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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, 2008oro

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-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.




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##### 





HARLAND
    CLARKE HOLDINGS CORP.
  INDEX TO
    ANNUAL REPORT ON
    FORM 10-K
  For the
    Year Ended December 31, 2008
  PagePART IItem 1.


Business


1Item 1A.


Risk Factors


9Item 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


47Item 8.


Financial Statements and Supplementary Data


48Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


48Item 9A(T).


Controls and Procedures


48Item 9B.


Other Information


49PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


50Item 11.


Executive Compensation


52Item 12.


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


66Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


67Item 14.


Principal Accounting Fees and Services


69PART IVItem 15.


Exhibits, Financial Statement Schedules


71EX-10.14: EMPLOYMENT AGREEMENTEX-10.15: EMPLOYMENT AGREEMENTEX-10.16: EMPLOYMENT AGREEMENTEX-10.18: AMENDMENT TO EMPLOYMENT AGREEMENTEX-10.19: AMENDMENT TO EMPLOYMENT AGREEMENTEX-10.20: AMENDMENT TO EMPLOYMENT AGREEMENTEX-21.1: SUBSIDIARIESEX-24.1: POWERS OF ATTORNEYEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATION   i




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PART I  Item 1.
    Business          e-mail
     1




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Company
    Overview
  Harland
    Clarke
    Products
    and Services
  Checks
    and Related Products and Services
        Marketing
    Services
    
    turnkey marketing solutions  a suite of campaigns
    that uses Stratics, our proprietary predictive modeling
    software, and is designed around core financial products and
    services such as CDs, money market accounts, auto loans and
    mortgages;
    onboarding  an ongoing, integrated client marketing
    solution that builds long-term relationships by engaging new
    checking account holders and growing them into satisfied,
    profitable and loyal customers;
    agency services  highly customized direct marketing
    campaigns that use client-tailored predictive models to support
    a variety of marketing strategies including acquisition,
    retention, activation, and cross-selling and up-selling;
    checkbook messaging  a program that employs digital
    print technology to insert targeted, intelligence-driven
    marketing messages into the checkbook; and
    e-mail
    marketing  a program that uses market-leading
    technology as well as high security and filter standards to
    deliver targeted, intelligence-driven marketing messages to
    customers who prefer
    e-mail
    communication.  Contact
    Center Services
   2




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Sales
    and Marketing
      Clients
      Competition
  Harte-Hanks,
  
    improving client satisfaction through consistent product quality
    and expertise in matching client preferences with the right
    product and delivery options;
    expanding client relationships through cross-selling and
    up-selling both check and related financial products on behalf
    of financial institution clients;
    capitalizing on integration with financial institution
    clients checking account processes to improve their
    customer service and operational efficiencies;
    being an existing secure and trusted provider to financial
    institutions in a time when security is of utmost importance to
    financial institutions; and
    offering a broad suite of outsourcing services, such as direct
    marketing, contact center services, treasury management, and
    analytical modeling.  Environmental
    Matters
   3




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and/or
  Harland
    Financial Solutions
    Products
    and Services
  Enterprise
    Solutions Group Products
      Risk
    Management and Compliance Products
   4




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Backlog
    Sales
    and Marketing
      Clients
    Competition
    Scantron
    Products
    and Services
  Education-Related
    Products
   5




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K-12
              Survey
    and Other Data Collection Products
     6




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Field
    Maintenance Services
    Medical-Related
    Products and Services
    Backlog
    Sales,
    Marketing and Product Support
    on-site
  Clients
    Competition
    The
    Companys Suppliers
     7




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The
    Companys Foreign Sales
    The
    Companys Employees
    The
    Companys Intellectual Property
    Governmental
    Regulation Related to the Company
        e-commerce and/or
 8




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Non-Operating
    Contingent Claims, Indemnification and Insurance
    Matters
  Honeywell
    Indemnification
    Other
      Availability
    of Reports
  Form 10-K, Form 10-Q, Form 8-K,
  Item 1A.
    Risk
    Factors  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
 9




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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
  
    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.
       10




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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
  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
  Account
    data breaches involving stored client data or misuse of such
    data could adversely affect our reputation, revenues, profits
    and growth.
  and/or
 11




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




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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
    strategy or realize all of our expected 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.
    We may
    be unable to maintain our licenses to use third-party
    intellectual property on favorable terms.
   13




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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




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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.
    We may
    be subject to environmental risks, and liabilities for
    environmental compliance or cleanup could have a material,
    adverse effect on our profitability.
   15




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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




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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.
      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.
   17




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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.
  and/or
    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 competitive
    position could erode and our business may suffer.
    
    continue to enhance and expand existing Harland Financial
    Solutions and Scantron products and services; 18




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
    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;
    enter new markets; 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 be accepted in the market.    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.
  and/or
  Downturns
    in general economic and market conditions 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.
   19




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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.
      Failure
    to hire and retain a sufficient number of qualified IT
    professionals could have a material adverse effect on our
    business, results of operations and financial
    condition.
   20




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We may
    not receive significant revenues from our current research and
    development efforts.
    Our
    Harland Financial Solutions segment provides services to clients
    which are subject to government regulations that could constrain
    its operations.
    We may
    not be able to complete the integration of the Data Management
    business, and we may not be able to achieve the remainder of the
    cost savings or synergies we currently expect.
    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.
    Budget
    deficits may reduce funding available for Scantron products and
    services and have a negative impact on our
    revenue.
   21




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If we
    are not able to obtain paper and other supplies at acceptable
    quantities and prices, our revenue could be negatively
    impacted.
    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 Regional
    Headquarters for 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(c)

Contact Center and 
    Operations Support


47,295



LeasedAtlanta, GA

Operations Support


9,665



LeasedBolingbrook, IL

Printing


120,000



LeasedBoulder City, NV

Administration and Production


4,000



LeasedCharlotte,
    NC(b)

Printing


38,120



LeasedCharlotte, NC

Administration


4,906



LeasedClayton, MO

Services


3,648



LeasedDes Moines, IA

Printing


65,250



LeasedGlen Burnie, MD

Printing and Marketing Services


120,000



LeasedGrapevine, TX

Printing


83,282



LeasedGreensboro,
    NC(b)

Printing


66,250



OwnedHato Rey, Puerto Rico

Printing


22,125



LeasedHato Rey, Puerto Rico

Sales


2,356



LeasedJeffersonville, IN

Printing


141,332



LeasedLouisville, KY

Printing


50,000



LeasedMemphis, TN

Printing


26,250



LeasedMilton, WA

Printing


87,640



Leased 22




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Approximate FloorLocation

Use

Space (Square Feet)


Leased/owned statusMounds View,
    MN(c)

Printing, Administration, Development and Support, Sales,
    Marketing and Contact Center


81,490



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



OwnedSalt Lake City, UT

Parking Lot


87,120



LeasedSan 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


2,137



LeasedSan Antonio, TX

Administration


1,936



LeasedSan Antonio, TX

Warehouse


16,166



LeasedSan Antonio, TX

Warehouse


18,675



LeasedSyracuse, NY

Printing


28,055



Owned     (a)

    
    Held for sale(b)

    
    To be closed in 2009 and operations will become part of a new
    leased facility in High Point, NC comprising 135,000 square
    feet.(c)

    
    To be closed in 2009.  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


39,395



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



LeasedDenver, CO

Closed


34,167



LeasedEnglewood, CO

Development and Support


28,800



LeasedFargo, ND

Development and Support


19,745



LeasedGrand Rapids, MI

Development and Support


5,703



LeasedLake Mary, FL

Regional 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



Leased 23




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Approximate FloorLocation

Use

Space (Square Feet)


Leased/ Owned StatusPortland, OR

Regional Headquarters, Development and Support


79,089



LeasedTel Aviv, Israel

Development and Support


4,693



Leased   Scantron
  Approximate FloorLocation

Use

Space (Square Feet)


Leased/Owned StatusColumbia, PA

Printing


121,370



OwnedEagan, MN

Development and Support


109,500



OwnedIrvine, CA

Corporate Headquarters


110,000



LeasedLawrence, KS

Administration


21,000



LeasedMarkham, Ontario

Field Services


635



LeasedOmaha, NE

Field Services, Administration and Support


50,000



OwnedSan Diego, CA

Development and Support


10,175



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




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


Predecessor


PredecessorSuccessor


Successor


Successor


Successor



(Honeywell)


(Novar)


(Novar)Year Ended


Year Ended


Year Ended


Dec 15 to



Apr. 1 to


Jan 1 to


Year EndedDec. 31,


Dec. 31,


Dec. 31,


Dec. 31,



Dec. 14,


Mar. 31,


Dec. 31,(In millions)


2008(a)


2007(b)


2006


2005



2005


2005


2004(c)Statement of Operations Data:Net revenues


$
1,794.6


$
1,369.9


$
623.9


$
24.1



$
439.9


$
154.4


$
607.6Cost of revenues



1,067.4



833.8



388.4



17.4




285.6



91.1



352.4Gross profit



727.2



536.1



235.5



6.7




154.3



63.3



255.2Selling, general and administrative expenses



446.8



336.3



145.2



6.0




99.0



38.8



147.5Restructuring costs



15.6



5.6



3.3








1.8



0.4



0.7Operating income



264.8



194.2



87.0



0.7




53.5



24.1



107.0Interest expense, net



(184.6
)


(215.0
)


(60.0
)


(2.8
)



(2.4
)


(5.6
)


(19.1
)Income (loss) before income taxes



80.2



(20.8
)


27.0



(2.1
)



51.1



18.5



87.9Provision (benefit) for income taxes



33.0



(5.4
)


7.5



(0.8
)



20.1



7.5



23.5Net income (loss)


$
47.2


$
(15.4
)

$
19.5


$
(1.3
)


$
31.0


$
11.0


$
64.4   25




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December 31,(In millions)

2008(a)


2007(b)


2006


2005



2004(c)Balance Sheet Data:Total assets

$
3,391.8


$
3,447.6


$
1,118.3


$
1,149.9



$
506.8Long-term debt, including current portion and short-term
    borrowings(d)


2,390.6



2,409.9



603.8



626.2




474.1Stockholders equity (deficit)


166.3



190.5



219.3



201.2




(101.3
)     (a)
    
    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).(b)
    
    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).(c)
    
    Includes the financial position and results of operations of
    Alcott Routon, Inc. from the date of its acquisition in March
    2004.(d)
    
    Includes capital leases of $2.6 million, $3.4 million
    and $4.6 million at December 31, 2008, 2007 and 2006,
    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




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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




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Economic
    and Other Factors Affecting the Businesses of the
    Company
  Harland
    Clarke
  and/or
    and/or
  Harland
    Financial Solutions
  and/or
   28




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Scantron
      Critical
    Accounting Policies and Estimates
    Revenue Recognition 97-2, SOP 98-9, 00-21 (EITF 00-21),
     29




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SOP 97-2, SOP 98-9, SOP 98-9.
        and/or
    Income Taxes
    Long-Lived Assets
 30




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
    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




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




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New
    Accounting Pronouncements
  Form 10-K
  Off-Balance
    Sheet Arrangements
  and/or
    Consolidated
    Operating Results
      Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
  Form 10-K).
 33




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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             Cost
    of Revenues:
  Year Ended December 31,2008


2007Consolidated Cost of Revenues:Harland Clarke Segment

$
823.0


$
711.8Harland Financial Solutions Segment


124.1



75.7Scantron Segment


121.1



47.5Eliminations


(0.8
)


(1.2
)Total

$
1,067.4


$
833.8  34




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##### Table of Contents



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


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

$
241.0


$
206.0Harland Financial Solutions Segment


131.6



90.5Scantron Segment


59.4



23.7Corporate


14.8



16.1Total

$
446.8


$
336.3        35




---



##### Table of Contents



Restructuring
    Costs
    Form 10-K).
  Interest
    Income
    Interest
    Expense
   36




---



##### Table of Contents



Loss
    on Early Extinguishment of Debt
  Form 10-K).
  Other
    Income (Expense), Net
    Provision
    (Benefit) for Income Taxes
    Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Form 10-K).
  Net
    Revenues:
  Year Ended December 31,2007


2006Consolidated Net Revenues:Harland Clarke Segment

$
1,104.5


$
623.9Harland Financial Solutions Segment


183.0



Scantron Segment


83.6



Eliminations


(1.2
)


Total

$
1,369.9


$
623.9        37




---



##### Table of Contents



Cost
    of Revenues:
  Year Ended December 31,2007


2006Consolidated Cost of Revenues:Harland Clarke Segment

$
711.8


$
388.4Harland Financial Solutions Segment


75.7



Scantron Segment


47.5



Eliminations


(1.2
)


Total

$
833.8


$
388.4         Selling,
    General and Administrative Expenses:
  Year Ended December 31,2007


2006Consolidated Selling, General and Administrative Expenses:Harland Clarke Segment

$
206.0


$
145.2Harland Financial Solutions Segment


90.5



Scantron Segment


23.7



Corporate


16.1



Total

$
336.3


$
145.2     Form 10-K),
 38




---



##### Table of Contents



Restructuring
    Costs
    Form 10-K).
  Interest
    Income
    Interest
    Expense
    Loss
    on Early Extinguishment of Debt
  Form 10-K).
  Other
    Income (Expense), Net
    (Benefit)
    Provision for Income Taxes
   39




---



##### Table of Contents



Related
    Party Transactions
  Notes
    Receivable
      Other
      Form 10-K,
  Form 10-K, Form 10-K,
   40




---



##### 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)


1,773.0



18.0



36.0



36.0



1,683.0Senior
    notes(3)(7)


615.0















615.0Interest on long-term
    debt(4)(7)


929.2



170.6



321.5



314.9



122.2Capital lease obligations and other indebtedness


2.6



1.8



0.7



0.1



Operating lease obligations


92.3



27.1



36.9



17.3



11.0Raw material purchase obligations


20.2



20.2











Other long-term liabilities


35.9



14.2



13.3



1.7



6.7Client incentive
    payments(5)


97.0



43.8



35.8



13.1



4.3Other purchase
    obligations(6)


72.1



33.1



20.6



12.6



5.8Postretirement benefits payments


11.1



1.1



2.1



2.2



5.7Total

$
3,648.4


$
329.9


$
466.9


$
397.9


$
2,453.7     (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. 41




---



##### Table of Contents



(2)

    
    $1,800.0 million senior secured term loan, which will
    mature on June 30, 2014. The Company is required to make
    scheduled payments of principal in the amount of
    $18.0 million per year in equal quarterly installments. See
    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
    $310.0 million of fixed rate notes and $305.0 million
    of floating rate notes. See Note 11 to the accompanying
    consolidated financial statements included elsewhere in this
    Annual Report on
    Form 10-K.
    During the first quarter of 2009 through the date of this Annual
    Report on
    Form 10-K,
    the Company extinguished $60.5 million principal amount of
    this debt by purchasing the senior notes in individually
    negotiated transactions. The amount due in the table above as of
    December 31, 2008 does not reflect this extinguishment of
    debt.(4)

    
    Interest on long-term debt assumes that all floating rates of
    interest remain the same as those in effect at December 31,
    2008 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,
    2008, 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
       42




---



##### 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
     43




---



##### Table of Contents



Form 10-K,
  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,
    2008, 2007 and 2006, the Company incurred $48.2 million,
    $25.5 million and $14.7 million of capital
    expenditures and $0.7 million, $0.4 million and
    $1.0 million of capitalized interest, respectively. Capital
    expenditures for the year ended December 31, 2008 include
    $21.7 million related to integration projects. Capital
    expenditures for the year ended December 31, 2008 include
    $2.0 million related to the acquired Data Management
    operations subsequent to February 22, 2008. 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, 2008, 2007 and 2006, the Company
    made $31.1 million, $15.6 million and
    $15.7 million of contract acquisition payments to its
    clients, respectively. Payments for the years ended
    December 31, 2008, 2007 and 2006 include
    $19.0 million, $2.9 million and $0.0 million,
    respectively, related to the acquired Harland operations.
    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 and
    the Data Management Acquisition. During the years ended
    December 31, 2008, 2007 and 2006, the Company made
    $19.2 million, $15.3 million and $4.0 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.     44




---



##### Table of Contents



Form 10-K,
  Cash Flow
    Risks
    Honeywell
    Indemnification
    Other
     45




---



##### Table of Contents



Forward-Looking
    Statements
  Form 10-K Form 10-K, Form 10-K. Form 10-K
    
    our substantial indebtedness;
    downturns in general economic and market conditions, 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;
    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 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;
    increased production and delivery costs; 46




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##### Table of Contents




    fluctuations in the costs of raw materials and other supplies;
    our ability to attract, hire and retain qualified personnel;
    technological improvements that may reduce our competitive
    advantage over some of our competitors;
    our ability to protect customer data from account data security
    breaches;
    changes in legislation relating to consumer privacy protection
    which could harm our business;
    contracts with our clients relating to consumer privacy
    protection which 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 that could harm our businesses and reputation;
    sales and other taxes which 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     47




---



##### 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-(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; 48




---



##### Table of Contents




    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 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   49




---



##### Table of Contents



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

Age

PositionCharles T. Dawson


59


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


40


Executive Vice President and Chief Financial OfficerA. O. Clemons, Jr.


60


President, Risk Management & Compliance Solutions, a
    division of Harland Financial SolutionsRaju M. Shivdasani


58


President, Enterprise Solutions, a division of Harland Financial
    SolutionsJames D. Singleton


49


Executive Vice President and Chief Operating Officer of Harland
    Clarke Corp.Paul G. Savas


45


DirectorBarry F. Schwartz


59


Director   Charles T. Dawson
  Peter A. Fera, Jr.
  A.O. Clemons, Jr.
 50




---



##### Table of Contents



Raju M. Shivdasani
  James D. Singleton
  Paul G. Savas
  Barry F. Schwartz
  Code of
    Ethics
    Board of
    Directors
   51




---



##### 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,
    beginning September 27, 2007;
    Mr. Peter A. Fera, Jr., CFO of the Company, beginning
    September 27, 2007;
    Mr. Jeffrey Heggedahl, President and CEO of Scantron,
    beginning May 2, 2007 until his resignation on
    February 17, 2009;
    Mr. James D. Singleton, Executive Vice President Sales and
    Marketing of Harland Clarke, from May 31, 2007 to
    October 4, 2008; and Chief Operating Officer of Harland
    Clarke, beginning October 5, 2008;
    Mr. Raju M. Shivdasani, President of Enterprise Solutions,
    a division of Harland Financial Solutions, beginning May 5,
    2008;
    Mr. A.O. Clemons, Jr., President of Risk Management
    and Compliance Solutions, a division of Harland Financial
    Solutions, beginning May 5, 2008; and
    Mr. John OMalley, President and CEO of Harland
    Financial Solutions, beginning May 2, 2007 until his
    resignation on April 15, 2008.       52




---



##### Table of Contents



Compensation
    Philosophy
          and/or
 53




---



##### Table of Contents



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 adjusted EBITDA target

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

     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 plan401(k) and Deferred Compensation Plan

     Long-term service with the Company

     Helps executive prepare for retirement     Makes overall pay package more
    competitive     Provides retention incentiveAdditional 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   Role
    Of Executive Officers In Compensation Process
   54




---



##### Table of Contents



Compensation
    Consultants and Benchmarking
    Elements
    of Compensation
  Base Salary
    The Annual Executive Bonus Plan
 55




---



##### Table of Contents



Base Salary


Target EBITDA


Target Bonus asNEO

for 2008


%


% of Base Salary


2007 Bonus


2008 BonusCharles T. Dawson

$
1,000,000



90-145.1+



90-175


$
901,034



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

$
450,000



90-145.1+



90-150


$
278,844



$450,000Jeffrey Heggedahl

$
600,000



90-125.1+



65-100


$
252,404



$450,000James D. Singleton

$
500,000



90-145.1+



90-150


$
278,629



$500,000Raju M. Shivdasani

$
375,000



90-125.1+



52-80


$
158,700



$240,000A.O. Clemons, Jr.

$
360,000



90-125.1+



52-80


$
152,352



$230,400John OMalley

$
236,538
(1)


90-150.1+



95-125


$
507,250



$222,643     Why We
    Use Adjusted EBITDA As a Performance Measure
    The 2008 M & F Worldwide Long Term Incentive
    Compensation Plan (the M & F
    LTIP).
 56




---



##### Table of Contents



Post Employment Compensation.
  gross-ups
    Other benefits and perquisites
  Tax
    Considerations Relating to Executive Compensation
  Section 162(m)
    of the Internal Revenue Code
   57




---



##### Table of Contents



Report
    of the Board Of Directors
  Form 10-K
  Submitted by:

Charles T. DawsonPaul G. SavasBarry F. Schwartz   SUMMARY
    COMPENSATION TABLE FOR FISCAL YEAR 2008
  Change InPensionValue andNonqualifiedNon-Equity


DeferredIncentive Plan


Compensation


All OtherSalary


Bonus


Compensation


Earnings


Compensation


TotalName and Principal Position

Year


($)


($)


($)(ii)


($)


($)(iv)


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


2008



993,654







1,250,000







248,682



2,492,3362007



840,192







5,085,508



40



151,820



6,077,5602006



587,500







1,002,750







63,520



1,653,770Peter A. Fera, Jr.
    Executive Vice President &
    Chief Financial Officer


2008



445,769







450,000







63,937



959,7062007



348,077







1,115,738



5



47,228



1,511,0482006



292,308







322,450







142,000



756,758Jeffrey Heggedahl,
    Former President of Scantron


2008



565,385







555,263







94,042



1,214,6902007



326,384



1,079,568
(i)


252,404







134,480



1,792,836James D. Singleton,
    Chief Operating Officer of
    Harland Clarke


2008



493,654







500,000







71,999



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


2008



375,000







270,075







35,721



680,796A.O. Clemons, Jr.,
    President, Risk Management &
    Compliance Solutions,
    a division of Harland
    Financial Solutions


2008



360,000







254,460







25,708



640,168John OMalley Former
    President and CEO of
    Harland Financial Solutions


2008



236,538







90,225







592,132



918,8952007



489,148



300,000
(iii)


507,250







24,689



1,321,087     (i)
    
    Mr. Heggedahl received a
    one-time post-Harland Acquisition 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 Harland. 58




---



##### Table of Contents



(ii)
    
    The compensation listed in this
    column for 2008 consists of amounts earned during 2008, and
    anticipated to be paid by March 13, 2009, under the annual
    Harland Clarke Senior Management Bonus Plan. Additionally, on
    April 25, 2008, Messrs. Heggedahl, Shivdasani, Clemons
    and OMalley 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. Heggedahl,
    $105,263; Mr. Shivdasani, $30,075; Mr. Clemons,
    $24,060; and Mr. OMalley, $90,225. An additional
    $105,262, $30,075 and $24,060 will be paid to
    Messrs. Heggedahl, Shivdasani and Clemons under the legacy
    John H. Harland 2007 Long-Term Cash Incentive Plan on each of
    the three anniversaries of April 25, 2008, subject to the
    executives continued employment on each of the payout
    dates.      (iii)
    
    Mr. OMalley received a
    one-time post-Harland Acquisition signing bonus.(iv)
    
    All Other Compensation:  All Other
    Compensation for Fiscal Year 2008
  EmployerTerm Life


Contributions to& Exec


401(k) plan andCountry


AD&D


SupplementalCar


Relocation


Club


Insurance


Excess Benefit


Tax


All OtherAllowance


Costs


Fees


Premiums


Plan


Gross-Up


Compensation


Severance


TotalName

Year


($)(i)


($)


($)(ii)


($)(iii)


($)(iv)


($)(v)


($)(vi)


($)


($)Charles T. Dawson


2008



29,305







6,748



2,296



197,931



12,402











248,6822007



17,126







4,822



2,163



119,767



7,942











151,8202006



15,843







3,880



2,162



33,783



7,852











63,520Peter A. Fera, Jr.


2008



5,940







4,051



632



53,314















63,9372007



5,940







4,726



595



35,967















47,2282006



5,940



102,914



1,993



572



14,048



16,533











142,000Jeffrey Heggedahl


2008



3,960



45,898







7,262



36,922















94,0422007







128,447







785







5,248











134,480James D. Singleton


2008



5,940







5,340



632



60,087















71,999Raju M. Shivdasani


2008















11,504



24,217















35,721A.O. Clemons, Jr.


2008















3,199



22,509















25,708John OMalley


2008















3,397



36,307



12,137



49,906



490,385



592,1322007











6,452



1,227











17,010







24,689     (i)
    
    Comprised of (i) car allowance
    in the case of Messrs. Fera, Singleton and Heggedahl and
    (ii) the aggregate incremental cost to the Company of the
    leased vehicle and fuel in the case of Mr. Dawson, which is
    calculated as the total cost of the lease payments on the car,
    the insurance and insurance deductibles relating to the car, and
    the cost of gasoline used in the car. Messrs. Fera,
    Singleton and Heggedahl are eligible to receive a pre-set amount
    per month as a car allowance. Mr. Dawsons employment
    agreement states that the Company will provide him with a leased
    vehicle at the Companys expense.(ii)
    
    The Company reimburses each
    executives monthly country club dues if there is a
    business reason for the executive to use the club.(iii)
    
    For 2008, amounts include
    (i) executive life premiums, (ii) executive AD&D
    premiums and (iii) supplemental LTD premiums.(iv)
    
    For 2008 consists of
    (i) employer contributions to the 401(k) plan of $9,200 for
    each NEO and (ii) employer contributions to a supplemental
    non-qualified excess benefit plan, the Benefits Equalization
    Plan described below in the Nonqualified Deferred Compensation
    Table, in the following amounts: Mr. Dawson $188,731,
    Mr. Fera $44,114, Mr. Heggedahl $27,722,
    Mr. Singleton $50,887, Mr. Shivdasani $15,017,
    Mr. Clemons $13,309 and Mr. OMalley $27,107.(v)
    
    For 2008 consists of the tax
    gross-up on
    the personal use of a company vehicle by Mr. Dawson, and
    sporting event tickets for Mr. OMalley.(vi)
    
    Consists of COBRA subsidy and
    outplacement for 2008, and tickets to sporting events for 2007
    and 2008.   59




---



##### Table of Contents



Employment
    Contracts for 2008
  Mr. Dawson
  Change-in-Control
  Mr. Fera
  Change-in-Control
  Mr. Heggedahl
   60




---



##### Table of Contents



Mr. Singleton
  Change-in-Control
  Mr. Shivdasani
  Change-in-Control
  Mr. Clemons
  Change-in-Control
  Mr. OMalley
     61




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##### Table of Contents



Amendments
    to Employment Contracts and Compensation Plans for
    2008
  Section 409A
    of the Code
    GRANTS OF
    PLAN-BASED AWARDS
    FOR FISCAL YEAR 2008
  Award Type

Threshold



Target


Maximum (iv)Name

(i),(ii)

($)



($)


($)Charles T. Dawson

Annual Bonus


900,000




1,250,000



1,750,000Segment
    2008-2010
    LTIP


787,500




1,575,000Consolidated 
    2008-2010
    LTIP


787,500




1,575,000Consolidated
    2008-2010
    LTIP (iii)


300,000




600,000Peter A. Fera, Jr.

Annual Bonus


405,000




450,000



675,000Segment
    2008-2010
    LTIP


247,500




495,000Consolidated
    2008-2010
    LTIP


247,500




495,000Jeffrey Heggedahl

Annual Bonus


390,000




450,000



600,000Segment
    2008-2010
    LTIP


450,000




900,000Consolidated
    2008-2010
    LTIP


450,000




900,000James D. Singleton

Annual Bonus


450,000




500,000



750,000Segment
    2008-2010
    LTIP


247,500




495,000Consolidated
    2008-2010
    LTIP


247,500




495,000Raju M. Shivdasani

Annual Bonus


195,000




225,000



300,000Segment
    2008-2010
    LTIP


262,500




525,000Consolidated
    2008-2010
    LTIP


262,500




525,000A.O. Clemons, Jr.

Annual Bonus


187,200




216,000



288,000Segment
    2008-2010
    LTIP


262,500




525,000Consolidated
    2008-2010
    LTIP


262,500




525,000  62




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##### Table of Contents



(i)
    
    The amounts listed in this column
    under the heading 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.(ii)
    
    The amounts listed in this column
    under the heading 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 M & F LTIP, as described in more
    detail above under Elements of Compensation 
    The 2008 M & F Worldwide Long Term Incentive
    Compensation Plan (the M & F LTIP). The
    first row in each column 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 in each column represents
    the amount attributable to consolidated Company results at the
    end of the three year performance period.(iii)
    
    Mr. Dawson received an
    additional grant under the M & F LTIP which represents
    the amount attributable to consolidated Company results at the
    end of the three year performance period as a result of
    increased responsibilities for the Company after taking the
    additional position as President and Chief Executive Officer of
    Harland Clarke Holdings.(iv)
    
    The M & F LTIP, which was
    designed to meet the requirements of Section 162(m) of the
    Code, was approved by the shareholders of M & F
    Worldwide in 2008. 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 Code.  NONQUALIFIED
    DEFERRED COMPENSATION TABLE FOR FISCAL YEAR 2008
  Registrant


Aggregate


Aggregate


AggregateContributions


Earnings


Withdrawals/


Balancein Last FY


in Last FY


Distributions


at Last FYEName

($)(i)


($)


($)


($)(ii)Charles T. Dawson


188,731



20,102







429,820Peter A. Fera, Jr.


44,114



3,612







81,155Jeffrey Heggedahl


27,722



627







28,349James D. Singleton


50,887



3,849







86,777Raju M. Shivdasani


15,017



430







15,447A. O. Clemons, Jr.


13,309



371







13,680John OMalley


27,107



682



(27,789
)


     (i)
    
    The amounts reported are included as part of All Other
    Compensation in the Summary Compensation Table.(ii)
    
    Reflects the total balance of the executives account as of
    the end of the Companys 2008 fiscal year. Company
    contributions to the Benefits Equalization Plan reported in the
    Summary Compensation Table for the 2007 fiscal year are as
    follows: Mr. Dawson $110,767; and Mr. Fera $26,967.
    With respect to Messrs. Dawson and Fera, these amounts were
    reported in the All Other Compensation 
    Employer Contributions to 401(k) plan and Supplemental Excess
    Benefit Plan column.  Material
    Features of the Deferred Compensation Plan
      10-Year
 63




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##### Table of Contents



Potential
    Payments upon Termination or
    Change-in-Control
    without cause good reason
  without cause good reason
  without cause for good
    reason,
  without cause for good
    reason
  
    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.  for
    cause
  good reason
       64




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##### Table of Contents



without cause for good reason
  TERMINATION
    WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON
    AS OF DECEMBER 31, 2008
  ExecutiveHealth/


Annual





DeferredSeparation





Welfare


bonus





CompensationName &

Pay(i)


Vacation(ii)


Plans(iii)


Plan(iv)


Outplacement


Plan
    Balance(vi)


TotalPrincipal Position

($)


($)


($)


($)


Assistance(v)


($)


($)Charles T. Dawson,
    President & CEO


2,000,000



11,077



6,583



1,250,000



30,000



429,820



3,727,480Peter A. Fera, Jr.
    EVP & CFO


675,000







8,588



450,000



30,000



81,155



1,244,743Jeffrey Heggedahl,
    Former President of
    Scantron


1,200,000







3,665



450,000



30,000



28,349



1,712,014James D. Singleton
    Chief Operating Officer of
    Harland Clarke


750,000







8,588



500,000



30,000



86,777



1,375,365Raju M. Shivdasani
    President Enterprise
    Solutions Group of
    Harland Financial Solutions


562,500







7,676



225,000



30,000



15,447



840,623A. O. Clemons, Jr.
    President, Risk Management &
    Compliance Solutions of
    Harland Financial Solutions


540,000







7,676



216,000



30,000



13,680



807,356     (i)
    
    For each NEO, upon termination of
    the executive without causeor 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 Heggedahl; and 18 months in the
    case of Messrs. Fera, Singleton, Shivdasani and Clemons.  (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 2008 based on the
    employees enrollment in Dental, Medical, and Vision plans
    as of December 31, 2008.(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, 2008.     65




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##### Table of Contents



DIRECTORS
    COMPENSATION TABLE FOR FISCAL YEAR 2008
  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
    Heggedahl(ii)


























John
    OMalley(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 as of
    May 1, 2007. The total amount paid to
    MacAndrews & Forbes in 2008 pursuant to the Second
    Amended and Restated Management Services Agreement was
    $10 million. In addition, M & F Worldwide paid to
    MacAndrews & Forbes a fee of $2 million in 2008
    for services related to sourcing, analyzing, negotiating and
    executing the Data Management Acquisition.(ii)
    
    Messrs. Dawson, Heggedahl and OMalley did not receive
    any compensation for their service as directors in 2008.
    Mr. OMalley resigned as a director and an employee of
    the Company on April 15, 2008. 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   66




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##### 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
%Bay Harbour Management, L.C.
    375 Park Avenue, New York, NY 10152


1,909,306
(2)


9.9
%Dimensional Fund Advisors LP
    Palisades West, Building One
    6300 Bee Cave Road, Austin, TX 78746


1,639,048
(3)


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


946,000
(1)


4.9
%Ronald O. Perelman


200,000
(1)


1.0
%Barry F. Schwartz


5,000



0.0
%Charles T. Dawson


0



0.0
%Jeffrey Heggedahl


0



0.0
%Paul G. Savas


1,000



0.0
%James D. Singleton


0



0.0
%Raju M. Shivdasani


0



0.0
%A. O. Clemons, Jr.


0



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


8,400,000
(4)


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
    200,000 shares of common stock deemed beneficially owned by
    Mr. Perelman as a result of Mr. Perelmans grant
    of restricted stock (an aggregate of 8,394,000 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 Bay Harbour Management, L.C. on
    February 13, 2009.(3)
    
    Beneficial ownership is based on a statement on
    Schedule 13G filed by Dimensional Fund Advisors LP on
    February 9, 2009.(4)
    
    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
   67




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##### Table of Contents



Form 10-K
  Management
    Services Agreement
         68




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##### Table of Contents



Insurance
    Tax
    Sharing Agreement
      Predecessors
    Director
    Independence
    Item 14.
    Principal
    Accounting Fees and Services   69




---



##### Table of Contents



Audit Fees. Form 10-Q Form 10-Q.
  Audit-Related Fees.
  Tax Fees.
  All Other Fees.
   70




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##### 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 December 8, 2005 among Flavors
    Holdings Inc., Mafco Worldwide Corporation, the several lenders
    from time to time party thereto, JPMorgan Chase Bank, N.A., as
    administrative agent, Bear Stearns Corporate Lending Inc., as
    syndication agent, and Natexis Banques Populaires and National
    City Bank, as co-documentation agents (incorporated by reference
    to Exhibit 4.4 to M & F Worldwide Corp.s
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005).4
.4

Guarantee and Collateral Agreement made by Flavors Holdings
    Inc., Mafco Worldwide Corporation, and certain of its
    subsidiaries in favor of JPMorgan Chase Bank, N.A., as
    administrative agent, dated as of December 8, 2005
    (incorporated by reference to Exhibit 4.5 to M &
    F Worldwide Corp.s Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005).4
.5

Mortgage, Security Agreement, Assignment of Leases and Rents,
    and Fixture Filing, made by Mafco Worldwide Corporation,
    Mortgagor, to JPMorgan Chase Bank, N.A., as Administrative
    Agent, Mortgagee, dated as of December 8, 2005
    (incorporated by reference to Exhibit 4.6 to M &
    F Worldwide Corp.s Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005). 71




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##### Table of Contents



ExhibitNumber

Description4
.6

Credit Line Deed of Trust, Security Agreement, Assignment of
    Leases and Rents, and Fixture Filing, made by Mafco Worldwide
    Corporation, Grantor, in favor of Kanawha Land
    Title Services, LLC, as Trustee, for the use and benefit
    of, JP Morgan Chase Bank, N.A., as Administrative Agent,
    Beneficiary, dated as of December 8, 2005 (incorporated by
    reference to Exhibit 4.7 to M & F Worldwide
    Corp.s Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005).4
.7

Notice of Grant of Security Interest in Trademarks, dated as of
    January 30, 2006, made by Mafco Worldwide Corporation in
    favor of JPMorgan Chase Bank, N.A., as Administrative Agent
    (incorporated by reference to Exhibit 4.8 to M &
    F Worldwide Corp.s Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005).4
.8

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
.9

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
.10

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
.11

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).4
.12

Intellectual Property Security Agreement, dated as of
    May 1, 2007, by and among
    B2Direct,

    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
.13

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
.14

Joinder Agreement, dated as of May 1, 2007, by and among
    B2Direct,

    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
.15

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
.16

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). 72




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##### Table of Contents



ExhibitNumber

Description4
.17

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
.18

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
.19

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
.20

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
.21

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).10
.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). 73




---



##### Table of Contents



ExhibitNumber

Description10
.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.21
.1*

Subsidiaries of Harland Clarke Holdings Corp.24
.1*

Powers of attorney executed by Messrs. Schwartz, Dawson and
    Savas.31
.1*

Certification of Charles T. Dawson, Chief Executive Officer,
    dated February 27, 2009.31
.2*

Certification of Peter A. Fera, Jr., Chief Financial Officer,
    dated February 27, 2009.     *
    
    Filed herewith.+
    
    Denotes management contract or compensatory plan or arrangement
    required to be filed as an exhibit hereto. 74




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##### Table of Contents



SIGNATURES
     HARLAND CLARKE HOLDINGS CORP.Dated: February 27, 2009

By: /s/  Charles
    T. DawsonCharles T. DawsonPresident, Chief Executive Officer and Director(Principal Executive Officer)Dated: February 27, 2009

By: /s/  Peter
    A. Fera, Jr.Peter A. Fera, Jr.Executive Vice President and Chief Financial Officer(Principal Financial Officer)Dated: February 27, 2009

By: /s/  J.
    Michael RileyJ. Michael Riley
    Vice President and Controller
    (Principal Accounting Officer)  75




---



##### Table of Contents



Signature

Title

Date/s/  Charles
    T. DawsonCharles
    T. Dawson

President, Chief Executive Officer and Director

February 27, 2009/s/  Paul
    G. Savas*Paul
    G. Savas

Director

February 27, 2009/s/  Barry
    F. Schwartz*Barry
    F. Schwartz

Director

February 27, 2009    *
    
    The undersigned by signing his name hereto does hereby execute
    this Form
    10-K
    pursuant to powers of attorney filed as exhibits to this
    Form 10-K.  Dated: February 27, 2009

By: /s/  Peter
    A. Fera, Jr.Peter
    A. Fera, Jr.
    Attorney-in-Fact  76




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
    AND FINANCIAL STATEMENT SCHEDULE
    YEAR ENDED DECEMBER 31, 2008
       
 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-38




---



##### 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 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
64.6


$
239.7Accounts receivable (net of allowance of $2.8 and $2.4 at
    December 31, 2008 and 2007)


128.8



100.3Inventories


38.4



31.3Income taxes receivable


8.0



16.8Deferred tax assets


21.0



20.3Assets held for sale


2.7



Prepaid expenses and other current assets


39.9



41.7Total current assets


303.4



450.1Property, plant and equipment, net


177.6



186.3Goodwill


1,465.5



1,346.9Other intangible assets, net


1,328.3



1,340.7Contract acquisition payments, net


39.8



51.6Other assets


77.2



72.0Total assets

$
3,391.8


$
3,447.6LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
54.4


$
64.2Deferred revenues


103.8



86.3Current maturities of long-term debt


19.8



20.1Accrued liabilities:Salaries, wages and employee benefits


68.4



71.9Income and other taxes payable


13.9



11.1Customer incentives


25.7



26.0Acquisition-related payments






2.9Payable to parent


0.7



2.1Other current liabilities


54.7



33.5Total current liabilities


341.4



318.1Long-term debt


2,370.8



2,389.8Deferred tax liabilities


435.7



472.6Other liabilities


77.6



76.6Commitment and contingenciesStockholders equity:Common stock  200 shares authorized; par value
    $0.01; 100 shares
    issued and outstanding at December 31, 2008 and 2007






Additional paid-in capital


157.0



202.5Retained earnings (deficit)


27.2



(0.5
)Accumulated other comprehensive (loss) income, net of taxes:Derivative fair-value adjustments


(16.8
)


(14.1
)Currency translation adjustments


(0.4
)


1.7Funded status of benefit plans


(0.7
)


0.9Total stockholders equity


166.3



190.5Total liabilities and stockholders equity

$
3,391.8


$
3,447.6    F-2




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##### Table of Contents



Harland
    Clarke Holdings Corp. and SubsidiariesConsolidated Statements of Operations(in millions)
  Year Ended December 31,2008


2007


2006Product revenues, net

$
1,491.8


$
1,199.3


$
622.3Service revenues, net


302.8



170.6



1.6Total net revenues


1,794.6



1,369.9



623.9Cost of products sold


910.9



753.1



387.2Cost of services provided


156.5



80.7



1.2Total cost of revenues


1,067.4



833.8



388.4Gross profit


727.2



536.1



235.5Selling, general and administrative expenses


446.8



336.3



145.2Restructuring costs


15.6



5.6



3.3Operating income


264.8



194.2



87.0Interest income


2.2



6.0



Interest expense


(186.4
)


(165.9
)


(60.0
)Loss on early extinguishment of debt






(54.6
)


Other (expense) income, net


(0.4
)


(0.5
)


Income (loss) before income taxes


80.2



(20.8
)


27.0Provision (benefit) for income taxes


33.0



(5.4
)


7.5Net income (loss)

$
47.2


$
(15.4
)

$
19.5    F-3




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##### 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, 2005


100


$
202.5


$
(1.3
)

$



$
201.2Net income










19.5







19.5Derivative fair-value adjustment, net of taxes of $0.0














0.1



0.1Total comprehensive income


















19.6Dividend paid to parent










(1.5
)






(1.5
)Balance, 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 tax benefit 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 tax benefit of $0.3














(0.5
)


(0.5
)Reclassification for investment write-down included in net
    income, net of tax benefit 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 tax benefit of $2.0














(2.7
)


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














(1.6
)


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














(0.5
)


(0.5
)Reclassification for investment write-downs, net of tax benefit
    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
)

$
166.3    F-4




---



##### Table of Contents



Harland
    Clarke Corp. and SubsidiariesConsolidated Statements of Cash Flows
    (in millions)
  Year Ended December 31,2008


2007


2006Operating activitiesNet income (loss)

$
47.2


$
(15.4
)

$
19.5Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation


66.6



58.5



25.9Amortization of intangible assets


97.9



67.7



28.6Amortization of deferred financing fees and original discount


7.8



7.0



3.2Loss on early extinguishment of debt






54.6



Deferred income taxes


(31.9
)


(7.6
)


(13.5
)Asset impairments


3.1



3.1



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


(13.1
)


3.5



3.4Inventories


0.6



4.9



0.3Prepaid expenses and other assets


1.9



(11.6
)


5.2Contract acquisition payments, net


11.8



20.6



6.4Accounts payable and accrued liabilities


(14.4
)


1.8



1.3Deferred revenues


11.2



12.1



(0.5
)Income and other taxes


12.7



7.0



(1.1
)Payable to parent


(1.4
)


2.1



Cash overdrafts






(0.1
)


(13.2
)Other, net


0.7



1.7



0.5Net cash provided by operating activities


200.7



209.9



66.0Investing activitiesPurchase of Harland, net of cash acquired of $23.8


(2.9
)


(1,438.9
)


Purchase of Data Management, net of cash acquired


(223.3
)






Purchase of Peldec assets






(14.3
)


Purchase of Transaction Holdings, net of cash acquired


(8.2
)






Investment in related party notes receivable


(14.4
)






Net repayments of related party notes receivable


1.8







Proceeds from sale of property, plant and equipment


5.7



3.3



Capital expenditures


(48.2
)


(25.5
)


(14.7
)Capitalized interest


(0.7
)


(0.4
)


(1.0
)Other, net


(0.6
)


(0.7
)


Net cash used in investing activities


(290.8
)


(1,476.5
)


(15.7
)Financing activitiesDividend to parent


(65.0
)


(1.8
)


(1.5
)Issuance of notes






615.0



Redemption of notes






(175.0
)


Borrowings on credit agreements


62.0



1,800.0



3.3Repayments of credit agreements and other borrowings


(82.0
)


(664.6
)


(27.8
)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


(85.0
)


1,475.8



(26.0
)Net (decrease) increase in cash and cash equivalents


(175.1
)


209.2



24.3Cash and cash equivalents at beginning of period


239.7



30.5



6.2Cash and cash equivalents at end of period

$
64.6


$
239.7


$
30.5Supplemental disclosure of cash paid for:Interest, net of amounts capitalized

$
171.2


$
152.5


$
59.3Income taxes, net of refunds


54.9



(4.3
)


22.3    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)
      2.
    Summary
    of Significant Accounting Policies  Use of
    Estimates
    Revenue
    Recognition
  and/or
    00-21,
     F-7




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
          Customer
    Incentives
    Shipping
    and Handling
    Cash
    and Cash Equivalents
    Accounts
    Receivable and Allowance for Doubtful Accounts
    Inventories
  first-in,
  Contract
    Acquisition Payments
   F-8




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Advertising
        Property,
    Plant and Equipment
      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
     F-9




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  product-by-product
  98-1,
  Goodwill
    and Acquired Intangible Assets
      and/or
     F-10




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      Long-Lived
    Assets
    Income
    and Other Taxes
        Pensions
    and Other Postretirement Benefits
     F-11




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  Translation
    of Foreign Currencies
    Self-Insurance
    Derivative
    Financial Instruments
      Deferred
    Financing Fees
   F-12




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  Restructuring
    Charges
  EITF 95-3,
  Reclassifications
    Accounting
    Pronouncements
       F-13




---



##### 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





$
16.0Inventories






7.5Property, plant and equipment






25.5Goodwill






115.9Other 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






240.8Deferred revenues






7.6Other liabilities






9.9Net assets acquired





$
223.3     EITF 95-3.
 F-14




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      Acquisition
    of Harland and Related Financing Transactions
      $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  F-15




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    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     EITF 95-3.
      Pro
    Forma Financial Information
   F-16




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Unaudited Pro FormaDecember 31,2008


2007Net revenues

$
1,811.9


$
1,836.1Operating income


272.0



187.7Net income (loss)


51.5



(54.1
)Depreciation and amortization (excluding amortization of
    deferred financing fees)


166.7



171.6         EITF 95-3.
    Acquisition
    of Transaction Holdings
   F-17




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    95-3.
    Peldec
    Assets Purchase
        4.
    Inventories    December 31,2008


2007Finished goods

$
13.3


$
7.8Work-in-progress


9.5



7.1Raw materials


15.6



16.4$
38.4


$
31.3  F-18




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  5.
    Property,
    Plant and Equipment    December 31,2008


2007Machinery and equipment

$
115.8


$
109.6Computer software and hardware


102.1



75.9Leasehold improvements


22.4



10.6Buildings and improvements


36.8



38.0Furniture, fixtures and transportation equipment


15.7



18.5Land


10.8



8.3Construction-in-progress


15.1



9.2318.7



270.1Accumulated depreciation


(141.1
)


(83.8
)$
177.6


$
186.3     Construction-in-progress
  6.
    Assets
    Held For Sale      Land

$
1.0Buildings and improvements


1.7Total

$
2.7    F-19




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  7.
    Goodwill
    and Other Intangible Assets    Balance as of December 31, 2006

$
346.8Harland Acquisition


992.2Peldec assets purchase


7.2Effect of exchange rate changes


0.7Balance as of December 31, 2007


1,346.9Data Management Acquisition


115.9Transaction Holdings Acquisition


2.8Adjustments to goodwill


0.4Effect of exchange rate changes


(0.5
)Balance as of December 31, 2008

$
1,465.5     Gross Carrying Amount


Accumulated AmortizationUseful Life


December 31,


December 31,


December 31,


December 31,(in years)


2008


2007


2008


2007Amortized intangible assets:Customer relationships


3-30


$
1,230.6


$
1,155.6


$
170.2


$
86.0Trademarks and tradenames


2-15



8.3



11.9



1.1



1.6Covenants not to compete


3







0.4







0.4Software and other


2-10



60.6



60.1



18.2



7.6Patented technology


4-20



19.6



12.2



2.3



0.81,319.1



1,240.2



191.8



96.4Indefinite lived intangible assets:Trademarks and tradenames






201.0



196.9







Total other intangible assets





$
1,520.1


$
1,437.1


$
191.8


$
96.4      F-20




---



##### Table of Contents



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

$
102.42010


99.72011


92.22012


85.52013


76.4       8.
    Income
    Taxes    Year Ended December 31,2008


2007


2006Income (loss) before income taxes:Domestic

$
88.4


$
(16.4
)

$
27.0Foreign


(8.2
)


(4.4
)


Total income (loss) before income taxes

$
80.2


$
(20.8
)

$
27.0Provision (benefit) for income taxes:Current:Federal

$
58.1


$



$
18.0State and local


6.7



2.2



3.0Foreign


0.1







64.9



2.2



21.0Deferred:Federal


(29.5
)


(5.9
)


(7.5
)State and local


(0.9
)


(1.7
)


(6.0
)Foreign


(1.5
)






(31.9
)


(7.6
)


(13.5
)Total provision (benefit) for income taxes

$
33.0


$
(5.4
)

$
7.5  F-21




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    December 31,2008


2007Current:Prepaid advertising

$
(1.5
)

$
(1.5
)Deferred revenues


6.6



3.8Net operating loss carryforwards


0.8



4.9Accrued expenses and other liabilities


17.5



16.7Net current deferred tax asset


23.4



23.9Valuation allowance


(2.4
)


(3.6
)21.0



20.3Long-term:Property, plant and equipment


(11.1
)


(20.3
)Postretirement benefits obligation


7.5



6.9Deferred compensation


2.9



2.6Intangible assets


(459.5
)


(481.2
)Net operating loss carryforwards


5.6



6.9Interest rate swap liability


10.2



8.9Other


12.3



8.5Net long-term tax liability


(432.1
)


(467.7
)Valuation allowance


(3.6
)


(4.9
)(435.7
)


(472.6
)Net deferred tax liabilities

$
(414.7
)

$
(452.3
)     2009-2010, 2011-2019,
  2009-2010, 2020-2027
   F-22




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    Year Ended December 31,2008


2007


2006Statutory rate


35.0
%


35.0
%


35.0
%State and local taxes


3.9
%


0.5
%


3.8
%Foreign rate differential


2.1
%






Foreign loss for which no benefit was recorded






(7.4
)%


Effect of changes in state tax rates on deferred taxes










(10.8
)%Other


0.1
%


(2.1
)%


(0.2
)%41.1
%


26.0
%


27.8
%        F-23




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    2008


2007Balance at January 1

$
19.3


$
9.9Additions from acquisitions






9.6Additions based on tax positions related to the current year






Additions for tax positions for prior years






Reductions for tax positions for prior years


(0.7
)


(0.2
)Settlements






Balance at December 31

$
18.6


$
19.3       9.
    Retirement
    Plans      10.
    Other
    Postretirement Benefit Plans     F-24




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    2008


2007APBO at beginning of year

$
15.6


$
Changes in APBO:Acquisition of Harland on May 1, 2007






17.3Interest cost


0.9



0.6Benefits paid


(2.7
)


(1.6
)Retiree contributions


1.2



0.8Actuarial loss (gain)


2.5



(1.5
)APBO at end of year

$
17.5


$
15.6Included in accrued salaries, wages and employee benefits

$
1.1


$
0.9Included in other liabilities


16.4



14.7APBO at end of year

$
17.5


$
15.6     2008


2007Fair value of plan assets at beginning of year

$



$
Employer contributions


1.5



0.8Retiree contributions


1.2



0.8Benefits paid


(2.7
)


(1.6
)Fair value of plan assets at end of year

$



$
Funded status

$
(17.5
)

$
(15.6
)Unrecognized actuarial net loss (gain)


1.0



(1.5
)Cumulative (charge) benefit to other comprehensive income


(1.0
)


1.5Benefit obligation at end of year

$
(17.5
)

$
(15.6
)     Year Ended December 31,2008


2007Interest on accumulated postretirement benefit obligation

$
0.9


$
0.6Net amortization






Net postretirement benefit cost

$
0.9


$
0.6    F-25




---



##### Table of Contents



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

1 PercentagePoint Increase

Point DecreaseEffect on total interest cost for 2008

$
0.1


$
(0.1
)Effect on postretirement benefit obligation at
    December 31, 2008


1.2



(1.1
)     2009

$
1.12010


1.12011


1.12012


1.12013


1.12014-2018


5.7     11.
    Long-Term
    Debt  December 31,2008


2007$1,900.0 Senior Secured Credit Facilities

$
1,773.0


$
1,791.0Senior Floating Rate Notes due 2015


305.0



305.09.50% Senior Fixed Rate Notes due 2015


310.0



310.0Capital lease obligations and other indebtedness


2.6



3.92,390.6



2,409.9Less: current maturities


(19.8
)


(20.1
)Long-term debt, net of current maturities

$
2,370.8


$
2,389.8   $1,900.0
    Senior Secured Credit Facilities
     F-26




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    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-27




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
        Senior
    Notes due 2015
      Form 10-K,
 F-28




---



##### 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
    Loss
    on Early Extinguishment of Debt
    Capital
    Lease Obligations and Other Indebtedness
    Interest
    Rate Hedges
     F-29




---



##### Table of Contents



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

$
19.82010


18.52011


18.12012


18.12013


18.1   12.
    Financial
    Instruments       F-30




---



##### Table of Contents



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



   13.
    Restructuring  Prior
    to the Harland Acquisition
        In
    connection with and subsequent to the Harland
    Acquisition
    
    consolidation of various facilities in the Harland Clarke
    segment;
    workforce rationalization in sales and marketing, information
    technology, production support, executive, finance, human
    resources, legal and other support functions; and
    consolidation of certain redundant outsourcing and other
    professional services, such as consulting.  EITF 95-3.
   F-31




---



##### 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, 2008:Severance and severance related

$
9.2


$
1.5


$
7.0


$
(10.5
)

$



$
7.2Facilities closures and other costs


4.6



(0.9
)


2.3



(2.3
)


(2.0
)


1.7$
13.8


$
0.6


$
9.3


$
(12.8
)

$
(2.0
)

$
8.9Year Ended December 31, 2007:Severance and severance related

$
1.7


$
18.2


$
2.9


$
(13.6
)

$



$
9.2Facilities closures and other costs


1.0



3.7



2.7



(1.7
)


(1.1
)


4.6$
2.7


$
21.9


$
5.6


$
(15.3
)

$
(1.1
)

$
13.8Year Ended December 31, 2006:Severance and severance related

$
1.8


$



$
3.2


$
(3.3
)

$



$
1.7Facilities closures and other costs


1.6







0.1



(0.7
)






1.0$
3.4


$



$
3.3


$
(4.0
)

$



$
2.7       Transaction
    Holdings Acquisition
  EITF 95-3.
  Data
    Management Acquisition
    
    consolidation of printing and manufacturing operations; F-32




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
   
    workforce rationalization in sales and marketing, information
    technology, production support, executive, finance, human
    resources, legal and other support functions; and
    consolidation of certain redundant outsourcing and other
    professional services, such as consulting.  EITF 95-3.
    Established inBeginning


Purchase








EndingBalance


Accounting


Expensed


Paid in Cash


BalanceYear Ended December 31, 2008:Severance and severance related

$



$
2.5


$
2.3


$
(3.8
)

$
1.0Facilities closures and other costs










0.1



(0.1
)


$



$
2.5


$
2.4


$
(3.9
)

$
1.0     Harland
    Financial Solutions
        Beginning





EndingBalance

Expensed

Paid in Cash

BalanceYear Ended December 31, 2008:Severance and severance related

$



$
3.9


$
(2.5
)

$
1.4    F-33




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
  14.
    Commitments
    and Contingencies  Lease
    and Purchase Commitments
    2009

$
27.12010


20.42011


16.52012


11.12013


6.2Thereafter


11.0         Honeywell
    Indemnification
    Other
   F-34




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
    15.
    Transactions
    with Related Parties    Notes
    Receivable
      Other
     F-35




---



##### Table of Contents



Harland
    Clarke Holdings Corp. and Subsidiaries
    Notes to Consolidated Financial Statements (Continued)
    (dollars in millions)
      16.
    Significant
    Customers    17.
    Business
    Segment Information    
    Harland Clarke segment Provides checks and
    related products, direct marketing and contact center services
    to financial and commercial institutions, as well as to
    individual consumers and small businesses. This segment operates
    in the United States and Puerto Rico.
    Harland Financial Solutions segment Provides
    core processing, retail and lending solutions to financial and
    other institutions. This segment operates primarily in the
    United States, Israel and Ireland.
    Scantron segment Provides data collection,
    testing and assessment products and services as well as field
    maintenance services which are sold primarily to educational and
    commercial customers. This segment operates in the United States
    and Canada.   F-36




---



##### Table of Contents



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


Financial





CorporateClarke(1)(4)


Solutions(1)(2)


Scantron(1)(3)


and
    Other(1)(5)


TotalProduct revenues, net:2008

$
1,285.4


$
79.9


$
126.5






$
1,491.82007


1,101.4



50.0



47.9







1,199.32006


622.3















622.3Service revenues, net:2008

$
4.7


$
213.8


$
84.3






$
302.82007


2.5



133.0



35.1







170.62006


1.6















1.6Intersegment revenues:2008

$
0.3


$



$
0.5


$
(0.8
)

$
2007


0.6







0.6



(1.2
)


2006


















Operating income (loss):2008

$
217.2


$
34.1


$
28.3


$
(14.8
)

$
264.82007


181.1



16.8



12.4



(16.1
)


194.22006


87.0















87.0Depreciation and amortization (excluding amortization of
    deferred financing fees and original discount):2008

$
112.5


$
28.7


$
23.3






$
164.52007


98.2



17.3



10.6



0.1



126.22006


54.5















54.5Capital expenditures (excluding capital leases):2008

$
32.2


$
4.0


$
12.0






$
48.22007


18.0



5.6



1.9







25.52006


14.7















14.7Total assets:December 31, 2008

$
1,184.2


$
335.4


$
307.0


$
1,565.2


$
3,391.8December 31, 2007


1,304.8



360.7



171.5



1,610.6



3,447.6   (1)
    
    Includes results of the acquired Harland businesses from the
    date of acquisition.(2)
    
    Includes results of the acquired Peldec business from the date
    of acquisition.(3)
    
    Includes results of the acquired Data Management businesses from
    the date of acquisition.(4)
    
    Includes results of acquired Transaction Holdings business from
    the date of acquisition.(5)
    
    Total assets include goodwill of $1,465.5 and $1,346.9 as of
    December 31, 2008 and 2007, respectively, which is not
    assigned to the operating segments.  18.
    Subsequent
    Event  Form 10-K,
 F-37




---



##### 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, 2008

$
2.4


$
8.0


$
7.6


$
2.8December 31, 2007

$



$
5.4


$
3.0


$
2.4December 31, 2006

$



$



$



$
  F-38