healthcare and governmental entities worldwide. This segment
    operates in the United States and Canada.    HarlandHarland

Financial



CorporateClarke(1)(4)

Solutions(1)(2)

Scantron(1)(3)

and
    Other(1)(5)

TotalProduct revenues, net:2009

$
1,221.6


$
73.0


$
123.2


$



$
1,417.82008


1,285.4



79.9



126.5







1,491.82007


1,101.4



50.0



47.9







1,199.3Service revenues, net:2009

$
4.4


$
205.9


$
84.2


$



$
294.52008


4.7



213.8



84.3







302.82007


2.5



133.0



35.1







170.6Intersegment revenues:2009

$



$



$
0.6


$
(0.6
)

$
2008


0.3







0.5



(0.8
)


2007


0.6







0.6



(1.2
)


Operating income
    (loss):(6)2009

$
195.8


$
32.8


$
34.5


$
(12.8
)

$
250.32008


217.1



34.1



28.4



(14.8
)


264.82007


181.1



16.8



12.4



(16.1
)


194.2Depreciation and amortization (excluding amortization of
    deferred financing fees and original discount):2009

$
109.3


$
26.9


$
25.9


$



$
162.12008


112.5



28.7



23.3







164.52007


98.2



17.3



10.6



0.1



126.2Non-cash asset impairment charges:2009

$
33.6


$
10.6


$
0.2


$



$
44.42008


2.4















2.42007


3.1















3.1Capital expenditures (excluding capital leases):2009

$
28.3


$
6.5


$
7.4


$



$
42.22008


32.2



4.0



12.0







48.22007


18.0



5.6



1.9







25.5Total assets:December 31, 2009

$
1,070.3


$
327.0


$
290.3


$
1,564.4


$
3,252.0December 31, 2008


1,184.2



335.4



307.0



1,565.2



3,391.8     (1)
    
    Includes results of the acquired Harland businesses from the
    date of acquisition. F-41




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
   (2)
    
    Includes results of the acquired Peldec business from the date
    of acquisition.(3)
    
    Includes results of the acquired Data Management business from
    the date of acquisition.(4)
    
    Includes results of the acquired Transaction Holdings, Protocol
    IMS and SubscriberMail businesses from the date of acquisition.(5)
    
    Total assets include goodwill of $1,473.2 and $1,465.5 as of
    December 31, 2009 and 2008, respectively, which is not
    assigned to the operating segments.(6)
    
    Includes restructuring costs of $32.5, $14.6 and $5.6 for 2009,
    2008 and 2007, respectively (see Note 15). F-42




---



##### Table of Contents



Schedule II 
    Valuation and Qualifying Accounts and Reserves
    (in millions)    Beginning

Amounts

Balance

EndingBalance

Reserved

Written Off

BalanceAllowance for Doubtful Accounts and Sales Returns and
    Allowance ReservesDecember 31, 2009

$
2.8


$
7.6


$
7.4


$
3.0December 31, 2008

$
2.4


$
8.0


$
7.6


$
2.8December 31, 2007

$



$
5.4


$
3.0


$
2.4  F-43