HARLAND CLARKE HOLDINGS CORP Form 10-K Annual Report

SECURITIES AND EXCHANGE COMMISSION

FORM 10-K Annual report pursuant to section 13 and 15(d)

Filing Date: 2013-02-25 | Period of Report: 2012-12-31 SEC Accession No. 0001354752-13-000005

(HTML Version on secdatabase.com)

FILER HARLAND CLARKE HOLDINGS CORP Mailing Address Business Address 10931 LAUREATE DRIVE 10931 LAUREATE DRIVE CIK:1354752| IRS No.: 841696500 | State of Incorp.:DE | Fiscal Year End: 1231 SAN ANTONIO TX 78249 SAN ANTONIO TX 78249 Type: 10-K | Act: 34 | File No.: 333-133253 | Film No.: 13636964 (210) 697-8888 SIC: 2780 Blankbooks, looseleaf binders & bookbindg & relatd work

Copyright © 2014 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K

(Mark One) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to ______

Commission File Number 333-133253 HARLAND CLARKE HOLDINGS CORP. (Exact name of registrant as specified in its charter)

Delaware 84-1696500 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization)

10931 Laureate Drive, San Antonio, TX 78249 (Address of principal executive offices) (Zip code) (210) 697-8888 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £ No R Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes R No £ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes R No £* Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No £ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. R Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer £ Accelerated file £ Non-accelerated filer R Smaller reporting company £ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes £ No R As of February 25, 2013, there were 100 shares of the registrant's common stock outstanding, with a par value of $0.01 per share. All outstanding shares are owned by a subsidiary of M & F Worldwide Corp.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document * The registrant is not required to file this Annual Report on Form 10-K or other reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, but has filed all reports during the preceding 12 months that would have been required pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The filing is required, however, pursuant to the terms of the indenture governing Harland Clarke Holdings Corp.'s senior notes due 2015.

INDEX TO ANNUAL REPORT ON FORM 10-K

Page PART I Item 1. Business 1 Item 1A. Risk Factors 8 Item 1B. Unresolved Staff Comments 21 Item 2. Properties 21 Item 3. Legal Proceedings 24 Item 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 Item 6. Selected Financial Data 25 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures about Market Risks 54 Item 8. Financial Statements and Supplementary Data 54 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 54 Item 9A. Controls and Procedures 54 Item 9B. Other Information 55 PART III Item 10. Directors, Executive Officers and Corporate Governance 56 Item 11. Executive Compensation 58 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 73 Item 13. Certain Relationships and Related Transactions, and Director Independence 73 Item 14. Principal Accounting Fees and Services 74 PART IV Item 15. Exhibits and Financial Statement Schedules 76

PART I

Item 1. Business Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its subsidiaries, the "Company") is a holding company that conducts its operations through its direct and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed to merge with an indirect, wholly owned subsidiary of MacAndrews, and following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of closing conditions, that merger was effected on December 21, 2011 (the "MacAndrews Acquisition"). On March 19, 2012, the Company purchased Faneuil, Inc. ("Faneuil") from affiliates of MacAndrews (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Faneuil is a separate business segment for financial reporting purposes. The Company has organized its business and corporate structure along the following four business segments: Harland Clarke, Harland Financial Solutions, Scantron and Faneuil. During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The Harland Technology Services ("HTS") and Medical Device Tracking ("MDT") businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment. Prior period segment information has been reclassified to reflect this change. The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial and commercial institutions. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards, survey services and other business and home office products to consumers and businesses. The Harland Financial Solutions segment provides technology products and related services to financial institutions worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems. The Scantron segment provides data management and decision support solutions and related services to educational, commercial and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment and forms. On January 3, 2011, Scantron purchased all of the outstanding capital stock or membership interests of KUE Digital Inc., KUED Sub I LLC and KUED Sub II LLC (collectively "GlobalScholar"). GlobalScholar's instructional management platform supports all aspects of managing education at K-12 schools, including student information systems; performance-based scheduler; gradebook; learning management system; longitudinal data collection, analysis and reporting; teacher development and performance tracking; and online communication and tutoring portals. GlobalScholar's instructional management platform complements Scantron's testing and assessment, response to intervention, student achievement management and special education software solutions thereby expanding Scantron's web-based education solutions (see Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). The Faneuil segment provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients. The Faneuil segment also provides patient information collection and tracking services, managed technical services and related field maintenance services to educational, commercial, healthcare and governmental entities.

Company Overview Harland Clarke Harland Clarke provides checks and related products, direct marketing services and customized business and home office products to financial services, retail and software providers as well as consumers and small business. In 2012, Harland Clarke generated revenues of $1,142.4 million (69% of the Company's 2012 consolidated net revenues). Products and Services Checks and Related Products In addition to offering basic consumer and small business checks, Harland Clarke also offers checks customized with licensed designs and characters, such as cartoon characters, collegiate designs and photographs. Harland Clarke also offers a variety of financial documents in conjunction with consumer and small business financial software packages. Accessory products include leather checkbook covers, endorsement stamps, address labels, recording registers and other bill paying accessories. In addition, Harland Clarke also offers its clients a variety of fraud prevention solutions. Harland Clarke offers various delivery options, including expedited and trackable delivery. Check users often prefer expedited delivery to both receive their order sooner and for the security and tracking features that these expedited methods provide. These delivery services represent an important component of the range of value-added service offerings. Harland Clarke also offers a wide variety of standard financial forms and flexible formats to suit clients' needs, and the products are also compatible with image processing systems. Harland Clarke also provides treasury management supplies, such as integrated cash deposit products, customized deposit tickets and security bags. Marketing Services Harland Clarke also offers integrated, multi-channel marketing services that help clients measure, understand, manage and optimize their business-to-consumer and business-to-business relationships as well as their returns on marketing investments. These services include: • marketing strategies such as acquisition, lead generation and nurturing, retention, activation, cross-selling and up-selling; • data management and analytics; • database design, development and hosting; • print production and lettershop; • teleservices; and • online and digital marketing with advanced filtering to deliver targeted messages, social media and web analytics integration, and tools to manage complex enterprise and channel programs. Customized Business and Home Office Products In addition to a wide variety of checks and related products, Harland Clarke offers consumers and small businesses customized products including stationery, business cards, notepads, invitations, announcements, labels, rubber stamps and envelopes. Sales and Marketing Harland Clarke manages relationships with large and complex financial and commercial institutions through dedicated account management teams composed of relationship management, marketing, operations and service oriented skill sets. In addition, Harland Clarke has a national sales force targeting distinct financial institution segments ranging from major nationwide and large regional banks and securities firms to community banks and credit unions. Hosted websites, contact center services and mail order forms enable clients to offer convenient ordering options to their customers. Harland Clarke also markets its products directly to consumers and small businesses through advertising inserts in newspapers, advertisements sent directly to residences, and online and digital advertising. Online shopping, contact center access and mail order forms enable consumers to order at their convenience.

Clients The clients of Harland Clarke range from major national and large regional banks and securities firms to community banks, credit unions, brokerage houses, retailers and software companies. In addition, Harland Clarke clients include consumers and small businesses. Harland Clarke's contracts with its institutional clients are generally sole-source contracts for the sale of its checks and related products to the clients' customers. The initial terms of the agreements generally range from three to five years and generally are terminable for cause, although some of its financial institution clients can terminate their contracts for convenience. Competition Harland Clarke's primary competition comes from alternative payment methods such as debit cards, credit cards, ACH, and other electronic and online payment options. Harland Clarke also competes with large providers that offer a wide variety of products and services including Deluxe Corporation, Harte-Hanks, Inc., and R.R. Donnelley & Sons Company. There are also many other competitors that specialize in providing one or more of the products and services Harland Clarke offers to its clients. Harland Clarke competes on the basis of service, convenience, quality, product range and price. Environmental Matters Harland Clarke's current check printing operations use hazardous materials in the printing process and generate solid wastes, wastewater and air emissions. Consequently, its facilities are subject to existing and may be subject to proposed federal, state and local laws and regulations designed to protect human health and the environment. While enforcement of these laws may require the expenditure of material amounts for environmental compliance or cleanup, Harland Clarke believes that its facilities are currently in material compliance with all applicable laws and regulations. Historic check printing operations at Harland Clarke's current and former facilities used hazardous materials and generated regulated wastes in greater quantities than Harland Clarke's current operations. In some instances Harland Clarke has sold these facilities and agreed to indemnify the buyer of the facility for potential environmental liabilities. Harland Clarke may also be subject to liability under environmental laws for environmental conditions at these current or former facilities or in connection with the disposal of waste generated at these facilities. Harland Clarke is not aware of any fact or circumstance that would require the expenditure of material amounts for environmental cleanup or indemnification in connection with its historic operations. However, if environmental contamination is discovered at any of these former facilities or at locations where wastes were disposed, Harland Clarke could be required to spend material amounts for environmental cleanup. It is generally not possible to predict the ultimate total costs relating to any remediation that may be demanded at any environmental site due to, among other factors, uncertainty regarding the extent of prior pollution, the complexity of applicable environmental laws and regulations and their interpretations, uncertainty regarding future changes to such laws and regulations or their enforcement, the varying costs and effectiveness of alternative cleanup technologies and methods, and the questionable and varying degrees of responsibility and/or involvement by Harland Clarke. Harland Financial Solutions Harland Financial Solutions provides technology products and related services to financial institutions worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems. In 2012, Harland Financial Solutions generated revenues of $253.7 million (15% of the Company's 2012 consolidated net revenues). Products and Services Harland Financial Solutions provides host processing systems on both an in-house and outsourced basis to financial institutions, including banks, credit unions and thrifts. Its products centralize customer information and facilitate high speed and reliable processing of transactions from every delivery channel. Harland Financial Solutions has integrated its compliance, branch automation, Internet banking, mobile banking, self-service and business intelligence products into its core processing solutions. Management believes that this integration capability differentiates Harland Financial Solutions from other providers. Harland Financial Solutions helps financial institutions increase the profitability of customer relationships through business intelligence and branch automation software. Harland Financial Solutions offers Internet banking, mobile banking and branch automation systems designed to enhance the customer experience through integrated teller, platform, call center and self-service tools from new account opening and funding to account-to- account money transfers, person-to-person payments, account and adviser-client relationship management, and bill presentment and payment.

Harland Financial Solutions also sells loan and deposit origination and compliance software to financial institutions. Harland Financial Solutions offers a complete product suite, ProSuite, including solutions for lending, account opening, sales management and loan underwriting. Harland Financial Solutions also offers a commercial lending risk management, underwriting and portfolio management product suite marketed as CreditQuest. Harland Financial Solutions provides mortgage loan origination, production and servicing solutions through its various products. As a result of the Parsam acquisition in December 2010, Harland Financial Solutions has a software development and support operation consisting of approximately 80 information technology professionals located in Thiruvananthapuram, India. Backlog Harland Financial Solutions' backlog was estimated to be $462.7 million and $399.3 million at December 31, 2012 and 2011, respectively. Backlog consists of contracted products, maintenance, outsourced services and professional services prior to revenue recognition and/or delivery. The Company expects to deliver approximately 31% of the 2012 backlog during 2013. Due to the long-term nature of certain service contracts, primarily in the service bureau business, the remainder of the backlog will be delivered in 2014 and beyond. Sales and Marketing Harland Financial Solutions predominately sells its products and services directly to financial institutions through its own national sales organization supported by dedicated product management, marketing, and client support organizations. Clients Harland Financial Solutions is a leading supplier of financial software and services to financial institutions, including banks, credit unions and thrifts. Harland Financial Solutions contracts generally provide for a license with optional ongoing maintenance or a term- based service arrangement. Competition Providing technological solutions to financial institutions is highly competitive and fragmented. Harland Financial Solutions competes with several large and diversified financial technology providers, including, among others, Fidelity National Information Services, Inc., Fiserv, Inc., Jack Henry & Associates, Inc., Computer Services Inc. and many regional providers. Many multi-national and international providers of technological solutions to financial institutions also compete with products or services offered by Harland Financial Solutions both domestically and internationally, including Temenos Group AG, Misys plc, Infosys Technologies Limited, Tata Consultancy and Oracle Financial Services. There are also many other competitors that offer one or more specialized products or services that compete with products and services offered by Harland Financial Solutions. Management believes that competitive factors influencing buying decisions include product features and functionality, client support, price and vendor financial stability. Scantron Scantron provides data management and decision support solutions and related services to educational, commercial and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis and management tools, including web-based solutions, software, scanning equipment and forms. In 2012, Scantron generated revenue of $118.1 million (7% of the Company's 2012 consolidated net revenues). Products and Services Education-Related Products Scantron's sales to K-12 educational institutions have historically represented the largest portion of Scantron's revenues, although it also generates revenues from sales to higher education, government and commercial institutions. In 2012, Scantron derived approximately 77% of its revenues from sales to K-12 educational institutions. Scantron's Achievement Series is a set of web-based testing solutions that provide schools and other enterprises with a content- neutral platform for measuring achievement, with real-time reporting. Scantron also offers solutions for managing and centralizing the data generated by the testing process to measure progress against state and national standards. Scantron's Performance Series is an Internet-delivered, standards-based, computer adaptive assessment that provides valid and reliable diagnostic and placement assessment data. Each assessment is adapted for each student, is aligned to individual state standards, and links to instructional applications that can help educators design formative assessment-based instruction.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Scantron has integrated Achievement Series and Performance Series to provide an overall diagnostic, achievement testing, monitoring and data reporting solution. These solutions also allow the easy integration of disparate technologies and content.

Scantron's Achievement Series and Performance Series solutions generate subscription revenues and the opportunity for the sale of associated products, including forms and scanner solutions, testing content, testing-based instruction applications and data management tools. EXCEED® is a web-based solution that manages, administers and prescribes the personalized learning process and data required for all K-12 students. Information about each student is gathered from any assessments to conduct universal screening and ongoing progress monitoring. This instructional outcome data is integrated with other student data like attendance, discipline, and grades to give teachers, principals and school district administrators a centralized, 360 degree view of each student and the data to inform and individualize instruction for every student. As a result of the GlobalScholar acquisition in January 2011, Scantron provides a comprehensive software platform through GlobalScholar's Pinnacle System, that supports standards-based student, classroom, and program grading and evaluation, enabling schools to identify deficiencies in student performance and comply with government-mandated standards. The Pinnacle System provides databases of attendance, grades, and student proficiencies that is available over the Internet and through other devices to students, parents, teachers and administrators. Additionally, users worldwide, through a series of websites, can obtain tutoring services and access directories of educational institutions; access lectures and full courses on many topics; obtain educational administrative support and assistance in developing interactive educational websites; and store curriculum, testing, and evaluation information. With the GlobalScholar acquisition, Scantron acquired operations located in Chennai, India consisting of approximately 250 employees. Approximately 200 of these employees are information technology professionals who provide software development and support services. Scantron provides educational institutions with a patented forms and scanner solution for standardized and classroom-based testing needs. The Scantron forms and scanner solution has achieved widespread acceptance among educational institutions. Scantron generates forms and scanner solutions revenues by charging for the purchase or lease of scanners and the purchase of forms by the client. In addition, Scantron has a loan marketing program, under which a scanner is loaned to a client in exchange for a minimum annual forms purchase. Scantron also offers custom form and scanner solutions, course evaluations and classroom testing software packages, and student response devices. Commercial and Government - Related Products Scantron provides data management and decision support services for clients using web-based, telephone and paper-based methods for data collection, processing, analysis and reporting. These services include operational data capture and a wide variety of other data collection, analysis and management applications. Scantron provides custom form and scanner solutions for a wide variety of data collection applications such as safety assessments and employee testing or information collection. Scantron offers scanners with both optical mark and full image capabilities. The scanners range in size and speed for various customer applications. Scantron also provides software that converts optical marks and images into digital data for delivery to third-party applications. In addition, Scantron offers software packages for operational data collection. Backlog Scantron's backlog, which consists primarily of contracted products and services prior to revenue recognition and/or delivery, was estimated to be $57.0 million and $49.3 million at December 31, 2012 and 2011, respectively. The Company expects to deliver approximately 37% of the 2012 backlog during 2013. Due to the long-term nature of certain service contracts, the remainder of the backlog will be delivered in 2014 and beyond. Sales, Marketing and Product Support Scantron sells its products and services directly through sales organizations segmented by industry vertical or product category. Scantron provides comprehensive product support to its clients directly with telephone and online support. Clients Clients for Scantron's educational products range from K-12 institutions and districts to higher education institutions. Clients for Scantron's other data management products include commercial and government organizations. Competition

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Scantron competes with many education software providers at the K-12 and higher education levels. Scantron also faces significant competition from a number of local and regional education competitors. Scantron faces competition with respect to its forms and scanners from large international and regional printers and manufacturers. The business landscape for commercial

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents and governmental data management is highly fragmented, and Scantron faces competition for its products and services from many large and small companies. Faneuil Faneuil specializes in technology-enabled in-person and automated service delivery, particularly in regulated, highly complex environments. Faneuil provides business processing solutions for both commercial and government entities. Utilizing advanced applications and a workforce of 3,300 service professionals, Faneuil delivers broad outsourcing support, ranging from customer care centers, fulfillment operations, and IT services, to manual and electronic toll collection, toll violation processing and medical device tracking. In 2012, Faneuil generated revenue of $154.7 million (9% of the Company's 2012 consolidated net revenues). Products and Services Contact Center Operations Faneuil operates multi-channel customer care centers staffed by 50 to 500 employees in several states. Contact center clients include several toll authorities, a statewide utility, a Midwestern municipality, an agency that operates two major airports serving the Washington, D.C. area and several other government and commercial entities. Toll Collection Services Faneuil has been retained by many state and municipal transportation authorities to conduct manual and electronic toll operations and provide violations processing support. As the nation's largest outsource provider of toll collection specialists, the company deploys more than 2,000 specialists across multiple states. With the introduction of technological advances in the toll industry, Faneuil has expanded its proficiencies to include electronic collections as more tolling authorities have invested in the required infrastructure. Faneuil's complement of automated services range from turn-key operations in which the company assumes complete responsibility for every aspect, including management, staffing, systems, customer care, and transponder sales and distribution, to targeted applications in which the company supplies specific components to supplement a client's own operation. Enforcement is also a key component of Faneuil's toll operations, which currently process more than 2 million violations each month. Medical Device Tracking Services Faneuil's Medical Device Tracking ("MDT") program supplies the technology that enables manufacturers of implantable medical devices to comply with United States Food and Drug Administration ("FDA") requirements that they maintain continuous tracking of patients who have them worldwide. To assist customers in meeting FDA tracking requirements, MDT provides document capture and image storage, data entry and investigation processes, inbound customer contact call center services and an aggressive quality assurance program. MDT's proprietary solution includes the systems, processes and expertise to track patients over the life of any medical device and during each stage of product development, from initial start-up and testing to commercial availability. MDT staff members are in daily contact with physicians and other medical professionals to provide relevant patient and device data that is important in the treatment of long-term illness and disease. MDT processes more than 100,000 transactions per month, maintaining and safeguarding data on more than 20 million patients, devices, physicians, facilities, records and images. Field Maintenance Services Faneuil's technology division, Harland Technology Services ("HTS"), is a nationwide provider of network infrastructure support and services for more than 15,000 clients. HTS provides network managed services, managed print services, and network design, implementation, hardware and maintenance support. Services are performed by more than 165 field service technicians located in major metropolitan areas across the United States and Canada. All are backed by certified technical support services representatives based at HTS headquarters office. HTS currently supplies information technology services and solutions for more than 8,200 schools (K-12), colleges and universities across the United States and Canada, maintaining and monitoring more than 150,000 pieces of equipment for educational clients alone. Backlog Faneuil's backlog, which consists primarily of contracted products and services prior to revenue recognition and/or delivery, was estimated to be $44.2 million and $28.6 million at 2012 and 2011, respectively, due to the long-term nature of certain service contracts. The Company expects to deliver approximately 54% of the 2012 backlog during 2013. The remainder of the backlog will be delivered in 2014 and beyond.

Sales, Marketing and Product Support Faneuil acquires new clients and contracts primarily by responding to requests for proposals issued by commercial and government entities and participating in other competitive bidding opportunities that align with its core proficiencies and strategic goals. Faneuil also partners with other businesses whose products and services complement their own, responding as a team or in a contractor - subcontractor capacity to selected solicitations that present advantageous business opportunities for both companies. Additionally, approximately 80 percent of Faneuil's current clients have expanded their business relationships with Faneuil since initial contract inception. Faneuil's business development representatives also network nationwide to promote Faneuil's outsourced business services to prospective clients. Clients Faneuil's client portfolio includes both government and commercial entities nationwide, among them several toll authorities and state agencies, a publicly owned utility, a Midwestern municipality, an agency that operates the major airports serving the Washington, D.C. area and several other public and private entities. Competition Faneuil's primary competitors are other large providers of toll services, such as Affiliated Computer Services, Inc. ("ACS") and TransCore, Inc., as well as contact center operators such as ACS and Convergys Corporation. If Faneuil cannot compete effectively to win new business and retain existing clients, its operating results will be negatively affected. To remain competitive, Faneuil must continuously implement new technologies, expand its portfolio of outsourced services and may have to make occasional strategic adjustments to its pricing for its services. The Company's Suppliers The main supplies used in check and form printing are paper, print ink, binders, boxes, packaging and delivery services. For all critical supplies, Harland Clarke has at least two qualified suppliers or multiple qualified production sites in order to ensure that supplies are available as needed. Using alternative suppliers may, however, result in increased costs. Harland Clarke has not historically experienced any material shortages and management believes Harland Clarke has redundancy in its supplier network for each of its critical inputs. Scantron purchases a majority of the paper for its business from a single supplier. It purchases scanner components from various equipment manufacturers and supply firms. Scantron historically has not experienced shortages of materials and believes it will continue to be able to obtain such materials or suitable substitutes in acceptable quantities and at acceptable prices. The Company's Foreign Sales The Company conducts business outside the United States in Canada, India, Ireland and Israel. Its foreign sales totaled $18.5 million in 2012, $23.0 million in 2011and $20.6 million in 2010. The Company's Employees As of December 31, 2012, the Company had approximately 9,000 employees. None of the employees of the Company are represented by a labor union. The Company considers its employee relations to be good. The Company's Intellectual Property The Company relies on a combination of trademark, copyright and patent laws, trade secret protection and confidentiality and license agreements to protect its trademarks, copyrights, software, inventions, trade secrets, know-how and other intellectual property. The sale of products bearing trademarks or designs licensed from third parties accounts for a significant portion of the Company's revenue. Typically, such license agreements are effective for a two- to three-year period, provide for the retention of ownership of the tradename, know-how or other intellectual property by the licensor and require the payment of a royalty to the licensor. There can be no guarantee that such licenses will be renewed or will continue to be available on terms that would allow the Company to sell the licensed products profitably. Governmental Regulation Related to the Company The Company is subject to the federal financial modernization law known as the Gramm-Leach-Bliley Act and the regulations implementing its privacy and information security requirements, as well as other privacy and data security federal and state laws and regulations. The Company is also subject to additional privacy and information security requirements in many of its contracts with

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document financial institution clients, which are often more restrictive than these laws and regulations. Collectively, these laws, regulations and agreements require the Company to develop and implement policies to protect the security and confidentiality of consumers' nonpublic personal information and to disclose these policies to consumers before a customer relationship is established and periodically thereafter.

These laws and regulations require some of the Company's businesses to provide a notice to consumers to allow them the opportunity to have their nonpublic personal information removed from the Company's files before the Company shares their information with certain third parties. These laws and regulations may limit the Company's ability to use its direct-to-consumer data in its businesses. Current laws and regulations allow the Company to transfer consumer information to process a consumer-initiated transaction, but also require the Company to protect the confidentiality of a consumer's records or to protect against actual or potential fraud, unauthorized transactions, claims or other liabilities. The Company is also allowed to transfer consumer information for required institutional risk control and for resolving customer disputes or inquiries. The Company may also contribute consumer information to a consumer-reporting agency under the Fair Credit Reporting Act. Some of the Company's financial institution clients request various contractual provisions in their agreements that are intended to comply with their obligations under the Gramm-Leach-Bliley Act and other laws and regulations. Congress and many states have passed and are considering additional laws or regulations that, among other things, restrict the use, purchase, sale or sharing of nonpublic personal information about consumers and business customers. New laws and regulations may be adopted in the future with respect to the Internet, e-commerce or marketing practices generally relating to consumer privacy. Such laws or regulations may impede the growth of the Internet and/or use of other sales or marketing vehicles. For example, new privacy laws could decrease traffic to the Company's websites, decrease telemarketing opportunities and decrease the demand for its products and services. Additionally, the applicability to the Internet of existing laws governing property ownership, taxation and personal privacy is uncertain and may remain uncertain for a considerable length of time. Availability of Reports Copies of the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports filed or furnished pursuant to the Securities Exchange Act of 1934, are available without charge as soon as reasonably practicable after the Company files such materials with or furnishes such materials to the Securities and Exchange Commission upon request to the Chief Financial Officer, Harland Clarke Holdings Corp., 10931 Laureate Drive, San Antonio, TX 78249.

Item 1A. Risk Factors Risks Related to Our Substantial Indebtedness We have substantial indebtedness, which may adversely affect our ability to operate our business and prevent us from fulfilling our obligations under our debt agreements. As of December 31, 2012, we had indebtedness with a total principal amount of $1,847.8 million (including $3.1 million of capital lease obligations), and $92.2 million of additional availability under our revolving credit facility (after giving effect to the issuance of $7.8 million of letters of credit). See Note 20 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of refinancing transactions with respect to our revolving credit facility completed on February 20, 2013. In addition, under certain circumstances, we are permitted to incur additional term loan and/or revolving credit facility indebtedness in an aggregate principal amount of up to $250.0 million, and the terms of our senior secured credit facilities and notes allow us to borrow substantial additional debt, including additional secured debt. Our substantial level of indebtedness could have important consequences. For example, it could: • 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond our control.

We are required to make scheduled payments of principal on our senior secured term loans in the amount of $77.0 million in 2013, $790.1 million in 2014, $69.3 million in 2015 and 2016, and $400.3 million in 2017. In addition, our term loan facility requires that a portion of our excess cash flow be applied to prepay amounts borrowed under that facility. No such excess cash flow payment is required to be paid in 2013 with respect to 2012. An excess cash flow payment of $12.5 million was paid in 2012 with respect to 2011 and was applied against other mandatory payments due in 2012 under the terms of the facility. An excess cash flow payment of $3.5 million was paid in 2011 with respect to 2010 and was applied against other mandatory payments due in 2011 under the terms of the facility. No such excess cash flow payment was paid in 2010 with respect to 2009. We are required to repay our non-extended senior secured term loans in full in 2014, our senior notes in 2015, our extended senior secured term loans in 2017 and our senior secured notes in 2018. Our revolving credit facility will mature in 2013. We may not be able to generate sufficient cash flow from operations and future borrowings may not be available to us under our senior secured credit facilities in an amount sufficient to enable us to repay our debt or to fund our other liquidity needs. If our future cash flow from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, obtain additional debt or equity capital or restructure or refinance all or a portion of our debt on or before maturity. We may not be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of our existing and future indebtedness, including the notes and our senior secured credit facilities, may limit our ability to pursue any of these alternatives. 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. We may be able to incur substantial additional indebtedness in the future. The terms of our senior secured credit facilities and the indentures governing our senior notes and senior secured notes do not fully prohibit us from doing so. In addition, as of December 31, 2012, there was $92.2 million of additional availability under our $100.0 million revolving credit facility (after giving effect to the issuance of $7.8 million of letters of credit). See Note 20 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of refinancing transactions with respect to our revolving credit facility completed on February 20, 2013. Under certain circumstances, we are permitted to incur additional term loan and/or revolving credit facility indebtedness under our senior secured credit facilities in an aggregate principal amount of up to $250.0 million. In addition, the terms of our senior secured credit facilities and senior notes allow us to borrow substantial additional debt, including additional secured debt. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify. Covenant restrictions under our indebtedness may limit our ability to operate our business. The indentures governing the notes and the agreement governing our senior secured credit facilities contain, among other things, covenants that restrict our ability to finance future operations or capital needs or to engage in other business activities. The indenture restricts, among other things, our ability to: • 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. Our senior secured credit facilities contain customary affirmative and negative covenants including, among other things, restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, investments, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale-leaseback transactions. In addition, our credit agreement requires us to maintain a maximum consolidated leverage ratio solely for the benefit of the lenders under our revolving credit facility. These restrictions may limit our ability to operate our businesses and may prohibit or limit our ability to enhance our operations or take advantage of potential business opportunities as they arise.

Risks Related to Our Business Weak economic conditions and further acceleration of check unit declines may continue to have an adverse effect on the Company's revenues and profitability and could result in additional impairment charges. The Company has substantial intangible assets, including substantial goodwill. Goodwill and other intangible assets determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired. The Company also has substantial property, plant and equipment and amortizable intangible assets, such as customer relationships, which are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The impairment test processes are more fully described in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" included elsewhere in this Annual Report on Form 10-K. The annual impairment evaluations for goodwill and indefinite-lived intangible assets involve significant estimates and assumptions made by management regarding specific business and operating factors as well as discount rates. Changes in estimates and assumptions, as well as the occurrence of various events or changes in circumstances could have a material impact on the fair value of goodwill or indefinite-lived intangible assets in future periods, which in turn may result in material asset impairments. Similar considerations apply to any impairment evaluation of our property, plant and equipment and amortizable intangible assets as well as our determinations as to whether interim impairment tests are necessary. The Company periodically updates its long-range business plans and forecasts, which include financial projections that are incorporated in the annual impairment tests. Estimated revenue growth rates for all reporting units may be lower than past projections due to the various factors discussed in this report, including, but not limited to, the following: • the continued adverse economic environment, which may negatively affect future revenue and margins as a result of lower demand and pricing pressure; and • check unit declines are expected to continue, which may negatively affect future revenue for our Harland Clarke segment. Depending on the nature of these factors and the expected relative magnitude and permanency of their effects, the Company's businesses may not be able to achieve previous levels of performance even when overall economic conditions improve. The annual impairment tests for goodwill and indefinite-lived tradenames performed in the fourth quarter of 2012 did not result in impairments of goodwill and indefinite-lived tradenames. As a result of the 2011 step one annual impairment test for goodwill, the Company determined the estimated fair value of the Scantron reporting unit was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. This required the Company to perform the second step of the test and hypothetically allocate the estimated fair value to Scantron's assets and liabilities with the unallocated fair value representing the implied fair value of Scantron's goodwill. As a result of this analysis, a non-cash impairment charge of $102.2 million was recorded for the Scantron segment in the fourth quarter of 2011 based on the implied fair value of Scantron's goodwill being less than its carrying value. The Company also performed the 2011 annual impairment test for indefinite-lived tradenames and determined the estimated fair value of the Scantron tradename was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. As a result of this impairment and changes in Scantron's branding strategy, the useful life of the Scantron tradename was reassessed and determined to no longer be indefinite. The Company determined the economic life for the Scantron tradename is 15 years. A non-cash impairment charge of $4.2 million was recorded for the Scantron segment in the fourth quarter of 2011 based on the estimated fair value of the Scantron tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to a life of 15 years. Future impairment tests may result in a determination that there has been a material asset impairment. Any asset impairment would be reported as a non-cash operating loss, would have a negative effect on the Company's earnings and total assets, and could have a negative impact on the market prices of the Company's outstanding securities. Impairment charges in the future would not affect the Company's consolidated cash flows, current liquidity, capital resources and covenants under its existing credit facilities. 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. The economic conditions since late 2008 and the volatility in the financial markets during this period have contributed and may continue to contribute to high unemployment levels, decreased consumer spending, reduced credit availability and/or declining business and consumer confidence. During this period, a number of financial institutions have taken significant write-downs of asset values. These write-downs have caused many financial institutions to seek additional capital, to merge with other institutions and, in some cases, to fail. We cannot determine whether the difficult conditions in the economy in general

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents and/or the financial markets will improve or worsen in the near future. Our businesses have been and may continue to be adversely affected by these difficult conditions. Harland Clarke may experience reduced revenues due to losses of customers in the event the financial institutions upon which it depends either merge with or are sold to other institutions, or fail, or in the event that consumer spending continues to decline, or checking account openings continue to decrease, resulting in further acceleration in the decline of check usage and the use of Harland Clarke's other products. Similarly, Harland Financial Solutions, which also depends on its financial institution customers, may be adversely affected due to losses of financial institution customers from mergers, consolidations or failures. Reductions in financial institution information technology budgets in response to market difficulties could continue to result in further delays or cancellations of Harland Financial Solutions client purchases, as well as potential pricing pressure on Harland Financial Solutions products. Economic slowdown and liquidity constraints may also cause state and local public and private education budgets to be further reduced, which could continue to result in reduced revenues at Scantron, as well as pricing pressure on Scantron products. Such conditions could also have an unfavorable effect on Faneuil's operations which are, in part, dependent upon government funding. In addition, further disruptions in the credit and other financial markets could, among other things, impair the financial condition of suppliers of the Company, thereby increasing the risk of supplier performance. Account data breaches involving stored client data or misuse of such data could adversely affect our reputation, revenues, profits and growth. We, our clients, and other third parties store customer account information relating to our Harland Clarke segment's checks. In addition, a number of clients use our Harland Financial Solutions products and Scantron products to store and manage sensitive customer and student information. Scantron and Faneuil also provide services which involve the storage of non-public customer information. Any breach of the systems on which sensitive customer data and account information are stored or archived and any misuse by our own employees, by employees of data archiving services or by other unauthorized users of such data could lead to fraudulent activity involving our clients and our financial institution clients' customers' information and/or funds, damage the reputation of our brands and result in claims against us. If we are unsuccessful in defending any lawsuit involving such data security breaches or misuse, we may be forced to pay damages, which could materially and adversely affect our profitability and could have a material adverse impact on our transaction volumes, revenue and future growth prospects. In addition, such breaches could adversely affect our financial institution clients' perception as to our reliability, and could lead to the termination of client contracts. Legislation and contracts relating to protection of personal data could limit or harm our future business. We are subject to state and federal laws and regulations regarding the protection of consumer information commonly referred to as "non-public personal information." Examples include the federal financial modernization law known as the Gramm-Leach-Bliley Act and the regulations implementing its privacy and information security requirements, as well as other privacy and data security federal and state laws and regulations. We are also subject to additional requirements in many of our contracts with financial institution clients, which are often more restrictive than the regulations. These laws, regulations and agreements require us to develop and implement policies to protect non-public personal information and to disclose these policies to consumers before a customer relationship is established and periodically thereafter. The laws, regulations, and agreements limit our ability to use or disclose non-public personal information for other than the purposes originally intended. Where not preempted by the provisions of the Gramm-Leach-Bliley Act, states may enact legislation or regulations that are more restrictive on our use of data. In addition, more restrictive legislation or regulations have been introduced in the past and could be introduced in the future in Congress and the states and could have a negative impact on our business, results of operations or prospects. Additionally, future contracts may impose even more stringent requirements on us which could increase our operating costs, as well as interfere with the cost savings we are trying to achieve. We market certain products and services through various distribution media, including direct mail, telemarketing, online marketing, and other methods. These media are subject to increasing regulation, both at the federal and state levels, particularly in the area of consumer privacy. Our ability to solicit or sign up new customers may be affected. The financial services sector is also subject to various federal and state regulations and oversight. As a supplier of services to financial institutions, certain operations of our Harland Clarke and Harland Financial Solutions segments are examined by the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC"), among other agencies, to confirm our ability to maintain data security. These agencies regulate and audit services we provide and the manner in which we operate, and we are required to comply with a broad range of applicable laws and regulations. Adverse audit findings could impact our ability to continue to render services or require investment in corrective measures. Moreover, current laws and regulations may be amended in the future or interpreted by regulators in a manner which could negatively affect the operations of our Harland Clarke or Harland Financial Solutions segments or limit their future growth. The operation of websites by Scantron that are accessed by children under the age of 13 may be subject to the Children's Online Privacy

Protection Act of 1998, commonly known as COPPA. The collection of patient data through Harland Clarke survey services and Faneuil's call center services and medical device tracking services is subject to the Health Insurance Portability and Accountability Act of 1996, commonly known as HIPAA, which protects the privacy of patient data. The use of our Scantron products and services to store and manage student and other educational data may be subject to The Family Education Rights and Privacy Act of 1974, commonly known as FERPA, which is a federal law that protects the privacy of student education records in connection with Scantron's web-based services. Many states have enacted similar laws to protect the privacy of student data. New laws and regulations may be adopted in the future with respect to the Internet, e-commerce or marketing practices generally relating to consumer privacy. Such laws or regulations may impede the growth of the Internet and/or use of other sales or marketing vehicles. As an example, new privacy laws could decrease traffic to our websites, decrease telemarketing opportunities and decrease the demand for our products and services. Additionally, the applicability to the Internet of existing laws governing property ownership, taxation, libel and personal privacy is uncertain and may remain uncertain for a considerable length of time. We may experience processing errors or software defects that could harm our business and reputation. We use sophisticated software and computing systems in all of our segments. We may experience difficulties in installing or integrating our technologies on platforms used by our clients. Furthermore, certain financial institution clients of our Harland Clarke segment have integrated certain components of their systems with ours, permitting our operators to effect certain operations directly into our financial institution clients' customers' accounts. Errors or delays in the processing of check orders, software defects or other difficulties could result in: • loss of clients; • additional development costs; • diversion of technical and other resources; • negative publicity; or • exposure to liability claims. We may not successfully implement any or all components of our business strategies or realize all of our continued cost savings, which could reduce our future revenues and profitability. Our business strategies include a goal to cross-sell between business segments, capitalize on complementary offerings across the client base of our Harland Clarke segment, cross-sell software products into our combined client base, continue focusing on software- enabled testing and assessment products while expanding the offering of survey services to financial institutions, and continue to reduce costs and generate strong cash flow. We may not be able to implement fully any or all components of our business strategies or realize, in whole or in part or within the timeframes anticipated, the efficiency improvements or cost savings from these strategies. These strategies are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. Financial industry turmoil and the general economic slowdown may continue to affect adversely our ability to implement our business strategies. Additionally, our business strategies may change from time to time. As a result, we may not be able to achieve our anticipated results of operations. We may be unable to protect our rights in intellectual property, and third-party infringement or misappropriation may materially adversely affect our profitability. We rely on a combination of measures to protect our intellectual property, among them, contract provisions, registering trademarks and copyrights, patenting inventions, implementing procedures that afford trade secret status and protection to our proprietary information, such as entering into third-party non-disclosure and intellectual property assignment agreements, and maintaining our intellectual property by entering into licenses that grant only limited rights to third parties. We may be required to spend significant resources to protect, monitor and police our trade secrets, proprietary know-how trademarks and other intellectual property rights. Despite our efforts to protect our intellectual property, third parties or licensees may infringe or misappropriate our intellectual property. The confidentiality agreements that are designed to protect our trade secrets and proprietary know-how could be breached, or our trade secrets and proprietary know-how might otherwise become known by others. We may not have adequate remedies for infringement or misappropriation of our intellectual property rights or for breach of our confidentiality agreements. The loss of intellectual property protection or the inability to enforce our intellectual property rights could harm our business and ability to compete.

We may be unable to maintain our licenses to use third-party intellectual property on favorable terms. A significant portion of our revenues are derived from the sale of products by our Harland Clarke segment bearing third-party trademarks or designs pursuant to royalty-bearing licenses. Typically, these licenses are for a term of between two and three years, and some licenses may be terminated at the licensor's option upon a change of control. There can be no guarantee that such licenses will be renewed or will continue to be available to us on terms that would allow us to continue to sell the licensed products profitably. Third parties may claim we infringe on their intellectual property rights. Third parties have and may assert intellectual property infringement claims against us in the future. In particular, there has been a substantial increase in the issuance of patents for Internet-related systems and business methods, which may have broad implications for participants in technology and service sectors. Claims for infringement of these patents are increasingly becoming a subject of litigation. Because patent application information may not always be readily available, there is also a risk that we could adopt a technology without knowledge of a pending patent application, which technology would infringe a third-party patent once that patent is issued. Responding to these infringement claims may require us to incur significant fees and costs and expend resources, to enter into royalty- bearing license agreements, to stop selling or to redesign affected products, services and technologies, to pay damages, and/or to satisfy indemnification commitments under agreements with our licensees. In the event that our trademarks are successfully challenged by third parties, we could be forced to rebrand our products, which could result in the loss of brand recognition. Litigation relating to infringement claims could also result in substantial costs to us and a diversion of management resources. Adverse determinations in any litigation or proceeding could also subject us to significant liabilities and could prevent us from using some of our products, services or technologies. 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 have entered into agreements with third-party providers for the licensing of certain software and the provision of information technology services, including software development and support services, and personal computer, telecommunications, network server and help desk services. In the event that one or more of these providers is not able to provide adequate information technology services or terminates a license or service, we would be adversely affected. Although we believe that information technology services and substantially equivalent software and services are available from numerous sources, a failure to perform or a termination by one or more of our service providers could cause a disruption in our business while we obtain an alternative source of supply and we may not be able to find such an alternative source on commercially reasonable terms, or at all. 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. Our business is driven in part by the personal relationships of our senior management teams. Despite executing employment agreements with certain members of our senior management teams, these individuals may discontinue service with us and we may not be able to find individuals to replace them at the same cost, or at all. We have not obtained "key person" insurance for any member of our senior management teams. The loss or interruption of the services of these executives could have a material adverse effect on 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. We have acquired complementary businesses in the past, and we may pursue acquisitions of complementary businesses in the future. We cannot predict whether suitable acquisition candidates can be acquired on acceptable terms or whether future acquisitions, even if completed, will be successful. Future acquisitions by us could result in the incurrence of contingent liabilities, debt or amortization expenses relating to intangible assets which could materially adversely affect our business, results of operations and financial condition. Moreover, the success of any past or future acquisition will depend upon our ability to integrate effectively the acquired businesses. We also cannot predict whether any acquired products, technology or business will contribute to our revenues or earnings to any material extent or whether cost savings and synergies we expect at the time of an acquisition can be realized once the acquisition has been completed. Furthermore, if we incur additional indebtedness to finance an acquisition, we cannot predict whether the acquired business will be able to generate sufficient cash flow to service that additional indebtedness.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unsuitable or unsuccessful acquisitions could therefore have a material and adverse effect on our business, prospects, financial condition and results of operations.

Our business is exposed to changes in interest rates. We are exposed to changes in interest rates on our variable-rate debt. A hypothetical increase of 1 percentage point in the variable component of interest rates applicable to floating rate debt outstanding as of December 31, 2012 would have resulted in an increase to interest expense of approximately $11.5 million per year including the effect of the interest rate swaps outstanding at December 31, 2012. At December 31, 2012, we had consolidated indebtedness outstanding with a total principal amount of $1,847.8 million of which $867.1 million will mature within 24 months. We expect to continue to incur indebtedness to replace some or all of the maturing debt. Changes in interest rates, changes by any rating agency to our rating or outlook as well as changes in debt market conditions could significantly increase our interest expense. Adverse interest rate changes could have a material adverse effect on our business, results of operations and financial condition. We are dependent on the success of our research and development efforts and the failure to develop new and improved products could adversely affect our business. We have in the past made, and intend to continue in the future to make, investments in research and development in order to enable us to identify and develop new products. The development process for new products can be lengthy. Despite investments in this area, our research and development may not result in the discovery or successful development of new products. The success of our new product offerings will depend on several factors, including our ability to: • 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. The continuous introduction of new products is important to our growth. Our financial condition could deteriorate if we cannot timely and cost effectively develop and commercialize new products. We may be subject to sales and other taxes, which could have adverse effects on our business. In accordance with current federal, state and local tax laws, and the constitutional limitations thereon, we currently collect sales, use or other similar taxes in state and local jurisdictions where we have a physical presence. One or more state or local jurisdictions may seek to impose sales tax collection obligations on us and other out-of-state companies which engage in remote or online commerce. Several states in the United States have taken various initiatives to prompt retailers to collect local and state sales taxes on purchases made over the Internet. Furthermore, tax law and the interpretation of constitutional limitations thereon is subject to change. In addition, any new operations of these businesses in states where they do not currently have a physical presence could subject shipments of goods into such states by these businesses to sales tax under current or future laws. If one or more state or local jurisdictions successfully asserts that we must collect sales or other taxes beyond our current practices, it could have a material, adverse effect 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. Our operations are subject to existing and may be subject to proposed federal, state and local laws and regulations pertaining to pollution and protection of human health and the environment, the violation of which can result in substantial costs and liabilities, including material civil and criminal fines and penalties. Such requirements include those pertaining to air emissions; wastewater discharges; occupational safety and health; the generation, handling, treatment, remediation, use, storage, transport, release, and exposure to hazardous substances and wastes. Under certain of these laws and regulations, such as the federal Superfund statute, the obligation to investigate and remediate contamination at a facility may be imposed on current and former owners or operators or on persons who may have sent waste to that facility for disposal. In addition, environmental laws and regulations, and interpretation or enforcement thereof, are constantly evolving and any such changes could affect the Company's business, financial condition or results of operations. Enforcement of these laws and regulations may require the expenditure of material amounts for environmental compliance or cleanup.

The operations of our Harland Clarke segment use hazardous materials in the printing process and generate wastewater and air emissions. Some of our historic check and form printing operations at current and former facilities used hazardous materials in greater quantities. In some instances, we have sold these facilities and agreed to indemnify the buyer of the facility for certain environmental liabilities. We may also be subject to liability under environmental laws and regulations for environmental conditions at our current or former facilities or in connection with the disposal of waste generated at these facilities. Although we are not aware of any fact or circumstance that would require the expenditure of material amounts for environmental compliance or cleanup, if environmental liabilities are discovered at our current or former facilities or at locations where our wastes were disposed, we could be required to spend material amounts for environmental compliance or cleanup. It is generally not possible to predict the ultimate total costs relating to any remediation that may be demanded at any environmental site due to, among other factors, uncertainty regarding the extent of prior pollution, the complexity of applicable environmental laws and regulations and their interpretations, uncertainty regarding future changes to such laws and regulations or their enforcement, the varying costs and effectiveness of alternative cleanup technologies and methods, and the questionable and varying degrees of responsibility and/or involvement by us. MacAndrews, our indirect parent company, and its sole stockholder have significant influence over us. Mr. Ronald O. Perelman, through MacAndrews, beneficially owned, as of December 31, 2012, all of the outstanding common stock of M & F Worldwide, which beneficially owns 100% of our stock. In addition, all of our directors are employees of either MacAndrews or the Company. As a result, MacAndrews and its sole stockholder possess significant influence over our business decisions. 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. Check and related products and services, including delivery services, account for most of our revenues. The check industry overall is a mature industry. The number of checks written in the United States has declined in recent years, and we believe that it will continue to decline due to the increasing use of alternative payment methods, including credit cards, debit cards, smart cards, automated teller machines, direct deposit, wire transfers, electronic, home banking applications, Internet based payment services and other bill paying services. The actual rate and extent to which alternative payment methods will achieve consumer acceptance and replace checks, whether as a result of legislative developments, personal preference or otherwise, cannot be predicted with certainty and could decline at a more rapid rate. Changes in technology or the widespread adoption of current technologies may also make alternative payment methods more popular. An increase in the use of any of these alternative payment methods could have a material adverse effect on the demand for checks and a material adverse effect on our business, results of operations and prospects. In recent years, Harland Clarke has experienced check unit declines at a higher rate than in the past, as evidenced by recent period-over-period declines in Harland Clarke revenue. Harland Clarke believes these higher rates of decline are attributable at least in part to changing business strategies of certain of our financial institution clients and an increase in the use of alternative non-cash payments in addition to other factors. Harland Clarke is unable to determine the extent to which other factors such as economic and financial market difficulties, the depth and length of the economic recession, higher unemployment, decreased openings of checking accounts and decreased consumer spending have also contributed to the higher rates of decline. During 2011 and 2012, this trend of higher check unit declines improved slightly from that experienced in recent years, however Harland Clarke is unable to determine at this time if this improvement to the trend will continue. Harland Clarke expects that check unit volume will continue to decline, resulting in a corresponding decrease in check revenues and depending on the nature and relative magnitude of the causes for the decreases, such decreases may not be mitigated as and when overall economic conditions improve. Harland Clarke is focused on growing its non-check related products and services, including marketing services, and optimizing its existing catalog of offerings to better serve its clients, as well as managing its costs, overhead and facilities to reflect the decline in check unit volumes. Harland Clarke does not believe that revenues from non-check related products and services will fully offset revenue declines from declining check unit volumes. In the future, Harland Clarke may not be able to mitigate the revenue declines from declining check unit volumes through cost management, which could negatively affect Harland Clarke's results of operations. 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. Mergers, acquisitions and personnel changes at financial institutions, as well as failures or liquidations of such financial institutions, may adversely affect our business, financial condition and results of operations. For the year ended December 31, 2012, financial institutions accounted for approximately 81% of revenues for our Harland Clarke segment. In recent years, the number of financial institutions has declined due to consolidation. Consolidation among financial institutions could cause us to

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents lose current and potential clients as such clients are, for example, acquired by financial institutions with pre-existing relationships with other providers. The increase in general negotiating strength possessed by such consolidated entities also presents a risk that new and/or renewed contracts with these institutions may not be secured on terms as favorable as those historically negotiated with these clients. Consolidation among or failure of financial institutions could therefore decrease our revenues and profitability. 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. The majority of sales from our Harland Clarke segment has been, and very likely will continue to be, concentrated among a small group of clients. For the year ended December 31, 2012, the top 20 clients of our Harland Clarke segment represented approximately 42% of its revenues, with sales to Bank of America and Wells Fargo representing a significant portion of revenues. A number of contracts with Harland Clarke segment clients may be terminated by the client for convenience upon written notice or "for cause." A significant decrease or interruption in business from any of our Harland Clarke segment significant clients, or the termination of our contracts with any of our most significant clients could have a material adverse effect on our revenues and profitability. Our financial results can also be adversely affected by the business practices and actions of our large clients in a number of ways, including timing, size and mix of product orders and supply chain management. Several contracts with our significant clients expire over the next several years. We may not be able to renew them on terms favorable to us, or at all. The loss of one or more of these clients or a shift in the demand by, distribution methods of, pricing to, or terms of sale to, one or more of these clients could materially adversely affect us. The write-off of any significant receivable due from delays in payment or return of products by any of our significant clients could also adversely impact 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. The check printing industry is intensely competitive. In addition to competition from alternative payment methods, we also face considerable competition from other check printers and other similar providers of printed products. The principal factors on which we compete are service, convenience, quality, product range and price. We may not be able to compete effectively against current and future competitors, 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. We have strong relationships with many of the country's largest paper mills and ink suppliers. These relationships afford us certain purchasing advantages, including stable supply and favorable pricing arrangements. Our supplier arrangements are by purchase order and terminable at will at the option of either party. While we have been able to obtain sufficient paper supplies during recent paper shortages and otherwise, in part through purchases from foreign suppliers, we are subject to the risk that we will be unable to purchase sufficient quantities of paper to meet our production requirements during times of tight supply. An interruption in our relationship with service providers for our digital printers could compromise our ability to fulfill pending orders for checks and related products. In addition, disruptions in the credit and other financial markets could, among other things, impair the financial condition of suppliers of the Company, thereby increasing the risk of supplier performance. Any interruption in supplies or service from these or other vendors or suppliers or delivery services could result in a disruption to our business if we are unable to readily find alternative service providers at comparable rates. Increased production and delivery costs, such as fluctuations in paper costs, could materially adversely affect our profitability. Increases in production costs such as paper and labor could adversely affect our profitability, our business, our financial condition and results of operations. For example, the principal raw material used by our Harland Clarke segment is paper. Rising inflation may cause our material and delivery costs to rise. Any significant increase in paper prices as a result of a short supply or otherwise would adversely affect our costs. In addition, disruptions in parcel deliveries or increases in delivery rates, which are often tied to fuel prices, could also increase our costs. Our contracts with clients in our Harland Clarke segment may contain certain restrictions on our ability to pass on to clients increased production costs or price increases. In addition, competitive pressures in the check industry may have the effect of inhibiting our ability to reflect these increased costs in the prices of our products and services. Softness in direct mail response rates could have an adverse impact on our operating results. The direct-to-consumer business of our Harland Clarke segment has experienced declines in response and retention rates related to direct mail promotional materials. We believe that these declines are attributable to a number of factors, including the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents decline in check usage, the overall increase in direct mail solicitations received by our target customers, and the multi-box promotional strategies employed by us and our competitors. To offset these factors, we may have to modify and/or increase our marketing efforts, which could result in increased expense. The profitability of the direct-to-consumer business of our Harland Clarke segment depends in large part on our ability to secure adequate advertising media placements at acceptable rates, as well as the consumer response rates generated by such advertising. Suitable advertising media may not be available at a reasonable cost, or available at all. Furthermore, the advertising we utilize may not be effective. Competitive pricing pressure may inhibit our ability to reflect any of these increased costs in the prices of our products. We may not be able to sustain our current levels of profitability as a result. Risks Related to our Harland Financial Solutions and Scantron Segments Our Scantron segment provides products and services to educational institutions that are subject to educational budget allotments, which are under pressure and could affect customer willingness to invest in our products. Our Scantron business is subject to federal and state educational budget allotments. In the current economic and political landscapes, these budget allotments may come under pressure and could be reduced, thus affecting customer willingness to invest in our products. If we fail to continually improve our Harland Financial Solutions and Scantron products, effectively manage our product offerings and introduce new products and service offerings, our business may suffer. Harland Financial Solutions' and Scantron's businesses are affected by technological change, evolving industry standards, changes in client requirements and frequent new product introductions and enhancements. The businesses of providing technological solutions to financial institutions, educational organizations and other enterprises have been and continue to be intensely competitive, requiring us to continually improve our existing products and create new products while at the same time controlling our costs. Such improvements have required and will continue to require substantial cash investments and allocations of personnel and other resources. In addition, customers may require or prefer technology offerings which are outside the scope of offerings provided by Harland Financial Solutions or Scantron. We may not be able to successfully anticipate or address those preferences or requirements. We face intense competition from a number of multi-national, international, national, regional and local providers of software and services, some of whom may have greater financial and other resources than we have, greater familiarity with our prospective clients than we do, or the ability to offer more attractive products and services than we do. Our future success will depend in part upon our ability to: • continue to enhance and expand existing Harland Financial Solutions and Scantron products and services; • make Harland Financial Solutions and Scantron products compatible with future and existing operating systems and applications that achieve popularity within the business application marketplace, including current and future versions of Windows, Unix and IBM iSeries; • engage in new business initiatives; and • develop and introduce new products and new services that satisfy increasingly sophisticated client requirements, keep pace with technological and regulatory developments, provide client value and are attractive to customers. We may not successfully anticipate and develop product enhancements or new products and services to adequately address changing technologies and client requirements. Any such products, solutions or services may not be successful or may not generate expected revenues or cash flow, and the business and results of operations of our Harland Financial Solutions and Scantron businesses may be materially and adversely affected as a result. 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, business prospects, results of operations and financial condition of Scantron could be materially and adversely affected. The data collection and educational testing industry has also changed significantly during recent years due to technological advances and regulatory changes, and we must successfully develop new products and solutions in our Scantron segment to respond to those changes. Scantron must continue to keep pace with changes in testing and data collection technology and the needs of its clients. The development of new testing methods and technologies depends on the timing and costs of the development effort, product performance, functionality, customer acceptance, adoption rates and competition, all of which could have a negative effect on our business. If we are not able to adopt new electronic data collection solutions at a rate that keeps pace with other technological advances, the business, business prospects, results of operations and financial condition of Scantron could be materially and adversely affected.

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. Providing technological solutions to financial institutions has been and continues to be intensely competitive. Some of our competitors have advantages over Harland Financial Solutions due to their significant worldwide presence, longer operating and product development history, larger installed client base, and substantially greater financial, technical and marketing resources. In response to competition, Harland Financial Solutions has been required in the past, and may be required in the future, to furnish additional discounts to clients, otherwise modify pricing practices or offer more favorable payment terms or more favorable contractual implementation terms. These developments have and may increasingly negatively affect the revenues, cash flows and results of operations of the Harland Financial Solutions business. 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. Mergers, acquisitions and personnel changes at financial institutions, as well as failures or liquidations of such financial institutions, may adversely affect our Harland Financial Solutions business, financial condition and results of operations. For the year ended December 31, 2012, financial institutions accounted for substantially all of our Harland Financial Solutions segment revenues. In recent years, the number of financial institutions has declined due to consolidation. Consolidation among financial institutions could cause us to lose current and potential clients as such clients are, for example, acquired by financial institutions with pre-existing relationships with other providers. The increase in general negotiating strength possessed by such consolidated entities also presents a risk that new and/or renewed contracts with these institutions may not be secured on terms as favorable as those historically negotiated with these clients. Consolidation among or failure of financial institutions could therefore decrease our revenues and profitability. Downturns in general economic and industry conditions, enhanced regulatory burdens and reductions in information technology budgets could cause decreases in demand for our software and related services which could negatively affect our revenues, cash flows and results of operations. Our revenues, cash flows and results of operations depend on the overall demand for our products, software and related services. Economic downturns in one or more of the countries in which we do business and enhanced regulatory burdens, including through increased fees and assessments charged to financial institutions by the FDIC and National Credit Union Administration ("NCUA") or due to recently enacted federal legislation for additional taxes on certain financial institutions, could result in reductions in the information technology budgets for some portion of our clients and potentially longer lead-times for acquiring Harland Financial Solutions products and services. Such reductions and longer lead times could result in delays or cancellations of client purchases and could have a material adverse effect on our business, financial position, results of operations and cash flows. Recent financial industry turmoil and the general economic slowdown may adversely affect our financial institution clients' ability or willingness to commit financial resources to our products, and spending decisions by these clients may continue to be delayed. Prolonged economic slowdowns may result in clients requiring us to renegotiate existing contracts on less advantageous terms than those currently in place or default on payments due on existing contracts. 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. Although our Harland Financial Solutions and Scantron businesses test each of their new products and product enhancement releases and evaluate and test the products obtained through acquisition before introducing them to customers, significant errors may be found in existing or future releases of our software products, and vulnerability to cyber attacks may arise, with the possible result that significant resources and expenditures may be required in order to correct such errors or otherwise satisfy client demands. In addition, defects in our products or difficulty integrating our products with our clients' systems could result in delayed or lost revenues, warranty or other claims against us by clients or third parties, adverse client reaction and negative publicity about us or our products and services or reduced acceptance of our products and services in the marketplace, any of which could have a material adverse effect on our business, financial position, results of operations and cash flows. 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. Because our clients may use our products for mission critical applications, errors, defects or other performance problems may cause financial or other damages to our clients and result in claims for substantial damages against us, regardless of our

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents responsibility for such errors, defects or other performance problems. For example, Harland Financial Solutions has been named in lawsuits challenging certain provisions in Harland Financial Solutions' lending products. The terms of our contracts with our clients are generally designed to limit our liability for errors, defects or other performance problems and damages relating to such errors, defects or other performance problems, but these provisions may not be enforced by a court or otherwise effectively protect us from legal claims. Our liability insurance may not be adequate to cover all of the costs resulting from these legal claims. Our current liability insurance coverage may not continue to be available on acceptable terms and insurers may deny coverage as to any future claim. The successful assertion against us of one or more large claims that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or coinsurance requirements, could have a material adverse effect on our business, financial position, results of operations and cash flows. Furthermore, even if we succeed in the litigation, we are likely to incur additional costs and our management's attention might be diverted from our normal operations. Failure to hire and retain a sufficient number of qualified information technology professionals could have a material adverse effect on our business, results of operations and financial condition. Our business of delivering professional information technology services is labor intensive, and, accordingly, our success depends upon our ability to attract, develop, motivate, retain and effectively utilize highly skilled information technology professionals. We believe that there is a growing shortage of, and significant competition for, information technology professionals in the United States who possess the technical skills and experience necessary to deliver our services, and that such information technology professionals are likely to remain a limited resource for the foreseeable future. We also plan to manage and grow software development operations internationally related to Harland Financial Solutions and Scantron. We believe that, as a result of these factors, we operate within an industry that experiences a significant rate of annual turnover of information technology personnel. Our business plans are based on hiring and training a significant number of additional information technology professionals each year to meet anticipated turnover and increased staffing needs. Our ability to maintain and renew existing engagements and to obtain new business depends, in large part, on our ability to hire and retain qualified information technology professionals. We may not be able to recruit and train a sufficient number of qualified information technology professionals, and we may not be successful in retaining current or future employees. Increased hiring by technology companies and increasing worldwide competition for skilled technology professionals may lead to a shortage in the availability of qualified personnel in the markets in which we operate and hire. Failure to hire and train or retain qualified information technology professionals in sufficient numbers could have a material adverse effect on our business, results of operations and financial condition. We may not receive significant revenues from our current research and development efforts. Developing and localizing software is expensive, and the investment in product development may involve a long payback cycle. Our future plans include significant investments in software research and development and related product opportunities. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position, but future revenues from these investments are not fully predictable. Therefore, we may not realize any benefits from our research and development efforts in a timely fashion or at all. Our Harland Financial Solutions segment provides services to clients that are subject to government regulations that could constrain its operations. The financial services sector is subject to various federal and state regulations and oversight. As a supplier of services to financial institutions, certain Harland Financial Solutions operations are examined by the OCC, the FDIC and the NCUA, among other agencies. These agencies regulate services we provide and the manner in which we operate, and we are required to comply with a broad range of applicable laws and regulations. Current laws and regulations may be amended in the future or interpreted by regulators in a manner which could negatively affect our current Harland Financial Solutions' operations or limit its future growth. Budget deficits may reduce funding available for Scantron products and services and have a negative effect on our revenue. Our Scantron segment derives a significant portion of its revenues from public schools and colleges, which are heavily dependent on local, state and federal governments for financial support. Government budget deficits, including deficits arising from the current economic slowdown, may have a negative effect on the availability of funding for Scantron products. Budget deficits experienced by schools or colleges may also cause those institutions to react negatively to future price increases for Scantron products. If budget deficits significantly reduce funding available for Scantron products and services, our revenue could be adversely affected.

If we are not able to obtain paper and other supplies at acceptable quantities and prices, our revenue could be adversely affected. Our Scantron segment purchases a majority of its paper from one supplier. Scantron purchases scanner components from equipment manufacturers, supply firms and others. Scantron may not be able to purchase those supplies in adequate quantities or at acceptable prices. Rising inflation will also cause Scantron's material and delivery costs to rise. If Scantron is forced to obtain paper and other supplies at higher prices or lower quantities, our profitability could be adversely affected. Risks Related to our Faneuil Segment Economic downturns and reductions in government funding could have a negative effect on Faneuil's business. Demand for the services offered by Faneuil has been, and is expected to continue to be, subject to significant fluctuations due to a variety of factors beyond our control, including economic conditions. During economic downturns, the ability of both private and governmental entities to make expenditures may decline significantly. We cannot be certain that economic or political conditions will be generally favorable or that there will not be significant fluctuations adversely affecting Faneuil's industry as a whole or key industry segments targeted by Faneuil. In addition, Faneuil's operations are, in part, dependent upon government funding. Significant changes in the level of government funding could have an unfavorable effect on Faneuil's business, financial position, results of operations and cash flows. Faneuil's business involves many program-related and contract-related risks. Faneuil's business is subject to a variety of program-related risks, including changes in political and other circumstances, particularly since contracts for major programs are performed over extended periods of time. These risks include changes in personnel at governing authorities, the failure of applicable governing authorities to take necessary actions, opposition by third parties to particular programs and the failure by customers to obtain adequate financing for particular programs. Due to these factors, losses on a particular contract or contracts could occur, and Faneuil could experience significant changes in operating results on a quarterly or annual basis. Faneuil faces intense competition. If Faneuil does not compete effectively, its business may suffer. Faneuil faces intense competition from numerous competitors. Faneuil's services as they relate to toll collection, customer contact centers and employee staffing compete primarily on the basis of quality, performance, innovation, technology, price, applications expertise, system and service flexibility and established customer service capabilities. Faneuil may not be able to compete effectively on all of these fronts or with all of its competitors. In addition, new competitors may emerge, and service offerings may be threatened by new technologies or market trends that reduce the value of the services Faneuil provides. To remain competitive, Faneuil must respond to new technologies and enhance its existing services, and we anticipate that it may have to adjust the pricing for its services to stay competitive on future responses to proposals. Faneuil's dependence on one or a few customers could adversely affect it. One or a few clients have in the past and may in the future contribute a significant portion of Faneuil's consolidated revenue in one year, or over a period of several consecutive years. In 2012, revenue from the Florida Department of Transportation accounted for 36% of Faneuil's total revenues. Faneuil has long standing relationships with many of its significant customers. However, because Faneuil's customers generally contract with it for specific projects or programs with a finite duration, Faneuil may lose these customers if funding for their program is discontinued, or their projects come to an end. The loss or reduction of any significant contracts with any of these customers could materially reduce Faneuil's revenue and cash flows. Additionally, many of Faneuil's customers are government entities. In many situations, government entities can unilaterally terminate or modify Faneuil's existing contracts without cause and without penalty to the government agency. If Faneuil does not replace them with other customers or other programs, the loss of business from any one of such customers could have a material adverse effect on its business or results of operations. Faneuil's fixed price contracts subject it to the risk of increased program costs. Faneuil's fixed price contracts involve risks relating to its inability to receive additional payments in the event the costs of performing those contracts prove to be greater than anticipated. Faneuil's cost of performing the contracts may be greater than anticipated due to uncertainties inherent in estimating contract completion costs, contract modifications by customers, failure of subcontractors to perform and other unforeseen events and conditions. Any one or more of these risks could result in reduced profits or possible losses on a particular contract or contracts. Faneuil's dependence on subcontractors and equipment manufacturers could adversely affect it.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In some cases, Faneuil relies on and partners with third party subcontractors as well as third party equipment manufacturers to service its contracts. To the extent that Faneuil cannot engage subcontractors or acquire equipment or

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents materials, Faneuil's ability to perform according to the terms of its contracts may be impaired. If the amount Faneuil is required to pay for subcontracted services or equipment exceeds the amount Faneuil has estimated in bidding for fixed prices, or fixed unit price contracts, it could experience reduced profit or losses in the performance of these contracts. In addition, if a subcontractor or a manufacturer is unable to deliver its services, equipment or materials according to the negotiated terms for any reason, including the deterioration of its financial condition, Faneuil may be required to purchase the services, equipment or materials from another source at a higher price. This may reduce the profit to be realized or result in a loss on a program for which the services, equipment or materials were needed. If Faneuil guarantees to a customer the timely implementation or performance standards of a program, Faneuil could incur additional costs to meet its guarantee obligations. In certain instances Faneuil guarantees a customer that Faneuil will implement a program by a scheduled date. Faneuil sometimes also provides that the program will achieve or adhere to certain performance standards or key performance indicators. If Faneuil subsequently fails to implement the program as scheduled, or if the program subsequently fails to meet the guaranteed performance standards, Faneuil may be held responsible for cost to the client resulting from any delay in implementation, or the costs incurred by the program to achieve the performance standards. In most cases where Faneuil fails to meet contract defined performance standards, it may be subject to agreed upon liquidated damages. To the extent that these events occur, the total costs for the program would exceed Faneuil's original estimates and it could experience reduced profits or in some cases a loss for that program. Adequate bonding is necessary for Faneuil to successfully win new work awards on some types of contracts. In line with industry practice, Faneuil is often required, primarily in its toll and transportation programs, to provide performance and surety bonds to customers in conjunction with its contracts. These bonds indemnify the customer should Faneuil fail to perform its obligations under the contract. If a bond is required for a particular program and Faneuil is unable to obtain an appropriate bond, Faneuil cannot pursue that program. Faneuil has bonding capacity but, as is typically the case, the issuance of a bond is at the surety's sole discretion. Moreover, due to events that affect the insurance and bonding markets generally, bonding may be more difficult to obtain in the future or may only be available at significant additional cost. There can be no assurance that bonds will continue to be available on reasonable terms. Any inability to obtain adequate bonding and, as a result, to bid on new work could have a material adverse effect on Faneuil's business, financial condition, results of operations and cash flows. Any business disruptions due to political instability, armed hostilities, and incidents of terrorism or natural disasters could adversely affect Faneuil's financial performance. If terrorist activity, armed conflict, political instability or natural disasters occur in the United States or other locations, such events may negatively affect Faneuil's operations, cause general economic conditions to deteriorate or cause demand for Faneuil's services, many of which depend on travel, to decline. A prolonged economic slowdown or recession could reduce the demand for Faneuil's services, and therefore, negatively affect Faneuil's future sales and profits. Any of these events could have a significant effect on Faneuil's business, financial condition or results of operations.

Item 1B. Unresolved Staff Comments None.

Item 2. Properties Harland Clarke is headquartered in San Antonio, Texas, Harland Financial Solutions is headquartered in Lake Mary, Florida, Scantron is headquartered in Eagan, Minnesota and Faneuil is headquartered in Hampton, Virginia. The principal properties for each segment are as follows:

Harland Clarke

Approximate Floor Leased/Owned Location Use Space (Square Feet) Status Atlanta, GA Administration, Information Technology, Sales and Marketing 96,400 Owned Atlanta, GA(a) Closed 36,000 Owned Atlanta, GA(a) Closed 54,000 Owned Atlanta, GA(a) Closed 132,300 Owned Atlanta, GA Tech Center 14,294 Leased Boulder City, NV Administration and Production 4,000 Leased Braintree, MA Marketing Services and Support 3,476 Leased Charlotte, NC Administration 4,906 Leased Colorado Springs, CO Services 22,665 Leased Glen Burnie, MD (b) Marketing Services and Production 120,000 Leased Grapevine, TX Printing 83,282 Leased Gurabo, Puerto Rico Printing 22,446 Leased High Point, NC Printing 135,000 Leased Jeffersonville, IN Printing 141,332 Leased Lisle, IL Marketing Services 7,050 Leased Louisville, KY Printing 50,000 Leased Milton, WA (b) Administration 87,640 Leased Nashville, TN Administration 8,124 Leased New Braunfels, TX Administration, Printing and Contact Center 98,030 Owned Phoenix, AZ Printing 64,000 Leased Salt Lake City, UT Printing, Distribution and Contact Center 129,100 Owned San Antonio, TX Printing 166,000 Leased San Antonio, TX Contact Center 68,000 Leased San Antonio, TX Contact Center 42,262 Leased San Antonio, TX Corporate Headquarters 90,000 Leased San Antonio, TX Administration 1,936 Leased San Antonio, TX Warehouse 16,166 Leased Chennai, India Support and Administration 9,182 Leased ______

(a) Held for sale. (b) To be closed in 2013.

Harland Financial Solutions

Approximate Floor Leased/Owned Location Use Space (Square Feet) Status Atlanta, GA Development and Support 7,098 Leased Birmingham, AL Development and Support 4,400 Leased Bothell, WA Development and Support 16,286 Leased Carmel, IN Development and Support 4,821 Leased Cincinnati, OH Service Bureau, Data Center 63,901 Leased Clive, IA Service Bureau, Data Center 36,466 Leased Englewood, CO Development and Support, Data Center 28,838 Leased Fargo, ND Development and Support 18,371 Leased Grand Rapids, MI Development and Support 5,484 Leased Lake Mary, FL Corporate Headquarters, Development and Support 80,390 Leased Memphis, TN Development and Support 11,433 Leased Miamisburg, OH Development and Support 15,286 Leased Orlando, FL Processing 14,856 Leased Pleasanton, CA Development and Support 30,232 Leased Portland, OR Administration, Development and Support 58,685 Leased Tel Aviv, Israel Development and Support 7,911 Leased Thiruvananthapuram, India Development and Support 21,500 Leased Scantron

Approximate Floor Leased/Owned Location Use Space (Square Feet) Status Atlanta, GA Administration, Development and Support 12,780 Leased Bellevue, WA Administration 31,324 Leased Chennai, India Development and Support 38,060 Leased Columbia, PA Printing 121,370 Owned Eagan, MN Corporate Headquarters, Development and Support 109,500 Owned Loveland, CO Development and Support 12,895 Leased Olivet, MI Development and Support 1,856 Leased Santa Ana, CA Administration, Development and Support 26,057 Leased San Diego, CA Development and Support 10,175 Leased Towson, MD Administration, Development and Support 9,193 Leased

Faneuil

Approximate Floor Leased/Owned Location Use Space (Square Feet) Status Atlantic City, NJ Administrative office 1,500 Leased Boca Raton, FL Florida corporate office 2,165 Leased Clifton Forge, VA Contact center 15,620 Leased El Paso, TX Administrative office 900 Leased Fort Lauderdale, FL Sales office 1,720 Leased Gloucester Point, VA Walk-in retail location 1,500 Leased Hampton, VA Corporate headquarters 12,363 Leased Herndon, VA Walk-in retail location 3,300 Leased Jupiter, FL Sales office 1,178 Leased Lakeland, FL Administrative office 1,040 Leased Lawrence, KS Administration 19,000 Leased Martinsville, VA Contact center 25,109 Leased Omaha, NE Field Services, Administration and Support 50,000 Owned Orlando, FL Administrative office 12,420 Leased Orlando, FL Contact center 17,842 Leased Richmond, VA Walk-in retail location 2,000 Leased South Boston, VA Contact center 10,761 Leased Tallahassee, FL Administrative office 1,500 Leased Tampa, FL Administrative office 1,453 Leased

Item 3. Legal Proceedings Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, intellectual property matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations.

Item 4. Mine Safety Disclosures Not applicable.

Part II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities We are an indirect, wholly owned subsidiary of MacAndrews. MacAndrews is wholly owned by Ronald O. Perelman. As such, our common stock is not listed on any stock exchange or traded in any over-the-counter market.

Item 6. Selected Financial Data The table below reflects historical financial data, which are derived from the audited consolidated financial statements for the year ended December 31, 2012, the periods January 1 to December 21, 2011 and December 22 to December 31, 2011 and each of the years ended December 31, 2010, 2009 and 2008. The Company is an indirect, wholly owned subsidiary of M & F Worldwide, which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews. On September 12, 2011, M & F Worldwide agreed to merge with an indirect wholly owned subsidiary of MacAndrews, and following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of closing conditions, that merger was effected on December 21, 2011. As a result of the MacAndrews Acquisition, under Generally Accepted Accounting Principles, the Company is required to present the operating results for the year ended December 31, 2011 separately for the predecessor and successor periods. The period prior to the merger transaction (January 1 to December 21, 2011) is presented below as ''Predecessor." The period subsequent to the merger transaction (December 22 to December 31, 2011) is presented below as ''Successor.'' As a result of the Company applying the acquisition method of accounting for the MacAndrews Acquisition, the Successor period financial statements reflect a new basis of accounting, while the Predecessor financial statements were prepared using the Company's historical basis of accounting. As a result, the Predecessor and Successor financial statements are not comparable. There have been no changes in the business operations of the Company due to the MacAndrews Acquisition. See Note 3 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion of the MacAndrews Acquisition. The selected financial data are not necessarily indicative of results of future operations, and should be read in conjunction with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

Predecessor Successor January 1 December 22 to to Year ended December 31, December 21, Years Ended December 31, December 31, (In millions) 2012 2011 (a) 2011 (a) 2010 (b) 2009 (c) 2008 (d) Statement of Operations Data: Net revenues $ 1,668.9 $ 37.7 $ 1,586.0 $ 1,671.2 $ 1,712.3 $ 1,794.6 Cost of revenues 1,058.4 29.4 931.2 958.5 997.7 1,066.9 Gross profit 610.5 8.3 654.8 712.7 714.6 727.7 Selling, general and administrative expenses 389.7 11.3 393.3 389.7 387.4 445.9 Revaluation of contingent consideration (0.6) — (24.3) 0.3 — — Asset impairment charges 1.7 — 111.6 3.7 44.4 2.4 Restructuring costs 18.9 — 12.6 22.3 32.5 14.6 Operating income (loss) 200.8 (3.0) 161.6 296.7 250.3 264.8 (Loss) gain on early extinguishment of debt (34.2) (0.1) — — 65.0 — Interest expense, net (220.7) (6.6) (104.4) (114.8) (135.9) (184.2) Loss from equity method investment (0.1) — — — — — Other (expense) income, net (0.2) — 13.2 0.1 0.1 (0.4) (Loss) income before income taxes (54.4) (9.7) 70.4 182.0 179.5 80.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (Benefit) provision for income taxes (19.4) (3.8) 41.2 67.8 67.4 33.0 Net (loss) income $ (35.0) $ (5.9) $ 29.2 $ 114.2 $ 112.1 $ 47.2

December 31,

(In millions) 2012 2011 (a) 2010 (b) 2009 (c) 2008 (d) Balance Sheet Data: Total assets $ 2,986.4 $ 3,103.7 $ 3,336.1 $ 3,252.0 $ 3,391.8 Long-term debt, including current portion and short- term borrowings(e) 1,847.8 1,812.0 2,219.7 2,238.8 2,390.6 Stockholder's equity 35.2 147.3 338.8 246.0 166.3 ______

(a) Includes the financial position and results of operations of GlobalScholar from the date of its acquisition on January 3, 2011 and the financial position and results of operations of Faneuil from the date of common control on December 21, 2011. Includes new basis of accounting in the Successor period related to acquisition accounting required by the MacAndrews Acquisition. See 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 Spectrum K12 from the date of its acquisition on July 21, 2010 and the financial position and results of operations of Parsam from the date of its acquisition on December 6, 2010. See 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 Protocol Integrated Marketing Services from the date of its acquisition on December 4, 2009 and the financial position of SubscriberMail from the date of its acquisition on December 31, 2009. (d) Includes the financial position and results of operations of Data Management I LLC from the date of its acquisition on February 22, 2008 and the financial position of Transaction Holdings from the date of its acquisition on December 31, 2008. (e) Includes capital leases of $3.1 million, $4.5 million, $4.6 million, $5.7 million and $2.6 million for fiscal years 2012, 2011, 2010, 2009 and 2008, 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 Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its subsidiaries, the "Company") is a holding company that conducts its operations through its direct and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed to merge with an indirect, wholly owned subsidiary of MacAndrews, and following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of closing conditions, that merger was effected on December 21, 2011 (the "MacAndrews Acquisition"). As a result of the Company applying the acquisition method of accounting for the MacAndrews Acquisition, the Successor (as defined hereinafter) period financial statements reflect a new basis of accounting, while the Predecessor (as defined hereinafter) financial statements were prepared using the Company's historical basis of accounting. As a result, the Predecessor and Successor financial statements are not comparable. There have been no changes in the business operations of the Company due to the MacAndrews Acquisition. See Note 3 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion of the MacAndrews Acquisition. On March 19, 2012, the Company purchased Faneuil, Inc. ("Faneuil") from affiliates of MacAndrews. See Note 3 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Faneuil is a separate business segment for financial reporting purposes. During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The Harland Technology Services ("HTS") and Medical Device Tracking ("MDT") businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment. The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial and commercial institutions. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards, survey services and other business and home office products to consumers and businesses. The Harland Financial Solutions segment provides technology products and related services to financial institutions worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems. The Scantron segment provides data management and decision support solutions and related services to educational, commercial and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment and forms. The Faneuil segment provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients. The Faneuil segment also provides patient information collection and tracking services, managed technical services and related field maintenance services to educational, commercial, healthcare and governmental entities. Refinancing Transactions

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On February 20, 2013, the Company completed certain refinancing transactions with respect to its revolving credit facility dated as of April 4, 2007. See Note 20 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

On July 24, 2012, the Company completed certain refinancing transactions with respect to its credit agreement dated as of April 4, 2007, as amended on May 10, 2012. See Note 11 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The Faneuil Acquisition On March 19, 2012, the Company entered into a Stock Purchase Agreement pursuant to which the Company purchased 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil") for $70.0 million in cash (the "Faneuil Acquisition") from affiliates of MacAndrews. The Company financed the Faneuil Acquisition with Harland Clarke Holdings' cash on hand. New Faneuil, through its wholly owned subsidiary, Faneuil, provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients across the United States. The GlobalScholar Acquisition On January 3, 2011, Scantron Corporation ("Scantron"), a wholly owned subsidiary of the Company, purchased all of the outstanding capital stock or membership interests of KUE Digital Inc., KUED Sub I LLC and KUED Sub II LLC (collectively "GlobalScholar"). GlobalScholar's instructional management platform supports all aspects of managing education at K-12 schools, including student information systems; performance-based scheduler; gradebook; learning management system; longitudinal data collection, analysis and reporting; teacher development and performance tracking; and online communication and tutoring portals. GlobalScholar's instructional management platform complements Scantron's testing and assessment, response to intervention, student achievement management and special education software solutions thereby expanding Scantron's web-based education solutions. The acquisition-date purchase price was $134.9 million in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $18.5 million, which resulted in total estimated consideration of $153.4 million as of the acquisition date. Contingent consideration would have been payable in 2012 upon achievement of certain revenue targets of GlobalScholar during calendar year 2011 (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K). No amount was paid in 2012 because the revenue targets were not met. The Company financed the acquisition and related fees and expenses with cash on hand. The Parsam Acquisition On December 6, 2010, Harland Financial Solutions, Inc. ("HFS"), a wholly owned subsidiary of the Company, acquired all of the outstanding membership interests of Parsam Technologies, LLC and the equity of SRC Software Private Limited (collectively "Parsam"). Parsam's solutions allow financial institutions to provide services online, in branches and at call centers, from new account opening and funding to account-to-account money transfers, person-to-person payments, account and adviser-client relationship management and bill presentment and payment. HFS has integrated Parsam's solutions into its existing solution offerings. The acquisition-date purchase price was $32.8 million in cash, net of cash acquired, and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $1.2 million, which resulted in total estimated consideration of $34.0 million as of the acquisition date. Contingent consideration would have been payable upon achievement of certain revenue targets of Parsam during calendar years 2011 and 2012 with a maximum contingent consideration of $25.0 million if the revenue targets were met (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K). No amounts will be paid because the revenue targets were not met. The Company financed the acquisition and related fees and expenses with cash on hand. The Spectrum K12 Acquisition On July 21, 2010, Scantron acquired Spectrum K12 School Solutions, Inc. ("Spectrum K12"). Spectrum K12 develops, markets and sells student achievement management, response to intervention and special education software solutions. Spectrum K12's software solutions complement Scantron's software solutions for education assessments, content and data management. The acquisition-date purchase price was $28.6 million in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $4.0 million, which resulted in total estimated consideration of $32.7 million as of the acquisition date. Contingent consideration would have been payable upon achievement of certain revenue targets of Spectrum K12 during the twelve-month periods ending June 30, 2011 and 2012 with a maximum aggregate contingent consideration of $20.0 million if the revenue targets had been met (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K). No amount was paid because the revenue targets were not met. The Company financed the acquisition and related fees and expenses with cash on hand.

Economic and Other Factors Affecting the Businesses of the Company Harland Clarke While total non-cash payments - including checks, credit cards, debit cards and other electronic forms of payment - are growing, the number of checks written has declined and is expected to continue to decline. Harland Clarke believes the number of checks printed is driven by the number of checks written, the number of new checking accounts opened and reorders reflecting changes in consumers' personal situations, such as name or address changes. In recent years, Harland Clarke has experienced check unit declines at a higher rate than in the past, as evidenced by recent period-over-period declines in Harland Clarke revenue which are discussed in more detail elsewhere in this report. Harland Clarke believes these higher rates of decline are attributable at least in part to changing business strategies of certain of our financial institution clients and an increase in the use of alternative non-cash payments in addition to other factors. Harland Clarke is unable to determine the extent to which other factors such as economic and financial market difficulties, the depth and length of the economic downturn, higher unemployment, decreased openings of checking accounts and decreased consumer spending have also contributed to the higher rates of decline. During 2011 and 2012, this trend of higher check unit declines improved slightly from that experienced in recent years, however Harland Clarke is unable to determine at this time if this improvement to the trend will continue. Harland Clarke still expects that check unit volume will continue to decline, resulting in a corresponding decrease in check revenues and depending on the nature and relative magnitude of the causes for the decreases, such decreases may not be mitigated as and when overall economic conditions improve. Harland Clarke is focused on growing its non-check related products and services, including marketing services, and optimizing its existing catalog of offerings to better serve its clients, as well as managing its costs, overhead and facilities to reflect the decline in check unit volumes. Harland Clarke does not believe that revenues from non-check related products and services will fully offset revenue declines from declining check unit volumes. In the future, Harland Clarke may not be able to mitigate the revenue declines from declining check unit volumes through cost management, which could negatively affect Harland Clarke's results of operations. Harland Clarke's primary competition comes from alternative payment methods such as debit cards, credit cards, ACH, and other electronic and online payment options. Harland Clarke also competes with large providers that offer a wide variety of products and services including Deluxe Corporation, Harte-Hanks, Inc., and R.R. Donnelley & Sons Company. There are also many other competitors that specialize in providing one or more of the products and services Harland Clarke offers to its clients. Harland Clarke competes on the basis of service, convenience, quality, product range and price. The Harland Clarke segment's operating results are also affected by consumer confidence and employment. Consumer confidence directly correlates with consumer spending, while employment also affects revenues through the number of new checking accounts being opened. The Harland Clarke segment's operating results may be negatively affected by slow or negative growth of, or downturns in, the United States economy. Business confidence affects a portion of the Harland Clarke segment. In addition, if Harland Clarke's financial institution customers fail or merge with other financial institutions, Harland Clarke may lose any or all revenue from such financial institutions and/or experience further pricing pressure, which would negatively affect Harland Clarke's operating results. Harland Financial Solutions Harland Financial Solutions' operating results are affected by the overall demand for our products, software and related services, which is based upon the technology budgets of our clients and prospects. Economic downturns in one or more of the countries in which we do business and enhanced regulatory burdens, including through increased fees and assessments charged to financial institutions by the Federal Deposit Insurance Corporation and National Credit Union Association or due to federal legislation for additional taxes on certain financial institutions, could result in reductions in the information technology budgets for some portion of our clients and potentially longer lead-times for acquiring Harland Financial Solutions products and services. In addition, if Harland Financial Solutions' financial institution customers fail or merge with other financial institutions, Harland Financial Solutions may lose any or all revenue from such financial institutions and/or experience further pricing pressure, which would negatively affect Harland Financial Solutions' operating results. Harland Financial Solutions' business is affected by technological change, evolving industry standards, regulatory changes in client requirements and frequent new product introductions and enhancements. The business of providing technological solutions to financial institutions and other enterprises requires that we continually improve our existing products and create new products while at the same time controlling our costs to remain price competitive. Providing technological solutions to financial institutions is highly competitive and fragmented. Harland Financial Solutions competes with several large and diversified financial technology providers, including, among others, Fidelity National Information Services, Inc., Fiserv, Inc., Jack Henry & Associates, Inc., Computer Services Inc. and many regional providers. Many multi-national

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and international providers of technological solutions to financial institutions also compete with Harland Financial Solutions both domestically and internationally, including Temenos Group AG, Misys plc, Infosys

Technologies Limited, Tata Consultancy and Oracle Financial Services. There are also many other competitors that offer one or more specialized products or services that compete with products and services offered by Harland Financial Solutions. Management believes that competitive factors influencing buying decisions include product features and functionality, client support, price and vendor financial stability. Scantron While the number of tests given annually in K-12 and higher education continues to grow, the demand for optical mark reader paper-based testing has declined and is expected to continue to decline. Changes in educational funding can affect the rate at which schools adopt new technology thus slowing the decline for paper-based testing but also slowing the demand for Scantron's on-line testing products. Educational funding changes may also reduce the rate of consumption of Scantron's forms and purchase of additional hardware to process these forms. Scantron's education-based customers may turn to lower cost solutions for paper-based forms and hardware in furtherance of addressing their budget needs. A weak economy in the United States may negatively affect education budgets and spending, which would have an adverse effect on Scantron's operating results. Scantron is subject to federal and state educational budget allotments. In the current economic and political landscapes, these budget allotments may come under pressure and could be reduced, thus affecting customer willingness to invest in Scantron products. Data collection is also experiencing a conversion to non-paper based methods of collection. Scantron believes this trend will also continue as the availability of these alternative technologies becomes more widespread. While Scantron's non-paper data collection business could benefit from this trend, Scantron's paper-based data collection business could be negatively affected by this trend. Changes in the overall economy can affect the demand for data collection to the extent that Scantron's customers adjust their research or testing expenditures. Scantron must successfully develop new products and solutions to respond to the significant changes in the educational testing and data collection industry due to technological and regulatory changes. Scantron must continue to keep pace with changes in testing and data collection technology and the needs of its clients. The development of new testing methods and technologies depends on the timing and costs of the development effort, product performance, functionality, customer acceptance, adoption rates and competition, all of which could have a negative effect on our business. If Scantron is not able to adopt new electronic data collection solutions at a rate that keeps pace with other technological advances, the business, business prospects, results of operations and financial condition of Scantron could be materially and adversely affected. Scantron enters into contracts with customers that provide for multiple products and services or "elements," such as software, implementation, configuration, training and maintenance (referred to as "multiple-element contracts"). In order to recognize revenue for each element of the contract separately as earned, the relevant accounting guidance requires that the Company have "vendor-specific objective evidence", or "VSOE", of fair value of each element. VSOE of fair value of each element is typically based on the price charged when sold separately. The Company does not yet have sufficient history with GlobalScholar and Spectrum K12 sales to establish VSOE for elements within their contracts. As a result, for such contracts, the entire contract is bundled as a single unit for accounting purposes with revenue being recognized ratably over the initial term of the contract commencing with the delivery of the software or the completion of implementation services if such services are essential to the functionality of the software. This methodology results in substantial deferral of revenue into future periods, while the related costs, with the exception of direct implementation costs, are expensed as incurred rather than deferred. In addition, revenue from contracts that are subject to substantive customer acceptance provisions is deferred until the acceptance provisions have been met. As a result of these factors that cause deferral of significant revenue into future periods for amounts that are billed and collected, the Company recorded operating losses for the acquired GlobalScholar and Spectrum K12 operations in 2012 and expects to record operating losses for those operations in 2013. Faneuil Faneuil is an outsourcer for government services and highly regulated industries with a focus on industries that remain robust under normal economic conditions, e.g., transportation, utilities, state agencies, municipal governments, healthcare, and education. During economic downturns, the ability of both private and governmental entities to make expenditures may decline. Faneuil cannot be certain that economic or political conditions will be generally favorable or that there will not be significant fluctuations which adversely affect Faneuil's industry as a whole or key markets targeted by Faneuil. As Faneuil's operations are, in part, dependent upon government funding, significant decreases in the level of government funding could have an unfavorable effect on Faneuil's operating results. Faneuil's business is subject to a variety of program related risks, including changes in political and other circumstances, particularly since contracts for major programs are performed over extended periods of time. These risks include the failure of applicable governing authorities to take necessary actions, opposition by third parties to specific programs and the failure by

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents customers to obtain adequate financing for particular programs. Due to these factors, losses on a select contract or contracts could occur, and Faneuil could experience significant changes in operating results. Faneuil's primary competition comes from other large providers of toll services such as Affiliated Computer Services, Inc. ("ACS") and TransCore, Inc., and providers of customer contact center services such as ACS and Convergys Corporation. If Faneuil cannot compete effectively, it will negatively affect its operating results. To remain competitive, Faneuil must continuously implement new technologies, expand its portfolio of outsourced services and may have to make occasional strategic adjustments to its pricing for its services. Faneuil's operations are positively affected by the growing trend in government agencies to outsource their internal operations to address shrinking budgets and eliminate the historically higher costs associated with staffing government programs. Tolling operations are expected to increase across the country in an effort to provide new funding for government agencies realizing budgetary cutbacks as a result of the prevailing economic climate. Similarly, governments and other highly regulated businesses are seeking economic efficiencies by outsourcing their customer contact centers. While Faneuil will look to take advantage of these opportunities, some of these opportunities require performance bonds, and there can be no assurance that bonds will be available on reasonable terms. Restructuring The Company has taken restructuring actions in the past in an effort to achieve manufacturing and contact center efficiencies and other cost savings. Past restructuring actions have related to both acquisitions and ongoing cost reduction initiatives and have included manufacturing plant closures, contact center closures and workforce rationalization. The Company anticipates future restructuring actions, where appropriate, to realize process efficiencies, to continue to align its cost structure with business needs and remain competitive in the marketplace. The Company expects to incur severance and severance-related costs, facilities closures costs and other costs such as inventory write-offs, training, hiring and travel in connection with future restructuring actions. Critical Accounting Policies and Estimates The Company reviews its accounting policies on a regular basis. The Company makes estimates and judgments as part of its financial reporting that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to accounts receivable, investments, intangible assets, other postretirement benefits, income taxes, contingencies and litigation, as well as other assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that it believes reasonable under the circumstances. These estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Results may differ from these estimates due to actual outcomes being different from the assumed outcomes. The Company believes the following critical accounting policies affect its more significant judgments and estimates. Revenue Recognition - The Company considers its revenue recognition policy as critical to its reported results of operations primarily in its Harland Financial Solutions and Scantron segments. Revenue recognition requires judgment, including amongst other things, whether a software arrangement includes multiple elements, whether any elements are essential to the functionality of any other elements, and whether VSOE of fair value exists for those elements. Customers receive certain elements of the Company's products and services over time. Changes to the elements in a software arrangement or in the Company's ability to identify VSOE for those elements could materially affect the amount of earned and unearned revenue reflected in the financial statements. For multiple-element software arrangements, total revenue is allocated to each element based on vendor specific objective evidence ("VSOE"), of its fair value represented by the price charged when the elements are sold separately. VSOE must exist for the undelivered elements to allocate the total revenue among all delivered elements and non-essential undelivered elements of the arrangement. When VSOE of fair value has been established for maintenance and professional services but not for software licenses, the residual method is used to allocate revenue to the license portion of multiple element arrangements. VSOE for certain elements of an arrangement is based upon the pricing in comparable transactions when the element is sold separately. VSOE for maintenance is primarily based upon customer renewal history when the services are sold separately. VSOE for professional services is also based upon the price charged when the services are sold separately. If the undelivered elements of the arrangement are essential to the functionality of the software product(s), revenue is deferred until the essential elements are delivered. If VSOE does not exist for one or more non-essential undelivered elements, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. If VSOE of all non- essential undelivered elements exist but VSOE does not exist for one or more of the delivered elements, revenue is recognized using the residual method. Under the residual method, the revenue for the undelivered

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents elements is deferred based upon VSOE and the remaining portion of the arrangement fee is recognized as revenue for the delivered elements, assuming all other criteria for revenue recognition have been met. When VSOE does not exist for maintenance and/or non- essential undelivered elements of multiple element arrangements, revenue is deferred until all elements are delivered or VSOE is established for the undelivered elements, whichever is earlier. For licenses that are hosted (cloud services), revenue is allocated to separate units of accounting based on the hierarchy of VSOE, third-party evidence ("TPE") or relative selling price. VSOE and TPE are not available so the relative selling price is used. Under the relative selling price method the concept of the residual method is eliminated and discounts are allocated across all deliverables in proportion to the best estimated selling price. Separate units of accounting exist if they have standalone value. Standalone value exists if the Company or other vendors sell the same item separately or the customer could resell the item on a standalone basis. Standalone value exists for most individual modules of the Company's hosted licenses because they are sold separately or as a group depending on the needs of customers. For each module, revenue is deferred until related professional services are complete. If standalone value does not exist then revenue for all modules and professional services in an arrangement are deferred until services are complete. Under either scenario, once services are complete, revenue is recognized on a straight-line basis over the remaining term of the contract. For arrangements that include both licenses and cloud services, each is accounted for under its relevant guidance. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period, as defined in the applicable agreement. Each new license includes maintenance, including the right to receive telephone support, "bug fixes" and unspecified upgrades and enhancements, for a specified duration of time, usually one year. Maintenance revenue is recognized ratably over the life of the related maintenance contract. Maintenance contracts on perpetual licenses generally renew annually. Maintenance fees are typically invoiced on an annual basis prior to the anniversary date of the license. Time- based and usage-based licenses include maintenance as a bundled item that is committed for the period of the agreement. Revenue from licensing of software under usage-based contracts is recognized ratably over the term of the agreement or on an actual usage basis. Professional services are generally for installation, training, implementation and configuration. These services are generally not considered essential to the functionality of the related software. Generally, revenue is recognized when services are completed. On implementations for outsourced data processing services, revenue is deferred and recognized over the life of the outsourcing arrangement. Revenue from arrangements that are subject to substantive customer acceptance provisions is deferred until the acceptance conditions have been met. Revenue from outsourced data processing services and other transaction processing services are recognized in the month the transactions are processed or the services are rendered. The Company recognizes product and service revenue when persuasive evidence of a non-cancelable arrangement exists, products have been shipped and/or services have been rendered, the price is fixed or determinable, collectability is reasonably assured, legal title and economic risk is transferred to the customer and an economic exchange has taken place. Revenues are recorded net of any applicable discounts, contract acquisition payments amortization, accrued incentives and allowances for sales returns. Deferred revenues generally represent amounts billed to the customer in excess of amounts earned. As a result of the accounting required in connection with the MacAndrews Acquisition, deferred revenues at December 31, 2011 represent the fair value of the cost to complete contractual obligations for which funds have already been received. Deferred revenues at December 31, 2012 represent amounts billed to the customer during 2012 in excess of amounts earned as well as the remaining balance of deferred revenues at December 31, 2011 that were not recognized as revenues in 2012. Revenues for direct response marketing services are recognized from the Company's fixed price direct mail and marketing contracts based on the proportional performance method for specific projects. Income Taxes - The Company estimates its actual current tax liability together with temporary differences resulting from differing treatment of items, such as net operating losses and depreciation, for tax and accounting purposes. These temporary differences result in deferred tax assets and liabilities. The Company must assess the likelihood that it will recover deferred tax assets from future taxable income and, to the extent it believes that recovery is not likely, establish a valuation allowance. To the extent the Company establishes a valuation allowance or increases this allowance in a period, it must include and expense the allowance within the tax provision in the consolidated statement of operations. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. As part of the process of preparing its consolidated financial statements, the Company is required to calculate the amount of income tax in each of the jurisdictions in which it operates. On a regular basis the amount of taxable income is reviewed by

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents various federal, state and foreign taxing authorities. As such, the Company routinely provides reserves for unrecognized tax benefits for items that it believes could be challenged by these taxing authorities. Long-Lived Assets - The Company assesses the impairment of property, plant and equipment and amortizable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Some factors the Company considers important that could trigger an impairment review include the following: • 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. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, it measures the impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with current market expectations. Significant assumptions requiring judgment are required to determine future cash flows, including but not limited to the estimated remaining useful life of the asset, future revenue streams and future expenditures to maintain the existing service potential of the asset. The Company re-evaluates the useful life of these assets at least annually to determine if events and circumstances continue to support their recorded useful lives. Assets held for sale are carried at the lower of carrying amount or fair value, less estimated costs to sell such assets. Goodwill and Acquired Intangible Assets - Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets acquired. Acquired intangibles are recorded at fair value as of the date acquired. Goodwill and other intangibles determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired, such as a significant adverse change in the business climate. The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of the Company's reporting units. The Company utilizes both the income and market approaches to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit's estimated cost of equity and debt ("cost of capital") derived using, both known and estimated, customary market metrics. The Company performs sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies; evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies; and applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. The Company weights the results of the income and market approaches equally, except where guideline companies are not similar enough to provide a reasonable value using the market approach. When that occurs, the market approach is weighted less than the income approach. If the estimated fair value of a reporting unit is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of the Company's "implied fair value" requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to the corresponding carrying value. The Company measures impairment of its indefinite-lived tradename based on the relief-from-royalty-method. Under the relief- from-royalty method of the income approach, the value of an intangible asset is determined by quantifying the cost savings a company obtains by owning, as opposed to licensing, the intangible asset. Assumptions about royalty rates are based on the rates at which similar tradenames are licensed in the marketplace. The Company also re-evaluates the useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life. The annual impairment evaluations for goodwill and the indefinite-lived intangible asset involve significant estimates made by management. The discounted cash flow analyses require various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Changes in estimates could have a material impact in the carrying amount of goodwill and the indefinite-lived intangible asset in future periods.

Intangible assets that are deemed to have a finite life are amortized over their estimated useful life generally using accelerated methods that are based on expected cash flows. They are also evaluated for impairment as discussed above in "Long-Lived Assets." Contingent Consideration Arrangements - The Company has entered into contingent consideration arrangements in conjunction with recent acquisitions. These arrangements are in the form of earn-out agreements with payments based on the achievement of certain revenue targets over specified time periods after the date of the acquisition. The fair value of these contingent consideration arrangements is recorded as a liability on the date of the acquisition, except for arrangements that are considered to be employee compensation for services rendered. In those cases, the fair value is recorded as a liability and compensation expense ratably over the requisite service period. The fair value of these arrangements is subject to remeasurement as of each balance sheet date. The fair value of each arrangement is estimated utilizing a discounted cash flow analysis. The analysis considers, among other things, estimates of future revenues which involve significant estimates by management. Changes in estimates of revenues could have a material effect on the fair value of liabilities for contingent consideration arrangements with any changes in fair value being recognized in net income. Contingencies and Indemnification Agreements - The Company records the estimated effects of various conditions, situations or circumstances involving uncertain outcomes. These events are "contingencies," and the accounting for such events follows accounting guidance for contingencies. The accrual of a contingency involves considerable judgment by management. The Company uses internal expertise and consults with outside experts, as necessary, to help estimate the probability that the Company has incurred a loss and the amount (or range) of the loss. When evaluating the need for an accrual or a change in an existing accrual, the Company considers whether it is reasonably probable to estimate an outcome for the contingency based on its experience, any experience of others facing similar contingencies of which the Company is aware and the particulars of the circumstances creating the contingency. Postretirement Benefits - The Company sponsors unfunded defined benefit postretirement plans that cover certain former salaried and non-salaried employees. One postretirement benefit plan provides healthcare benefits and the other provides life insurance benefits. The Company consults with outside actuaries who use several statistical and other factors that attempt to estimate future events to calculate the expense and liability related to the plans. These factors include assumptions about the discount rate within certain guidelines. In addition, the Company's actuarial consultants also use subjective factors such as withdrawal and mortality rates and the expected healthcare cost trend rate to estimate these factors. The actuarial assumptions used by the Company may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, higher or lower healthcare inflation rates or longer or shorter life spans of participants, among other things. Differences from these assumptions may result in a significant difference with the amount of postretirement benefits expense and liability that the Company recorded. Derivative Financial Instruments - The Company uses derivative financial instruments to manage interest rate risk related to a portion of its long-term debt. The Company recognizes all derivatives at fair value as either assets or liabilities on the consolidated balance sheets and changes in the fair values of such instruments are recognized in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, the Company recognizes the changes in fair value of these instruments in other comprehensive income (loss) until the underlying debt instrument being hedged is settled or the Company determines that the specific hedge accounting criteria are no longer met. On the date the interest rate derivative contract is entered into, the Company designates the derivative as either a fair value hedge or a cash flow hedge. The Company formally documents the relationship between hedging instruments and the hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. The Company links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. The Company links all hedges that are designated as cash flow hedges to forecasted transactions or to liabilities on the balance sheet. The Company also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. If an existing derivative becomes not highly effective as a hedge, the Company discontinues hedge accounting prospectively. The Company assesses the effectiveness of the hedge based on total changes in the hedge's cash flows at each payment date as compared to the change in the expected future cash flows on the long-term debt.

Accounting Guidance See Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K regarding the impact of recently adopted and recently issued accounting guidance on the Company's financial condition and results of operations. Off-Balance Sheet Arrangements It has not been the Company's practice to enter into off-balance sheet arrangements. In the normal course of business the Company periodically enters into agreements that incorporate general indemnification language. These indemnifications encompass such items as intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third-party claim. There has historically been no material losses related to such indemnifications, and the Company does not expect any material adverse claims in the future. The Company is not engaged in any transactions, arrangements or other relationships with any unconsolidated entity or other third party that is reasonably likely to have a material effect on its consolidated results of operations, financial position or liquidity. In addition, the Company has not established any special purpose entity. Asset Impairments Changes in estimates and assumptions used in the Company's financial projections resulting from the factors discussed above for any of the Company's business segments could have a material impact on the fair value of goodwill, indefinite-lived intangible assets or other long-lived assets in future periods, which may result in material asset impairments, as more fully described in Item 1A, "Risk Factors - Weak economic conditions and further acceleration of check unit declines may continue to have an adverse effect on the Company's revenues and profitability and could result in additional impairment charges." Restructuring The Company has taken restructuring actions in the past in an effort to achieve manufacturing and contact center efficiencies and other cost savings. Past restructuring actions have related to both acquisitions and ongoing cost reduction initiatives and have included manufacturing plant closures, contact center closures and workforce rationalization. The Company anticipates future restructuring actions, where appropriate, to realize process efficiencies, to continue to align our cost structure with business needs and remain competitive in the marketplace. The Company expects to incur severance and severance-related costs, facilities closures costs and other costs such as inventory write-offs, training, hiring and travel in connection with future restructuring actions. Presentation of Financial Information As a result of the change in ownership from the MacAndrews Acquisition, under Generally Accepted Accounting Principles ("GAAP"), the Company is required to present the operating results for the year ended December 31, 2011 separately for the predecessor and successor periods. The period prior to the MacAndrews Acquisition (January 1 to December 21, 2011) is presented below as ''Predecessor." The periods subsequent to the MacAndrews Acquisition (the year ended December 31, 2012 and the period December 22 to December 31, 2011) are presented below as ''Successor.'' In the following discussion, the Successor operating results for the year ended December 31, 2012 are compared to the combined results of operations from the Predecessor and Successor periods for the year ended December 31, 2011. Likewise, the combined results of operations from the Predecessor and Successor periods for the year ended December 31, 2011 are also compared to the Predecessor results of operations for the year ended December 31, 2010. Although such presentation is not in accordance with GAAP, management believes this is the most informative way to present and discuss the Company's results of operations. In addition, as a result of the MacAndrews Acquisition, the acquisition consideration has been allocated and pushed down to the Company. The effects of the acquisition accounting fair valuations are reflected in the Successor periods for 2011 and 2012. Those effects include but are not limited to increases in the carrying values of property, plant and equipment, intangible assets, and inventories and decreases in the carrying values of long-term debt and deferred revenues. The Successor periods, the year ended December 31, 2012 and the period December 22 to December 31, 2011, and future successor periods will include significantly higher interest expense, depreciation and amortization expense and lower revenues which will reduce net income significantly. However, since these effects are non-cash in nature, the Company's cash flow will not be adversely affected. Consolidated Operating Results The Company has organized its business along four reportable segments together with a corporate group for certain support services. The Company's operations are aligned on the basis of products, services and industry. Management measures and evaluates the reportable segments based on operating income. During the second quarter of 2012, the Company transferred

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The HTS and MDT businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment. Prior period results in the tables below have been reclassified to reflect these business segment changes. In the tables below, dollars are in millions. 2012 Compared to 2011 The operating results for 2012 and 2011, as reflected in the accompanying consolidated statements of operations and described below, include the acquired GlobalScholar, Parsam, and Spectrum K12 businesses from the respective dates of acquisition and the acquired Faneuil business from the date of common control (see Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Net Revenues:

Successor Predecessor Combined Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2011 Consolidated Net Revenues: Harland Clarke segment $ 1,142.6 $ 24.3 $ 1,120.2 $ 1,144.5 Harland Financial Solutions segment 253.7 6.3 279.5 285.8 Scantron segment 119.9 4.4 118.2 122.6 Faneuil segment 155.0 2.7 68.8 71.5 Eliminations (2.3) — (0.7) (0.7) Total $ 1,668.9 $ 37.7 $ 1,586.0 $ 1,623.7

Net revenues increased by $45.2 million, or 2.8%, to $1,668.9 million in 2012 from $1,623.7 million in 2011. Net revenues for the Harland Clarke segment decreased by $1.9 million, or 0.2%, to $1,142.6 million in 2012 from $1,144.5 million in 2011. The decrease was primarily due to volume declines, net of client additions and losses, in check and related products that reduced net revenues by $55.2 million. Net revenues in 2011 included revenue for a one-time payment of $6.5 million resulting from the loss of a client, which led to a net decrease in one-time payments in 2012 of $5.3 million as compared to 2011. These decreases were largely offset by an increase in revenues per unit that increased revenues by $28.5 million and a net benefit of $29.8 million for non- cash fair value acquisition accounting adjustments to deferred revenues and client incentives related to the MacAndrews Acquisition. Net revenues in 2011 included charges of $1.5 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition. Net revenues for the Harland Financial Solutions segment decreased by $32.1 million, or 11.2%, to $253.7 million in 2012 from $285.8 million in 2011. In 2012, the Harland Financial Solutions segment incurred a net charge of $43.0 million from non-cash fair value acquisition accounting adjustments to deferred revenue related to the MacAndrews Acquisition. Net revenues also decreased by $1.1 million due to nonrecurring early termination fees in 2011. These decreases were partially offset by a net increase in license fee revenues of $6.9 million primarily as a result of meeting revenue recognition criteria for certain product lines, increased service bureau revenues of $1.7 million as a result of growth in electronic bill pay services and increased maintenance revenues of $1.0 million due to increased implementation of credit management solutions. Net revenues in 2011 included charges for non-cash fair value acquisition accounting adjustments to deferred revenue of $3.0 million related to the acquisition of Parsam and the MacAndrews Acquisition. Net revenues for the Scantron segment decreased by $2.7 million, or 2.2%, to $119.9 million in 2012 from $122.6 million in 2011. The decrease in net revenues was primarily due to volume declines in forms, scanners and services that reduced revenues by $9.6 million. The decrease was partially offset by higher revenue of $1.9 million in the GlobalScholar and Spectrum K12 businesses as a result of completed project implementations and increased intersegment sales of $1.5 million. In 2012, the Scantron segment incurred a net charge of $5.7 million for non-cash fair value acquisition accounting adjustments to deferred revenue related to the MacAndrews Acquisition compared to a net charge of $9.3 million in 2011 from non-cash fair value acquisition accounting adjustments to deferred revenues related to the acquisitions of the Spectrum K12 and GlobalScholar businesses, resulting in an increase in net revenue of $3.6 million.

Net revenues for the Faneuil segment increased by $83.5 million to $155.0 million in 2012 from $71.5 million in 2011 (during which only the HTS and MDT businesses were in the Faneuil segment prior to the MacAndrews Acquisition). The increase was primarily due to the Faneuil Acquisition which had revenues of $93.6 million in 2012 compared to revenues of $2.7 million in 2011 after the MacAndrews Acquisition. The resulting net increase in revenues from the Faneuil Acquisition of $90.9 million was partially offset by a decrease in net revenues of $7.4 million for the HTS and MDT businesses that were transferred from the Scantron segment, primarily due to net charges of $5.1 million from non-cash fair value acquisition accounting adjustments to deferred revenues related to the MacAndrews Acquisition. The remaining decrease was primarily due to declines in revenues related to installation and maintenance services for the HTS and MDT businesses. Elimination of net revenues increased to $2.3 million in 2012 from $0.7 million in 2011 primarily due to intersegment sales of information technology services from the Scantron segment to the Harland Clarke segment. Cost of Revenues:

Successor Predecessor Combined Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2011 Consolidated Cost of Revenues: Harland Clarke segment $ 740.8 $ 20.6 $ 688.1 $ 708.7 Harland Financial Solutions segment 126.6 3.3 115.5 118.8 Scantron segment 72.0 3.4 83.1 86.5 Faneuil segment 121.3 2.1 45.2 47.3 Eliminations (2.3) — (0.7) (0.7) Total $ 1,058.4 $ 29.4 $ 931.2 $ 960.6

Cost of revenues increased by $97.8 million, or 10.2%, to $1,058.4 million in 2012 from $960.6 million in 2011. Cost of revenues for the Harland Clarke segment increased by $32.1 million, or 4.5%, to $740.8 million in 2012 from $708.7 million in 2011. In 2012, the Harland Clarke segment incurred a net charge of $66.2 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition, including a $54.0 million increase in depreciation and amortization and net charges of $12.2 million in other non-cash adjustments. The increase in cost of revenues was partially offset by a decrease in variable expenses related to volume declines of $17.7 million, a decrease in labor costs of $5.6 million primarily due to cost reduction initiatives implemented in the third quarter of 2012, a decrease in depreciation and amortization not related to acquisition accounting of $2.6 million and a decrease in other general overhead expenses of $2.6 million. Cost of revenues in 2011 also included an increase of $1.8 million in depreciation and amortization and a charge of $3.3 million for non-cash fair value acquisition accounting adjustments to inventory related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Harland Clarke segment was 64.8% in 2012 compared to 61.9% in 2011 primarily due to the non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition. Cost of revenues for the Harland Financial Solutions segment increased by $7.8 million, or 6.6%, to $126.6 million in 2012 from $118.8 million in 2011. In 2012, the Harland Financial Solutions segment incurred a net charge of $7.1 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition, including a $9.9 million increase in depreciation and amortization and a $2.8 million benefit in other non-cash adjustments compared to net charges of $0.2 million in 2011 for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition. The increase in cost of revenues was also a result of increased telecom expense of $1.2 million primarily due to growth in the service bureau business, increased equipment lease and maintenance of $0.9 million and increased internal software expense of $0.5 million. These increases were partially offset by decreased depreciation and amortization unrelated to acquisition accounting of $1.1 million and decreased hardware expense of $1.1 million due to a change in product mix. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 49.9% in 2012 compared to 41.6% in 2011 primarily due to non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition that reduced net revenues by $43.0 million in 2012.

Cost of revenues for the Scantron segment decreased by $14.5 million, or 16.8%, to $72.0 million in 2012 from $86.5 million in 2011. In 2012, the Scantron segment incurred a net benefit of $21.8 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition as a result of a decrease in depreciation and amortization of $21.7 million and a $0.1 million benefit for other non-cash adjustments compared to a net benefit of $0.4 million in 2011 for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition. Cost of revenues was also reduced by lower direct costs of $0.9 million due to lower volumes of forms and scanners sold and higher cost deferrals in 2012 of $0.5 million related to implementation services for revenues that have not yet been recognized. These cost reductions were partially offset by higher labor and other expenses of $6.2 million due to an increase in implementation resources and $1.4 million of higher amortization due to new product releases. Cost of revenues as a percentage of revenues for the Scantron segment was 60.1% in 2012 as compared to 70.6% in 2011 primarily due to the net benefit for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition. Cost of revenues for the Faneuil segment increased by $74.0 million to $121.3 million in 2012 from $47.3 million in 2011 (during which only the HTS and MDT businesses were in the Faneuil segment prior to the MacAndrews Acquisition). The increase was primarily due to the Faneuil Acquisition which had cost of revenues of $76.9 million in 2012 compared to cost of revenues of $2.1 million in 2011 after the MacAndrews Acquisition. The resulting increase in cost of revenues from the Faneuil Acquisition of $74.8 million was partially offset by a decrease in cost of revenues of $0.8 million for the HTS and MDT businesses that were transferred from the Scantron segment. The decrease was primarily due to a net benefit of $1.8 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition, including a decrease in depreciation and amortization of $2.5 million and a net charge of $0.7 million for other non-cash adjustments, volume declines and lower labor and related expenses for the HTS and MDT businesses, partially offset by an increase in depreciation and amortization not related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Faneuil segment was 78.3% in 2012 compared to 66.2% in 2011 due to the change in business mix resulting from the Faneuil Acquisition. Elimination of cost of revenues increased to $2.3 million in 2012 from $0.7 million in 2011 period primarily due to intersegment sales of information technology services from the Scantron segment to the Harland Clarke segment. Selling, General and Administrative Expenses:

Successor Predecessor Combined Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2011 Consolidated Selling, General and Administrative Expenses: Harland Clarke segment $ 176.0 $ 4.3 $ 181.8 $ 186.1 Harland Financial Solutions segment 103.9 3.9 109.5 113.4 Scantron segment 68.7 2.4 75.7 78.1 Faneuil segment 22.4 0.4 11.5 11.9 Corporate 18.7 0.3 14.8 15.1 Total $ 389.7 $ 11.3 $ 393.3 $ 404.6

Selling, general and administrative expenses decreased by $14.9 million, or 3.7%, to $389.7 million in 2012 from $404.6 million in 2011. Selling, general and administrative expenses for the Harland Clarke segment decreased by $10.1 million, or 5.4%, to $176.0 million in 2012 from $186.1 million in 2011. In 2012, the Harland Clarke segment incurred a net benefit of $2.7 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition, including a $4.4 million benefit for other non-cash adjustments and a $1.7 million increase in depreciation and amortization. The decrease was also due to a decrease in labor costs of $3.7 million due primarily to cost reduction initiatives implemented in the third quarter of 2012, a decrease in other overhead costs of $3.6 million and a decrease in advertising and promotion costs of $1.6 million. These decreases were partially offset by an increase in depreciation and amortization not related to acquisition accounting of $1.4 million. Selling, general and administrative expenses in 2011 also included a benefit of $0.3 million for non-cash fair value acquisition accounting adjustments to pre-paid advertising related to the MacAndrews Acquisition. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment were 15.4% in 2012 compared to 16.3% in 2011 primarily due to the benefit for other non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition and cost reduction actions for selling, general and administrative expenses implemented in the third quarter of 2012.

Selling, general and administrative expenses for the Harland Financial Solutions segment decreased by $9.5 million, or 8.4%, to $103.9 million in 2012 from $113.4 million in 2011. In 2012, the Harland Financial Solutions segment incurred a net benefit of $5.2 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition, including a $6.4 million benefit in other non-cash adjustments and a $1.2 million increase in depreciation and amortization compared to net charges of $0.7 million in 2011 for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition. The decrease was also due to increased capitalization of internal software development costs of $4.6 million, decreased travel expense of $1.6 million and decreased occupancy costs of $0.7 million. These decreases were partially offset by increased depreciation and amortization unrelated to acquisition accounting of $1.7 million and increased commission expense of $1.3 million. Selling, general and administrative expenses as a percentage of revenues for the Harland Financial Solutions segment was 41.0% in 2012 compared to 39.7% in 2011 due to non- cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition that reduced net revenues by $43.0 million. Selling, general and administrative expenses for the Scantron segment decreased $9.4 million, or 12.0%, to $68.7 million in 2012 from $78.1 million in 2011. The decrease was primarily due to cost savings of $6.9 million resulting from cost reductions and restructuring activities, a decrease of $2.8 million resulting from an increase in capitalization of internal software development costs and a decrease of $0.9 million for outside services related to projects to increase efficiencies. These cost decreases were partially offset by charges for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition of $1.1 million for increased depreciation and amortization. Selling, general and administrative expenses as a percentage of revenues for the Scantron segment was 57.3% in 2012 compared to 63.7% in 2011 primarily due to cost reduction initiatives and higher capitalization of internal software development costs in 2012. Selling, general and administrative expenses for the Faneuil segment increased by $10.5 million to $22.4 million in 2012 from $11.9 million in 2011 (during which only the HTS and MDT businesses were in the Faneuil segment prior to the MacAndrews Acquisition). The increase was primarily due to the Faneuil Acquisition which had selling, general and administrative expenses of $11.7 million in 2012 compared to selling, general and administrative expenses of $0.4 million in 2011 after the MacAndrews Acquisition. The resulting net increase in selling, general and administrative expenses from the Faneuil Acquisition of $11.3 million was inclusive of $0.2 million of transaction costs and $0.6 million of unusual legal expenses. These increases were partially offset by a decrease in selling, general and administrative expenses of $0.8 million due to cost reductions for the HTS and MDT businesses that were transferred from the Scantron segment. Selling, general and administrative expenses as a percentage of revenues for the Faneuil segment was 14.5% in 2012 compared to 16.6% in 2011 due to the change in business mix resulting from the Faneuil Acquisition. Corporate selling, general and administrative expenses increased by $3.6 million, or 23.8%, to $18.7 million in 2012 from $15.1 million in 2011 primarily due to transaction expenses of $2.8 million for the recent debt refinancing, the MacAndrews Acquisition and other acquisition activities as well as $0.2 million for unusual legal fees. The remainder of the increase was primarily due to increased labor and related costs. Revaluation of Contingent Consideration Operating expenses decreased by $0.6 million in 2012 due to a decrease in the fair value of accrued contingent consideration related to an acquisition in 2010 because revenue targets were not met. Operating expenses decreased by $24.3 million in 2011 due to a net decrease in the fair value of accrued contingent consideration primarily related to acquisitions in 2009 and 2010, which resulted from a decrease in revenue projections that would trigger a payment. Asset Impairment Charges During 2012, the Company recorded non-cash impairment charges of $0.8 million for the Faneuil segment related to abandoned leasehold improvements resulting from the loss of a client, $0.8 million for the Harland Clarke segment related to assets that were determined to have limited future use and to adjust the fair value of assets held for sale and $0.1 million for the Harland Financial Solutions segment related to assets that were determined to have limited future use. During 2011, the Company recorded non-cash impairment charges of $108.3 million for the Scantron segment, $2.7 million for the Faneuil segment and $0.6 million for the Harland Clarke segment. The impairment charges for the Scantron segment was primarily related to the annual impairment tests for Scantron's goodwill and indefinite-lived tradename. The impairment charges for the Faneuil and Harland Clarke segments primarily related to assets that were determined to have limited future use. See Notes 5, 6, 7 and 13 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these asset impairment charges. Restructuring Costs

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company has adopted plans to strengthen operating margins and leverage incremental synergies within the printing plants, contact centers and selling, general and administrative areas by relying on the Company's shared services capabilities and reorganizing certain operations and sales and support functions.

During 2012, the Company recorded restructuring costs of $11.0 million for the Harland Clarke segment and Corporate, $0.4 million for the Harland Financial Solutions segment, $5.8 million for the Scantron segment and $1.7 million for the Faneuil segment related to these plans. During 2011, the Company recorded restructuring costs of $7.7 million for the Harland Clarke segment and Corporate, $0.4 million for the Harland Financial Solutions segment and $4.5 million for the Scantron segment related to these plans (see Note 15 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Interest Income Interest income was $0.9 million in 2012 as compared to $0.4 million in 2011. The increase in interest income was primarily due to an increase in notes receivable outstanding from a related party (see Note 17 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Interest Expense

Successor Predecessor Combined Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2011 Interest Expense $ (221.6) $ (6.6) $ (104.8) $ (111.4)

Interest expense was $221.6 million in 2012 as compared to $111.4 million in 2011. The increase in interest expense was primarily due to fair value acquisition accounting adjustments to the principal amount of debt outstanding related to the MacAndrews Acquisition that resulted in a $111.5 million increase in non-cash interest expense as well as higher interest rates for extended term loans and senior secured notes in 2012 compared to 2011. These increases were partially offset by other fair value acquisition accounting adjustments to deferred financing costs and interest rate swaps related to the MacAndrews Acquisition that resulted in a $13.6 million decrease in non- cash interest expense as well as a decrease in total debt outstanding in 2012 compared to 2011. Loss on Early Extinguishment of Debt The loss on early extinguishment of debt of $34.2 million in 2012 relates to refinancing transactions. The loss consists of the write- off of unamortized acquisition accounting-related fair value discount, which was attributable to the MacAndrews Acquisition (see Note 3 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K). During 2011, the Company extinguished debt with a total principal amount of $2.5 million with a carrying value of $1.6 million, after acquisition accounting related fair value adjustments, by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7 million, resulting in a loss of $0.1 million. Loss from Equity Method Investment During 2012, the Company recorded its share of losses incurred by an investee accounted for by the equity method after the date certain equity securities of the investee were purchased by the Company. Other (Expense) Income, Net Other (expense) income, net was expense of $0.2 million in 2012 as compared to income of $13.2 million in 2011 primarily due to a loss in 2012 and a gain in 2011 on the sale of marketable securities. Provision for Income Taxes The Company's effective tax rate was 35.7% in 2012 and 61.6% in 2011. The effective tax benefit rate in the 2012 period reflects the effect of changes in state tax legislation. The effective tax provision rate for the 2011 period reflects the impairment of non- deductible goodwill, partially offset by $22.8 million of reductions of contingent consideration related to acquisitions that are not subject to income taxes, a release of a reserve for uncertain tax positions of $1.2 million and a release of a valuation allowance reserve for capital loss carryovers utilized of $0.9 million. 2011 Compared to 2010 The operating results for 2011 and 2010, as reflected in the accompanying consolidated statements of operations and described below, include the acquired GlobalScholar, Parsam, and Spectrum K12 businesses from the respective dates of acquisition and the acquired Faneuil business from the date of common control (see Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Net Revenues:

Successor Predecessor Combined Predecessor December 22 to January 1 to Year ended Year ended December 31, December 21, December 31, December 31, 2011 2011 2011 2010 Consolidated Net Revenues: Harland Clarke segment $ 24.3 $ 1,120.2 $ 1,144.5 $ 1,203.4 Harland Financial Solutions segment 6.3 279.5 285.8 282.7 Scantron segment 4.4 118.2 122.6 119.5 Faneuil segment 2.7 68.8 71.5 66.3 Corporate — (0.7) (0.7) (0.7) Total $ 37.7 $ 1,586.0 $ 1,623.7 $ 1,671.2

Net revenues decreased by $47.5 million, or 2.8%, to $1,623.7 million in 2011 from $1,671.2 million in 2010. Net revenues for the Harland Clarke segment decreased by $58.9 million, or 4.9%, to $1,144.5 million in 2011 from $1,203.4 million in 2010. The decrease was primarily due to volume declines, net of client additions and losses, in check and related products that reduced net revenues by $49.6 million, as well as a $10.9 million decrease resulting from a decline in sales of a solution to assist financial institutions with the implementation of new federal regulations in 2010 and a decline in survey services of $2.5 million. The decline in revenue was partially offset by an increase in revenues per unit that increased net revenues by $4.2 million. Net revenues in 2011 included revenue for a one-time payment of $6.5 million resulting from the loss of a client, a net increase of $1.7 million as compared to 2010. Net revenues included charges for non-cash fair value acquisition accounting adjustments to deferred revenues and client incentives of $1.5 million related to the MacAndrews Acquisition. Net revenues for the Harland Financial Solutions segment increased by $3.1 million, or 1.1% to $285.8 million in 2011 from $282.7 million in 2010. The increase was primarily due to incremental revenues of $5.9 million from the Parsam acquisition completed in December 2010, as well as a $3.0 million increase in software revenues from perpetual license agreements, a $2.3 million increase in early termination fees and a $1.7 million increase in services revenues from new clients. The increases were partially offset by a non- cash change in the recognition of revenue for certain product lines due to undelivered elements within multiple-element contracts for those product lines, which reduced net revenues by $4.4 million. In addition, there was a $3.1 million decrease in maintenance revenues driven by industry trends to hosted versus in-house solutions and customers converting from enterprise to term agreements. Net revenues in 2011 included charges for non-cash fair value acquisition accounting adjustments to deferred revenue of $1.0 million related to the Parsam acquisition and $2.0 million related to the MacAndrews Acquisition. Net revenues for the Scantron segment increased by $3.1 million or 2.6%, to $122.6 million in 2011 from $119.5 million in 2010. The increase was primarily due to the acquisitions of GlobalScholar and Spectrum K12, which contributed incremental net revenues of $10.2 million, partially offset by volume declines in sales of forms that decreased net revenues by $5.1 million and a reduction in sales of a web-based solution that reduced net revenues by $2.0 million. Net revenues in 2011 included charges for non-cash fair value acquisition accounting adjustments to deferred revenue of $8.8 million related to the GlobalScholar and Spectrum K12 acquisitions and $0.5 million related to the MacAndrews Acquisition. In addition, as further discussed in "Economic and Other Factors Affecting the Businesses of the Company," GlobalScholar and Spectrum K12 have not established VSOE of fair value for their multiple-element contracts and also have contracts with substantive customer acceptance provisions, resulting in a substantial deferral of revenues into future periods. Deferred revenue related to GlobalScholar and Spectrum K12 increased by $28.9 million during 2011. Net revenues for the Faneuil segment increased by $5.2 million or 7.8%, to $71.5 million in 2011 (during which only the HTS and MDT businesses were in the Faneuil segment prior to the MacAndrews Acquisition) from $66.3 million in 2010 due to net revenues of $2.7 million in 2011 attributable to the Faneuil Acquisition and an increase in net revenues of $2.5 million for the HTS and MDT businesses that were transferred from the Scantron segment. The increase in revenues for the HTS and MDT businesses was primarily due to installation and maintenance services.

Cost of Revenues:

Successor Predecessor Combined Predecessor December 22 to January 1 to Year ended Year ended December 31, December 21, December 31, December 31, 2011 2011 2011 2010 Consolidated Cost of Revenues: Harland Clarke segment $ 20.6 $ 688.1 $ 708.7 $ 737.9 Harland Financial Solutions segment 3.3 115.5 118.8 121.7 Scantron segment 3.4 83.1 86.5 59.7 Faneuil segment 2.1 45.2 47.3 39.9 Corporate — (0.7) (0.7) (0.7) Total $ 29.4 $ 931.2 $ 960.6 $ 958.5

Cost of revenues increased by $2.1 million, or 0.2%, to $960.6 million in 2011 from $958.5 million in 2010. Cost of revenues for the Harland Clarke segment decreased by $29.2 million, or 4.0%, to $708.7 million in 2011 from $737.9 million in 2010. The decrease in cost of revenues was primarily due to decreases in depreciation and amortization expense of $11.5 million, labor cost reductions of $10.0 million primarily resulting from restructuring activities, lower delivery, materials and other variable overhead expenses of $8.2 million resulting from lower volumes and a decrease in other overheads of $4.4 million. Cost of revenues in 2011 also included an increase of $1.8 million for depreciation and amortization and a charge of $3.3 million for non-cash fair value acquisition accounting adjustments to inventory, which will not recur, related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Harland Clarke segment was 61.9% in 2011 as compared to 61.3% in 2010. Cost of revenues for the Harland Financial Solutions segment decreased by $2.9 million, or 2.4%, to $118.8 million in 2011 from $121.7 million in 2010. The decrease in cost of revenues was primarily due to decreases in depreciation and amortization expense of $2.5 million, telecom expense of $1.7 million, occupancy costs of $1.2 million, and labor costs of $1.3 million. The decrease in telecom was a result of renegotiated communications contracts, the decrease in occupancy expense was related to restructuring and consolidation of facilities and the decrease in labor expense was a result of restructuring activities and lower benefits expense. The decrease in cost of revenues was partially offset by costs of $1.9 million associated with the Parsam acquisition completed in December 2010. Cost of revenues in 2011 also included an increase of $0.3 million for depreciation and amortization related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Harland Financial Solutions segment was 41.6% in 2011 as compared to 43.0% in 2010. Cost of revenues for the Scantron segment increased by $26.8 million, or 44.9%, to $86.5 million in 2011 from $59.7 million in 2010. The increase was primarily due to costs of $28.9 million associated with the businesses acquired in the Spectrum K12 and GlobalScholar acquisitions including $17.1 million in amortization expense in 2011 resulting from intangible assets recorded in connection with these acquisitions. These costs were partially offset by a decrease of $1.7 million primarily due to lower volumes of forms and other cost reductions. Cost of revenues in 2011 also included a decrease of $0.7 million for depreciation and amortization and a charge of $0.3 million for non-cash fair value acquisition accounting adjustments to inventory, which will not recur, related to the MacAndrews Acquisition. Cost of revenues as a percentage of revenues for the Scantron segment was 70.6% in 2011 as compared to 50.0% in 2010. The increase in cost of revenues as a percentage of revenues were primarily due to the amortization expense and other costs associated with the acquisitions, non-cash fair value acquisition accounting adjustments that reduced revenue by $9.3 million and the deferral of revenue for certain amounts billed and collected as further described above in the Net Revenues section. Cost of revenues for the Faneuil segment increased by $7.4 million, or 18.5%, to $47.3 million in 2011 (during which only the HTS and MDT businesses were in the Faneuil segment prior to the MacAndrews Acquisition) from $39.9 million in 2010 due to cost of revenues of $2.1 million in 2011 attributable to the Faneuil Acquisition and an increase in cost of revenues of $5.3 million for the HTS and MDT businesses that were transferred from the Scantron segment. The increase for the HTS and MDT businesses was primarily due to higher volumes and higher labor and related expenses. Cost of revenues as a percentage of revenues for the Faneuil segment was 66.2% in 2011 as compared to 60.2% in 2010 primarily due to a change in business mix.

Selling, General and Administrative Expenses:

Successor Predecessor Combined Predecessor December 22 to January 1 to Year ended Year ended December 31, December 21, December 31, December 31, 2011 2011 2011 2010 Consolidated Selling, General and Administrative Expenses: Harland Clarke segment $ 4.3 $ 181.8 $ 186.1 $ 208.3 Harland Financial Solutions segment 3.9 109.5 113.4 109.6 Scantron segment 2.4 75.7 78.1 43.9 Faneuil segment 0.4 11.5 11.9 12.7 Corporate 0.3 14.8 15.1 15.2 Total $ 11.3 $ 393.3 $ 404.6 $ 389.7

Selling, general and administrative expenses increased by $14.9 million, or 3.8%, to $404.6 million in 2011 from $389.7 million in 2010. Selling, general and administrative expenses for the Harland Clarke segment decreased by $22.2 million, or 10.7%, to $186.1 million in 2011 from $208.3 million in 2010. The decrease was primarily due to labor cost reductions of $10.3 million mostly resulting from restructuring activities, lower travel costs of $4.1 million, a decline in other general overhead expenses of $3.3 million, lower professional fees of $2.1 million and a decline in facility expenses of $1.4 million. Selling, general and administrative expenses in 2011 also included a benefit of $0.3 million for non-cash fair value acquisition accounting adjustments to pre-paid advertising related to the MacAndrews Acquisition. Selling, general and administrative expenses as a percentage of revenues for the Harland Clarke segment was 16.3% in 2011 as compared to 17.3% in 2010. The decrease in selling, general and administrative expenses as a percentage of revenues was primarily a result of restructuring and other cost reduction activities. Selling, general and administrative expenses for the Harland Financial Solutions segment increased by $3.8 million, or 3.5%, to $113.4 million in 2011 from $109.6 million in 2010. The increase was primarily due to costs of $3.1 million associated with the business acquired in the Parsam acquisition completed in December 2010 and expanded selling efforts, which increased travel expenses by $1.3 million. Partially offsetting these increases was a decrease in professional fees of $1.1 million and a decrease in compensation expense of $1.1 million related to an incentive agreement for an acquisition in 2007. Selling, general and administrative expenses in 2011 also included an expense of $0.7 million for non-cash fair value acquisition accounting adjustments related to the MacAndrews Acquisition. Selling, general and administrative expenses as a percentage of revenues for the Harland Financial Solutions segment was 39.7% in 2011 as compared to 38.8% in 2010. Selling, general and administrative expenses for the Scantron segment increased $34.2 million, or 77.9%, to $78.1 million in 2011 from $43.9 million in 2010. The increase was primarily due to costs of $30.8 million associated with the businesses acquired in the Spectrum K12 and GlobalScholar acquisitions, a $2.4 million increase in costs related to the integration of the GlobalScholar and Spectrum acquisitions and a $1.8 million decrease in capitalized costs, partially offset by a $0.7 million decrease in professional fees. Selling, general and administrative expenses as a percentage of revenues for the Scantron segment was 63.7% in 2011 as compared to 36.7% in 2010. The increase in selling, general and administrative expenses as a percentage of revenues was primarily due to costs associated with the acquisitions, non-cash fair value acquisition accounting adjustments that reduced revenue by $9.3 million and the deferral of revenue for certain amounts billed and collected, as further described above in the Net Revenues section and increased product development expenses. Selling, general and administrative expenses for the Faneuil segment decreased by $0.8 million, or 6.3%, to $11.9 million in 2011 (during which only the HTS and MDT businesses were in the Faneuil segment prior to the MacAndrews Acquisition)from $12.7 million in 2010 due to a decrease in selling, general and administrative expenses of $1.2 million for the HTS and MDT businesses that were transferred from the Scantron segment, partially offset by selling, general and administrative expenses of $0.4 million in 2011 attributable to the Faneuil Acquisition. The decrease in selling, general and administrative expenses for the HTS and MDT businesses was primarily due to cost reductions. Selling, general and administrative expenses as a percentage of revenues for the Faneuil segment was 16.6% in 2011 as compared to 19.2% in 2010 due to a change in business mix. Corporate selling, general and administrative expenses decreased $0.1 million, or 0.7%, to $15.1 million in 2011 from $15.2 million in 2010 primarily due to decreases in general overhead costs.

Revaluation of Contingent Consideration Operating expenses decreased by $24.3 million in 2011 due to decreases in the fair value of accrued contingent consideration related to the GlobalScholar, Spectrum K12, Parsam and SubscriberMail acquisitions, which resulted from 2011 actual and 2012 projected revenues below the threshold amounts that would trigger a payment. Operating expenses increased by $0.3 million in 2010 due to an increase in the fair value of accrued contingent consideration related to the Spectrum K12 acquisition, which resulted from accruals for the incentive compensation component of the arrangement. Asset Impairment Charges During 2011, the Company recorded non-cash impairment charges of $108.3 million for the Scantron segment, $2.7 million for the Faneuil segment and $0.6 million for the Harland Clarke segment. The impairment charges for the Scantron segment was primarily related to the annual impairment tests for Scantron's goodwill and indefinite-lived tradename. The impairment charges for the Faneuil and Harland Clarke segments primarily related to assets that were determined to have limited future use. During 2010, the Company recorded non-cash impairment charges of $3.7 million for the Harland Clarke segment primarily related to the abandonment of a development project, an adjustment to the carrying value of certain held for sale facilities to reflect an updated estimate for the fair values less costs to sell and restructuring related impairments of property, plant and equipment. See Notes 5, 6, 7 and 13 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these asset impairment charges. Restructuring Costs The Company has adopted plans to strengthen operating margins and leverage incremental synergies within the printing plants, contact centers and selling, general and administrative areas by relying on the Company's shared services capabilities and reorganizing certain operations and sales and support functions. During 2011, the Company recorded restructuring costs of $7.7 million for the Harland Clarke segment and Corporate, $0.4 million for the Harland Financial Solutions segment and $4.5 million for the Scantron segment related to these plans. During 2010, the Company recorded restructuring costs of $12.3 million for the Harland Clarke segment and Corporate, $2.8 million for the Harland Financial Solutions segment, $6.6 million for the Scantron segment and $0.6 million for the Faneuil segment related to these plans (see Note 15 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Interest Income Interest income was $0.4 million in 2011 as compared to $0.7 million in 2010. The decrease in interest income was primarily due to decreased interest on notes receivable from a related party (see Note 17 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Interest Expense

Successor Predecessor Combined Predecessor December 22 to January 1 to Year ended Year ended December 31, December 21, December 31, December 31, 2011 2011 2011 2010 Interest Expense $ (6.6) $ (104.8) $ (111.4) $ (115.5)

Interest expense was $111.4 million in 2011 as compared to $115.5 million in 2010. The decrease in interest expense was primarily due to lower effective interest rates as well as a decrease in total debt outstanding, partially offset by acquisition accounting related fair value adjustments of $2.1 (see Note 11 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Loss on Early Extinguishment of Debt During 2011, the Company extinguished debt with a total principal amount of $2.5 million with a carrying value of $1.6 million, after acquisition accounting related fair value adjustments, by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7 million, resulting in a loss of $0.1 million. The Company did not purchase any 2015 Senior Notes during the 2010 period (see Note 11 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Other (Expense) Income, Net Other (expense) income, net was income of $13.2 million in 2011 as compared to income of $0.1 million in 2010. The income in 2011 and 2010 was due to gains on the sale of marketable securities. Provision for Income Taxes The Company's effective tax rate was 61.6% in 2011 and 37.3% in 2010. The increase in the effective tax rate for 2011 was primarily due to the impairment of non-deductible goodwill partially offset by $22.8 million of reductions of contingent consideration in 2011 related to acquisitions that were not subject to income taxes. Related Party Transactions Notes Receivable On December 27, 2011, the Company entered into a revolving credit agreement with its indirect parent, MacAndrews, whereby MacAndrews could borrow an amount not exceeding $30.0 million. The facility is unsecured, bears interest at LIBOR plus 2% and matures in December 2013. The facility was drawn in full by MacAndrews on December 27, 2011 and remained outstanding at December 31, 2012. Interest income of $0.8 was recorded and related payments were received during 2012. In 2008, Harland Clarke Holdings acquired the senior secured credit facility and outstanding note of Delphax Technologies, Inc. ("Delphax"), the supplier of Imaggia printing machines and related supplies and service for the Harland Clarke segment. The senior secured credit facility and note were paid in full and cancelled on November 9, 2011. The senior secured credit facility was comprised of a revolving credit facility of up to $14.0 million, subject to borrowing limitations set forth therein that originally matured in September 2011. Contemporaneous with its acquisition of the senior secured credit facility and the note, Harland Clarke Holdings also acquired 250,000 shares of Delphax common stock from the previous holder of the Delphax note. In May 2011, the note was restated to set the interest rate to 8.0%, effective October 1, 2010, and to require the repayment of $1.0 million of principal in 2011 and the senior secured credit facility was extended to mature in September 2012. During 2011, the Company received $4.0 million in payments on the note, fully repaying the principal balance of the note. During 2010, the Company received $3.0 million in payments on the note, bringing the principal balance of the note and the senior secured credit facility to $4.0 million and $0.0 million, respectively, at December 31, 2010. Interest income of $0.2 million and $0.4 million and was recorded during 2011 and 2010, respectively. Other The Company expensed $2.7 million annually during 2012, 2011 and 2010 for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses and accrued expenses. In 2012 and 2011, the Company paid cash dividends of $32.3 million and $61.3 million, respectively, to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements. As discussed in Note 8 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K, the Company made net payments to and had net receivables with M & F Worldwide related to a tax sharing agreement. The Company also had a net payable to MacAndrews related to a tax sharing agreement. The Company participates in MacAndrews directors and officers insurance program, which covers the Company as well as MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews for its allocable portion of the premiums for such coverage, which the Company believes are more favorable than the premiums the Company could secure were it to secure its own coverage. At December 31, 2012, the Company recorded prepaid expenses and other assets of $0.7 million and $1.0 million, respectively, related to the directors and officers insurance program in the accompanying consolidated balance sheets included elsewhere in this Annual Report on Form 10-K. At December 31, 2011, the Company had no prepaid expenses related to the directors and officers insurance program recorded in the accompanying consolidated balance sheets included elsewhere in this Annual Report on Form 10-K. The Company paid $2.0 million, $0.1 million and $0.0 million to MacAndrews in 2012, 2011 and 2010, respectively, under the insurance program.

Liquidity and Capital Resources Cash Flow Analysis The following table summarizes our historical cash flows:

Successor Predecessor Combined December 22 January 1 Year ended to to Year ended December 31, December 31, December 21, December 31, (In millions) 2012 2011 2011 2011 Cash Provided By (Used In): Operating activities $ 237.6 $ 20.1 $ 220.0 $ 240.1 Investing activities (59.6) (82.8) (182.3) (265.1) Financing activities (177.8) (20.7) (64.0) (84.7)

The Company's net cash provided by operating activities in 2012 was $237.6 million compared to $240.1 million in 2011. The decrease in net cash provided by operating activities of $2.5 million was due to a $26.2 million decrease in cash flow from operations, which was substantially offset by a $23.7 million increase in cash flows from changes in operating assets and liabilities. The decrease in cash flow from operations was due to a decrease in net income after adjusting for the effects of financing and investing activities and non-cash operating items including depreciation and amortization, asset impairments and deferred income taxes. The increase in cash flows from changes in operating assets and liabilities was primarily due to an increase in deferred revenues, which had an impact of $53.7 million, partially offset by an increase in accounts receivable, which had an impact of $32.3 million. The Company's net cash used in investing activities was $59.6 million in 2012 compared to $265.1 million in 2011. The decrease in net cash used in investing activities in 2012 compared to 2011 was due to decreased payments for acquisitions of $98.9 million and a $42.9 million increase in proceeds from the sale of marketable securities. The Company also purchased marketable securities for $56.5 million and funded a related party note receivable in the amount of $30.0 million in 2011. These decreases in net cash used in investing activities were partially offset by a $7.1 million increase in capitalized computer software development expenditures in 2012 compared to 2011 and a $7.0 million payment for an investment in a business accounted for under the equity method. The Company's net cash used in financing activities was $177.8 million in 2012 compared to $84.7 million in 2011. The increase in net cash used in financing activities was primarily due to an increase in repayments of credit agreements and other borrowings of $320.6 million largely the result of an amendment and extension of the Company's credit agreement, a payment to parent of $33.8 million in 2012 for the Faneuil Acquisition as further described in Note 3 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K, debt issuance costs of $12.7 million in 2012 related to refinancing activities and a $7.6 million increase in payments related to derivative instruments in 2012 compared to 2011. These decreases in net cash used in financing activities were partially offset by proceeds of $225.6 million from the issuance of 9.75% senior secured notes and borrowings of $25.0 million by Faneuil on a revolving credit facility with an affiliate of MacAndrews in 2012 as further described in Note 11 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K. There was also a decrease in dividends paid to parent of $29.0 million in 2012 compared to 2011.

The Company's Consolidated Contractual Obligations The Company has certain cash obligations and other commercial commitments which will affect its short-term liquidity. At December 31, 2012, such obligations and commitments, which do not include options for renewal, were as follows:

Payments Due by Period Less than After (In millions) Total 1 year 1-3 years 4-5 years 5 years Revolving credit facilities(1)(8) $ — $ — $ — $ — $ — Senior secured term loans(2)(8) 1,406.0 77.0 859.4 469.6 — Senior notes(3)(8) 475.6 — 475.6 — — Senior secured notes(4)(8) 235.0 — — — 235.0 Interest on long-term debt(5)(8) 381.2 118.3 168.4 81.1 13.4 Capital lease obligations 3.3 1.7 1.5 0.1 — Operating lease obligations 82.7 26.0 32.2 17.9 6.6 Raw material purchase obligations 16.6 16.6 — — — Other long-term liabilities 15.7 0.1 8.8 1.6 5.2 Client incentive payments(6) 50.9 20.1 26.2 4.6 — Other purchase obligations(7) 56.6 22.2 22.5 11.9 — Postretirement benefits payments 6.7 0.7 1.3 1.3 3.4 Total $ 2,730.3 $ 282.7 $ 1,595.9 $ 588.1 $ 263.6 ______(1) Consists of our $100.0 million revolving credit facility, which was to mature on June 28, 2013. See Notes and to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of refinancing transactions with respect to our revolving credit facility completed on February 20, 2013. (2) $1,800.0 million senior secured term loans will mature on June 30, 2014 and June 30, 2017, and the Company is required to make payments of principal in quarterly installments. See to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K. (3) The senior notes will mature in 2015 and include $271.3 million of fixed rate notes and $204.3 million of floating rate notes. See to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K. (4) The senior secured notes will mature on August 1, 2018. See to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K. (5) Interest on long-term debt assumes that all floating rates of interest remain the same as those in effect at December 31, 2012 and includes the effect of the Company's interest rate derivative arrangement on future cash payments for the remaining period of the derivative. 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, 2012, and all mandatory payments are made. (6) Represents unpaid amounts under existing client contracts. (7) 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. The Company routinely issues 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. (8) The credit facilities, senior notes and senior secured notes include early repayment provisions if certain events occur, including excess cash flow payments with respect to the senior secured credit facilities. See 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. At December 31, 2012, the Company had a net deferred tax liability of $577.6 million. See Note 8 to the accompanying consolidated financial statements included elsewhere in this annual Report on Form 10-K. Deferred tax liabilities are temporary differences between tax and financial statement basis of assets and do not directly relate to income taxes to be paid in the future. At

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document December 31, 2012, the Company had unrecognized tax benefits of $10.2 million for which the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority. Thus, these liabilities have not been included in the contractual obligations table.

The Company's Credit Agreement Extended Term Loans On July 24, 2012, an amendment (the "Amendment") entered into on May 10, 2012 by the Company to its credit agreement (the "Credit Agreement") dated as of April 4, 2007 became effective, thereby extending the maturity of $973.0 million of term loans under the Credit Agreement (the "Extended Term Loans") from June 2014 to June 2017 (subject to a springing maturity 90 days prior to the maturity date of the Company's 2015 Senior Notes (as defined hereinafter) if such notes have not been repaid, extended or refinanced). The Amendment also includes several covenants in addition to those covenants in the Credit Agreement. The effectiveness of the Amendment was conditioned on, among other customary conditions, the repayment of $280.2 million of the Extended Term Loans, which repayment was made with net proceeds from the issuance of the 2018 Senior Secured Notes (as defined hereinafter) and cash on hand. After giving effect to such repayment and the effectiveness of the Amendment, there were $692.8 million of Extended Term Loans outstanding and $729.0 million of non-extended term loans (the "Non-Extended Term Loans") outstanding. The Company is required to repay the Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 10% of the original extended amount after giving effect to the $280.2 million prepayment thereof required as a condition precedent to the effectiveness of the Amendment. The Extended Term Loans bear, at the Company's option, interest at: • 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 4.25% per annum; or • A rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin of 5.25% per annum. Non-Extended Term Loans On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into the Credit Agreement. The Credit Agreement provides for a $1,800.0 million senior secured loan which was drawn at closing on May 1, 2007 and matures on June 30, 2014 with respect to the Non-Extended Term Loans. The Company is required to repay the Non-Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount multiplied by the ratio of Non- Extended Term Loans outstanding on the effective date of the Amendment to the total Non-Extended Term Loans and Extended Term Loans outstanding on the effective date of the Amendment prior to giving effect to the prepayment required as a condition precedent to the effectiveness of the Amendment. In addition, the Credit Agreement requires that a portion of the Company's excess cash flow be applied to prepay amounts borrowed, as further described below. The Credit Agreement also provides for a $100.0 million revolving credit facility (the "Revolver") that matures on June 28, 2013. The Revolver includes an up to $60.0 million subfacility in the form of letters of credit and an up to $30.0 million subfacility in the form of short-term swing line loans. The Revolver was terminated on February 20, 2013 upon the execution of a new revolving credit facility. See Note 20 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of the new revolving credit facility. All obligations under the credit facilities are guaranteed by the Company's direct parent and by each of the Company's direct and indirect present domestic subsidiaries and future wholly-owned domestic subsidiaries. The credit facilities are secured by a perfected first priority security interest in substantially all of the Company and the guarantors' assets, other than voting stock in excess of 65.0% of the outstanding voting stock of each direct foreign subsidiary and certain other excluded property. The term loan facility requires that a portion of the Company's excess cash flow (as defined in the senior secured credit facilities) be applied to prepay amounts borrowed thereunder, beginning in 2009 with respect to 2008. No such excess cash flow payment is required to be paid in 2013 with respect to 2012. An excess cash flow payment of $12.5 million was paid in 2012 with respect to 2011 and applied against other mandatory payments due in 2012 under the terms of the facility. An excess cash flow payment of $3.5 million was paid in 2011 with respect to 2010 and applied against other mandatory payments due in 2011 under the terms of the facility. No such excess cash flow payments were required in 2010 and 2009. The Non-Extended Term Loans bear, at the Company's option, interest at: • 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 credit facilities have a commitment fee of 0.50% for the unused portion of the revolver and a weighted average commitment fee of 2.51% for issued letters of credit. Interest rate margins and commitment fees under the revolver are subject to reduction in increments based upon the Company achieving certain consolidated leverage ratios. The credit facilities contain representations and warranties customary for a senior secured credit facility. They also contain affirmative and negative covenants customary for a senior secured credit facility, including, among other things, restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale leaseback transactions. The credit facilities also require the Company to maintain a certain maximum consolidated leverage ratio solely for the benefit of the lenders under the revolver only. As of December 31, 2012, $677.4 million principal amount of Extended Term Loans and $728.6 million of principal amount of Non-Extended Term Loans were outstanding under the term loan facility. As of December 31, 2012, no amounts were drawn under the Company's $100.0 million revolving credit facility, and the Company had $92.2 million available for borrowing (giving effect to the issuance of $7.8 million of letters of credit). The revolving credit facility was terminated on February 20, 2013 upon the execution of a new revolving credit facility. See Note 20 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of the new revolving credit facility. During 2010, the Company entered into an interest derivative transaction in the form of a three-year interest rate swap with a notional amount of $255.0 million, which swaps the underlying variable rate for a fixed rate of 1.264%. This derivative is being accounted for as a cash flow hedge. The purpose of the transaction is to limit the Company's risk on a portion of its variable rate term loan. The Company's Senior Notes On May 1, 2007, the Company issued $305.0 million aggregate principal amount of Senior Floating Rate Notes due 2015 (the "Floating Rate Notes") and $310.0 million aggregate principal amount of 9.50% Senior Fixed Rate Notes due 2015 (the "Fixed Rate Notes" and, together with the Floating Rate Notes, the "2015 Senior Notes"). The 2015 Senior Notes mature on May 15, 2015. The Fixed Rate Notes bear interest at a rate per annum of 9.50%. The Floating Rate Notes bear interest at a rate per annum equal to the Applicable LIBOR Rate (as defined in the indenture governing the 2015 Senior Notes (the "2015 Senior Notes Indenture")), subject to a floor of 1.25%, plus 4.75%. The Senior Notes are unsecured and are therefore effectively subordinated to all of the Company's senior secured indebtedness, including outstanding borrowings under the senior secured credit facilities, including outstanding borrowings under the Credit Agreement and the 2018 Senior Secured Notes (as defined hereinafter). The 2015 Senior Notes Indenture contains customary restrictive covenants, including, among other things, restrictions on the Company's ability to incur additional debt, pay dividends and make distributions, make certain investments, repurchase stock, incur liens, enter into transactions with affiliates, enter into sale and lease back transactions, merge or consolidate and transfer or sell assets. The Company must offer to repurchase all of the 2015 Senior Notes upon the occurrence of a "change of control," as defined in the Indenture, at a purchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. The Company must also offer to repurchase the 2015 Senior Notes with the proceeds from certain sales of assets, if it does not apply those proceeds within a specified time period after the sale, at a purchase price equal to 100% of their aggregate principal amount, plus accrued and unpaid interest. The Senior Notes are guaranteed fully and unconditionally, jointly and severally by each of the Company's existing subsidiaries other than unrestricted and certain immaterial subsidiaries, all of which are wholly owned by the Company. During 2011, the Company extinguished debt with a total principal amount of $2.5 million by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7 million. During 2009, the Company extinguished debt with a total principal amount of $136.9 million by purchasing 2015 Senior Notes in individually negotiated transactions for an aggregate purchase price of $67.6 million. The Company did not purchase any 2015 Senior Notes during 2012 or 2010.

9.75% Senior Secured Notes due 2018 On July 24, 2012, the Company and Harland Clarke Corp., Harland Financial Solutions, Inc., Scantron Corporation and Checks in the Mail, Inc. (together, the "Co-Issuers") completed an offering of $235.0 million aggregate principal amount of 9.75% Senior Secured Notes due 2018 (the "2018 Senior Secured Notes"). The Company used the net proceeds from the offering, together with cash on hand, to repay $280.2 million aggregate principal amount of outstanding Extended Term Loans under its Credit Agreement. The 2018 Senior Secured Notes were issued pursuant to an indenture, dated as of July 24, 2012 (the "2018 Senior Secured Notes Indenture"), among the Company, the Co-Issuers, certain of the Company's domestic subsidiaries that guarantee the 2018 Senior Secured Notes (the "Guarantors") and Wells Fargo Bank, National Association, as trustee and collateral agent (the "Trustee"). The Guarantors have guaranteed (the "Guarantees") the Company's and Co-Issuers' obligations under the 2018 Senior Secured Notes and the 2018 Senior Secured Notes Indenture on a senior secured basis. The 2018 Senior Secured Notes and the Guarantees are secured pursuant to a Security Agreement, dated as of July 24, 2012, by and among the Company, the Co-Issuers, the Guarantors and Wells Fargo Bank, National Association, as collateral trustee (the "Collateral Trustee") and a Collateral Trust Agreement, dated as of July 24, 2012, by and among the Company, certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee. The 2018 Senior Secured Notes will mature on August 1, 2018. The Company will pay interest on the 2018 Senior Secured Notes at 9.75% per annum, semiannually in arrears on each of February 1 and August 1 to holders of record at the close of business on the immediately preceding January 15 and July 15 of each year, commencing on February 1, 2013. The 2018 Senior Secured Notes are senior secured obligations of the Company and the Co-Issuers and the Guarantees are senior secured obligations of the Guarantors. The 2018 Senior Secured Notes and the Guarantees rank as follows: (i) secured on a first-priority basis, equally and ratably with all obligations of the Company, the Co-Issuers and the Guarantors that are secured by pari passu liens on the collateral, including their existing senior secured credit facilities; (ii) effectively junior to all of the Company's, Co-Issuers' and the Guarantors' obligations under any future asset-based revolving credit facility to the extent of the value of the current asset collateral held by the Company, the Co-Issuers and the Guarantors; (iii) structurally subordinated to any existing and future indebtedness and other liabilities of any existing and future subsidiaries of the Company that are not Guarantors; (iv) pari passu in right of payment with all of the existing and future senior indebtedness of the Company, the Co-Issuers and the Guarantors and effectively senior to the extent of the value of the collateral to any future unsecured indebtedness of the Company, the Co-Issuers and the Guarantors that is secured by liens on the collateral that are junior to the liens securing the Senior Secured Notes and the Guarantees or that is unsecured; and (v) senior in right of payment to any existing and future subordinated indebtedness of the Company, the Co-Issuers and the Guarantors. The 2018 Senior Secured Notes and the Guarantees are secured on a first-priority basis, equally and ratably with the indebtedness under the Credit Agreement, by substantially all of the Company's, the Co-Issuers' and the Guarantors' assets, subject to certain exceptions and permitted liens. Beginning with the fiscal year of the Company ending December 31, 2013, if the Company's secured leverage ratio exceeds 3.25 for 2013 and 3.00 for 2014 and after, the Company will be required to offer to purchase an amount of the 2018 Senior Secured Notes equal to the greater of (1) $15.0 million and (2) 50% of its excess cash flow for the applicable period, less any voluntary prepayments of 2018 Senior Secured Notes or credit facility indebtedness and certain mandatory prepayments made during the applicable period and subject to certain other exceptions, at a purchase price equal to 100% of the principal amount of the 2018 Senior Secured Notes, plus accrued and unpaid interest and additional interest. Upon the occurrence of a change of control or if the Company sells certain assets, the Company may be required to make an offer to purchase the 2018 Senior Secured Notes at certain specified prices. The 2018 Senior Secured Notes Indenture contains covenants that, among other things, limit the Company's, the Co-Issuers' and the Guarantors' ability to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company's subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company's affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all assets; and (x) transfer or sell assets. These covenants are subject to important exceptions and qualifications. The 2018 Senior Secured Notes Indenture contains affirmative covenants and events of default that are customary for indentures governing high-yield debt securities.

Impact of Inflation The Company presents its results of operations and financial condition based upon historical cost. While it is difficult to measure accurately the impact of inflation due to the imprecise nature of the estimates required, the Company believes that, for the three most recent fiscal years, the effects of inflation, if any, on its results of operations and financial condition have been minor. Liquidity Assessment The Company believes that its cash and cash equivalents, borrowings available under its credit agreements (as further discussed in Notes 11 and 20 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K) and anticipated cash flow from operating activities will be sufficient to meet the Company's expected operating needs, investment and capital spending requirements and debt service requirements for the foreseeable future. The Company anticipates it will refinance its Non-Extended Term Loans in advance of their June 2014 maturity date. In addition to normal operating cash, working capital requirements and service of indebtedness, the Company also requires cash to fund capital expenditures, make contract acquisition payments to financial institution clients and enable cost reductions through restructuring projects as follows: • 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, 2012, 2011 and 2010, the Company incurred $57.8 million, $58.7 million and $38.6 million of capital expenditures and $0.5 million, $0.3 million and $0.1 million of capitalized interest, respectively. The Company's capital expenditures are estimated to be in the range of $50.0 million to $60.0 million for the year ending December 31, 2013. • Contract Acquisition Payments. During the years ended December 31, 2012, 2011 and 2010, the Company made $45.0 million, $43.3 million and $39.6 million of contract acquisition payments to its clients, respectively. • Restructuring/Cost Reductions. Restructuring accruals 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 certain acquisitions. During the years ended December 31, 2012, 2011 and 2010, the Company made $15.5 million, $12.3 million and $14.4 million of payments for restructuring, respectively. The Company may also, from time to time, seek to use its cash to make acquisitions or investments, and also to retire or purchase its outstanding debt in open market purchases, in privately negotiated transactions, or otherwise. Such retirement or purchase of debt may be funded from the operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material. The Company used cash on hand to fund the $70.0 million purchase price for the acquisition of Faneuil that was consummated on March 19, 2012. The Company used proceeds from the issuance of senior secured notes and cash on hand to fund the repayment of $280.2 million of extended term loans in July 2012. During 2011, the Company extinguished debt with a total principal amount of $2.5 million by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7 million. The Company also used cash on hand to fund the aggregate $61.2 million, net of cash acquired, expended for both the Spectrum K12 and Parsam acquisitions in 2010 and the $134.9 million, net of cash acquired, expended for the GlobalScholar acquisition on January 3, 2011.

Cash Flow Risks The Company's ability to meet its debt service obligations and reduce its total debt will depend upon its ability to generate cash in the future which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond the Company's control. The Company may not be able to generate sufficient cash flow from operations or borrow under its credit facility in an amount sufficient to repay its debt or to fund other liquidity needs. As of December 31, 2012, the Company had $92.2 million of availability under its revolving credit facility (after giving effect to the issuance of $7.8 million of letters of credit). The Company may also use its revolving credit facility to fund potential future acquisitions or investments. The revolving credit facility was terminated on February 20, 2013 upon the execution of a new revolving credit facility. See Note 20 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of the new revolving credit facility. If future cash flow from operations and other capital resources is insufficient to pay the Company's obligations as they mature or to fund its liquidity needs, the Company may be forced to reduce or delay business activities and capital expenditures, sell assets, obtain additional debt or equity capital or restructure or refinance all or a portion of its debt on or before maturity. The Company may not be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of the Company's existing and future indebtedness may limit its ability to pursue any of these alternatives. Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, intellectual property matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations. Forward-Looking Statements This Annual Report on Form 10-K for the year ended December 31, 2012, as well as certain of the Company's other public documents and statements and oral statements, contains forward-looking statements that reflect management's current assumptions and estimates of future performance and economic conditions. When used in this Annual Report on Form 10-K, the words "believes," "anticipates," "plans," "expects," "intends," "estimates" or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this Annual Report on Form 10-K. Although the Company believes that its plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, such plans, intentions or expectations may not be achieved. Such forward-looking statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those projected, stated or implied by the forward-looking statements. In addition, the Company encourages investors to read the summary of the Company's critical accounting policies and estimates included in this Annual Report on Form 10-K under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates." In addition to factors described in the Company's SEC filings and others, the following factors could cause the Company's actual results to differ materially from those expressed in any forward-looking statements made by the Company: • our substantial indebtedness; • further adverse changes in or worsening of general economic and industry conditions, including the depth and length of the economic downturn and higher unemployment, which could result in more rapid declines in product sales and/or pricing pressure and reductions in information technology budgets which could result in adverse effects on our businesses; • weak economic conditions and declines in the financial performance of our business that may result in material impairment charges, which could have a negative effect on the Company's earnings, total assets and market prices of the Company's outstanding securities; • our ability to generate sufficient cash in the future that affects our ability to make payments on our indebtedness; • our ability to incur substantially more debt that could exacerbate the risks associated with our substantial leverage; • covenant restrictions under our indebtedness that may limit our ability to operate our businesses and react to market changes; • increases in interest rates;

• the maturity of the paper check industry, including a faster than anticipated decline in check usage due to increasing use of alternative payment methods, decreased consumer spending and other factors and our ability to grow non-check related product lines; • consolidation among financial institutions; • adverse changes or failures or consolidation of the large financial institution clients on which we depend, resulting in decreased revenues and/or pricing pressure; • intense competition in all areas of our businesses; • our ability to successfully integrate and manage recent acquisitions as well as 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; • fluctuations in the costs of raw materials and other supplies; • our ability to attract, hire and retain qualified personnel; • technological improvements that may reduce any advantage over other providers in our respective industries; • our ability to protect customer or consumer data against data security breaches; • changes in legislation relating to consumer privacy protection that could increase our costs or limit our future business opportunities; • contracts with our clients relating to consumer privacy protection that could restrict our business; • our ability to protect our intellectual property rights; • our reliance on third-party providers for certain significant information technology needs; • software defects or cyber attacks that could harm our businesses and reputation; • sales and other taxes that could have adverse effects on our businesses; • 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 and to grow Scantron's web-based education business; • our ability to achieve VSOE of fair value for multiple-element arrangements for software businesses we have acquired or will acquire, which could affect the timing of recognition of revenue; • 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 and Faneuil segments; • 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company encourages investors to read carefully the risk factors in the section entitled "Risk Factors" for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risks The Company has exposure to market risk from changes in interest rates and foreign currency exchange rates, which could affect its business, results of operations and financial condition. The Company manages its exposure to these market risks through its regular operating and financing activities. At December 31, 2012, the Company had $1,406.0 million of term loans outstanding under its credit agreement, $7.8 million of letters of credit outstanding under its revolving credit facility (see Note 20 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of refinancing transactions with respect to our revolving credit facility completed on February 20, 2013), $204.3 million of floating rate senior notes, $271.3 million of 9.50% fixed rate senior notes and $235.0 million of 9.75% senior secured notes. All of these outstanding loans bear interest at variable rates, with the exception of the $271.3 million of fixed rate senior notes and $235.0 million senior secured notes. Accordingly, the Company is subject to risk due to changes in interest rates. The Company believes that a hypothetical increase of 1 percentage point in the variable component of interest rates applicable to its principal amount of floating rate debt outstanding as of December 31, 2012 would have resulted in an increase in its annual interest expense of approximately $11.5 million, including the effect of the interest rate derivative transactions discussed below. In order to manage its exposure to fluctuations in interest rates on a portion of the outstanding variable rate debt, the Company entered into an interest rate derivative transaction in 2010 in the form of a swap with a notional amount totaling $255.0 million currently outstanding as further described in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. This derivative currently swaps the underlying variable rate for a fixed rate of 1.264%. As of December 31, 2012, the Company's net foreign currency market exposures were $23.1 million. This is the value of the equity of the investments in the foreign subsidiaries in Canada, India, Ireland and Israel. Since the exposures are not material, the Company does not generally hedge against foreign currency fluctuations. A 10% appreciation in foreign currency exchange rates from the prevailing market rates would result in a $2.3 million increase in the related assets or liabilities. Conversely, a 10% depreciation in these currencies from the prevailing market rates would result in a $2.3 million decrease in the related assets or liabilities.

Item 8. Financial Statements and Supplementary Data See the financial statements and supplementary data listed in the accompanying Index to Consolidated Financial Statements and Financial Statement Schedules on page F-1 herein. Information required by other schedules called for under Regulation S-X is either not applicable or is included in the consolidated financial statements or notes thereto included elsewhere in this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

Item 9A. Controls and Procedures The Company's management, with the participation of the Company's Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13(a)-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of December 31, 2012. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2012. There were no material changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2012 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Management's Report on Internal Control over Financial Reporting

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. Based on its assessment, management believes that, as of December 31, 2012, the Company's internal control over financial reporting was effective.

Item 9B. Other Information Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance Organizational Structure Harland Clarke Holdings is organized along the following four business segments: Harland Clarke, Harland Financial Solutions, Scantron and Faneuil. The following table sets forth information regarding our directors and executive officers as of February 25, 2013:

Name Age Position Charles T. Dawson 64 President and Chief Executive Officer, Harland Clarke Holdings; Director Peter A. Fera, Jr. 44 Executive Vice President and Chief Financial Officer, Harland Clarke Holdings and Harland Clarke James D. Singleton 53 President and Chief Executive Officer, Harland Clarke Raju M. Shivdasani 62 President and Chief Executive Officer, Harland Financial Solutions Kevin R. Brueggeman 54 Chief Executive Officer, Scantron Anna M. Van Buren 53 President and Chief Executive Officer, Faneuil Paul G. Savas 50 Director Barry F. Schwartz 63 Director

Charles T. Dawson was appointed President and Chief Executive Officer of Harland Clarke Holdings on September 27, 2007. Mr. Dawson was elected as a Director of Harland Clarke Holdings and appointed Chief Executive Officer of Harland Clarke on May 1, 2007. Mr. Dawson's experience with the operations of the Company led the Board of Directors to conclude that he should be a member of the Board of Directors. Mr. Dawson has over 30 years of experience in the security printing industry. Mr. Dawson also served as President of Harland Clarke from May 2007 to August 2009 and before that as President of Clarke American Corp. ("Clarke American") from April 2005 to May 2007. Previous roles at Clarke American included Executive Vice President/General Manager of Partnership Development from February 2003 to April 2005 and Senior Vice President/General Manager of the National Account/ Securities/Business Development divisions from July 2000 to February 2003. Mr. Dawson was the Chief Executive Officer for Rocky Mountain Bank Note Company before joining Clarke American in 1992. Mr. Dawson was a director of M & F Worldwide until the consummation of the MacAndrews Acquisition. Peter A. Fera, Jr. was appointed Executive Vice President and Chief Financial Officer of Harland Clarke Holdings on September 27, 2007. Mr. Fera was appointed Executive Vice President and Chief Financial Officer of Harland Clarke on May 1, 2007 and also served as Senior Vice President and Chief Financial Officer of Clarke American from April 2005 to April 2007. Previously, Mr. Fera was employed by Honeywell International, Inc. ("Honeywell") for seven years and held a variety of leadership positions in finance and marketing. Most recently he served as Chief Financial Officer for the Aircraft Landing Systems business of Honeywell from October 2003 to April 2005. At Honeywell, he also served as Director of Finance - Business Analysis and Planning from February 2002 to October 2003 and Global Marketing Manager from October 2000 to February 2002. Earlier in his career he held operational and engineering roles at General Electric Co. James D. Singleton was appointed President and Chief Executive Officer of Harland Clarke on March 12, 2012. Mr. Singleton was appointed President of Harland Clarke on August 14, 2009 and previously served as Chief Operating Officer of Harland Clarke from October 5, 2008 to August 13, 2009 and Executive Vice President of Harland Clarke from May 2007 until October 2008 with responsibility for Sales, Marketing, and Customer Service and Sales Contact Centers. Mr. Singleton previously held other roles at Clarke American including Senior Vice President Partnership Development from January 2006 to May 2007, as well as a variety of positions in Sales and Marketing. Previous roles at Indalex Aluminum Solutions Inc. from November 2000 to January 2006 included Vice President and General Manager, Specialty Products, Business Unit President South, and Senior Vice President Sales Marketing and International. Raju M. Shivdasani was appointed Chief Executive Officer of Harland Financial Solutions on March 12, 2012. Mr. Shivdasani was appointed President of Harland Financial Solutions on August 31, 2009. Mr. Shivdasani previously served as President of Enterprise Solutions for Harland Financial Solutions since August 2001. Prior to joining Harland Financial Solutions, Mr. Shivdasani was with Phoenix International, Inc. where he served as President and Chief Operating Officer from 1998 to 2001, and as Senior Vice

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document President and President of the International Division from July 1996 to January 1998. Mr. Shivdasani was previously employed as the Group Executive Vice President for Fiserv, Inc. and with Citicorp Information Resources as President of CBS Worldwide. He also served on the IBM AS/400 Strategic Advisory Board from 1992 to 1994.

Kevin R. Brueggeman was appointed Chief Executive Officer of Scantron and GlobalScholar on August 20, 2012. Mr. Brueggeman previously served as President and Chief Executive Officer of Triumph Learning from August 2011 to April 2012, providing strategic advising in the K-12 education sector to various private equity firms, and served as President/Chief Executive Officer of businesses at Harcourt Assessment and Pearson Education from 2006 to 2010. Mr. Brueggeman also served as President of AGS Publishing, Inc. from August 2003 to December 2005 and led the sale of the company to Pearson in 2005. He was President and Chief Executive Officer of Experior Assessment, LLC from June 2000 to August 2003 which was a joint venture of Educational Testing Service and Sylvan Learning Systems. Anna M. Van Buren was appointed President and Chief Executive Officer of Faneuil, in April 2009, after previously serving as President and Chief Operating Officer from 2007 to 2009, as Vice President and Managing Director of Faneuil's Government Services Division from 2005 to 2007, and as its Vice President of Business Development from 2004 to 2005. Prior to her association with Faneuil, Ms. Van Buren founded Capital Initiatives, a consulting service for clients seeking visibility among federal lawmakers with the objective of encouraging legislative action, and operated numerous government services and marketing companies. She began her career at a major metropolitan multimedia company, serving as an executive and member of the Board of Directors of the Hampton Roads, Virginia-based Daily Press, Inc., which produced and distributed two daily newspapers and that operated a radio station, two cable television stations and several other smaller businesses. Paul G. Savas has been one of our directors since May 1, 2007 and served as Harland Clarke Holdings' Executive Vice President and Chief Financial Officer from May 1, 2007 to September 27, 2007. Mr. Savas was appointed to the Board of Directors because of his extensive business and operations experience with the Company, M & F Worldwide and MacAndrews. He has been Executive Vice President and Chief Financial Officer of MacAndrews & Forbes Holdings Inc. and various affiliates since May 2007, and previously served as Executive Vice President - Finance from April 2006 until May 2007 and was Senior Vice President - Finance of MacAndrews & Forbes Holdings Inc. and various affiliates from 2002 until April 2006. Mr. Savas joined MacAndrews & Forbes Holdings Inc. in 1994 as Director of Corporate Finance and was appointed Vice President - Finance in 1998. Mr. Savas is also a director of SIGA Technologies Inc., which is required to file reports under the Securities Exchange Act of 1934. Barry F. Schwartz has been one of our directors since the Clarke American acquisition by M & F Worldwide in 2005, has acted as Chairman of our Board since September 2007, and served as Harland Clarke Holdings' President and Chief Executive Officer from May 1, 2007 to September 27, 2007. Mr. Schwartz was appointed to the Board of Directors because of his extensive business and operations experience with the Company, M & F Worldwide and MacAndrews. Mr. Schwartz has been Executive Vice Chairman of MacAndrews & Forbes Holdings Inc. and various affiliates since October 2007 and previously served as Executive Vice President and General Counsel of MacAndrews & Forbes Holdings Inc. and various affiliates since 1993 and was Senior Vice President of MacAndrews & Forbes Holdings Inc. and various affiliates from 1989 to 1993. Mr. Schwartz is also a Director of the following organizations which are required to file reports under the Securities Exchange Act of 1934: Scientific Games Corporation, Revlon Consumer Products Corporation and Revlon Inc. Code of Ethics Harland Clarke Holdings does not have a separate code of ethics but is subject to the code of ethics of its parent, M & F Worldwide. All of our employees, including our principal executive officer, principal financial officer and principal accounting officer, are subject to the M & F Worldwide Code of Business Conduct. The Code is available to employees at www.myHC2.com, and the Company will provide a copy of the Code to any person, without charge, upon written request to Harland Clarke Holdings Corp., 10931 Laureate Drive, San Antonio, Texas 78249. Board of Directors Harland Clarke Holdings is an indirect, wholly owned subsidiary of M & F Worldwide. Our board of directors is currently composed of three individuals, Charles T. Dawson, Paul G. Savas and Barry F. Schwartz. We believe this structure effectively combines the involvement of our parent, M & F Worldwide (for which Messrs. Savas and Schwartz serve as executives), and our Chief Executive Officer in the oversight of the Company's operations. The Board is responsible for risk oversight. The Board's role in the Company's risk oversight process includes receiving periodic reports from members of senior management on areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic and reputational risks. The Company does not have a separate risk committee or chief risk officer as risk functions are performed throughout the organization and reviewed by the Board and senior management of the Company and M & F Worldwide, providing what we believe to be an appropriate level of accountability, as well as separation of duties.

Board Committees Prior to the MacAndrews Acquisition, we did not have standing audit, nominating or compensation committees because we were a wholly owned subsidiary of M & F Worldwide, which had an audit, nominating and compensation committee. After the MacAndrews Acquisition, M & F Worldwide no longer has an audit, nominating or compensation committee and our Board of Directors serves these functions for the Company subject to consultation with senior management of M & F Worldwide. We do not have a formal policy on diversity in identifying board nominees. The exact number of members of our board is determined from time to time by a resolution of a majority of our full Board of Directors. Compensation Committee Interlocks and Insider Participation Prior to the MacAndrews Acquisition, there were no interlocking relationships between any member of M & F Worldwide's Compensation Committee and any of our executive officers that would require disclosure under the rules of the United States Securities and Exchange Commission. Prior to the MacAndrews Acquisition, no member of M & F Worldwide's Compensation Committee was a current or former officer or employee of the Company. Compensation Risk Assessment The Company conducted a risk assessment of the various compensation policies and practices at the Harland Clarke Holdings level and across its four business segments. The Company evaluated whether any of its compensation programs, policies, and practices are reasonably likely to have a material adverse effect on the Company. The following summarizes the Company's evaluation of our compensation programs, policies, and practices with respect to the assessment of risk: • The programs provide an appropriate mix of fixed and variable compensation. • Variable pay is an appropriate mix of both short-term and long-term compensation. • Program features which limit the payout of variable compensation provide an additional balance between risk and reward. For example, all 2010 variable compensation plans are capped and certain plans commencing in 2011 have a clawback provision. • Base pay is limited by the terms of the relevant employment agreements for executives or compensation policy for employees who do not have an employment agreement. • Long-term incentives are subject to multi-year vesting which ties value to long-term performance. • All executive variable compensation programs are based on the achievement of pre-established targets set by management and reviewed with the CEO and management. Adjustments to performance measures are made to align achievement of targets with significant changes to the business, including adjustments for acquisitions and dispositions. • Harland Clarke Holdings currently does not provide single-trigger "change of control" compensation to its executives or employees. • Severance pay is defined by Company policy or applicable employment agreement with severance packages offering a maximum of two years of salary continuation for only certain of our named executive officers ("NEOs") and significantly lesser amounts for other employees. • Severance amounts for all employees, including those severance amounts made available to NEOs and other executives under an employment agreement, are in line with market standards. • Compensation policies in general are reviewed periodically to compare against market standards. Based on this evaluation and the currently known facts and circumstances, the Company concluded that its compensation programs, policies, and practices are not reasonably likely to have a material adverse effect on the Company.

Item 11. Executive Compensation Compensation Discussion & Analysis Named Executive Officers

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document This Compensation Discussion & Analysis ("CD&A") describes the compensation programs applicable for our named executive officers and the basis for decisions regarding their compensation for 2012. Our NEOs for 2012 are: • Mr. Charles T. Dawson, President and CEO of the Company;

• Mr. Peter A. Fera, Jr., CFO of the Company; • Mr. James D. Singleton, President and CEO of Harland Clarke; • Mr. Raju M. Shivdasani, President and CEO of Harland Financial Solutions; and • Ms. Anna M. Van Buren, President and CEO of Faneuil. Compensation Decision Makers Our Compensation Committee Prior to the MacAndrews Acquisition, the Compensation Committee of the Board of Directors of M & F Worldwide served as our compensation committee (the "Prior Compensation Committee"). After the MacAndrews Acquisition, our Board of Directors, in consultation with the management of MacAndrews, is responsible for functions performed by the Prior Compensation Committee. Role of Executive Officers in the Compensation Process Mr. Dawson recommends business performance targets and objectives to management of MacAndrews in his role as CEO of the Company. He further evaluates the performances of and recommends compensation for the executive officers reporting to him, which includes all NEOs other than himself for 2012. Targets are set consistent with annual budgets of the Company. Compensation Consultants In 2010, the Prior Compensation Committee engaged Compensation Advisory Partners, LLC to advise on the structure of a long- term incentive plan covering the period 2011-2013 ("2011-2013 LTIP") as well as other changes to senior executives' compensation. The Company did not engage compensation consultants in 2012. Market Data The Company subscribes to various compensation surveys to provide general market data for executive positions. Further, in determining the structure of the 2011-2013 LTIP as well as other changes to senior executives' total compensation in 2011, the Prior Compensation Committee reviewed data for peer groups and companies with revenues within a comparable range of the Company's revenue, provided by the Prior Compensation Committee's compensation consultant, Compensation Advisory Partners, LLC. Compensation Philosophy The objectives of the Company's compensation programs are to enable the Company to attract, retain, and motivate key talent and to reward achievement of short-term and long-term strategic business objectives and financial goals. The material principles underlying the Company's executive compensation policies and decisions include recognizing that quality talent is attracted and retained with quality pay packages and that our executives recognize through their pay structure that their personal success with the Company is subject to and conditioned on the success of the Company's business segments. We set pay in a way we think best drives our executives to promote the growth of our four principal business segments, Harland Clarke, Harland Financial Solutions, Scantron and Faneuil. Ms. Van Buren became an executive officer of the Company as a result of the Faneuil Acquisition on March 19, 2012. At that time Ms. Van Buren was Chief Executive Officer of Faneuil and was a party to an employment agreement with Faneuil as well as an existing benefits program in place with Faneuil, both of which continued in effect for the remainder of 2012. As a result, Ms. Van Buren was not a participant in most of the compensation programs covering the other NEOs during 2012. Ms. Van Buren entered into a new employment agreement with the Company effective January 1, 2013, and her compensation programs (other than benefits as described in the section labeled Other Benefits and Perquisites on page 64) are similar to our other NEOs. We use cash compensation, not equity compensation. We, along with management of MacAndrews, have determined that our cash- based compensation programs are an appropriate means by which to link compensation with performance measures. In addition, we prefer cash-based compensation programs because of their greater simplicity in design and their ability to be understood by our executives and other employees. Compensation can increase or decrease materially in the event of a change in scope of position responsibilities, in light of individual and/or Company performance, and in response to business need. We generally do not take one element of pay into account when setting another pay element for the same executive, but we have designed target total compensation opportunities to be

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document competitive. We do calculate bonus as a percentage of base pay as we explain below. We view base plus bonus as an executive's core pay, and we deliberately set the specific mix of base and bonus on the responsibility the executive has for our

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents financial performance. Overview of Compensation Components Our executive compensation program includes the following elements:

Pay Element What the Pay Element Rewards Purpose of the Pay Element Base 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 goals Annual Executive Bonus Plan • Executive's contributions towards our • Focuses executive on achievement of annual goals most achievement of annual performance targets important to the Company and investors • Recognizes executive's direct responsibility for • Exposes executive to risk of not receiving pay or our annual performance targets receiving diminished pay if Company or business segment underperforms • Gives executive direct motivation to help Company or business segment achieve annual performance targets with significant upside for achieving exceptional results Long-Term Incentive Compensation • Achievement of sustained growth • Keeps executive focused on long- term growth of the Plans Company • Achievement of cumulative performance targets • Keeps executive personally invested in the over a three-year period implementation of the Company's long-term growth plan Executive Employment Contract • Continued service with the Company • Keeps executive focused on job and expected performance 401(k) and Nonqualified Deferred • Long-term service with the Company • Provides retention incentive Compensation Plan • Makes overall pay package more competitive • Helps executive incrementally prepare for retirement Additional 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 not Termination Benefits • Continued service in circumstances under which • Keeps executive focused on job and performance in best executive's job is at risk interest of Company even if executive works himself or herself out of a job

Elements of Compensation Base Salary Mr. Dawson determines an NEO's recommended base pay by evaluating the NEO's individual leadership competencies, achievement of personal goals in support of the Company objectives and position-critical skills. Management of MacAndrews conducts this evaluation together with Mr. Dawson, and, where appropriate, discusses it with the NEO. Mr. Dawson's base salary is determined by his employment agreement. We feel that a substantial portion of an executive's core pay (base and bonus) should be subject to risk to the extent that the executive is partially responsible for below-target financial performance of the relevant business segment or consolidated Company. The analysis of how much direct responsibility our executives have for the Company's performance targets determines how much of the executive's core pay should be at risk. Annual Executive Bonus Plan The amount of bonus paid to our NEOs is tied directly to the relevant business segment or consolidated Company's performance and the NEO's individual performance. The Company wants our annual bonus program to properly reward our NEOs for their individual performances and contributions to the Company. Each NEO's bonus targets are set based on the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents performance of the principal business segment for which the NEO is responsible. These Adjusted EBITDA for Compensation Purposes targets vary for each of our business segments, reflecting the appropriate adjustments we make to financial performance. We discuss these Adjusted EBITDA for Compensation Purposes targets in more detail in "Adjusted EBITDA for Compensation Purposes Targets" below. We base the bonus plan on achievement of the annual Adjusted EBITDA for Compensation Purposes target for each business segment. As illustrated in the chart below, the amount of bonus opportunity is tied to a percentage of salary increasing incrementally as performance against goal increases incrementally, up to a maximum amount. If at least 90% of target is not achieved, then no bonus will be paid. The differences in percentages listed in the "Bonus as a Percentage of Base Salary" column are due to differences in each NEO's responsibility and the size of the NEO's relevant business segment. The bonuses generally were designed to be compliant with the performance-based exception of Section 162(m) of the Internal Revenue Code (the "Code"), if applicable. Section 162(m) is not currently applicable to us because we are not a public company and M & F Worldwide is no longer a public company since the MacAndrews Acquisition. Each NEO, with the exception of Ms. Van Buren, earned a bonus from the Company during 2010, 2011 and 2012. Ms. Van Buren earned a bonus from the Company for 2012. Bonuses are generally paid by March 15th of the year following the year for which the bonuses are earned. The chart below sets forth the base salary, bonus potential and actual bonus paid for 2011 and 2012 for each of our NEOs.

Actual 2012 Base Salary Bonus as a % Bonus Paid NEO for 2012 Target % of Base Salary in 2013 Charles T. Dawson $ 1,050,000 90-145.1+ 112.5-187 $ 1,458,345 Peter A. Fera, Jr. $ 468,000 90-145.1+ 90-150 $ 519,995 James D. Singleton $ 520,000 90-145.1+ 90-150 $ 548,912 Raju M. Shivdasani $ 450,000 90-145.1+ 90-150 $ 475,020 Anna M. Van Buren $ 420,000 N/A N/A $ 350,000

Long-Term Incentive Compensation We believe in linking compensation to Company and individual performance. We tie long-term incentive compensation to our overall financial goals and, where appropriate, to the goals of individual business segments. A NEO's compensation varies with our financial and operating performance so that they are rewarded when performance meets or exceeds objectives and receive lower compensation when performance objectives are not met. We apply objective measures of performance in setting pay levels. The Company has a history of achieving performance at and above target levels, and management of MacAndrews has determined that linking NEOs' compensation to certain individual and collective performance objectives can help our Company to achieve its established targets. The Company maintained a three-year cash-based plan tied to multi-year Company and business segment performance for the performance period from 2008 to 2010. Payments under this plan were paid to the eligible executives, to include the NEOs, excluding Ms. Van Buren, on March 11, 2011. A similarly designed long-term incentive plan covering the period from 2011 to 2013 was approved by the Prior Compensation Committee on December 10, 2010. For Ms. Van Buren, Faneuil maintained a three-year cash-based plan tied to 2010 through 2012 Adjusted EBITDA for Compensation Purposes targets. After the Faneuil Acquisition in 2013, the Company established for Faneuil a three-year cash-based plan tied to multi-year Company and business unit performance for the performance period from 2013 through 2015 for certain executives who were not participants in the 2011-2013 LTIP. Ms. Van Buren is a participant in that new plan pursuant to her employment agreement. Each of these long-term incentive plans are described below, followed by additional detail on the determinations of performance measures and targets established pursuant to these plans. The 2008-2010 M & F Worldwide Long-Term Incentive Compensation Plan ("2008-2010 LTIP") The 2008-2010 LTIP was a three-year cash-based plan tied to multi-year Company and business segment performance. It became effective on January 1, 2008 and covered fiscal years 2008 through 2010. All payouts earned by the executives were paid on March 11, 2011. All of the current NEOs participated in the 2008-2010 LTIP in 2010, 2009 and 2008, except Ms. Van Buren, who was not affiliated with the Company during the term of the 2008-2010 LTIP. The payout amount to our current NEOs for the 2008-2010 LTIP at the end of the three-year cycle was $7.8 million. The 2011-2013 M & F Worldwide Long-Term Incentive Compensation Plan

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On December 10, 2010, the Prior Compensation Committee approved the 2011-2013 LTIP. The 2011-2013 LTIP is a three-year cash-based plan tied to Company and business segment performance. The 2011-2013 LTIP became effective January 1, 2011 and covers fiscal years 2011 through 2013.

The Company has granted awards to participate in the 2011-2013 LTIP to certain executives of the Company and its subsidiaries, including each of the NEOs except Ms. Van Buren who was not an employee of the Company until 2012 and therefore participates in a separate long-term incentive plan. All payouts to the executives participating will be made, assuming the cumulative performance thresholds are met, at the end of the three-year cycle. While the Company expects the performance targets under the 2011-2013 LTIP to be met, the Company is not certain it will achieve or exceed the performance targets. The 2011-2013 LTIP provides for a cash payment at the end of the three-year period ending December 31, 2013 and the executives may be entitled to payments in the amounts set forth in the table below assuming targets are achieved at the end of such three-year period. The performance measures used under the 2011-2013 LTIP include Adjusted EBITDA and a "non-check revenue" performance measure (as discussed in more detail in "Performance Measures and Performance Targets" below). Each award granted under the 2011-2013 LTIP will be based 75% on cumulative Adjusted EBITDA for Compensation Purposes targets and 25% on cumulative non- check revenue targets. If less than 90% of the target is achieved, then no payment will be made. If between 90% and 100% of the targets are achieved, then the amount of the award in the table below will be adjusted based on linear interpolation between 50% up to 100%, and if between 100% and 110% of the targets are achieved, then the amount of the award in the table below will be adjusted based on linear interpolation between 100% up to a maximum of 150%. For Mr. Dawson and Mr. Fera, the awards and related payments will be based solely on Company results and for Messrs. Singleton and Shivdasani, 50% will be based on Company results and 50% will be based on the results of their respective business segment. The target payout amount to our NEOs excluding Ms. Van Buren at the end of the three-year cycle, assuming 100% of the target is achieved, is approximately $8.7 million in the aggregate. The target payout for all participants at the end of the three-year cycle, assuming 100% of the target is achieved, is approximately $11.8 million in the aggregate. The 2011-2013 LTIP contains clawback provisions, which provide that if a participant is determined to have violated a noncompete, nonsolicit, nondisclosure covenant or other agreement or engaged in activity that was in conflict with or was adverse to the interests of the Company or its affiliates (including fraud) or conduct contributing to any financial restatement or financial irregularities, the participant's award may be cancelled. In addition, the participant may be required to repay any profits or benefit realized by the participant. To the extent required by applicable law (including without limitation Section 302 of the Sarbanes-Oxley Act of 2002 and Section 954 of the Dodd Frank Act), awards shall be subject to clawback, forfeiture or similar requirement. 2011-2013 LTIP Aggregate Target Amounts

Aggregate Target Amount Executive (at end of 2013) Mr. Dawson $ 4,050,000 Mr. Fera $ 1,350,000 Mr. Singleton $ 1,800,000 Mr. Shivdasani $ 1,500,000

The 2010-2012 Faneuil Long-Term Incentive Plan ("Faneuil 2010-2012 LTIP") The 2010-2012 Faneuil LTIP was a three-year cash-based plan based on Faneuil Adjusted EBITDA performance. On March 8, 2013, Ms. Van Buren will be paid $350,893 for the Faneuil 2010-2012 LTIP, which is equal to 7.5% of Faneuil's Adjusted EBITDA over a certain target level. The 2013-2015 MFW Long-Term Incentive Plan ("2013-2015 LTIP") In 2013, the Company approved the 2013-2015 LTIP. The 2013-2015 LTIP is a three-year cash-based plan tied to Company and business unit performance for certain executives who are not participants in the 2011-2013 LTIP. The 2013-2015 LTIP became effective January 1, 2013 and covers fiscal years 2013 through 2015. In 2013, the Company has granted awards to participate in the 2013-2015 LTIP to certain executives of the Company and its subsidiaries, including Ms. Van Buren. All payouts to the executives participating will be made, assuming the cumulative performance thresholds are met, at the end of the three-year cycle. While the Company expects the performance targets under the 2013-2015 LTIP to be met, the Company is not certain it will achieve or exceed the performance targets. The 2013-2015 LTIP provides for a cash payment at the end of the three-year period ending December 31, 2015 and the executives may be entitled to payments assuming targets are achieved at the end of such three-year period. The performance measures used under the 2013-2015 LTIP include Adjusted EBITDA and a "non-check revenue" performance measure (as discussed in more detail in "Performance Measures and Performance Targets" below). Each award granted under the 2013-2015 LTIP will be based 75% on cumulative Adjusted EBITDA for Compensation Purposes targets and 25% on

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents cumulative non-check revenue targets. If less than 90% of the target is achieved, then no payment will be made. If between 90% and 100% of the targets are achieved, then the amount of the award will be adjusted based on linear interpolation between 50% up to 100%, and if between 100% and 110% of the targets are achieved, then the amount of the award will be adjusted based on linear interpolation between 100% up to a maximum of 150%. The target payout amount to Ms. Van Buren at the end of the three-year cycle, assuming 100% of the target is achieved, is approximately $0.8 million in the aggregate. The target payout for all participants at the end of the three-year cycle, assuming 100% of the target is achieved, is approximately $2.0 million in the aggregate. The 2013-2015 LTIP contains clawback provisions, which provide that if a participant is determined to have violated a noncompete, nonsolicit, nondisclosure covenant or other agreement or engaged in activity that was in conflict with or was adverse to the interests of the Company or its affiliates (including fraud) or conduct contributing to any financial restatement or financial irregularities, the participant's award may be cancelled. In addition, the participant may be required to repay any profits or benefit realized by the participant. To the extent required by applicable law (including without limitation Section 302 of the Sarbanes-Oxley Act of 2002 and Section 954 of the Dodd Frank Act), awards shall be subject to clawback, forfeiture or similar requirement. Performance Measures and Performance Targets Adjusted EBITDA for Compensation Purposes Targets The Prior Compensation Committee believed and management of MacAndrews believes that Adjusted EBITDA for Compensation Purposes targets is an appropriate performance measure on which to base long-term incentive compensation payments. Adjusted EBITDA for Compensation Purposes is a non-GAAP measure representing EBITDA (net income before interest expense-net, income taxes, depreciation and amortization) adjusted to reflect the impact of those items the Company does not consider indicative of its ongoing performance such as restructuring costs, certain non-operational items, group management fees, acquisition-related expenses, certain stand-alone costs, and other adjustments relevant to each segment. The Adjusted EBITDA for Compensation Purposes targets are similar to measures of covenant compliance under the Company's debt agreements, and securities analysts often use similar measures to evaluate the performance of the Company. The Company's long-term incentive compensation plans have Adjusted EBITDA for Compensation Purposes targets based on both consolidated and each business segment's performance; whereas the annual bonus is based solely on the relevant business segment Adjusted EBITDA for Compensation Purposes targets. The consolidated Adjusted EBITDA for Compensation Purposes targets for the 2011-2013 and 2013-2015 periods are not being disclosed as they represent confidential financial information that we do not disclose to the public, and we believe that disclosure of this information would cause us competitive harm because our direct competitors would know our historic financial budgets with respect to each of our business segments. In our industry segments, such information would give our competition a particular advantage over us because we are engaged in highly competitive industries which are very sensitive to pricing decisions, customer wins and losses, and customer perception. We would be at a significant disadvantage with respect to our customers if our competitors were able to compare themselves to us or draw inferences, particularly with respect to our pricing and profit margins, from our budgets and targets. We believe that these performance goals are difficult to achieve for the following reasons, among others: (i) the industries in which we are involved are mature industries which makes growth more challenging; and (ii) we are subject to both volatile customer wins and losses and customer bidding processes. Non-Check Revenue Performance Measures Commencing in 2011 Commencing in 2011, the Prior Compensation Committee implemented a new performance measure for a portion of the Company's long-term compensation programs. Non-Check Revenue is the performance measure that encourages the development of additional revenue sources other than checks and check-related products, which are currently the Company's largest source of revenue, which have been in decline in recent years and are expected to continue declining. This measure is intended to encourage diversification of the Company's sources of revenue. Post-Employment Compensation Payments to be made to executives in connection with termination without cause are in the form of severance and the temporary continuation of other benefits that are set forth in an individual's employment agreement. We want our executives to make business decisions that put the Company's interests before their own. We encourage them to feel comfortable making difficult decisions for the Company which might not otherwise be in their own long-term best interests by offering severance which would generally replace the income they would have received for the one and a half to two years following their termination of employment if we terminate them without cause.

We do not offer change in control protection, and we do not provide tax gross-ups if our NEOs are subject to the so-called "golden parachute excise tax," a special tax imposed under section 4999 of the Code on unusually large payments (in comparison to historic compensation) made in connection with a change in control. In the event of termination with cause, post-employment compensation is forfeited. Other Benefits and Perquisites Other benefits and perquisites are a part of executive compensation offered in order to provide a competitive total compensation and benefits package. Our NEOs, other than Ms. Van Buren, participate in benefit plans available to all the employees of Harland Clarke Corp. and on the same terms as similarly situated employees, such as group medical insurance and participation in the Company- sponsored 401(k) plan. Some of our NEOs may also participate in our non-elective, nonqualified deferred compensation plan known as the "Benefit Equalization Plan," or "BEP," which is a supplemental benefit program for employees whose Company contributions to the 401(k) plan are limited due to IRS annual qualified plan compensation limits. Ms. Van Buren receives life insurance plus reimbursement and tax gross-up for medical benefits. In addition, our NEOs other than Ms. Van Buren receive benefits available to other officers such as a monthly car allowance and life insurance. Certain of our NEOs are provided private country club membership. Mr. Dawson is the only NEO that is provided with a leased company car rather than a car allowance. Mr. Singleton is permitted to travel first class, and Mr. Dawson is permitted to travel first class or by chartered aircraft. Report of the Board of Directors We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have determined to include the Compensation Discussion and Analysis in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

Submitted by: Charles T. Dawson Paul G. Savas Barry F. Schwartz, Chairman

SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2012

Nonqualified Non-Equity Deferred Incentive Plan Compensation All Other Name and Principal Position Year Salary Compensation(i) Earnings(ii) Compensation(iii) Total Charles T. Dawson President & Chief Executive Officer 2012 $ 1,050,000 $ 1,458,345 $ — $ 368,925 $ 2,877,270 2011 $ 1,049,039 $ 1,128,750 $ — $ 394,039 $ 2,571,828 2010 $ 1,000,000 $ 5,307,693 $ 909 $ 202,196 $ 6,510,798 Peter A. Fera, Jr. Executive Vice President & Chief Financial Officer 2012 $ 468,000 $ 519,995 $ — $ 48,464 $ 1,036,459 2011 $ 467,653 $ 444,600 $ — $ 105,728 $ 1,017,981 2010 $ 450,000 $ 1,521,741 $ 200 $ 57,594 $ 2,029,535 James D. Singleton President and Chief Executive Officer of Harland Clarke 2012 $ 520,000 $ 548,912 $ — $ 105,182 $ 1,174,094 2011 $ 519,615 $ 520,000 $ — $ 136,528 $ 1,176,143 2010 $ 500,000 $ 1,896,509 $ 220 $ 74,202 $ 2,470,931 Raju M. Shivdasani President and Chief Executive Officer of Harland Financial Solutions 2012 $ 450,000 $ 475,020 $ — $ 56,911 $ 981,931 2011 $ 449,518 $ 480,075 $ — $ 120,036 $ 1,049,629 2010 $ 424,231 $ 1,623,902 $ 63 $ 48,864 $ 2,097,060 Anna M. Van Buren Chief Executive Officer of Faneuil 2012 $ 419,615 $ 700,893 $ — $ 622,335 $ 1,742,843 ______

(i) The compensation in this column for 2012 consists of amounts earned during 2012 and paid in 2013 under the Annual Executive Bonus Plan as follows: Mr. Dawson $1,458,345, Mr. Fera $519,995, Mr. Singleton $548,912, Mr. Shivdasani $475,020, and Ms. Van Buren $350,000 and the 2010-2012 Faneuil LTIP for Ms. Van Buren of $350,893.

(ii) Represents the above-market interest, if any, credited under our Benefits Equalization Plan ("the BEP"). We determined the above-market interest credited by determining the difference between the interest on BEP accounts calculated using the actual rate used in the plan, and 120% of the applicable federal long-term rate, with quarterly compounding for January of the applicable year, as prescribed under section 1274(d) of the Internal Revenue Code. Interest rates credited to the BEP accounts were 3.0%, 4.5%, and 5.0% for 2012, 2011, and 2010, respectively.

(iii) All Other Compensation:

All Other Compensation

Term Life, Employer Executive Contributions AD&D and to 401(k) Plan Executive and Country Disability Supplemental Other Car Club Fees Insurance Excess Benefit Tax Gross- Compensation Name Year Allowance(i) (ii) Premiums (iii) Plan (iv) Up (v) (vi) Total Charles T. Dawson 2012 $ 33,251 $ 10,590 $ 1,762 $ 87,150 $ 96,488 $ 139,684 $ 368,925 Peter A. Fera, Jr. 2012 $ 5,940 $ 5,059 $ 485 $ 36,504 $ 126 $ 350 $ 48,464 James D. Singleton 2012 $ 12,000 $ 5,340 $ 485 $ 41,600 $ 14,849 $ 30,909 $ 105,183 Raju M. Shivdasani 2012 $ 12,000 $ — $ 4,859 $ 36,000 $ 3,099 $ 953 $ 56,911 Anna M. Van Buren 2012 $ — $ — $ 13,673 $ — $ 8,662 $ 600,000 $ 622,335 ______

(i) Comprised of (i) car allowance in the case of Messrs. Fera, Singleton and Shivdasani and (ii) the aggregate incremental cost to the Company of the leased vehicle in the case of Mr. Dawson, which is calculated as the total cost of the lease payments on the car, the insurance relating to the car, gasoline used in the car, and cleaning and maintenance of the car. Messrs. Fera, Singleton and Shivdasani are eligible to receive a pre-set amount per month as a car allowance.

(ii) The Company reimburses each executive's monthly country club dues.

(iii) The amount includes executive life premiums and executive AD&D premiums for all NEOs, executive disability premiums for Mr. Shivdasani and Medical Executive Reimbursement Program for Ms. Van Buren.

(iv) Consists of (i) employer contributions to the 401(k) plan of $10,000 for each NEO except Ms. Van Buren and (ii) employer contributions to a supplemental non-qualified excess benefit plan, the BEP (described below and in the Nonqualified Deferred Compensation Table), in the following amounts: Mr. Dawson $77,150, Mr. Fera $26,504, Mr. Singleton $31,600 and Mr. Shivdasani $26,000. Ms. Van Buren does not participate in the 401(k) plan or the BEP.

(v) Consists of (i) the tax gross-up on the personal use of a company vehicle by Mr. Dawson of $16,370, (ii) the tax gross-up on executive disability premiums for Mr. Shivdasani of $2,756 and the tax gross-up of medical premiums for Ms. Van Buren of $8,662, (iii) the tax gross-up for the spousal travel and entertainment for Mr. Dawson of $28,942, Mr. Fera of $126, Mr. Singleton of $14,849 and Mr. Shivdasani of $343 and (iv) the tax gross-up for Mr. Dawson on home security of $51,176.

(vi) Consists of (i) spousal travel and entertainment for Mr. Dawson of $50,460, Mr. Fera of $350, Mr. Singleton of $30,909 and Mr. Shivdasani of $953, (ii) home security for Mr. Dawson of $89,224 and (iii) payment of amounts contractually owed to Ms. Van Buren in connection with the prior acquisition of Faneuil of $600,000 which amounts were triggered as a result of the Company's acquisition of Faneuil. The elements of NEO compensation are based upon the applicable employment contract, each NEO's long-term incentive plan agreements, Company policy regarding employee benefit plan participation (401(k) benefits, welfare and group insurance benefits), car allowance, cell phone use, or the application of past practice. Specifically, the salaries are set under the terms of the respective employment contracts. During 2012, each of our NEOs had an employment contract in effect. The material terms of these employment contracts during 2012 are detailed in the section titled Employment Contracts below. Bonus plans for each of our NEO's are outlined within their respective employment contract and long-term incentive plan agreements. Participation in the 401(k) and our nonqualified deferred compensation plan, the BEP, is pursuant to the plan documents. All other compensation is provided pursuant to written Company policy or practice according to their respective positions.

GRANTS OF PLAN BASED AWARDS FOR FISCAL YEAR 2012

Name Award Type(i), (ii) Threshold Target Maximum (iv) Charles T. Dawson Annual Bonus $ 945,000 $ 1,312,500 $ 1,837,500 Segment 2011-2013 LTIP $ — $ — $ — Consolidated 2011-2013 LTIP $ 2,025,000 $ 4,050,000 $ 6,075,000 Peter A. Fera, Jr. Annual Bonus $ 421,200 $ 468,000 $ 702,000 Segment 2011-2013 LTIP $ — $ — $ — Consolidated 2011-2013 LTIP $ 675,000 $ 1,350,000 $ 2,025,000 James D. Singleton Annual Bonus $ 468,000 $ 520,000 $ 780,000 Segment 2011-2013 LTIP $ 450,000 $ 900,000 $ 1,350,000 Consolidated 2011-2013 LTIP $ 450,000 $ 900,000 $ 1,350,000 Raju M. Shivdasani Annual Bonus $ 405,000 $ 450,000 $ 675,000 Segment 2011-2013 LTIP $ 375,000 $ 750,000 $ 1,125,000 Consolidated 2011-2013 LTIP $ 375,000 $ 750,000 $ 1,125,000 Anna M. Van Buren (iii) Annual Bonus N/A $ 350,000 N/A Faneuil 2010-2012 LTIP N/A $ 350,893 N/A ______

(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 under the heading 2011-2013 LTIP represent the threshold and target amount which might be payable in 2014 to each NEO at the end of the three year performance period (2011-2013) pursuant to the 2011-2013 LTIP, as described in more detail above under "Elements of Compensation - The 2011 M & F Worldwide Long Term Incentive Compensation Plan (the "2011-2013 LTIP"). The first row labeled 2011-2013 LTIP represents the amount of the 2011-2013 LTIP attributable to the performance of each NEO's individual business segment at the end of the three year performance period and the second row represents the amount attributable to consolidated Company results at the end of the three year performance period.

(iii) Represents Ms. Van Buren's annual bonus and Faneuil 2010-2012 LTIP payout which will be made in March 2013.

(iv) The 2011-2013 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 2011 for an aggregate maximum of $16.5 million. Under the terms of the 2011-2013 LTIP, the maximum payout to any participant is $10 million. Section 162(m) is not applicable to us because we are not a public company and M & F Worldwide has not been a public company since the MacAndrews Acquisition. Employment Contracts Mr. Dawson Prior Employment Agreement On February 13, 2008, Harland Clarke Holdings entered into an employment agreement with Mr. Dawson, effective as of January 1, 2008, which superseded his prior employment agreement with Harland Clarke Holdings dated as of May 29, 2007. The term of this employment agreement, whereby Mr. Dawson was employed as President and Chief Executive Officer of Harland Clarke Holdings and Chief Executive Officer of the Harland Clarke Business (as defined in the employment agreement), was to continue until December 31, 2013, pursuant to an extension amendment dated February 2, 2010. The current term is subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Under this employment agreement, Mr. Dawson's annual base salary was $1,000,000, and he was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Clarke Business Adjusted EBITDA for Compensation Purposes target. Mr. Dawson's annual bonus was established at 125% of his base salary if 100% of target was attained and increased ratably up to a maximum of 175% of his base salary if 145.1% of the target was attained. Pursuant to his employment agreement, Mr. Dawson participated in the 2008-2010 LTIP, for which he received a portion of the 2008-2010 LTIP bonus pool attributed to the Harland Clarke business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company. In September 2007, Mr. Dawson became President and Chief Executive Officer of Harland

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Clarke Holdings. As a result of his increased responsibilities, he was granted an additional portion of the 2008-2010 LTIP bonus pool that was based solely on consolidated performance. Mr. Dawson also received other standard officer benefits.

Amended and Restated Employment Agreement On January 1, 2011, M & F Worldwide and Harland Clarke Holdings entered into an amended and restated employment agreement with Mr. Dawson which superseded, effective January 1, 2011, the previous employment agreement dated February 13, 2008. Pursuant to this agreement, Mr. Dawson will continue to serve as the President and Chief Executive Officer of the Company and the Chief Executive Officer of the Harland Clarke Business (as defined in the employment agreement) until December 31, 2013, subject to earlier termination as described therein. Under his employment agreement, Mr. Dawson's annual base salary is $1,050,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of the Company. His target annual bonus is 125% of base salary and increases ratably up to a maximum of 175% of his base salary if 145.1% of the targets are attained. Mr. Dawson will also participate in the Company's 2011-2013 LTIP. Mr. Dawson will continue to receive other standard officer benefits. Mr. Fera Prior Employment Agreement On February 13, 2008, Harland Clarke Holdings entered into an employment agreement with Mr. Fera, effective as of January 1, 2008, which superseded his prior employment agreement with Harland Clarke Holdings dated May 2, 2007. This employment agreement, whereby Mr. Fera was employed as Chief Financial Officer of Harland Clarke Holdings and Executive Vice President and Chief Financial Officer of the Harland Clarke Business, was to continue until December 31, 2013, pursuant to an extension amendment dated February 2, 2010. The term was subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Under this employment agreement, Mr. Fera's annual base salary was $450,000 and he was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Clarke Business Adjusted EBITDA for Compensation Purposes target. Mr. Fera's annual bonus was 100% of his base salary if 100% of target is attained and increased ratably up to a maximum of 150% of his base salary if 145.1% of the target was attained. Pursuant to this agreement, Mr. Fera participated in the 2008-2010 LTIP, for which he received a portion of the 2008-2010 LTIP bonus pool attributable to the Harland Clarke Business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company, and he also received other standard officer benefits. Amended and Restated Employment Agreements On January 1, 2011, Harland Clarke Holdings entered into an amended and restated employment agreement with Mr. Fera which superseded, effective January 1, 2011, the previous employment agreement dated February 13, 2008. Pursuant to this agreement, Mr. Fera will continue to serve as the Executive Vice President and the Chief Financial Officer of the Company until December 31, 2013, subject to earlier termination as described therein. Under his employment agreement Mr. Fera's annual base salary is $468,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of the Company. His target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of his base salary if 145.1% of the targets are attained. Mr. Fera will also participate in the Company's 2011-2013 LTIP. Mr. Fera will continue to receive other standard officer benefits. Mr. Singleton Prior Employment Agreement On February 7, 2008, Harland Clarke Holdings entered into an employment agreement with Mr. Singleton, effective as of January 1, 2008, which superseded his prior employment agreement with Harland Clarke Holdings dated May 2, 2007. This employment agreement, whereby Mr. Singleton was employed as Chief Operating Officer and President of Harland Clarke was to continue until December 31, 2013, pursuant to an extension amendment dated February 2, 2010. The current term was subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Under this employment agreement, Mr. Singleton's annual base salary was $500,000 and he was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Clarke Business Adjusted EBITDA for Compensation Purposes target. Mr. Singleton's annual bonus was 100% of his base salary if 100% of target was attained and increased ratably up to a maximum of 150% of his base salary if 145.1% of the target was attained. Pursuant to this agreement, Mr. Singleton participated in the 2008-2010 LTIP, for which he received a portion of the 2008-2010 LTIP bonus pool attributable to the Harland Clarke Business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company, and he also received other standard officer benefits. Amended and Restated Employment Agreement

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On January 1, 2011, Harland Clarke Holdings entered into an amended and restated employment agreement with Mr. Singleton which superseded, effective January 1, 2011, the previous employment agreement dated February 7, 2008. Pursuant to this agreement, Mr. Singleton will continue to serve as the President and Chief Operating Officer of the Harland

Clarke Business (as defined in the employment agreement) until December 31, 2013, subject to earlier termination as described therein. Mr. Singleton's title was changed to President and Chief Executive Officer of Harland Clarke effective March 12, 2012. Under his employment agreement Mr. Singleton's annual base salary is $520,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of the Harland Clarke Business. His target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of his base salary if 145.1% of the targets are attained. Mr. Singleton will also participate in the Company's 2011-2013 LTIP. Mr. Singleton will continue to receive other standard officer benefits. Mr. Shivdasani Prior Employment Agreement Effective August 31, 2009, Harland Financial Solutions and Harland Clarke Holdings amended the employment agreement with Mr. Shivdasani to provide that Mr. Shivdasani was employed as President of Harland Financial Solutions until December 31, 2010, subject to earlier termination as described in the "Potential Payments Upon Termination or Change-in-Control" section below. Mr. Shivdasani's annual base salary was $375,000 in 2009 and increased to $425,000 effective January 1, 2010 in light of his increased responsibilities as President of Harland Financial Solutions. He was entitled to receive annual bonuses based on the attainment of a certain percentage of the Harland Financial Solutions Adjusted EBITDA for Compensation Purposes target. Mr. Shivdasani's bonus for 2009 was 60% of his base salary if 100% of target was attained and increased ratably up to a maximum of 80% of his base salary if 125.1% of the target was attained. Mr. Shivdasani's annual bonus target for 2010 increased to 75% of his base salary if 100% of target was attained and increased ratably up to a maximum of 112.5% of his base salary if 145.1% of target was obtained, in light of his increased responsibilities as President of Harland Financial Solutions. Mr. Shivdasani also received a portion of the 2008-2010 LTIP attributable to the Harland Financial Solutions business and a portion of the 2008-2010 LTIP bonus pool attributed to the Company, and he also received other standard officer benefits. Amended and Restated Employment Agreement On January 1, 2011, Harland Clarke Holdings and Harland Financial Solutions, Inc. entered into an amended and restated employment agreement with Mr. Shivdasani which superseded, effective January 1, 2011, the previous employment agreement dated August 31, 2009. Pursuant to this agreement, Mr. Shivdasani will continue to serve as the President of Harland Financial Solutions until December 31, 2013, subject to earlier termination as described therein. Mr. Shivdasani's title was changed to President and Chief Executive Officer of Harland Financial Solutions effective March 12, 2012. Under his employment agreement his annual base salary is $450,000. He is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of HFS. His target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of his base salary if 145.1% of the targets are attained. Mr. Shivdasani will also participate in the Company's 2011-2013 LTIP. Mr. Shivdasani will continue to receive other standard officer benefits. Ms. Van Buren Employment Agreement On August 20, 2010, Faneuil, Inc. entered into an employment agreement with Ms. Van Buren, effective as of January 1, 2010. Pursuant to this employment agreement, Ms. Van Buren served as Chief Executive Officer and Director of Faneuil, Inc. through December 31, 2012. Under her employment agreement her annual base salary was $400,000. She was entitled to receive an annual bonus based on Faneuil's Board's determination. Ms. Van Buren also participated in the Faneuil's 2010-2012 LTIP. Amended and Restated Employment Agreement On February 22, 2013, Harland Clarke Holdings and Faneuil, Inc. entered into an employment agreement with Ms. Van Buren, effective as of January 1, 2013. Pursuant to this employment agreement, Ms. Van Buren will serve as President and Chief Executive Officer of Faneuil, Inc. until December 31, 2015, subject to earlier termination as described therein. Under her employment agreement Ms. Van Buren's annual base salary is $420,000. She is entitled to receive an annual bonus based on the attainment of a certain percentage of Adjusted EBITDA for Compensation Purposes of Faneuil. Her target annual bonus is 100% of base salary and increases ratably up to a maximum of 150% of her base salary if 145.1% of the targets are attained. Ms. Van Buren will also participate in the Company's 2013-2015 LTIP.

NONQUALIFIED DEFERRED COMPENSATION TABLE FOR FISCAL YEAR 2012

Registrant Aggregate Executive Contributions Contributions in Last Aggregate Earnings Withdrawals/ Aggregate Balance at Name in Last FY FY (i) in Last FY Distributions Last FYE (ii) Charles T. Dawson $ — $ 77,150 $ 29,895 $ — $ 1,031,519 Peter A. Fera, Jr. $ — $ 26,504 $ 7,328 $ — $ 256,099 James D. Singleton $ — $ 31,600 $ 8,509 $ — $ 297,015 Raju M. Shivdasani $ — $ 26,000 $ 4,436 $ — $ 157,598 Anna M. Van Buren $ — $ — $ — $ — $ — ______

(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 December 31, 2012. Material Features of the Deferred Compensation Plan Our deferred compensation plan is a non-elective, nonqualified deferred compensation plan known as the BEP. It serves as a supplemental benefit program for employees whose Company contributions to the 401(k) plan are limited due to IRS annual qualified plan compensation limits. The employees of Harland Clarke Corp. whose eligible earnings are greater than the IRS qualified plan compensation limit are automatically eligible for this benefit. The employees of Faneuil do not participate in this plan. Employees may not defer income into this plan. We do not match contributions under our tax-qualified 401(k) plan in respect of pay above the tax-qualified plan compensation limits. Instead, we credit a notional contribution in respect of pay above the tax-qualified plan limits to the employee's BEP account. The BEP is an unfunded deferred compensation plan. Interest is compounded quarterly and credited to each participant's account based upon the 10-Year U.S. Treasury Bond yield as in effect on the first business day of the plan year rounded to the next higher one- half percent, plus one percent. For plan year 2012, the rate was 3.0%. This methodology of applying interest is based on the language outlined in the BEP. Interest rates are provided annually by a compensation consultant. Distributions are allowed only at termination, retirement, death, or disability and are paid in a single lump sum on the first day of the seventh month following the occurrence of such a qualifying event. Potential Payments Upon Termination or Change-in-Control Each of our NEOs is entitled to certain payments and benefits in the event of termination of his or her employment. These payments and benefits are set forth in each of our NEO's respective employment agreements, described above. The terms of these arrangements were set through the course of arms-length negotiations with each of the NEOs. Messrs. Dawson, Singleton, Shivdasani, and Ms. Van Buren will be entitled to continued payment of his or her base salary respectively for a period of two years after termination in the event he or she is terminated without cause or resigns for good reason. Mr. Fera will be entitled to continued payment of his base salary for a period of 18 months after termination in the event he is terminated without cause or resigns for good reason. In the case of termination without cause or in the event of resignation for good reason, Messrs. Dawson, Singleton, and Shivdasani would be entitled to receive: (i) the annual bonus for the year in which termination occurred, if it would have otherwise been payable but for the termination; (ii) any earned but unpaid annual bonus for the year prior to the year in which termination occurred; and (iii) a pro rata amount payable, if any, under the 2011-2013 LTIP in accordance with its terms; in each case, paid at the time and in the manner the bonus or long-term incentive plan amount, as applicable, is paid to other executives. In the case of termination without cause, or in the event of resignation for good reason, Mr. Fera would be entitled to receive: (i) a pro rata annual bonus for the year in which termination occurred, if it would have otherwise been payable but for the termination; (ii) any earned but unpaid annual bonus for the year prior to the year in which termination occurred; and Mr. Fera would be entitled to a pro rata amount payable, if any, under the 2011-2013 LTIP in accordance with its terms; in each case, paid at the time and in the manner the bonus or long-term incentive plan amount, as applicable, is paid to other executives.

In the case of termination without cause or in the event of resignation for good reason, Ms. Van Buren would be entitled to receive: (i) the annual bonus for the year in which termination occurred, if it would have otherwise been payable but for the termination; (ii) any earned but unpaid annual bonus for the year prior to the year in which termination occurred; and (iii) a pro rata amount payable, if any, under the 2013-2015 LTIP in accordance with its terms; in each case, paid at the time and in the manner the bonus or long-term incentive plan amount, as applicable, is paid to other executives. In addition, in the case of termination of the employment of an NEO without cause, or if the executive resigns for good reason, the executive will also be entitled to receive continued participation in applicable welfare benefit plans for 12 months after termination with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the NEO as was effective on the date of termination. If the employment of any of our NEOs is terminated for cause, further compensation is forfeited, except for accrued and unpaid base salary. In our NEO's employment agreements, "cause" is generally defined as neglect of duties, continued incompetence, unsatisfactory attendance, conviction of any felony, embezzlement, disloyalty, defalcation, usurpation of a Company opportunity, violation of rules, instructions, or requirements regarding conduct of employees, willful misconduct or breach of fiduciary obligation owed to the Company, breach of employment agreement, discriminatory or sexually harassing behavior, any act that has a material adverse effect upon the reputation or public confidence in the Company, material insubordination, or drug or alcohol use while working or representing the Company. Pursuant to the terms of the employment agreements of each of our NEOs, "good reason" means, without the advance written consent of the executive: (i) a reduction in the executive's base salary; or (ii) a material and continuing reduction in the executive's responsibilities, in each case which the Company fails to cure within 30 days of receiving notice from the executive of such an event. In order to receive any of the payments or benefits described above which are payable upon termination of employment, the NEO must execute an irrevocable release of claims in favor of the Company. Each NEO is bound by a two-year non-competition covenant as well as a two-year non-solicitation covenant following termination of his employment. Breach of either the non-competition or the non-solicitation covenants will result in a cessation of salary continuation and premium rates under the group health benefits. If the executive's employment term is not renewed and the executive's employment is terminated after the end of the term, other than for cause or disability, the NEO will be subject to a minimum of a one- year non-competition covenant and a one-year non-solicitation covenant. None of our NEOs will receive any additional payments or benefits beyond the severance terms described above in the event there is a change in control of the Company, or his or her employment is terminated following a change in control of the Company. In the case of death or disability, each NEO would be entitled to receive (i) the pro rata annual bonus for the year in which death or disability occurred, if it would have otherwise been payable but for the death or disability, (ii) any earned but unpaid annual bonus for the year prior to the year in which death or disability occurred; and (iii) a pro rata amount payable, if any, under the 2011-2013 LTIP or, in the case of Ms. Van Buren, the 2013-2015 LTIP, in accordance with their respective terms; in each case, paid at the time and in the manner the bonus or long-term incentive plan amount, as applicable, is paid to other executives. The following table sets forth payments which would hypothetically be made to our NEOs in the event each is terminated without cause, or he or she resigns for good reason as of December 31, 2012. This table excludes payments under the 2011-2013 LTIP or the 2013-2015 LTIP as described under "Potential Payments upon Termination or Change-in-Control" above because, as indicated in the footnotes to the table, they are payable only at the termination of the 2011-2013 LTIP or 2013-2015 LTIP, and are not a continuing benefit.

TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON AS OF DECEMBER 31, 2012

Deferred Executive Compensation Separation Health/Welfare Annual Bonus Outplacement Plan Balance Name and Principal Position Pay (i) Vacation (ii) Plans (iii) Plan (iv) Assistance (v) (vi) Total Charles T. Dawson, President and CEO $ 2,100,000 $ 11,077 $ 5,198 $ 1,312,500 $ 30,000 $ 1,031,519 $ 4,490,294 Peter A. Fera, Jr., EVP & CFO $ 702,000 $ — $ 13,297 $ 468,000 $ 30,000 $ 256,099 $ 1,469,396 James D. Singleton, President & CEO of Harland Clarke $ 1,040,000 $ — $ 13,166 $ 520,000 $ 30,000 $ 297,015 $ 1,900,181 Raju M. Shivdasani, President & CEO of Harland Financial Solutions $ 900,000 $ — $ 9,359 $ 450,000 $ 30,000 $ 157,598 $ 1,546,957 Anna Van Buren, CEO of Faneuil $ 420,000 $ — $ 20,483 $ 420,000 $ — $ — $ 860,483 ______

(i) For each NEO, upon termination of the executive without cause or resignation for good reason (each as defined in each employment agreement), the executive is entitled to receive continued payment of base salary for the following periods: 24 months in the case of Messrs. Dawson, Singleton, and Shivdasani and Ms. Van Buren; 18 months in the case of Mr. Fera.

(ii) Upon termination, the executive is entitled to his or her earned and unused vacation for the current year. Effective December 31, 2012, certain subsidiaries established a policy pursuant to which up to 16 hours of vacation may be carried over from year to year. Mr. Shivdasani and Ms. Van Buren are eligible to carry over 40 hours of vacation 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 2012 based on the employee's enrollment in dental, medical and vision plans as of December 31, 2012. The employer portion for Ms. Van Buren reflects costs for dental and medical only.

(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 an 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 except for Mr. Fera, who is entitled to a pro rata share of his annual bonus. 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, Messrs. Dawson, Singleton, Shivdasani and Fera are entitled to standard outplacement assistance for the key executive level 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, 2012.

DIRECTORS' COMPENSATION TABLE FOR FISCAL YEAR 2012

Pension Value and Nonqualified Fees Earned Non-Equity Deferred or Paid in Option Incentive Plan Compensation All Other Name Cash Stock Awards Awards Compensation Earnings Compensation Total Barry F. Schwartz(i) $ — $ — $ — $ — $ — $ — $ — Paul G. Savas(i) $ — $ — $ — $ — $ — $ — $ — Charles T. Dawson(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 LLC. Pursuant to the Second Amended and Restated Management Services Agreement, M & F Worldwide paid to MacAndrews & Forbes LLC, a wholly owned subsidiary of MacAndrews, a fee of $2.5 million per calendar quarter, beginning May 1, 2007. The total amount paid to MacAndrews & Forbes LLC in 2012, 2011, and 2010 pursuant to the Second Amended and Restated Management Services Agreement was $10.0 million in each year.

(ii) Mr. Dawson did not receive any compensation for his service as a director in 2012, 2011 and 2010.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters M & F Worldwide beneficially owns all the outstanding shares of our common stock. None of our executive officers or directors owns any of our common stock. M & F Worldwide is wholly owned by MacAndrews, which in turn is wholly owned by Mr. Ronald O. Perelman. M & F Worldwide, MacAndrews and Mr. Perelman all have a business address at 35 East 62nd Street, New York, NY 10065.

Item 13. Certain Relationships and Related Transactions and Director Independence Related Person Transactions Policy As a wholly owned subsidiary of MacAndrews, we are subject to M & F Worldwide's Code of Business Conduct and Ethics (the "Code"), which covers transactions and other activities by employees of M & F Worldwide and its subsidiaries (including our directors and officers) that give rise to conflicts of interest. The conflicts of interest policy in the Code limits or prohibits, among other things, transactions between the employee and M & F Worldwide and transactions by the employee with (and employment with or substantial investments in) an enterprise that is a present or potential supplier, customer or competitor, or that engages or may engage in any other business with M & F Worldwide. In addition, the policy also prohibits employees from appropriating for personal benefit business opportunities that should be first offered to M & F Worldwide. The Code also limits similar transactions by family members of employees. Any waivers of the Code must be approved by the Board of Directors of M & F Worldwide. All of the transactions reported under Item 13 of this Annual Report on Form 10-K that occurred during our last completed fiscal year were not subject to the Code because they were not transactions involving conflicts of interest covered by the Code. All of the reported transactions were approved by our Board of Directors, and all such transactions entered into after the date of the indentures governing our 2015 Senior Notes and 2018 Senior Secured Notes complied with the limitations on affiliate transactions contained in the indentures. Notes Receivable On December 27, 2011, the Company entered into a revolving credit agreement with its indirect parent, MacAndrews, whereby MacAndrews could borrow an amount not exceeding $30.0 million. The facility is unsecured, bears interest at LIBOR plus 2% and matures in December 2013. The facility was drawn in full by MacAndrews on December 27, 2011 and remained outstanding at December 31, 2012. Interest income of $0.8 million was recorded and related payments were received during 2012. Insurance

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We participate in MacAndrews's directors' and officers' insurance program, which also covers other affiliates of MacAndrews. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. We bear an allocation of the premiums for such coverage, which we believe is more favorable

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents than the premiums we could secure under stand alone coverage. The Company paid MacAndrews $2.0 million, $0.1 million and $0.0 million in 2012, 2011, and 2010, respectively, in respect of such insurance coverage. Tax Sharing Agreement The Company, M & F Worldwide and another subsidiary of M & F Worldwide entered into a tax sharing agreement in 2005 (the "2005 Tax Sharing Agreement") whereby M & F Worldwide files consolidated federal income tax returns on our and our affiliated subsidiaries' behalf, as well as on behalf of certain other subsidiaries of M & F Worldwide for periods prior to the MacAndrews Acquisition. Under the 2005 Tax Sharing Agreement, we made periodic payments to M & F Worldwide. These payments are based on the applicable federal income tax liability that we and our affiliated subsidiaries would have had for each taxable period if we had not been included in our parent company's consolidated tax filing group. Similar provisions apply with respect to any foreign, state or local income or franchise tax returns filed by any consolidated, combined or unitary group containing the Company for each period that we or any of our subsidiaries are included in any such group for foreign, state or local tax purposes. Effective with the closing of the MacAndrews Acquisition, the 2005 Tax Sharing Agreement was amended and restated to incorporate MacAndrews as the common parent (the "2011 Tax Sharing Agreement"). For the periods beginning on or after December 22, 2011, MacAndrews will file consolidated federal income tax returns on the Company's behalf, as well as on the behalf of certain other subsidiaries of MacAndrews. The terms of the 2011 Tax Sharing Agreement are consistent with the terms of the 2005 Tax Sharing Agreement. The Company made net payments to MacAndrews of $94.6 million in 2012 and net payments to M & F Worldwide of $70.3 million and $83.5 million in 2011 and 2010, respectively, pursuant to the terms of the tax sharing agreements. To the extent that we have losses for tax purposes, the 2005 Tax Sharing Agreement and the 2011 Tax Sharing Agreement permit us to carry those losses back to periods beginning on or after December 15, 2005 and forward for so long as we are included in the affiliated group of which our parent is the common parent (in both cases, subject to federal, state and local rules on limitation and expiration of net operating losses) to reduce the amount of the payments we otherwise would be required to make to M & F Worldwide, under the 2005 Tax Sharing Agreement, or MacAndrews, under the 2011 Tax Sharing Agreement, in years in which it has current income for tax purposes. If the loss is carried back to the previous period, M & F Worldwide, under the 2005 Tax Sharing Agreement, and MacAndrews, under the 2011 Tax Sharing Agreement, shall pay us an amount equal to the decrease of the taxes we would have benefited as a result of the carry back. Allocations As a wholly owned subsidiary of M & F Worldwide, we receive certain financial, administrative and risk management oversight from M & F Worldwide. These fees are allocations of shared service costs from our parent and are included in selling, general and administrative expenses in the consolidated statements of operations. The Company recorded $2.7 million annually during the years ended December 31, 2012, 2011, and 2010 related to such fees. Director Independence Because we are not listed on any exchange, we are not subject to any listing standards for director independence. Under the listing standards of either the New York Stock Exchange or NASDAQ, however, none of our directors are independent because each of our directors is either one of our officers or an officer of M & F Worldwide.

Item 14. Principal Accounting Fees and Services The Board of Directors along with the M & F Worldwide Audit Committee selected Ernst & Young LLP as the independent auditors for the Company for the years ended December 31, 2012 and 2011. Audit Fees. The aggregate fees and expenses that Ernst & Young LLP billed to us for professional services rendered for the audits of our financial statements and reviews of the financial statements included in our quarterly reports on Form 10-Q were $2.9 million and $2.2 million for 2012 and 2011, respectively. Audit services include fees associated with the annual audit and reviews of quarterly reports on Form 10-Q and comfort letters and reviews related to financing transactions. Audit-Related Fees. The aggregate fees and expenses that Ernst & Young LLP billed to us for audit-related services rendered in 2012 and 2011 were $0.9 million and $0.9 million, respectively. Audit-related services include SAS 70 and SSAE 16 reports on internal controls, due diligence, accounting consultations and acquisition-related consulting services. Tax Fees. The aggregate fees and expenses that Ernst & Young LLP billed us for assistance with acquisition-related income tax matters were $0.1 million and $0.0 million during 2012 and 2011, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document All Other Fees. No such fees were incurred by us in 2012 and 2011. The Board of Directors, along with the M & F Worldwide Audit Committee, when applicable, considered whether any audit-related and non-audit service that Ernst & Young LLP provided were compatible with maintaining the auditor's

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents independence from management and Harland Clarke Holdings. Generally, the plan of audit services to be provided and an estimate of the cost for such audit service is approved in advance. Approval in advance for each calendar year of a plan of the expected services and a related budget, submitted by management, for audit-related services, tax services and other services that the Company expects the auditors to render during the year has also generally occurred. Any expenditure in excess of the approval limits for approved services, and any engagement of the auditors to render services in addition to those previously approved, requires advance approval by the Board of Directors. The Board of Directors, along with the M & F Worldwide Audit Committee, when applicable, pre-approved the audit plan, all of the fees disclosed above and the non-audit services that the Company expects Ernst & Young LLP to provide in 2012.

PART IV

Item 15. Exhibits and Financial Statement Schedules (a) (1 and 2) Financial statements and financial statement schedule. See Index to Consolidated Financial Statements and Financial Statement Schedules, which appears on page F-1 herein. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. (3) Exhibits.

Exhibit Number Description 2.1 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). 2.4 Securities Purchase Agreement, dated as of December 15, 2010, by and between Scantron Corporation and KUE Digital International LLC (incorporated by reference to Exhibit 2.1 of M & F Worldwide Corp.'s Current Report on Form 8-K, dated December 16, 2010). 2.5 Stock Purchase Agreement, dated as of March 19, 2012, by and among Harland Clarke Holdings Corp., FLX Holdings LLC and Faneuil Holdco LLC. (incorporated by reference to Exhibit 2.5 of Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2011). 3.1 Certificate of Incorporation of Harland Clarke Holdings Corp., as amended (incorporated by reference to Exhibit 3.1(i) of Harland Clarke Holdings Corp.'s Registration Statement on Form S-4, Commission File No. 333-133253). 3.2 By-laws of Harland Clarke Holdings Corp. (incorporated by reference to Exhibit 3.1(ii) of Harland Clarke Holdings Corp.'s Registration Statement on Form S-4, Commission File No. 333-133253). 4.1 Indenture dated as of May 1, 2007 among Harland Clarke Holdings Corp., the co-issuers and guarantors party thereto and Wells Fargo Bank, N.A., as trustee. (incorporated by reference to Exhibit 4.1 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.2 Registration Rights Agreement (relating to the initial notes) dated as of May 1, 2007 by and among Harland Clarke Holdings Corp., the Guarantors (listed therein), Credit Suisse Securities (USA) LLC, Bear, Stearns & Co., Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. (incorporated by reference to Exhibit 4.4 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.3 Credit Agreement, dated as of April 4, 2007 among Harland Clarke Holdings Corp., the Subsidiary Borrowers (listed therein), the Lenders (listed therein) and Credit Suisse, Cayman Islands Branch, as administrative agent. (incorporated by reference to Exhibit 4.5 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.4 First Amendment to Credit Agreement, dated as of May 4, 2007, by and among Harland Clarke Holdings Corp., the lender parties (listed therein) and Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.6 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.5 Guarantee and Collateral Agreement, dated as of May 1, 2007, by and among Harland Clarke Holdings Corp. and certain subsidiaries in favor of Credit Suisse, Cayman Islands Branch. (incorporated by reference to Exhibit 4.7 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 4.6 Assumption Agreement, dated as of May 1, 2007 by and among Harland Clarke Corp., Harland Checks and Services, Inc., Scantron Corporation, Harland Financial Solutions, Inc., HFS Core Systems, Inc., Centralia Holding Corp. and John H. Harland Company of Puerto Rico in favor of Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.8 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717).

Exhibit Number Description 4.7 Intellectual Property Security Agreement, dated as of May 1, 2007, by and among B(2)Direct, Inc., Checks in the Mail, Inc. and Clarke American Checks, Inc., the Grantors, in favor of Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.9 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.8 Intellectual Property Security Agreement, dated as of May 1, 2007, by and among Harland Clarke Corp., Harland Checks and Services, Inc., Scantron Corporation, Harland Financial Solutions, Inc. and HFS Core Systems, Inc., the Grantors, in favor of Credit Suisse, Cayman Islands Branch, as administrative and collateral agent. (incorporated by reference to Exhibit 4.10 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.9 Joinder Agreement, dated as of May 1, 2007, by and among B(2)Direct, Inc., Checks in the Mail, Inc., Clarke American Checks, Inc., New CS, Inc., New SCSFH, Inc., H Acquisition Corp., New SCH, Inc., New SFH, Inc. and Credit Suisse, Cayman Islands Branch. (incorporated by reference to Exhibit 4.11 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.10 Joinder Agreement, dated as of May 1, 2007, by and among Harland Clarke Corp., Harland Checks and Services, Inc., Scantron Corporation, Harland Financial Solutions, Inc., HFS Core Systems, Inc. and Credit Suisse, Cayman Islands Branch. (incorporated by reference to Exhibit 4.12 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.11 Deed to Secure Debt by Harland Clarke Corp. to Credit Suisse, Cayman Islands Branch (5096 Panola Industrial Blvd, Decatur, Georgia and 2933-2939 Miller Road, Decatur, Georgia). (incorporated by reference to Exhibit 4.14 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.12 Deed of Trust, Security Agreement, Assignment of Rents and Leases and Fixture Filing by Scantron Corporation in favor of First American Title Insurance Company, as trustee for the benefit of Credit Suisse, Cayman Islands Branch (2020 South 156 Circle, Omaha, Nebraska). (incorporated by reference to Exhibit 4.15 to Harland Clarke Holdings Corp. Registration Statement on Form S-4, Commission File No. 333-143717). 4.13 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). 4.14 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). 4.15 Credit Agreement, dated as of April 4, 2007, as amended by the First Amendment dated as of May 4, 2007 and the Second Amendment dated as of May 10, 2012, by and among the Lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent, Harland Clarke Holdings Corp. as Borrower and subsidiaries of Harland Clarke Holdings Corp. party thereto, as subsidiary Co-Borrowers (incorporated by reference to Exhibit 4.15 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253). 4.16 Indenture, dated as of July 24, 2012, by and among Harland Clarke Holdings Corp., as Issuer, the Co-Issuers named therein, the Guarantors named therein, and Wells Fargo Bank, National Association, as trustee and collateral agent (incorporated by reference to Exhibit 4.16 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253). 4.17 Purchase Agreement, dated as of July 17, 2012, by and among Harland Clarke Holdings Corp., as Issuer, certain Co- Issuers named therein, and the Initial Purchasers named therein (incorporated by reference to Exhibit 4.17 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253). 4.18 Security Agreement, dated as of July 24, 2012, by and among Harland Clarke Holdings Corp., certain subsidiaries of Harland Clarke Holdings Corp. named therein, and Wells Fargo Bank, National Association, as collateral trustee (incorporated by reference to Exhibit 4.18 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 4.19 Collateral Trust Agreement, dated as of July 24, 2012, by and among, Harland Clarke Holdings Corp., certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands Branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee (incorporated by reference to Exhibit 4.19 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended June 30, 2012, Commission File No. 333-133253).

Exhibit Number Description 4.20 Amendment Agreement, dated as of May 10, 2012, by and among the Lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent, Harland Clarke Holdings Corp. as Borrower and subsidiaries of Harland Clarke Holdings Corp. party thereto, as subsidiary Co-Borrowers (incorporated by reference to Exhibit 4.20 to Harland Clarke Holdings Corp. Form 10-Q for the quarterly period ended September 30, 2012, Commission File No. 333-133253). 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. 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). 10.3+ 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). 10.4+ 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). 10.5+ 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). 10.6+ 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). 10.7+ Employment Agreement dated February 13, 2008 between Harland Clarke Corp. and Peter A. Fera, Jr. (incorporated by reference to Exhibit 10.2 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on February 15, 2008). 10.8+ 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). 10.9+ Employment Agreement, dated as of February 7, 2008, between Harland Clarke Holdings Corp. and Daniel Singleton (incorporated by reference to Exhibit 10.14 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008). 10.10+ Employment Agreement, dated as of May 5, 2008, between Harland Clarke Holdings Corp., Harland Financial Solutions and Raju M. Shivdasani (incorporated by reference to Exhibit 10.15 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008). 10.11 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). 10.12+ 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 (incorporated by reference to Exhibit 10.18 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008). 10.13+ 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 (incorporated by reference to Exhibit 10.19 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008). 10.14+ Amendment, dated as of February 2, 2010, to the Employment Agreement, dated as of February 13, 2008, between Harland Clarke Holdings Corp. and Charles T. Dawson (incorporated by reference to Exhibit 10.21 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009). 10.15+ Amendment, dated as of February 2, 2010, to the Employment Agreement, dated as of February 7, 2008, between Harland Clarke Holdings Corp. and Daniel Singleton (incorporated by reference to Exhibit 10.22 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.16+ Amendment, dated as of February 2, 2010, to the Employment Agreement, dated as of February 13, 2008, between Harland Clarke Holdings Corp. and Peter A. Fera, Jr. (incorporated by reference to Exhibit 10.23 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009).

Exhibit Number Description 10.17+ Amendment, dated as of February 22, 2010, to the Employment Agreement, dated as of May 5, 2008, among Harland Clarke Holdings Corp., Harland Financial Solutions and Raju Shivdasani (incorporated by reference to Exhibit 10.24 to Harland Clarke Holdings Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009). 10.18+ Employment Agreement, dated as of January 1, 2011, by and among M & F Worldwide Corp., Harland Clarke Holdings Corp. and Charles Dawson (incorporated by reference to Exhibit 10.1 to M & F Worldwide Corp.'s Current Report on Form 8-K filed on January 6, 2011). 10.19+ Employment Agreement, dated as of January 1, 2011, between Harland Clarke Holdings Corp. and Peter Fera (incorporated by reference to Exhibit 10.2 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on January 6, 2011). 10.20+ Employment Agreement, dated as of January 1, 2011, between Harland Clarke Holdings Corp. and Daniel Singleton (incorporated by reference to Exhibit 10.3 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on January 6, 2011). 10.21+ Employment Agreement, dated as of January 1, 2011, by and among Harland Clarke Holdings Corp., Harland Financial Solutions, Inc. and Raju Shivdasani (incorporated by reference to Exhibit 10.4 to Harland Clarke Holdings Corp.'s Current Report on Form 8-K filed on January 6, 2011). 10.22 Amended and Restated Tax Sharing Agreement, dated as of December 21, 2011, by and among MacAndrews & Forbes Holdings Inc., M & F Worldwide Corp., Harland Clarke Holdings Corp. and PCT International Holdings Inc. (incorporated by reference to Exhibit 10.23 to Harland Clarke Holdings Corp.'s Annual Report on Form 10‑K for the fiscal year ended December 31, 2011). 10.23+* Amended and Restated Employment Agreement, dated as of August 20, 2010, between Faneuil, Inc. and Anna Van Buren. 10.24+* Employment Agreement, dated as of August 14, 2012, by and among Harland Clarke Holdings Corp., Scantron Corporation and Kevin Brueggeman. 10.25+* Employment Agreement, dated as of January 1, 2013, among Harland Clarke Holdings Corp., Faneuil, Inc. and Anna Van Buren. 21.1* Subsidiaries of Harland Clarke Holdings Corp. 31.1* Certification of Charles T. Dawson, Chief Executive Officer, dated February 25, 2013. 31.2* Certification of Peter A. Fera, Jr., Chief Financial Officer, dated February 25, 2013. 101.INS XBRL Instance Document. (1) 101.SCH XBRL Taxonomy Extension Schema.(1) 101.CAL XBRL Taxonomy Extension Calculation Linkbase. (1) 101.DEF XBRL Taxonomy Definition Linkbase. (1) 101.LAB XBRL Taxonomy Extension Labels Linkbase. (1) 101.PRE XBRL Taxonomy Extension Presentation Linkbase.(1)

______

* Filed herewith.

+ Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto.

(1) Furnished, not filed. Furnished with this Annual Report on Form 10-K are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2012 and December 31, 2011, (ii) the Consolidated Statements of Operations for the fiscal year ended December 31, 2012 (Successor), the periods from December 22 to December 31, 2011 (Successor) and January 1 to December 21, 2011 (Predecessor) and fiscal year ended December 31, 2010, (iii) Statement of Shareholder's Equity for the fiscal year ended December 31, 2012 (Successor), the periods from December 22 to December 31, 2011 (Successor) and January 1 to December 21, 2011 (Predecessor) and fiscal year ended December 31, 2010, (iv) the Consolidated Statements of Cash Flows for the fiscal year ended December

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 31, 2012 (Successor), the periods from December 22 to December 31, 2011 (Successor) and January 1 to December 21, 2011 (Predecessor) and fiscal year ended December 31, 2010, and (v) Notes to Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HARLAND CLARKE HOLDINGS CORP.

Dated: February 25, 2013 By: /s/ Charles T. Dawson Charles T. Dawson President, Chief Executive Officer and Director (Principal Executive Officer)

Dated: February 25, 2013 By: /s/ Peter A. Fera, Jr. Peter A. Fera, Jr. Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Dated: February 25, 2013 By: /s/ J. Michael Riley J. Michael Riley Vice President and Controller (Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Charles T. Dawson President, Chief Executive Officer and February 25, 2013 Charles T. Dawson Director

/s/ Paul G. Savas Director February 25, 2013 Paul G. Savas

/s/ Barry F. Schwartz Director February 25, 2013 Barry F. Schwartz

The following consolidated financial statements of Harland Clarke Holdings Corp. and Subsidiaries are included in Item 8:

Pages Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2012 and December 31, 2011 F-3 Consolidated Statements of Operations for the fiscal year ended December 31, 2012 (Successor), the periods from December 22 to December 31, 2011 (Successor) and January 1 to December 21, 2011 (Predecessor) and the fiscal year ended December 31, 2010 (Predecessor) F-4 Consolidated Statements of Comprehensive (Loss) Income for the fiscal year ended December 31, 2012 (Successor), the periods from December 22 to December 31, 2011 (Successor) and January 1 to December 21, 2011 (Predecessor), and the fiscal year ended December 31, 2010 (Predecessor). F-5 Consolidated Statements of Stockholder's Equity for the fiscal year ended December 31, 2012 (Successor), the periods from December 22 to December 31, 2011 (Successor) and January 1 to December 21, 2011 (Predecessor), and the fiscal year ended December 31, 2010 (Predecessor) F-6 Consolidated Statements of Cash Flows for the fiscal year ended December 31, 2012 (Successor), the periods from December 22 to December 31, 2011 (Successor) and January 1 to December 21, 2011 (Predecessor), and the fiscal year ended December 31, 2010 (Predecessor) F-7 Notes to Consolidated Financial Statements F-8 Schedule II - Valuation and Qualifying Accounts and Reserves F-46

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

F-1

The Board of Directors and Stockholder of Harland Clarke Holdings Corp.

We have audited the accompanying consolidated balance sheets of Harland Clarke Holdings Corp. and subsidiaries as of December 31, 2012 and 2011, the related consolidated statements of operations, comprehensive (loss) income, stockholder's equity, and cash flows for the fiscal year ended December 31, 2012 (Successor), the period from December 22 to December 31, 2011 (Successor), the period from January 1 to December 21, 2011 (Predecessor) and the fiscal year ended December 31, 2010 (Predecessor). Our audits also included the financial statement schedule II listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Harland Clarke Holdings Corp. and subsidiaries' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Harland Clarke Holdings Corp. and subsidiaries' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Harland Clarke Holdings Corp. and subsidiaries at December 31, 2012 and December 31, 2011 and the consolidated results of their operations and their cash flows for the fiscal year ended December 31, 2012, the period from December 22 to December 31, 2011 (Successor), the period from January 1 to December 21, 2011 (Predecessor), and the fiscal year ended December 31, 2010 (Predecessor), in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Stamford, Connecticut February 25, 2013

F-2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Harland Clarke Holdings Corp. and Subsidiaries Consolidated Balance Sheets (in millions, except share data)

December 31, December 31, 2012 2011 (recasted) ASSETS Current assets: Cash and cash equivalents $ 102.0 $ 101.8 Marketable securities — 56.6 Accounts receivable (net of allowances of $1.5 and $1.8) 132.1 121.3 Inventories 29.0 43.2 Income taxes receivable 23.7 15.7 Notes receivable - related party 30.0 — Deferred tax assets 45.1 25.5 Prepaid expenses and other current assets 56.7 54.0 Total current assets 418.6 418.1 Property, plant and equipment, net 190.0 210.7 Goodwill 761.6 758.6 Other intangible assets, net 1,535.6 1,659.0 Contract acquisition payments, net 17.6 — Notes receivable - related party — 30.0 Other assets 63.0 27.3 Total assets $ 2,986.4 $ 3,103.7 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 44.5 $ 39.1 Deferred revenues 133.9 82.2 Current maturities of long-term debt 78.5 45.1 Accrued liabilities: Salaries, wages and employee benefits 55.9 58.1 Income and other taxes payable 11.9 12.8 Customer incentives 52.0 57.4 Payable to parent 0.1 0.2 Other current liabilities 42.1 33.7 Total current liabilities 418.9 328.6 Long-term debt 1,769.3 1,766.9 Deferred tax liabilities 622.7 726.5 Deferred revenues 54.2 28.5 Other liabilities 86.1 105.9 Commitments and contingencies Stockholder's equity: Common stock — 200 shares authorized; par value $0.01; 100 shares issued and outstanding at December 31, 2012 and 2011 — — Additional paid-in capital 76.1 145.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (Accumulated deficit) retained earnings (40.6) 1.9 Accumulated other comprehensive income (loss), net of taxes: Foreign currency translation adjustments 0.4 — Unrecognized amounts included in postretirement obligations (0.7) (0.1) Derivative fair-value adjustments — (0.1) Unrealized gains on investments, net — 0.1 Total accumulated other comprehensive loss, net of taxes (0.3) (0.1) Total stockholder's equity 35.2 147.3 Total liabilities and stockholder's equity $ 2,986.4 $ 3,103.7

See Notes to Consolidated Financial Statements

F-3

The acquisition method of accounting was used to revalue assets and liabilities assumed as a result of the MacAndrews Acquisition on December 21, 2011. Accordingly, the accompanying financial statements of the Successor and Predecessor are not comparable in all material respects since those financial statements report financial position, results of operations and cash flows on a different basis of accounting for the periods before and after the MacAndrews Acquisition. See Notes 1 and 3.

Successor Predecessor

Year ended December 22 to January 1 to Year ended December 31, 2012 December 31, 2011 December 21, 2011 December 31, 2010 (recasted) Product revenues, net $ 1,285.1 $ 27.4 $ 1,273.2 $ 1,344.8 Service revenues, net 383.8 10.3 312.8 326.4 Total net revenues 1,668.9 37.7 1,586.0 1,671.2 Cost of products sold 792.3 22.1 772.0 787.3 Cost of services provided 266.1 7.3 159.2 171.2 Total cost of revenues 1,058.4 29.4 931.2 958.5 Gross profit 610.5 8.3 654.8 712.7 Selling, general and administrative expenses 389.7 11.3 393.3 389.7 Revaluation of contingent consideration (0.6) — (24.3) 0.3 Asset impairment charges 1.7 — 111.6 3.7 Restructuring costs 18.9 — 12.6 22.3 Operating income (loss) 200.8 (3.0) 161.6 296.7 Interest income 0.9 — 0.4 0.7 Interest expense (221.6) (6.6) (104.8) (115.5) Loss on early extinguishment of debt (34.2) (0.1) — — Loss from equity method investment (0.1) — — — Other (expense) income, net (0.2) — 13.2 0.1 (Loss) income before income taxes (54.4) (9.7) 70.4 182.0 (Benefit) provision for income taxes (19.4) (3.8) 41.2 67.8 Net (loss) income $ (35.0) $ (5.9) $ 29.2 $ 114.2

See Notes to Consolidated Financial Statements

F-4

Successor Predecessor Year ended December 22 to January 1 to Year ended December 31, 2012 December 31, 2011 December 21, 2011 December 31, 2010 Net (loss) income $ (35.0) $ (5.9) $ 29.2 $ 114.2 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 0.4 — (0.9) (0.4) Changes in derivative instruments: Changes in fair value of interest rate swaps during period — (0.1) (3.5) (14.3) Less reclassification adjustments for loss included in net (loss) income 0.1 — 7.9 12.0 Net changes in derivative instruments 0.1 (0.1) 4.4 (2.3) Unrealized (losses) gains on investments: Unrealized (losses) gains on investments during period (0.2) 0.1 0.3 6.9 Less reclassification adjustment for amounts included in net (loss) income 0.1 — (8.1) — Net change in unrealized (losses) gains on investments (0.1) 0.1 (7.8) 6.9 Changes in postretirement benefit obligations recognized in other comprehensive income: Amortization of prior service credits included in net income — — (0.3) — Prior service credits — — — 5.3 Unrecognized actuarial (loss) gain (0.6) (0.1) (0.8) 0.3 Net change in postretirement benefit obligation recognized in other comprehensive income (0.6) (0.1) (1.1) 5.6 Total other comprehensive (loss) income, net of tax (0.2) (0.1) (5.4) 9.8 Comprehensive (loss) income $ (35.2) $ (6.0) $ 23.8 $ 124.0

Tax Benefit (Expense) of Other Comprehensive (Loss) Income Included in Above Amounts: Changes in derivative instruments: Changes in fair value of interest rate swaps during period $ — $ — $ 2.3 $ 9.0 Less reclassification adjustments for loss included in net income — — (5.0) (7.7) Unrealized (losses) gains on investments: Unrealized (losses) gains on investments during period — — (0.1) (4.4)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Less reclassification adjustment for amounts included in net income (0.1) — 5.1 — Changes in postretirement benefit obligations recognized in other comprehensive income: Amortization of prior service credits included in net income — — 0.1 — Prior service credits — — — (3.3) Unrecognized actuarial gain (loss) 0.4 0.1 0.5 (0.3) Total net tax benefit (expense) included in other comprehensive (loss) income $ 0.3 $ 0.1 $ 2.9 $ (6.7)

See Notes to Consolidated Financial Statements

F-5

Retained Accumulated Shares of Additional Earnings Other Common Paid-In (Accumulated Comprehensive Stock Capital Deficit) (Loss) Income Total Predecessor Balance, December 31, 2009 100 $ 157.0 $ 98.0 $ (9.0) $ 246.0 Net income 114.2 114.2 Other comprehensive income, net of tax 9.8 9.8 Dividend paid to parent (31.2) (31.2) Balance, December 31, 2010 100 $ 157.0 $ 181.0 $ 0.8 $ 338.8 Net income 29.2 29.2 Other comprehensive loss, net of tax (5.4) (5.4) Dividends declared to parent (61.3) (61.3) Balance as of December 21, 2011 100 $ 157.0 $ 148.9 $ (4.6) $ 301.3 Successor Change in ownership (157.0) (148.9) 4.6 (301.3) Allocation of equity consideration from MacAndrews Acquisition 142.2 142.2 Faneuil balances at date of common control 3.3 7.8 11.1 Net loss (5.9) (5.9) Other comprehensive loss, net of tax (0.1) (0.1) Balance at December 31, 2011 100 $ 145.5 $ 1.9 $ (0.1) $ 147.3 Net loss (35.0) (35.0) Other comprehensive loss, net of tax (0.2) (0.2) Acquisition of business from parent (33.8) (33.8) Elimination of Faneuil acquired balances (28.7) (7.5) (36.2) Capital contribution from parent 25.4 25.4 Dividends declared to parent (32.3) (32.3) Balance at December 31, 2012 100 $ 76.1 $ (40.6) $ (0.3) $ 35.2

See Notes to Consolidated Financial Statements

F-6

Successor Predecessor

Year ended December 22 to January 1 to Year ended December 31, 2012 December 31, 2011 December 21, 2011 December 31, 2010 (recasted) Operating activities Net (loss) income $ (35.0) $ (5.9) $ 29.2 $ 114.2 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 75.9 1.9 40.9 48.9 Amortization of intangible assets 137.7 4.1 117.5 109.0 Amortization of debt fair value adjustments, original issue discount and deferred financing fees 117.4 4.1 6.7 7.0 Loss on early extinguishment of debt 34.2 0.1 — — Revaluation of contingent consideration (0.6) — (24.3) 0.3 Loss (gain) on sale of marketable securities 0.2 — (13.2) (0.1) Deferred income taxes (126.6) (6.1) (35.5) (31.9) Asset impairments 1.7 — 111.6 3.7 Changes in operating assets and liabilities, net of effect of businesses acquired: Accounts receivable (17.2) 0.1 15.0 (1.1) Inventories 14.2 3.7 2.3 0.9 Prepaid expenses and other assets (15.8) (1.3) (12.0) (17.0) Contract acquisition payments, net (17.6) — (8.9) 1.4 Accounts payable and accrued liabilities (2.2) 5.8 (13.8) 18.4 Deferred revenues 77.5 12.0 11.8 13.0 Income and other taxes (8.7) 2.3 (7.4) 0.6 Payable to parent (0.1) (0.8) 0.1 0.7 Other, net 2.6 0.1 — 5.0 Net cash provided by operating activities 237.6 20.1 220.0 273.0 Investing activities Purchase of businesses, net of cash acquired (36.2) — (135.1) (61.2) Faneuil cash at date of common control — 5.3 — — Purchase of marketable securities — (56.5) — — Purchase of equity method investment (7.0) — — — Funding of related party note receivable — (30.0) — — Repayments of related party notes receivable — — 4.0 3.0 Proceeds from sale of property, plant and equipment 0.1 — 0.2 2.5 Proceeds from sale of marketable securities 56.3 — 13.4 24.7 Capital expenditures (57.8) (0.1) (58.6) (38.6) Capitalized interest (0.5) — (0.3) (0.1) Computer software development (14.5) (1.5) (5.9) (4.2)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net cash used in investing activities (59.6) (82.8) (182.3) (73.9) Financing activities Dividends to parent (32.3) (12.6) (48.7) (31.2) Acquisition of business from parent (33.8) — — — Redemption of notes — (1.7) — — Payments of contingent consideration arrangements — — (0.3) (0.7) Payments for derivative instruments (9.5) (1.9) — — Issuance of notes 225.6 — — — Borrowings on credit agreements 25.0 — — — Repayments of credit agreements and other borrowings (340.1) (4.5) (15.0) (19.6) Debt issuance costs (12.7) — — — Net cash used in financing activities (177.8) (20.7) (64.0) (51.5) Net increase (decrease) in cash and cash equivalents 0.2 (83.4) (26.3) 147.6 Cash and cash equivalents at beginning of period 101.8 185.2 211.5 63.9 Cash and cash equivalents at end of period $ 102.0 $ 101.8 $ 185.2 $ 211.5

Supplemental disclosure of cash paid for: Interest, net of amounts capitalized $ 91.9 $ 5.4 $ 94.4 $ 108.0 Income taxes, net of refunds 115.1 — 84.1 97.7 Non-cash financing activities: Extinguishment of Faneuil debt to parent $ 25.4 $ — $ — $ —

See Notes to Consolidated Financial Statements

F-7

1. Description of the Business and Basis of Presentation Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its subsidiaries, the "Company") is a holding company that conducts its operations through its direct and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed to merge with an indirect wholly owned subsidiary of MacAndrews, and following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of closing conditions, that merger was effected on December 21, 2011 (hereafter referred to as the "MacAndrews Acquisition"). As a result of the MacAndrews Acquisition, which resulted in a change in ownership of M & F Worldwide, the Company was required to use the acquisition method of accounting to revalue its assets and liabilities as of the date of the MacAndrews Acquisition. Such accounting results in a number of changes (see Note 3), including, but not limited to, decreased revenues as a result of fair value adjustments to deferred revenues, increased depreciation and amortization as a result of the revaluation of assets and increased non-cash interest expense that results from adjusting the Company's long-term debt to fair value as of the date of the MacAndrews Acquisition. Accordingly, the accompanying financial statements for the Predecessor and Successor periods are not comparable in all material respects and the Company is required to present separately its operating results for periods before and after the MacAndrews Acquisition. The periods prior to the MacAndrews Acquisition (the period January 1 to December 21, 2011 and the year ended December 31, 2010) are presented in the accompanying consolidated financial statements as "Predecessor." The periods subsequent to the MacAndrews Acquisition (the year ended December 31, 2012 and the period December 22 to December 31, 2011) are presented in the accompanying consolidated financial statements as "Successor." On March 19, 2012, the Company purchased Faneuil, Inc. ("Faneuil") from affiliates of MacAndrews (see Note 3). Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Faneuil is a separate business segment for financial reporting purposes. The Company has organized its business and corporate structure along the following four business segments: Harland Clarke, Harland Financial Solutions, Scantron and Faneuil. During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The Harland Technology Services and Medical Device Tracking businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment. Prior period segment information has been reclassified to reflect this change. The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial and commercial institutions. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards, survey services and other business and home office products to consumers and businesses. The Harland Financial Solutions segment provides technology products and related services to financial institutions worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems. The Scantron segment provides data management and decision support solutions and related services to educational, commercial and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment and forms.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Faneuil segment provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients. The Faneuil segment also provides patient information collection and tracking services, managed technical services and related field maintenance services to education, commercial, healthcare and governmental entities.

F-8

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries after the elimination of all material intercompany accounts and transactions. The Company has consolidated the results of operations and accounts of businesses acquired from the date of acquisition or the date of common control (see Note 3). The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries are guarantors and may also be co-issuers under the 2015 Senior Notes and 2018 Senior Secured Notes (as hereinafter defined) (see Note 11). Harland Clarke Holdings is a holding company and has no significant assets at December 31, 2012 and no operations. The guarantees and the obligations of the subsidiaries of the Company are full and unconditional and joint and several, and any subsidiaries of the Company other than the subsidiary guarantors and obligors are not significant. See Note 3 for information regarding recent acquisitions.

2. Summary of Significant Accounting Policies Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition The Company recognizes product and service revenue when persuasive evidence of a non-cancelable arrangement exists, products have been shipped and/or services have been rendered, the price is fixed or determinable, collectability is reasonably assured, legal title and economic risk is transferred to the customer and an economic exchange has taken place. Revenues are recorded net of any applicable discounts, contract acquisition payments amortization, accrued incentives and allowances for sales returns. As a result of the accounting required in connection with the MacAndrews Acquisition, deferred revenues at December 31, 2011 represent the fair value of the cost to complete contractual obligations for which funds have already been received. Deferred revenues at December 31, 2012 represent amounts billed to the customer during 2012 in excess of amounts earned as well as the remaining balance of deferred revenues at December 31, 2011 that were not recognized as revenues in 2012. Revenues for direct response marketing services are recognized from the Company's fixed price direct mail and marketing contracts based on the proportional performance method for specific projects. For multiple-element software arrangements, total revenue is allocated to each element based on vendor specific objective evidence ("VSOE"), of its fair value represented by the price charged when the elements are sold separately. VSOE must exist for the undelivered elements to allocate the total revenue among all delivered elements and non-essential undelivered elements of the arrangement. When VSOE of fair value has been established for maintenance and professional services but not for software licenses, the residual method is used to allocate revenue to the license portion of multiple element arrangements. VSOE for certain elements of an arrangement is based upon the pricing in comparable transactions when the element is sold separately. VSOE for maintenance is primarily based upon customer renewal history when the services are sold separately. VSOE for professional services is also based upon the price charged when the services are sold separately. If the undelivered elements of the arrangement are essential to the functionality of the software product(s), revenue is deferred until the essential elements are delivered. If VSOE does not exist for one or more non-essential undelivered elements, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. If VSOE of all non- essential undelivered elements exist but VSOE does not exist for one or more of the delivered elements, revenue is recognized using the residual method. Under the residual method, the revenue for the undelivered elements is deferred based upon VSOE and the remaining portion of the arrangement fee is recognized as revenue for the delivered elements, assuming all other criteria for revenue recognition have been met. When VSOE does not exist for maintenance and/or non-essential undelivered elements of multiple element arrangements, revenue is deferred until all elements are delivered or VSOE is established for the undelivered elements, whichever is earlier. For licenses that are hosted (cloud services), revenue is allocated to separate units of accounting based on the hierarchy of VSOE, third-party evidence ("TPE") or relative selling price. VSOE and TPE are not available so the relative selling price is used. Under the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document relative selling price method the concept of the residual method is eliminated and discounts are allocated across all deliverables in proportion to the best estimated selling price. Separate units of accounting exist if they have standalone value. Standalone value exists if the Company or other vendors sell the same item separately or the customer could resell the item on a standalone basis. Standalone value exists for most individual modules of the Company's hosted licenses

F-9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Harland Clarke Holdings Corp. and Subsidiaries Notes to Consolidated Financial Statements (Continued) (dollars in millions) because they are sold separately or as a group depending on the needs of customers. For each module, revenue is deferred until related professional services are complete. If standalone value does not exist then revenue for all modules and professional services in an arrangement are deferred until services are complete. Under either scenario, once services are complete, revenue is recognized on a straight-line basis over the remaining term of the contract. For arrangements that include both licenses and cloud services, each is accounted for under its relevant guidance. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period, as defined in the applicable agreement. Each new license includes maintenance, including the right to receive telephone support, "bug fixes" and unspecified upgrades and enhancements, for a specified duration of time, usually one year. Maintenance revenue is recognized ratably over the life of the related maintenance contract. Maintenance contracts on perpetual licenses generally renew annually. Maintenance fees are typically invoiced on an annual basis prior to the anniversary date of the license. Time- based and usage-based licenses include maintenance as a bundled item that is committed for the period of the agreement. Revenue from licensing of software under usage-based contracts is recognized ratably over the term of the agreement or on an actual usage basis. Non-essential professional services revenue includes fees derived from the delivery of certain training, installation, and consulting services. Revenue from non-essential training, installation, and consulting services is recognized on a time and materials basis or after delivery is complete. Essential professional services typically involve significant production, modification or customization of the software. Revenue from essential services is combined with license revenue and recognized using either a percentage-of-completion or completed contract basis. Percentage-of-completion recognizes both license and services revenue as the services are performed using an input method based on labor hours. Estimates of efforts to complete a project are used in the percentage-of-completion calculation. Due to the uncertainties inherent in these estimates, actual results could differ from those estimates. Completed contract basis is used either when reliable estimates of effort are not available, or if VSOE does not exist for one or more elements, or if there are substantive customer acceptance provisions. Under this methodology all revenue is deferred until all services are complete, or the acceptance conditions have been met. Revenue from outsourced data processing services and other transaction processing services is recognized in the month the transactions are processed or the services are rendered. The contractual terms of software sales do not provide for product returns or allowances. However, on occasion the Company may allow for returns or allowances primarily in the case of a new product release. Provisions for estimated returns and sales allowances are established by the Company concurrently with the recognition of revenue and are based on a variety of factors including actual return and sales allowance history and projected economic conditions. Service revenues are comprised of revenues derived from software maintenance agreements, software implementation services, software as a service, field maintenance services, direct marketing services, certain contact center services, core processing service bureau deliverables, consulting services, training services, survey services, back office services, toll collection services, staffing services and other services. Customer Incentives The Company's Harland Clarke segment has contracts with certain clients that provide both fixed and volume-based incentives. These incentives are recorded as a reduction of revenues to which they apply and as accrued liabilities. Contract Acquisition Payments Certain contracts with customers of the Company's Harland Clarke segment involve upfront payments to the customer. These payments are capitalized and amortized on a straight-line basis as a reduction of revenue over the life of the related contract. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance. These payments are generally refundable from the customer on a prorated basis if the contract is canceled prior to the contract termination date. When such a termination occurs, the amounts repaid are offset against any unamortized contract acquisition payment balance related to the terminating customer, with any resulting excess reported as an increase in revenue. The Company recorded revenue related to these contract terminations of $2.2, $0.0, $7.5 and $5.8 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively.

Shipping and Handling Revenue received from shipping and handling fees is reflected in product revenues, net in the accompanying consolidated statements of operations. Costs related to shipping and handling are included in cost of products sold. Cash and Cash Equivalents The Company considers all cash on hand, money market funds and other highly liquid debt instruments with a maturity, when purchased, of three months or less to be cash and cash equivalents. Investments The Company has investments consisting of corporate equity securities and United States treasury securities which are classified as available-for-sale securities and are stated at fair value with unrealized gains and losses on such investments reflected net of tax, as other comprehensive income (loss). Realized gains and losses on investments are included in other (expense) income, net in the accompanying consolidated statements of operations. The cost of securities sold is based on the specific identification method. The United States treasury securities are classified as current and included in marketable securities in the accompanying consolidated balance sheets. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14. The Company also has an investment consisting of corporate equity securities which is accounted for using the equity method. Under the equity method, the original investment is recorded at cost and is adjusted periodically to recognize the Company's share of earnings and losses after the date of the acquisition. Dividends received reduce the basis of the investment. The Company's share of earnings and losses are shown as a separate line item in the accompanying consolidated statements of operations. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14. If the market value of an investment declines below its cost, the Company evaluates whether the decline is temporary or other than temporary. The Company considers several factors in determining whether a decline is temporary including the length of time market value has been below cost, the magnitude of the decline, financial prospects of the issuer or business and the Company's intention to hold the security. If a decline in market value of an investment is determined to be other than temporary, a charge to earnings is recorded for the loss and a new cost basis in the investment is established. Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable losses in its existing accounts receivable based on historical losses and current economic conditions. Account balances are charged against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance sheet credit exposure related to its customers. Inventories The Company states inventories at the lower of cost or market value. The Company determines cost by average costing or the first- in, first-out method. Advertising Advertising costs, which are recorded predominately in selling, general and administrative expenses, consist mainly of marketing new and existing products, re-branding existing products and launching new initiatives throughout the Company. Direct-response advertising is capitalized and amortized over its expected period of future benefit, while all other advertising costs are expensed as incurred. Direct-response advertising consists primarily of inserts that include order coupons for products offered by a division of the Company's Harland Clarke segment, which are amortized for a period up to 18 months. These costs are amortized following their distribution, and are charged to match the advertising expense with the related revenue streams. At December 31, 2012 and 2011, the Company had prepaid advertising costs of $2.6 and $0.1, respectively, which are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. The Company's advertising expense was $20.1, $0.4, $21.5 and $19.6 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively.

Property, Plant and Equipment The Company states property, plant and equipment at cost. Maintenance and repairs are charged to expense as incurred. Additions, improvements and replacements that extend the asset life are capitalized. Depreciation is provided on a straight-line basis over the estimated useful lives of such assets. The Company amortizes leasehold improvements over the shorter of the useful life of the related asset or the lease term. Certain leases also contain tenant improvement allowances, which are recorded as a leasehold improvement and deferred rent and amortized over the lease term. The Company eliminates cost and accumulated depreciation applicable to assets retired or otherwise disposed of from the accounts and reflects any gain or loss on such disposition in operating results. As further discussed below, the Company capitalizes the qualifying costs incurred during the development stage on software to be sold, leased or otherwise marketed, internally developed software and software obtained for internal use and amortizes the costs over the estimated useful life of the software. The Company capitalizes interest on qualified long-term projects and depreciates it over the life of the related asset. The useful lives for computing depreciation are as follows:

Years Machinery and equipment 3 - 15 Computer software and hardware 3 - 5 Leasehold improvements 1 - 20 Buildings and improvements 20 - 30 Furniture, fixtures and transportation equipment 5 - 8

Software and Other Development Costs The Company expenses research and development expenditures as incurred, including expenditures related to the development of software products that do not qualify for capitalization. The amounts expensed totaled $25.6, $0.1, $29.2 and $21.9 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and were primarily costs incurred related to the development of software. Software development costs incurred for sold, leased, or otherwise marketed software prior to the establishment of technological feasibility are expensed as incurred. Software development costs incurred after establishing the technological feasibility of the subject software product and before its availability for sale are capitalized and are included in other intangible assets, net on the accompanying consolidated balance sheets. Capitalized software development costs are amortized on a product-by-product basis over the estimated economic life of the product using a straight-line method with related amortization expense in cost of products sold on the accompanying consolidated statements of operations. Unamortized software development costs in excess of estimated net realizable value from a particular product are written down to their estimated net realizable value. The Company capitalizes costs to develop or obtain computer software for internal use once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project and (3) interest costs incurred, when significant, while developing internal-use software. Capitalization of costs ceases when the project is substantially complete and ready for its intended use and is included in property, plant and equipment, net on the accompanying consolidated balance sheets. Capitalized costs to develop or obtain computer software for internal use are amortized over the estimated useful life using a straight-line method with related amortization expense in cost of revenues and selling, general and administrative expenses on the accompanying consolidated statements of operations. Goodwill and Acquired Intangible Assets Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets acquired. Acquired intangibles are recorded at fair value as of the date acquired. Goodwill and other intangibles determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired, such as a significant adverse change in the business climate.

The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of the Company's reporting units. The Company utilizes both the income and market approaches to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit's estimated cost of equity and debt ("cost of capital") derived using, both known and estimated, customary market metrics. The Company performs sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies; evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies; and applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. The Company weights the results of the income and market approaches equally, except where guideline companies are not similar enough to provide a reasonable value using the market approach. When that occurs, the market approach is weighted less than the income approach. If the estimated fair value of a reporting unit is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of the Company's "implied fair value" requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to the corresponding carrying value. The results of the Company's annual test for 2012 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values. The Company's step one annual impairment test for 2011 indicated goodwill impairment for the Scantron reporting unit as the estimated fair value for the Scantron reporting unit was less than its carrying value. The Company performed the second step of the test to determine the "implied fair value" of goodwill for the Scantron reporting unit, resulting in a non-cash impairment charge of $102.2 (see Notes 7 and 13 regarding the non-cash goodwill impairment charge recorded in 2011). No goodwill impairment was indicated for the Company's other two reporting units as a result of the 2011 test. The results of the Company's annual test for 2010 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values. The Company measures impairment of its indefinite-lived tradename based on the relief-from-royalty-method. Under the relief- from-royalty method of the income approach, the value of an intangible asset is determined by quantifying the cost savings a company obtains by owning, as opposed to licensing, the intangible asset. Assumptions about royalty rates are based on the rates at which similar tradenames are licensed in the marketplace. The Company also re-evaluates the useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life. In 2011, an impairment charge was recorded and the useful life for the Scantron reporting unit tradename was reclassified from an indefinite life to a definite life of 15 years (see Notes 7 and 13). The annual impairment evaluations for goodwill and the indefinite-lived intangible asset involve significant estimates made by management. The discounted cash flow analyses require various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Changes in estimates could have a material effect on the carrying amount of goodwill and indefinite-lived intangible assets in future periods. Intangible assets that are deemed to have a finite life are amortized over their estimated useful life generally using accelerated methods that are based on expected cash flows. They are also evaluated for impairment as discussed below in "Long-Lived Assets." Costs to renew or extend the term of a recognized intangible asset are expensed as incurred and are not significant. Long-Lived Assets When events or changes in circumstances indicate that the carrying amount of a long-lived asset other than goodwill and indefinite- lived intangible assets may not be recoverable, the Company assesses the recoverability of such asset based on estimates of future undiscounted cash flows compared to net book value. If the future undiscounted cash flow estimates are less than net book value, net book value would then be reduced to estimated fair value, which generally approximates discounted cash flows. The Company also evaluates the amortization periods of assets to determine whether events or circumstances

As part of the process of preparing its consolidated financial statements, the Company is required to calculate the amount of income tax in each jurisdiction in which it operates. On a regular basis, the amount of taxable income is reviewed by various federal, state and foreign taxing authorities. As such, the Company routinely provides reserves for unrecognized tax benefits for items that it believes could be challenged by these taxing authorities. The Company records any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue- producing transaction between a seller and a customer, which may include, but is not limited to, sales, use, value added, and excise taxes, on a net basis in the accompanying consolidated statements of operations. Pensions and Other Postretirement Benefits The Company has defined benefit postretirement plans and defined contribution 401(k) plans, which cover certain current and former employees of the Company who meet eligibility requirements. The Company recognizes in its balance sheet the funded status of its defined benefit postretirement benefit plans, measured as the difference between the fair value of the plan assets and the benefit obligation and recognizes changes in the funded status of a defined benefit postretirement benefit plan within accumulated other comprehensive income (loss), net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost (see Note 10). Translation of Foreign Currencies The functional currency for each of the Company's foreign subsidiaries is its local currency. The Company translates all assets and liabilities denominated in foreign functional currencies into United States dollars at rates of exchange in effect at the balance sheet date and statement of operations items at the average rates of exchange prevailing during the period. The Company records translation gains and losses as a component of accumulated other comprehensive income (loss) in the stockholder's equity section of the Company's balance sheets. Gains and losses resulting from transactions in other than functional currencies are reflected in operating results, except for transactions of a long-term nature. The Company considers undistributed earnings of certain foreign subsidiaries to be permanently invested. As a result, no income taxes have been provided on these undistributed earnings or on the foreign currency translation adjustments recorded as a part of other comprehensive income (loss). Self-Insurance The Company is self-insured for certain workers' compensation and group medical costs subject to stop-loss limits. Provisions for losses expected under these programs are recorded based on the Company's estimates of the aggregate liabilities for the claims incurred. Payments for estimated claims beyond one year have been discounted. As of December 31, 2012 and 2011, the combined liabilities for self-insured workers' compensation and group medical were $10.0 and $9.5, respectively. Derivative Financial Instruments The Company uses derivative financial instruments to manage interest rate risk related to a portion of its long-term debt. The Company recognizes all derivatives at fair value as either assets or liabilities in the consolidated balance sheets and changes in the fair values of such instruments are recognized in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, the Company recognizes the changes in fair value of these instruments in other comprehensive income (loss) until the underlying debt instrument being hedged is settled or the Company determines that the specific hedge accounting criteria are no longer met. On the date the interest rate derivative contract is entered into, the Company designates the derivative as either a fair value hedge or a cash flow hedge. The Company formally documents the relationship between hedging instruments and the hedged items, as well as its

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document risk-management objectives and strategy for undertaking various hedge transactions. The Company links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. The Company links all hedges that are designated as cash flow hedges to forecasted transactions or to liabilities

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Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Harland Clarke Holdings Corp. and Subsidiaries Notes to Consolidated Financial Statements (Continued) (dollars in millions) on the balance sheet. The Company also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. If an existing derivative were to become not highly effective as a hedge, the Company would discontinue hedge accounting prospectively. Deferred Financing Fees Deferred financing fees are being amortized to interest expense using the effective interest method over the term of the respective financing agreements. Unamortized balances are reflected in other assets in the accompanying consolidated balance sheets and were $11.7 and $0.1 as of December 31, 2012 and 2011, respectively. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance. Restructuring Charges The Company has restructuring costs related primarily to facility consolidations and workforce rationalization. The costs primarily consist of employee termination benefits which are accrued when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. In addition to employee termination benefits and facility closure costs, other restructuring costs include, but are not limited to, equipment moves, training and travel, which are expensed as incurred. Additional restructuring charges related to the Company's existing operations will be incurred as the Company completes its restructuring plans. Fair Value Measurements The Company measures fair value using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (see Note 13). Reclassifications Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2012. These reclassifications had no effect on previously reported net income. Prior period amounts have been reclassified in Notes 7, 15 and 19 in accordance with applicable accounting guidance to reflect the business segment changes described in Note 1 above. Prior period deferred revenues have been reclassified between current and non-current based on further review of fair value adjustments related to the MacAndrews Acquisition. Recently Adopted Accounting Guidance Effective January 1, 2012, the Company adopted amended guidance related to the requirement for an annual goodwill impairment test. The amendment provides entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This amendment affects testing steps only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows. Effective January 1, 2012, the Company adopted amended guidance related to the presentation of comprehensive income. The amendment requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two separate but consecutive statements. It eliminates the option to report other comprehensive income and its components as part of the statement of changes in shareholder's equity. This amendment affects presentation and disclosure only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows. Effective January 1, 2012, the Company adopted amended guidance related to fair value measurement. The guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between United States generally accepted accounting principles and International Financial Reporting Standards. The adoption of this amended guidance did not have a material effect on the Company's consolidated financial position, results of operations, cash flows or related disclosures. New Accounting Guidance

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In July 2012, the Financial Accounting Standards Board amended its guidance related to the testing of indefinite-lived intangible assets for impairment. Under this standard, entities testing indefinite-lived intangible assets for impairment now have

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3. Acquisitions Faneuil Acquisition On March 19, 2012, the Company entered into a Stock Purchase Agreement pursuant to which the Company purchased 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil") for $70.0 in cash (the "Faneuil Acquisition") from affiliates of MacAndrews. The Company financed the Faneuil Acquisition with Harland Clarke Holdings' cash on hand. New Faneuil, through its wholly owned subsidiary, Faneuil, provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients across the United States. Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Cash paid in excess of the carrying amount of the assets and liabilities assumed in the amount of $33.8 is treated as an equity transaction with the parent in accordance with accounting guidance for transactions among entities under common control. The following table summarizes the historical cost of assets and liabilities assumed on March 19, 2012, the date of the Faneuil Acquisition:

Cash $ 2.3 Accounts receivable 11.8 Property, plant and equipment 10.3 Goodwill 13.0 Other intangible assets: Customer relationships $ 0.2 Tradenames 0.8 Software 0.3 Total other intangible assets 1.3 Other assets 7.2 Total assets acquired 45.9 Deferred revenues 1.2 Capital leases 1.0 Other liabilities 7.5 Net assets acquired $ 36.2

The pro forma effects of the Faneuil Acquisition on the consolidated results of operations were not material and are not included in the Pro Forma Financial Information presented below. MacAndrews Acquisition of M & F Worldwide On September 12, 2011, M & F Worldwide, the indirect parent of the Company, agreed, subject to various closing conditions, to merge with an indirect, wholly owned subsidiary of MacAndrews, and following a vote of stockholders of M & F Worldwide and the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document satisfaction or waiver of all other closing conditions, that merger was effected on December 21, 2011. The transaction was accounted for as a business combination. M & F Worldwide allocated its new equity basis amongst itself, the Company and another operating subsidiary of M & F Worldwide. M & F Worldwide had preliminarily allocated and pushed down $222.3 of the new equity basis to the Company as of the acquisition date. During the first quarter of 2012, M & F

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Worldwide revised the equity allocation amongst these entities, and, as a result, the equity allocated to the Company was reduced to $142.2. As required by accounting guidance for business combinations, this adjustment was recorded by the Company retrospectively as of the acquisition date resulting in changes to the preliminary amounts of goodwill and additional paid-in capital set forth in the Company's December 31, 2011 consolidated balance sheet included in its Annual Report on Form 10-K for the year ended December 31, 2011. This change had no effect on amounts reported in the consolidated statements of operations for 2011. As discussed in Note 1, the periods after the MacAndrews Acquisition have been bifurcated in these financial statements and indicated by the heading "Successor." The following table summarizes the estimated fair values of the Company's assets and liabilities assumed at the date of the MacAndrews Acquisition:

Cash $ 185.2 Accounts receivable 110.1 Property, plant and equipment 207.1 Goodwill * 748.4 Other intangible assets: Customer relationships $ 1,519.0 Tradenames 101.4 Technology 39.8 Total other intangible assets 1,660.2 Other assets * 147.6 Total assets acquired * 3,058.6 Deferred revenues 96.8 Long-term debt 1,787.4 Deferred tax liabilities * 723.8 Other liabilities * 308.4 Net assets acquired * $ 142.2

* As discussed above, amounts have been adjusted from the preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011. Goodwill in the amount of approximately $178.7 and intangible assets in the amount of approximately $142.7 are deductible for tax purposes. During 2012, the Company recorded a net change in deferred taxes of $2.8 in accordance with applicable accounting guidance with a corresponding increase in goodwill. The goodwill arises because the total consideration for the acquisition allocated to the Company, which reflects its future earnings and cash flow potential, exceeds the fair value of net assets acquired. The goodwill resulting from the acquisition was assigned to the Company's segments as follows: $417.0 to Harland Clarke, $282.6 to Harland Financial Solutions, $40.1 to Scantron and $8.7 to Faneuil. Acquisition-related fees and expenses for the Company were not material. As part of the application of fair value accounting for business combinations, the carrying value of inventory was increased by $17.5. The amount of the inventory fair value adjustment was expensed as additional non-cash cost of products sold as the fair-valued inventory was sold (of which $13.9 and $3.6 was expensed in 2012 and during the period from December 22 to December 31, 2011, respectively). Also as part of the application of fair value accounting for business combinations, the carrying values of long-term debt and deferred revenues were decreased by $417.8 and $68.1, respectively. These fair value adjustments result in higher interest expense and lower revenues being recognized over the related earnings period, both of which are non-cash adjustments (of which $115.6 and $4.1was reflected as increased interest expense and $50.8 and $3.9 was reflected as reduced revenues in 2012 and during the period from December 22 to December 31, 2011, respectively). The Company also wrote-off $34.2 of the non-cash fair value adjustment to long-term debt in the third quarter of 2012 as a result of refinancing transactions (see Note 11).

Pro Forma Financial Information The unaudited financial information in the table below summarizes the results of operations of the Company, on a pro forma basis, as though the acquisition had occurred as of the beginning of the year presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if this transaction had taken place at the beginning of the year presented, nor does it purport to represent results of operations for future periods.

Unaudited Pro Forma Year ended December 31, 2011 Net revenues $ 1,596.9 Operating income 151.3 Net loss (65.7) Depreciation and amortization (excluding amortization of deferred financing fees) 156.5

In the pro forma information above, the results prior to the acquisition were adjusted to include the pro forma effect of: the adjustment of amortization of intangible assets and depreciation of fixed assets based on the acquisition accounting allocations; the adjustment of interest expense reflecting the amortization of fair value adjustments of Harland Clarke Holdings' outstanding long-term debt; the non-recurring fair value adjustments to contract acquisition payments and commitments, deferred revenues, inventory and other deferred expenses; and to reflect the impact of income taxes with respect to the pro forma adjustments, utilizing an estimated effective tax rate of 39.0%. Acquisition of GlobalScholar On January 3, 2011, Scantron Corporation ("Scantron"), a wholly owned subsidiary of the Company, purchased all of the outstanding capital stock or membership interests of KUE Digital Inc., KUED Sub I LLC and KUED Sub II LLC (collectively "GlobalScholar"). GlobalScholar's instructional management platform supports all aspects of managing education at K-12 schools, including student information systems; performance-based scheduler; gradebook; learning management system; longitudinal data collection, analysis and reporting; teacher development and performance tracking; and online communication and tutoring portals. GlobalScholar's instructional management platform complements Scantron's testing and assessment, response to intervention, student achievement management and special education software solutions thereby expanding Scantron's web-based education solutions. The acquisition-date purchase price was $134.9 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $18.5, as described below, which resulted in total estimated consideration of $153.4 as of the acquisition date. Contingent consideration would have been payable in 2012 upon achievement of certain revenue targets of GlobalScholar during calendar year 2011, which targets were not met as discussed below. The transaction was accounted for as a business combination and GlobalScholar's results of operations have been included in the Company's operations since the date of its acquisition. The allocation of purchase price resulted in identified intangible assets of $92.3 and goodwill of $93.1. During 2011, the Company recorded additional deferred tax assets of $2.9 in accordance with applicable accounting guidance with a corresponding decrease in goodwill. The goodwill arises because the total consideration for GlobalScholar, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $5.6 is deductible for income tax purposes. The Company financed the GlobalScholar acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. The Company has recognized $1.6 of acquisition related costs for this acquisition, of which $0.2 was expensed and included in selling, general and administrative expenses in the consolidated statements of operations in 2011, with the remainder having been expensed and included in selling, general and administrative expenses in the fourth quarter of 2010. The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $20.0, based on the achievement of certain revenue targets of GlobalScholar measured during the calendar year 2011. The acquisition-date fair value of the contingent consideration arrangement of $18.5 was estimated utilizing a discounted cash flow analysis with significant inputs that were

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document not observable in the market (Level 3 inputs). Key assumptions included a projection of certain GlobalScholar revenues for the measurement period. The application of fair value accounting for the contingent consideration

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Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Harland Clarke Holdings Corp. and Subsidiaries Notes to Consolidated Financial Statements (Continued) (dollars in millions) arrangement required recurring remeasurement for changes in key assumptions (see Note 13). No amount was paid in 2012 because the revenue targets were not met. The application of acquisition accounting decreased acquired deferred revenues by $14.9 to $11.6 due to a fair value adjustment. This non-cash fair value adjustment resulted in lower revenue being recognized over the related earnings period (of which $5.2 was reflected as a reduction of revenues for the period January 1, 2011 to December 21, 2011). The fair value of financial assets acquired was not significant. The pro forma effects for the GlobalScholar acquisition on the consolidated results of operations were not material. Acquisition of Parsam On December 6, 2010, Harland Financial Solutions, Inc. ("HFS"), a wholly owned subsidiary of the Company, acquired all of the outstanding membership interests of Parsam Technologies, LLC and the equity of SRC Software Private Limited (collectively "Parsam"). Parsam's solutions allow financial institutions to provide services online, in branches and at call centers, from new account opening and funding to account-to-account money transfers, person-to-person payments, account and adviser-client relationship management, and bill presentment and payment. HFS has integrated Parsam's solutions into its existing solution offerings. The acquisition-date purchase price was $32.8 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $1.2, as described below, which resulted in total estimated consideration of $34.0 as of the acquisition date. Contingent consideration would be payable upon achievement of certain revenue targets of Parsam during calendar years 2011 and 2012. The transaction was accounted for as a business combination and Parsam's results of operations have been included in the Company's operations since the date of its acquisition. The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $25.0, which would have been payable upon the achievement of certain future revenue targets of Parsam measured during calendar years 2011 and 2012. The acquisition-date fair value of the contingent consideration arrangement was estimated utilizing a discounted cash flow analysis with significant inputs that were not observable in the market (Level 3 inputs). Key assumptions included a projection of certain Parsam revenues for the measurement periods. During the first quarter of 2011, the Company identified a $1.6 decrease in the initial estimate of acquisition-date fair value of contingent consideration with a corresponding $1.6 decrease in goodwill. The application of fair value accounting for the contingent consideration arrangement required recurring remeasurement for changes in key assumptions (see Note 13). No amounts will be paid because the revenue targets were not met. The allocation of purchase price resulted in identified intangible assets of $7.8 and goodwill of $26.2. The goodwill arises because the total consideration for Parsam, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Harland Financial Solutions segment. Of the goodwill recognized, $23.1 is expected to be deductible for income tax purposes. The Company financed the Parsam acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. Acquisition-related fees and expenses were not material. The application of acquisition accounting decreased acquired deferred revenues by $1.6 to $0.4 due to a fair value adjustment. This non-cash fair value adjustment resulted in lower revenues being recognized over the related earnings period (of which $1.0 was reflected as a reduction of revenues for the period January 1 to December 21, 2011). The reduction of revenues resulting from this acquisition accounting fair value adjustment was negligible for the period December 7, 2010 to December 31, 2010. The fair value of financial assets acquired was not significant. The pro forma effects for the Parsam acquisition on the consolidated results of operations were not material.

F-19

Acquisition of Spectrum K12 On July 21, 2010, Scantron acquired 100% of the equity of Spectrum K12 School Solutions, Inc. ("Spectrum K12"). Spectrum K12 develops, markets and sells student achievement management, response to intervention and special education software solutions. Spectrum K12's software solutions complement Scantron's software solutions for educational assessments, content and data management. The acquisition-date purchase price was $28.6 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $4.0, as described below, which resulted in total estimated consideration of $32.7 as of the acquisition date. The transaction was accounted for as a business combination and Spectrum K12's results of operations have been included in the Company's operations since the date of its acquisition. The allocation of purchase price resulted in identified intangible assets of $6.6 and goodwill of $25.2. During 2011, the Company recorded additional deferred tax assets of $1.4 in accordance with current accounting guidance with a corresponding decrease in goodwill. The goodwill arises because the total consideration for Spectrum K12, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $1.5 is expected to be deductible for income tax purposes. The Company financed the Spectrum K12 acquisition and related fees and expenses with cash on hand. Acquisition-related fees and expenses were not material. The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $20.0, which would have been payable upon the achievement of certain future revenue targets of Spectrum K12 measured during the twelve-month periods ended June 30, 2011 and 2012. Certain of the contingent consideration payments would have been payable under the terms of the acquisition to eligible employees who remained employed by Spectrum K12 during the twelve-month periods ended June 30, 2011 and 2012. These contingent consideration payments of up to an aggregate of $5.0 to eligible employees were considered incentive compensation and recorded as compensation expense as earned. The acquisition-date fair value of the contingent consideration arrangement of $4.9, of which $0.9 was considered to be incentive compensation, was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions included a projection of Spectrum K12 revenues for the measurement periods. The application of fair value accounting for the contingent consideration arrangement requires recurring remeasurement for changes in key assumptions (see Note 13). No amount was paid because the revenue targets were not met. The application of acquisition accounting decreased acquired deferred revenues by $10.5 to $5.0 due to a fair value adjustment. This non-cash fair value adjustment resulted in lower revenues being recognized over the related earnings period (of which $3.6 and $1.8 was reflected as a reduction of revenues for the period January 1 to December 21, 2011 and the year ended December 31, 2010, respectively). The fair value of financial assets acquired was not significant. The pro forma effects for the Spectrum K12 acquisition on the consolidated results of operations were not material. 4. Inventories Inventories consist of the following:

December 31, December 31, 2012 2011 Finished goods $ 7.7 $ 12.4 Work-in-process 8.2 17.9 Raw materials 13.1 12.9 $ 29.0 $ 43.2

See Note 3 - MacAndrews Acquisition of M & F Worldwide for a discussion of the effect of the application of fair value accounting for business combinations on the carrying value of inventories at December 31, 2011.

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5. Property, Plant and Equipment Property, plant and equipment consists of the following:

December 31, December 31, 2012 2011 Machinery and equipment $ 92.3 $ 67.0 Computer software and hardware 91.0 60.2 Leasehold improvements 22.2 18.1 Buildings and improvements 29.1 29.0 Furniture, fixtures and transportation equipment 9.1 7.9 Land 8.2 8.3 Construction-in-progress 17.6 26.2 269.5 216.7 Accumulated depreciation (79.5) (6.0) $ 190.0 $ 210.7

Depreciation expense was $75.9, $1.9, $40.9, and $48.9 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and includes the depreciation of the Company's capital leases. See Notes 1 and 3 for a discussion of the effect on depreciation expense of the revaluation of the Company's assets as a result of the MacAndrews Acquisition. Capitalized lease equipment was $4.6 and $4.6 at December 31, 2012 and 2011, respectively, and the related accumulated depreciation was $1.9 and $1.1 at December 31, 2012 and 2011, respectively. During 2012, the Company recorded non-cash impairment charges of $0.8 for the Faneuil segment related to abandoned leasehold improvements resulting from the loss of a client, $0.6 for the Harland Clarke segment related to assets that were determined to have limited future use. During the 2011 Predecessor period, non-cash impairment charges of $0.5 were recorded for the Harland Clarke segment related to assets that were determined to have limited future use. During 2010, non-cash impairment charges of $2.8 were recorded for the Harland Clarke segment primarily related to the abandonment of a development project and restructuring-related impairments of property, plant and equipment. These impairment charges are included in asset impairment charges in the accompanying consolidated statements of operations. Construction-in-progress mainly consists of investments in Harland Clarke's information technology infrastructure, contact centers, production bindery and delivery systems. 6. Assets Held For Sale At December 31, 2012, assets held for sale consist of the following Harland Clarke segment facilities:

Location Former Use Year Closed Atlanta, GA Operations Support 2008 Atlanta, GA Printing 2008 Atlanta, GA Information Technology 2010 During 2010, the Company closed its information technology facility in Atlanta, GA and relocated those operations into an existing facility. The other listed Atlanta facilities were closed as part of the Company's plan to exit duplicative facilities related to an acquisition. Subsequent to the classification of the Atlanta facilities as assets held for sale, there have been significant changes in the real estate market. Non-cash impairment charges of $0.2, $0.1 and $0.9 were recorded in 2012, the Predecessor period in 2011 and 2010, respectively, to adjust the carrying values of the print facility and information technology facility to reflect an updated estimate of the fair values less costs to sell. These impairment charges are included in asset impairment charges in the accompanying consolidated statements of operations. The Company has made appropriate changes to its marketing plan and believes these facilities will be sold

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document within 12 months. In June 2010, the Company sold its Greensboro facility, which was closed in 2009, for $1.3 and realized a gain of $0.3, which is included in restructuring costs in the accompanying consolidated statements of operations.

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Assets held for sale are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets and consist of the following:

December 31, December 31, 2012 2011 Land $ 1.0 $ 1.0 Buildings and improvements 2.1 2.3 $ 3.1 $ 3.3

7. Goodwill and Other Intangible Assets The change in carrying amount of goodwill by business segment for the years ended December 31, 2012, 2011 and 2010 is as follows:

Harland Harland Financial Clarke Solutions Scantron Faneuil Total Predecessor Balance at December 31, 2010 $ 785.2 $ 452.2 $ 228.4 $ 61.0 $ 1,526.8 2010 acquisitions — (1.4) (1.4) — (2.8) 2011 acquisition — — 90.2 — 90.2 Impairment — — (102.2) — (102.2) Effect of exchange rate changes — (0.2) — — (0.2) Balance at December 21, 2011 785.2 450.6 215.0 61.0 $ 1,511.8 Successor Change in ownership (785.2) (450.6) (215.0) (61.0) (1,511.8) MacAndrews Acquisition 415.0 281.8 40.1 8.7 745.6 Faneuil balance at date of common control — — — 13.0 13.0 Balance at December 31, 2011 415.0 281.8 40.1 21.7 758.6 MacAndrews Acquisition 2.0 0.8 — — 2.8 Effect of exchange rate changes — 0.1 0.1 — 0.2 Balance at December 31, 2012 $ 417.0 $ 282.7 $ 40.2 $ 21.7 $ 761.6

Useful lives, gross carrying amounts and accumulated amortization for other intangible assets are as follows:

Gross Carrying Amount Accumulated Amortization Net Carrying Amount December 31, December 31, December 31, Useful Life (in years) 2012 2011 2012 2011 2012 2011 Amortized intangible assets: Customer relationships 3 - 19 $ 1,528.0 $ 1,528.0 $ 132.7 $ 12.3 $ 1,395.3 $ 1,515.7 Trademarks and tradenames 15 - 25 101.4 101.4 5.3 0.1 96.1 101.3 Software 3 - 9 56.5 42.2 13.1 1.0 43.4 41.2 1,685.9 1,671.6 151.1 13.4 1,534.8 1,658.2 Indefinite-lived intangible assets: Tradename 0.8 0.8 — — 0.8 0.8 Total other intangible assets $ 1,686.7 $ 1,672.4 $ 151.1 $ 13.4 $ 1,535.6 $ 1,659.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Amortization expense was $137.7, $4.1, $117.5 and $109.0 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. See Note 1 for a discussion of the effect on

F-22

Year ending December 31, 2013 $ 128.9 Year ending December 31, 2014 120.8 Year ending December 31, 2015 112.7 Year ending December 31, 2016 101.5 Year ending December 31, 2017 97.0

During 2012, the Company recorded a non-cash impairment charge of $0.1 for the Harland Financial Solutions segment related to software that was determined to have limited future use. The impairment charge was included in asset impairment charges in the accompanying consolidated statements of operations. As a result of the 2011 step one annual impairment test for goodwill, the Company determined the estimated fair value of the Scantron reporting unit was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. This required the Company to perform the second step of the test and hypothetically allocate the estimated fair value to Scantron's assets and liabilities with the unallocated fair value representing the implied fair value of Scantron's goodwill. As a result of this analysis, a non-cash impairment charge of $102.2 was recorded for the Scantron segment in the fourth quarter of 2011 based on the implied fair value of Scantron's goodwill being less than its carrying value. The Company also performed the 2011 annual impairment test for indefinite-lived tradenames and determined the estimated fair value of the Scantron tradename was less than its carrying value primarily due to declines in projected revenues and margins and a higher discount rate. As a result of this impairment and changes in Scantron's branding strategy, the useful life of the Scantron tradename was reassessed and determined to no longer be indefinite. The Company determined the estimated economic life for the Scantron tradename is 15 years. A non-cash impairment charge of $4.2 was recorded for the Scantron segment in the fourth quarter of 2011 based on the estimated fair value of the Scantron tradename being less than its carrying value and the reclassification of the useful life from an indefinite life to an estimated economic life of 15 years. In addition to the impairment charges resulting from the annual impairment tests, the Company recorded non-cash impairment charges of $2.7 and $1.9 during 2011 for the Faneuil and Scantron segments related to software that was determined to have limited future use. All of these impairment charges were included in asset impairment charges in the accompanying consolidated statements of operations. The impairment charges did not affect consolidated cash flows, current liquidity, capital resources or covenants under existing credit facilities.

F-23

8. Income Taxes Information pertaining to the Company's (loss) income before income taxes and the applicable (benefit) provision for income taxes is as follows:

Successor Predecessor

Year ended December December 22 to January 1 to Year ended December 31, 2012 December 31, 2011 December 21, 2011 31, 2010 (recasted) (Loss) income before income taxes: Domestic $ (55.7) $ (9.7) $ 69.1 $ 185.6 Foreign 1.3 — 1.3 (3.6) Total (loss) income before income taxes $ (54.4) $ (9.7) $ 70.4 $ 182.0 (Benefit) provision for income taxes: Current: Federal $ 88.3 $ 2.0 $ 61.2 $ 83.8 State and local 18.3 0.3 14.6 15.8 Foreign 0.6 — 0.9 0.1 107.2 2.3 76.7 99.7 Deferred: Federal (114.3) (5.5) (29.8) (28.7) State and local (12.1) (0.6) (5.6) (3.0) Foreign (0.2) — (0.1) (0.2) (126.6) (6.1) (35.5) (31.9) Total (benefit) provision for income taxes $ (19.4) $ (3.8) $ 41.2 $ 67.8

F-24

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

December 31, December 31, 2012 2011 (recasted) Current: Prepaid expenses $ 0.4 $ 4.1 Inventory 0.9 (4.4) Deferred revenues 5.4 (11.1) Deferred gain on debt repurchase (5.3) — Accelerated gain on amendment and extension of credit agreement 5.5 — Net operating loss carryforwards 7.0 7.1 Accrued expenses and other liabilities 32.4 31.7 Net current deferred tax asset before valuation allowance 46.3 27.4 Valuation allowance (1.2) (1.9) Net current deferred tax asset 45.1 25.5 Long-term: Property, plant and equipment (22.7) (29.8) Intangible assets (557.5) (591.4) Net operating loss carryforwards and AMT credits 4.0 11.0 Deferred gain on debt repurchases (20.2) (25.4) Accelerated gain on amendment and extension of credit agreement 19.3 — Debt fair value adjustments (103.0) (161.0) Deferred financing fees 2.9 7.1 Accrued rebates 22.3 33.8 Other 34.0 31.1 Net long-term deferred tax liability before valuation allowance (620.9) (724.6) Valuation allowance (1.8) (1.9) Net long-term deferred tax liability (622.7) (726.5) Net deferred tax liabilities $ (577.6) $ (701.0)

At December 31, 2012, the Company had domestic federal net operating loss ("NOL") carryforwards of $21.1, which expire between 2021 and 2030. The federal NOL carryforwards relate to acquisitions and therefore are subject to annual limitations under Internal Revenue Code Section 382, which generally restricts the amount of a corporation's taxable income that can be offset by a taxpayer's NOL carryforwards in taxable years after a change in ownership has occurred. The Company had domestic state net operating loss carryforwards totaling $1.5 (tax effected), with $0.5 expiring between 2013 and 2020 and the remainder expiring after 2020. In addition, the Company had foreign net operating loss carryforwards of $11.4 for Ireland, which have no expiration dates. The Company has established a valuation allowance for certain federal, state and foreign net operating loss and tax credit carryforwards. Management believes that, based on a number of factors, the available objective evidence creates uncertainty regarding the utilization of these carryforwards. At December 31, 2012, there was a valuation allowance of $3.0 for such items. The valuation

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document allowance for deferred tax assets decreased by $0.8 during 2012. The decrease in this allowance was primarily due to the utilization of NOLs during the current period for which a valuation was established.

F-25

The effective tax rate varies from the current statutory federal income tax rate as follows:

Successor Predecessor

Year ended December December 22 to January 1 to December Year ended December 31, 2012 December 31, 2011 21, 2011 31, 2010 Statutory rate 35.0 % 35.0 % 35.0 % 35.0 % State and local taxes 3.9 % 5.1 % 6.0 % 4.1 % Goodwill impairment — % — % 34.0 % — % Contingent consideration — % — % (11.4)% — % Domestic production activities deduction — % — % (4.0)% (2.1)% Uncertain tax positions 0.2 % — % (0.3)% (1.2)% Effect of state law change (3.5)% — % — % — % Other 0.1 % (0.9)% (0.7)% 1.5 % 35.7 % 39.2 % 58.6 % 37.3 %

The Company, M & F Worldwide and another subsidiary of M & F Worldwide entered into a tax sharing agreement in 2005 (the "2005 Tax Sharing Agreement") whereby M & F Worldwide files consolidated federal income tax returns that include the Company, as well as certain other subsidiaries of M & F Worldwide for periods prior to the MacAndrews Acquisition. Under the 2005 Tax Sharing Agreement, the Company made periodic payments to M & F Worldwide. These payments were based on the applicable federal income tax liability that the Company would have had for each taxable period if the Company had not been included in the M & F Worldwide consolidated group. Similar provisions apply with respect to any foreign, state or local income or franchise tax returns filed by any M & F Worldwide consolidated, combined or unitary group for each period that the Company is included in any such group for foreign, state or local tax purposes. Effective upon the closing of the MacAndrews Acquisition, the 2005 Tax Sharing Agreement was amended and restated to incorporate MacAndrews as the common parent (the "2011 Tax Sharing Agreement"). For the periods beginning on or after December 22, 2011, MacAndrews will file consolidated federal income tax returns that include the Company, as well as certain other subsidiaries of MacAndrews. The terms of the 2011 Tax Sharing Agreement are consistent with the terms of the 2005 Tax Sharing Agreement. The Company made net payments to MacAndrews of $94.6 for fiscal year 2012 and net payments to M & F Worldwide of $0.0, $70.3, and $83.5, for the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, under the tax sharing agreements. At the end of 2012 and 2011, the Company had net receivables of $22.7 and $16.0, respectively, relating to the tax sharing agreements. To the extent that the Company has losses for tax purposes, the 2005 Tax Sharing Agreement and the 2011 Tax Sharing Agreement permit the Company to carry those losses back to periods beginning on or after December 15, 2005, and forward for so long as the Company is included in the affiliated group of which MacAndrews is the common parent (in both cases, subject to federal, state and local rules on limitation and expiration of net operating losses) to reduce the amount of the payments the Company otherwise would be required to make to M & F Worldwide, under the 2005 Tax Sharing Agreement, or MacAndrews, under the 2011 Tax Sharing Agreement, in years in which it has current income for tax purposes. If the loss is carried back to the previous period, M & F Worldwide, under the 2005 Tax Sharing Agreement, and MacAndrews, under the 2011 Tax Sharing Agreement, shall pay the Company an amount equal to the decrease of the taxes the Company would have benefited as a result of the carry back. In connection with the 2005 acquisition of Clarke American Corp., Honeywell International Inc. ("Honeywell") agreed to indemnify M & F Worldwide and its affiliates, including the Company, for certain income tax liabilities that arose prior to the acquisition of Clarke American and M & F Worldwide has agreed to reimburse to the Company an amount equal to 100% of any payment received (unless M & F Worldwide incurs any such liabilities directly).

F-26

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Successor Predecessor

Year ended December December 22 to January 1 to Year ended 31, 2012 December 31, 2011 December 21, 2011 December 31, 2010 Balance at beginning of period $ 10.9 $ 10.9 $ 12.0 $ 13.6 Additions based on tax positions related to the current year 0.8 — — — Additions for tax positions for prior years 0.9 — 2.5 0.6 Reductions for tax positions for prior years (2.4) — (3.6) (2.2) Settlements — — — — Balance at end of period $ 10.2 $ 10.9 $ 10.9 $ 12.0

Of the amounts reflected in the table above at December 31, 2012 and 2011, there were $5.6 and $4.8 of tax benefits that, if recognized in 2012 and 2011, respectively, would have reduced the Company's annual effective tax rate. The Company had accrued interest and penalties of approximately $5.4 and $6.7 as of December 31, 2012 and 2011, respectively. The Company records both accrued interest and penalties related to income tax matters, which is not significant, in the provision for income taxes in the accompanying consolidated statements of operations. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company is subject to taxation in the United States and various state and foreign jurisdictions. The statute of limitations for the Company's federal and state tax returns for the tax years 2009 through 2012 generally remain open. In addition, open tax years related to foreign jurisdictions remain subject to examination but are not considered material. In 2011, the Internal Revenue Service completed its examination of Novar USA Inc., a predecessor of Harland Clarke Holdings, for the tax year 2005 without change. 9. Retirement Plans The Company, through its subsidiaries, sponsors certain defined contribution benefit plans whereby it generally matches employee contributions up to 4% of base wages. Contributions to the plans totaled $12.0, $0.1, $12.7 and $13.2 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. The Company has deferred compensation agreements with certain former officers. The present value of the cash benefits payable under these agreements was $6.7 and $6.9 at December 31, 2012 and 2011, respectively. Accretion expense recognized for these agreements was not significant.

10. Other Postretirement Benefit Plans The Company sponsors two unfunded postretirement defined benefit plans that cover certain former salaried and non-salaried employees. One plan provides healthcare benefits and the other provides life insurance benefits. The medical plan is contributory and contributions are adjusted annually based on actual claims experience. For retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000, the Company contributes a portion of the cost of the medical plan. For all other retirees, the Company's intent is that the retirees provide the majority of the actual cost of the medical plan. The life insurance plan is noncontributory for those employees that retired by December 31, 2002. During 2010, the Company amended the medical plan for benefits to be provided after December 31, 2010 for retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000. As a result of these amendments, the Company remeasured its accumulated postretirement benefit obligation ("APBO") as of September 30, 2010. The remeasurement reflected a new discount rate of 5.0% and resulted in a $7.0 decrease in the APBO and the offsetting amount was recorded in other comprehensive income.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of December 31, 2012 and 2011, the APBO was $12.3 and $11.4, respectively. The Company contributed to these plans $0.4, $0.0, $0.4 and $0.5 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. The Company expects to contribute $0.7 to these plans in 2013.

F-27

The following table presents the beginning and ending balances of the APBO, the changes in the APBO, and reconciles the plans' status to the accrued postretirement healthcare and life insurance liability reflected on the accompanying consolidated balance sheets as of December 31, 2012 and 2011:

Successor Predecessor Year ended December 22 to January 1 to December 31, 2012 December 31, 2011 December 21, 2011 APBO at beginning of period $ 11.4 $ 11.2 $ 10.1 Changes in APBO: Interest cost 0.5 — 0.5 Benefits paid (0.6) — (0.8) Retiree contributions 0.2 — 0.3 Health benefits subsidy — — 0.1 Actuarial loss 0.8 0.2 1.0 APBO at end of period $ 12.3 $ 11.4 $ 11.2

Included in accrued salaries, wages and employee benefits $ 0.7 $ 0.6 $ 0.6 Included in other liabilities 11.6 10.8 10.6 APBO at end of period $ 12.3 $ 11.4 $ 11.2

The following table presents the changes in the fair value of plan assets and the funded status for the periods presented:

Successor Predecessor Year ended December 22 to January 1 to December 31, 2012 December 31, 2011 December 21, 2011 Fair value of plan assets at beginning of period $ — $ — $ — Employer contributions 0.4 — 0.4 Retiree contributions 0.2 — 0.3 Health benefits subsidy — — 0.1 Benefits paid (0.6) — (0.8) Fair value of plan assets at end of period $ — $ — $ — Funded status $ (12.3) $ (11.4) $ (11.2)

As of December 31, 2012 and 2011, amounts recognized in accumulated other comprehensive income (loss), which have not yet been recognized as a component of net postretirement benefit cost, consist of:

2012 2011 Unrecognized actuarial net loss $ 1.0 $ 0.2

F-28

Net periodic postretirement benefit costs and other changes in benefit obligations recognized in other comprehensive income for these plans were as follows:

Successor Predecessor

Year ended December December 22 to January 1 to Year ended December 31, 2012 December 31, 2011 December 21, 2011 31, 2010 Interest on accumulated postretirement benefit obligation $ 0.5 $ — $ 0.5 $ 0.9 Amortization of prior service credits — — (0.4) (0.1) Amortization of net actuarial loss — — — 0.1 Net postretirement benefit cost $ 0.5 $ — $ 0.1 $ 0.9 Other changes in benefit obligations recognized in other comprehensive income, before taxes: Unrecognized actuarial net loss (gain) $ 0.8 $ 0.2 $ 1.0 $ (0.6) Amortization of net actuarial loss — — — (0.1) Prior service credits — — — (8.6) Amortization of prior service credits — — 0.4 0.1 Total changes in benefit obligations recognized in other comprehensive income, before taxes $ 0.8 $ 0.2 $ 1.4 $ (9.2)

Weighted average discount rates used to determine benefit obligations and net periodic benefit cost were as follows:

Successor Predecessor

Year ended December December 22 to January 1 to December Year ended December 31, 2012 December 31, 2011 21, 2011 31, 2010 Weighted average discount rates used to determine benefit obligations 3.63% 4.15% 4.30% 5.25% Weighted average discount rates used to determine the net periodic postretirement benefit cost 4.15% 5.25% 5.25% 5.75%

The annual healthcare cost trend rates used for 2013 to determine benefit obligations at December 31, 2012 were assumed to be 8.0%. The estimated annual healthcare cost trend rates grade down gradually to 5.0% at 2019. Participant contributions are assumed to increase with healthcare cost trend rates. The benefit obligations also include the estimated impact of the provisions of the Patient Protection and Affordable Care Act that are effective as of January 1, 2013 as well as those provisions that will take effect in the future. The healthcare cost trend rate assumptions, which are net of participant contributions, could have a significant effect on amounts reported. A change in the assumed trend rate of 1 percentage point would have the following effects:

1 Percentage 1 Percentage Point Increase Point Decrease Effect on total interest cost for 2012 $ — $ — Effect on postretirement benefit obligation at December 31, 2012 0.3 (0.2)

The following reflects the estimated future benefit payments, net of estimated participant contributions:

2013 $ 0.7 2014 0.7 2015 0.7 2016 0.7 2017 0.7 2018-2022 3.4

There will not be any amortization of accumulated actuarial net loss in 2013.

11. Long-Term Debt

December 31, December 31, 2012 2011 $1,900.0 Senior Secured Credit Facilities: Extended Term Loans due 2017 $ 677.4 $ — Non-Extended Term Loans due 2014 728.6 1,719.0 Total $1,900.0 Senior Secured Credit Facilities 1,406.0 1,719.0 9.75% Senior Secured Notes due 2018 235.0 — Senior Floating Rate Notes due 2015 204.3 204.3 9.50% Senior Fixed Rate Notes due 2015 271.3 271.3 Faneuil Revolving Credit Facility — 25.6 Capital lease obligations 3.1 4.5 Unamortized original issue discount and acquisition accounting-related fair value discount (271.9) (412.7) 1,847.8 1,812.0 Less: current maturities (78.5) (45.1) Long-term debt, net of current maturities $ 1,769.3 $ 1,766.9

$1,900.0 Senior Secured Credit Facilities Extended Term Loans On July 24, 2012, an amendment (the "Amendment") entered into on May 10, 2012 by the Company to its credit agreement dated as of April 4, 2007 (the "Credit Agreement") became effective, thereby extending the maturity of $973.0 of term loans under the Credit Agreement (the "Extended Term Loans") from June 2014 to June 2017 (subject to a springing maturity 90 days prior to the maturity date of the Company's 2015 Senior Notes (as defined hereinafter) if such notes have not been repaid, extended or refinanced). The effectiveness of the Amendment was conditioned on, among other customary conditions, the repayment of $280.2 of the Extended Term Loans, which repayment was made with net proceeds from the issuance of the 2018 Senior Secured Notes (as defined hereinafter) and cash on hand. After giving effect to such repayment and the effectiveness of the Amendment, there were $692.8 of Extended Term Loans outstanding and $729.0 of non-extended term loans (the "Non-Extended Term Loans") outstanding. The Company is required to repay the Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 10% of the original extended amount after giving effect to the $280.2 prepayment thereof required as a condition precedent to the effectiveness of the Amendment. The Amendment also includes several covenants in addition to those covenants in the Credit Agreement. The weighted average interest rate on the principal amount of Extended Term Loans outstanding was 5.5% at December 31, 2012. The Extended Term Loans bear, at the Company's option, interest at:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document • 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 4.25% per annum; or • A rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin of 5.25% per annum.

F-30

Non-Extended Term Loans On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into the Credit Agreement. The Credit Agreement provides for a $1,800.0 senior secured term loan (the "Term Loan"), which was fully drawn at closing on May 1, 2007 and matures on June 30, 2014 with respect to the Non-Extended Term Loans. The Company is required to repay the Non-Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount multiplied by the ratio of Non-Extended Term Loans outstanding on the effective date of the Amendment to the total Non-Extended Term Loans and Extended Term Loans outstanding on the effective date of the Amendment prior to giving effect to the prepayment required as a condition precedent to the effectiveness of the Amendment. In addition, the Credit Agreement requires that a portion of the Company's excess cash flow be applied to prepay amounts borrowed, as further described below. The Credit Agreement also provides for a $100.0 revolving credit facility (the "Revolver") that matures on June 28, 2013. The Revolver includes an up to $60.0 subfacility in the form of letters of credit and an up to $30.0 subfacility in the form of short-term swing line loans. The weighted average interest rate on the principal amount of Non-Extended Term Loans outstanding was 2.7% at December 31, 2012. As of December 31, 2012, there were no outstanding borrowings under the Revolver and there was $92.2 available for borrowing (giving effect to the issuance of $7.8 of letters of credit). The Revolver was terminated on February 20, 2013 upon the execution of a new revolving credit facility. See Note 20 for a discussion of the new revolving credit facility. Under certain circumstances, the Company is permitted to incur additional term loan and/or revolving credit facility indebtedness in an aggregate principal amount of up to $250.0. In addition, the terms of the Credit Agreement, the 2015 Senior Notes (as defined hereinafter), and the 2018 Senior Secured Notes (as defined hereinafter) allow the Company to incur substantial additional debt. The Non-Extended Term Loans bear, at the Company's option, interest at: • 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 Credit Agreement has a commitment fee of 0.50% for the unused portion of the Revolver and a weighted average commitment fee of 2.51% for issued letters of credit. Interest rate margins and commitment fees under the Revolver are subject to reduction in increments based upon the Company achieving certain consolidated leverage ratios. The Company and each of its existing and future domestic subsidiaries, other than unrestricted subsidiaries, certain immaterial subsidiaries, subsidiaries that do not guarantee other debt of the Company and subject to certain other exceptions, are guarantors and may also be co-borrowers under the Credit Agreement. In addition, the Company's direct parent, CA Acquisition Holdings, Inc., is a guarantor under the Credit Agreement. The senior secured credit facilities are secured by a perfected first priority security interest in substantially all of the Company's, each of the co-borrowers' and the guarantors' tangible and intangible assets and equity interests (other than voting stock in excess of 65.0% of the outstanding voting stock of each direct foreign subsidiary and certain other excluded property). The Credit Agreement contains customary affirmative and negative covenants including, among other things, restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale-leaseback transactions. The Credit Agreement requires the Company to maintain a maximum consolidated leverage ratio solely for the benefit of lenders under the Revolver. The Company has the right to prepay the term loans at any time without premium or penalty, subject to certain breakage costs, and the Company may also reduce any unutilized portion of the Revolver at any time, in minimum principal amounts set forth in the Credit Agreement. The Company is required to prepay the term loans with 50% of excess cash flow (as defined in the Credit Agreement, with certain reductions set forth in the Credit Agreement, based on achievement and maintenance of leverage ratios) and 100% of the net proceeds of certain issuances, offerings or placements of debt obligations of the Company or any of its subsidiaries (other than permitted debt). Each such prepayment will be applied first to the next eight unpaid quarterly amortization installments on the term loans and second to the remaining amortization installments on the term loans on a pro rata basis. No such excess cash flow payment is required in 2013 with respect to 2012. Excess cash flow payments of $12.5 and $3.5 were paid in March 2012 and 2011, respectively, for 2011 and 2010, respectively. No such excess cash flow payments were required in 2010 and 2009. Under the terms of the Credit Agreement such excess cash flow payments were applied against other mandatory payments due in the same year of the excess cash flow payment.

The Credit Agreement also contains certain customary affirmative covenants and events of default. Such events of default include, but are not limited to: non-payment of amounts when due; violation of covenants; material inaccuracy of representations and warranties; cross default and cross acceleration with respect to other material debt; bankruptcy and other insolvency events; certain ERISA events; invalidity of guarantees or security documents; and material judgments. Some of these events of default allow for grace periods. If a change of control (as defined in the Credit Agreement) occurs, the Company will be required to make an offer to prepay all outstanding term loans under the Credit Agreement at 101% of the outstanding principal amount thereof plus accrued and unpaid interest, and lenders holding a majority of the revolving credit commitments may elect to terminate the revolving credit commitments in full. The Company is also required to offer to prepay outstanding term loans at 100% of the principal amount to be prepaid, plus accrued and unpaid interest, with the proceeds of certain asset sales under certain circumstances. Senior Notes due 2015 On May 1, 2007, the Company issued $305.0 aggregate principal amount of Senior Floating Rate Notes due 2015 (the "Floating Rate Notes") and $310.0 aggregate principal amount of 9.50% Senior Fixed Rate Notes due 2015 (the "Fixed Rate Notes" and, together with the Floating Rate Notes, the "2015 Senior Notes"). The 2015 Senior Notes mature on May 15, 2015. The Fixed Rate Notes bear interest at a rate per annum of 9.50%, payable on May 15 and November 15 of each year. The Floating Rate Notes bear interest at a rate per annum equal to the Applicable LIBOR Rate (as defined in the indenture governing the 2015 Senior Notes (the "2015 Senior Notes Indenture")), subject to a floor of 1.25%, plus 4.75%, payable on February 15, May 15, August 15 and November 15 of each year. The interest rate on the Floating Rate Notes was 6.0% at December 31, 2012. The Senior Notes are unsecured and are therefore effectively subordinated to all of the Company's senior secured indebtedness, including outstanding borrowings under the Credit Agreement and the 2018 Senior Secured Notes. The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries and certain other exceptions, are guarantors and may also be co-issuers under the 2015 Senior Notes. The 2015 Senior Notes Indenture contains customary restrictive covenants, including, among other things, restrictions on the Company's ability to incur additional debt, pay dividends and make distributions, make certain investments, repurchase stock, incur liens, enter into transactions with affiliates, enter into sale and lease back transactions, merge or consolidate and transfer or sell assets. The Company must offer to repurchase all of the 2015 Senior Notes upon the occurrence of a "change of control," as defined in the 2015 Senior Notes Indenture, at a purchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. The Company must also offer to repurchase the 2015 Senior Notes with the proceeds from certain sales of assets, if it does not apply those proceeds within a specified time period after the sale, at a purchase price equal to 100% of their aggregate principal amount, plus accrued and unpaid interest. 9.75% Senior Secured Notes due 2018 On July 24, 2012, the Company and Harland Clarke Corp., Harland Financial Solutions, Inc., Scantron Corporation and Checks in the Mail, Inc. (together, the "Co-Issuers") completed an offering of $235.0 aggregate principal amount of 9.75% Senior Secured Notes due 2018 (the "2018 Senior Secured Notes"). The Company used the net proceeds from the offering, together with cash on hand, to repay $280.2 aggregate principal amount of outstanding Extended Term Loans under its Credit Agreement. The 2018 Senior Secured Notes were issued pursuant to an indenture, dated as of July 24, 2012 (the "2018 Senior Secured Notes Indenture"), among the Company, the Co-Issuers, certain of the Company's domestic subsidiaries that guarantee the 2018 Senior Secured Notes (the "Guarantors") and Wells Fargo Bank, National Association, as trustee and collateral agent (the "Trustee"). The Guarantors have guaranteed (the "Guarantees") the Company's and Co-Issuers' obligations under the 2018 Senior Secured Notes and the 2018 Senior Secured Notes Indenture on a senior secured basis. The 2018 Senior Secured Notes and the Guarantees are secured pursuant to a Security Agreement, dated as of July 24, 2012, by and among the Company, the Co-Issuers, the Guarantors and Wells Fargo Bank, National Association, as collateral trustee (the "Collateral Trustee") and a Collateral Trust Agreement, dated as of July 24, 2012, by and among the Company, certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee. The 2018 Senior Secured Notes will mature on August 1, 2018. The Company will pay interest on the 2018 Senior Secured Notes at 9.75% per annum, semiannually in arrears on each of February 1 and August 1 to holders of record at the close of business on the immediately preceding January 15 and July 15 of each year, commencing on February 1, 2013.

The 2018 Senior Secured Notes are senior secured obligations of the Company and the Co-Issuers and the Guarantees are senior secured obligations of the Guarantors. The 2018 Senior Secured Notes and the Guarantees rank as follows: (i) secured on a first-priority basis, equally and ratably with all obligations of the Company, the Co-Issuers and the Guarantors that are secured by pari passu liens on the collateral, including their existing senior secured credit facilities; (ii) effectively junior to all of the Company's, Co-Issuers' and the Guarantors' obligations under any future asset-based revolving credit facility to the extent of the value of the current asset collateral held by the Company, the Co-Issuers and the Guarantors; (iii) structurally subordinated to any existing and future indebtedness and other liabilities of any existing and future subsidiaries of the Company that are not Guarantors; (iv) pari passu in right of payment with all of the existing and future senior indebtedness of the Company, the Co-Issuers and the Guarantors and effectively senior to the extent of the value of the collateral to any future unsecured indebtedness of the Company, the Co-Issuers and the Guarantors that is secured by liens on the collateral that are junior to the liens securing the Senior Secured Notes and the Guarantees or that is unsecured; and (v) senior in right of payment to any existing and future subordinated indebtedness of the Company, the Co-Issuers and the Guarantors. The 2018 Senior Secured Notes and the Guarantees are secured on a first-priority basis, equally and ratably with the indebtedness under the Credit Agreement, by substantially all of the Company's, the Co-Issuers' and the Guarantors' assets, subject to certain exceptions and permitted liens. Beginning with the fiscal year of the Company ending December 31, 2013, if the Company's secured leverage ratio exceeds 3.25 for 2013 and 3.00 for 2014 and after, the Company will be required to offer to purchase an amount of the 2018 Senior Secured Notes equal to the greater of (1) $15.0 and (2) 50% of its excess cash flow for the applicable period, less any voluntary prepayments of 2018 Senior Secured Notes or credit facility indebtedness and certain mandatory prepayments made during the applicable period and subject to certain other exceptions, at a purchase price equal to 100% of the principal amount of the 2018 Senior Secured Notes, plus accrued and unpaid interest and additional interest. Upon the occurrence of a change of control or if the Company sells certain assets, the Company may be required to make an offer to purchase the 2018 Senior Secured Notes at certain specified prices. The 2018 Senior Secured Notes Indenture contains covenants that, among other things, limit the Company's, the Co-Issuers' and the Guarantors' ability to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company's subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company's affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all assets; and (x) transfer or sell assets. These covenants are subject to important exceptions and qualifications. The 2018 Senior Secured Notes Indenture contains affirmative covenants and events of default that are customary for indentures governing high-yield debt securities.

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Loss on Early Extinguishment of Debt In connection with the repayment of $280.2 of the Extended Term Loans in the third quarter of 2012, the Company recorded a loss on early extinguishment of debt of $34.2 resulting from the write-off of unamortized acquisition accounting-related fair value discount, which was attributable to the MacAndrews Acquisition (see Note 3). During 2011, the Company extinguished debt with a total principal amount of $2.5 with a carrying value of $1.6, after acquisition accounting related fair value adjustments, by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7, resulting in a loss of $0.1. Capital Lease Obligations The Company has outstanding capital lease obligations with principal balances totaling $3.1 and $4.5 at December 31, 2012 and December 31, 2011, respectively. These obligations have imputed interest rates ranging from 0.0% to 9.6% and have required payments of $1.5 in 2013, $1.3 in 2014, $0.2 in 2015 and $0.1 in 2016. Annual Maturities Annual maturities of long-term debt (excluding capital lease obligations) during the next five years are as follows:

2013 $ 77.0 2014 790.1 2015 544.9 2016 69.3 2017 400.3

12. Derivative Financial Instruments Interest Rate Hedges The Company uses hedge transactions, which are accounted for as cash flow hedges, to limit the Company's risk on a portion of its variable-rate debt. During June 2009, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $350.0, which became effective on June 30, 2009 and expired on June 30, 2012. This hedge swapped the underlying variable rate for a fixed rate of 2.353%. During September 2009, the Company entered into an additional interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $250.0, which became effective on September 30, 2009 and expired on September 30, 2012. This hedge swapped the underlying variable rate for a fixed rate of 2.140%. During June 2010, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $255.0, which became effective on June 30, 2010. This hedge swaps the underlying variable rate for a fixed rate of 1.264%. The following presents the fair values of these derivative instruments and the classification in the consolidated balance sheets.

Balance Sheet December 31, December 31, Derivatives Designated as Cash Flow Hedging Instruments: Classification 2012 2011 Interest rate swaps Other current liabilities $ 1.3 $ 6.1 Other liabilities — 2.9

Fair value of interest rate swaps is based on forward-looking interest rate curves as provided by the counterparty, adjusted for the Company's credit risk.

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These derivative instruments were ineffective during fiscal year 2012 and the period December 22 to December 21, 2011 and had no ineffective portions during the period January 1 to December 21, 2011 and fiscal year 2010. Accordingly, no amounts were required to be reclassified from accumulated other comprehensive income to the consolidated statements of operations in 2010 due to ineffectiveness. The following presents the effect of these derivative instruments (effective and ineffective portion) on other comprehensive income and amounts reclassified from accumulated other comprehensive income into interest expense.

Successor Predecessor

Year ended December 22 to January 1 to Year ended December 31, 2012 December 31, 2011 December 21, 2011 December 31, 2010 Interest Rate Swaps: Loss recognized in other comprehensive income (effective portion) $ — $ 0.1 $ 5.8 $ 23.3 Loss reclassified from other comprehensive income into interest expense (effective portion) 0.1 — 12.9 19.7 Loss recognized in interest expense (ineffective portion) 1.8 0.1 — — The following presents the balances and net changes in the accumulated other comprehensive income related to these derivative instruments, net of income taxes:

Successor Predecessor Year ended December 22 to January 1 to Balances and Net Changes: December 31, 2012 December 31, 2011 December 21, 2011 Balance at beginning of period $ 0.1 $ 6.5 $ 10.9 Change in ownership — (6.5) — Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0, $0.0 and $5.0 (0.1) — (7.9) Net change in fair value of interest rate swaps (effective portion), net of taxes of $0.0, $0.0 and $2.3 — 0.1 3.5 Balance at end of period $ — $ 0.1 $ 6.5

13. Fair Value Measurements Nonrecurring Fair Value Measurements The following table presents the Company's nonfinancial assets that were measured at fair value on a nonrecurring basis during 2011:

Fair Value at November 1, Impairment 2011 (Level 1) (Level 2) (Level 3) Charges Goodwill - Scantron $ 281.9 $ — $ — $ 281.9 $ 102.2 Indefinite-lived tradename - Scantron 6.8 — — 6.8 4.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document See Note 2 for more information on the fair value measurement process for goodwill and indefinite-lived trademarks and tradenames.

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Recurring Fair Value Measurements Fair values of financial instruments subject to recurring fair value measurements as of December 31, 2012 and 2011, are as follows:

Balance at December 31, 2012 (Level 1) (Level 2) (Level 3) Corporate equity securities $ 0.1 $ 0.1 $ — $ — Liability for interest rate swaps 1.3 — 1.3 —

Balance at December 31, 2011 (Level 1) (Level 2) (Level 3) United States treasury securities $ 56.6 $ 56.6 $ — $ — Corporate equity securities 0.1 0.1 — — Liability for interest rate swaps 9.0 — 9.0 — Liability for contingent consideration related to business combinations 0.6 — — 0.6

Fair value of interest rate swaps is based on forward-looking interest rate curves as provided by the counterparty, adjusted for the Company's credit risk. Fair value of corporate equity securities and United States treasury securities are based on quoted market prices. Fair value of the liability for contingent consideration related to business combinations is estimated utilizing a discounted cash flow analysis. The analysis considers, among other things, estimates of future revenues and the timing of expected future contingent consideration payments. The following table presents the Company's liability for contingent consideration related to business combinations measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

2012 2011 Balance at beginning of period $ 0.6 $ 8.2 Businesses acquired — 17.0 Net changes in fair value (0.6) (24.3) Payment on contingent consideration arrangement — (0.3) Balance at end of period $ — $ 0.6

Fair Value of Financial Instruments Most of the Company's clients are in the financial services and educational industries. The Company performs ongoing credit evaluations of its clients and maintains allowances for potential credit losses. The Company does not generally require collateral. Actual losses and allowances have been within management's expectations. The carrying amounts for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues as of the measurement date. The estimated fair value of long-term debt at December 31, 2012 and 2011 was approximately $1,984.4 and $1,821.4, respectively. The carrying value of long-term debt at December 31, 2012 and 2011 was $1,847.8 and $1,812.0, respectively. As described in Note 3, the carrying value of the Company's long-term debt was adjusted to fair value as of the date of the MacAndrews Acquisition.

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14. Investments Equity Method Investment During the fourth quarter of 2012, the Company purchased certain equity securities of Transactis, Inc. ("Transactis"), a privately held company, representing a 15.5% ownership interest for $7.0 in cash. The Company accounts for this investment using the equity method (See Note 2) due to its ability to influence operating and financial matters of Transactis through its representation on the Transactis board of directors and certain rights under the terms of the stock purchase agreement. The assets, liabilities and results of operations were not significant to the Company's financial position or results of operations in 2012. Marketable Securities

The Company's marketable securities are classified as available-for-sale and are reported at their fair values, which are as follows:

Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Balance at December 31, 2012: Corporate equity securities $ 0.1 $ — $ — $ 0.1 Balance at December 31, 2011: United States treasury securities $ 56.5 $ 0.1 $ — $ 56.6 Corporate equity securities 0.1 — — 0.1

The Company purchased United States treasury securities, which were to mature in 2014, during the fourth quarter of 2011. During 2012, the Company sold its United States treasury securities for $56.3 in cash and recognized a loss of $0.2, which is included in other (expense) income, net in the accompanying consolidated statements of operations. During 2011, the Company sold certain corporate equity securities for $13.4 in cash and recognized a gain of $13.2, which is included in other (expense) income, net in the accompanying consolidated statements of operations.

15. Restructuring Harland Clarke and Corporate The Company adopted plans during recent years to realize cost savings in the Harland Clarke segment and Corporate by consolidating printing plants, contact centers and selling, general and administrative functions. The following table details the components of the Company's restructuring accruals under its plans related to the Harland Clarke segment and Corporate for 2012, 2011 and 2010:

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Beginning Non-cash Ending Balance Expensed Paid in Cash Utilization Balance Successor: Year ended December 31, 2012: Severance and severance-related $ 4.5 $ 8.8 $ (6.9) $ — $ 6.4 Facilities closures and other costs 3.0 2.2 (1.8) (1.0) 2.4 Total $ 7.5 $ 11.0 $ (8.7) $ (1.0) $ 8.8

Predecessor: Year ended December 31, 2011: Severance and severance-related $ 1.5 $ 6.1 $ (3.1) $ — $ 4.5 Facilities closures and other costs 4.5 1.6 (3.0) (0.1) 3.0 Total $ 6.0 $ 7.7 $ (6.1) $ (0.1) $ 7.5 Year ended December 31, 2010: Severance and severance-related $ 2.5 $ 5.1 $ (6.1) $ — $ 1.5 Facilities closures and other costs 2.5 7.2 (2.5) (2.7) 4.5 Total $ 5.0 $ 12.3 $ (8.6) $ (2.7) $ 6.0

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period. The non-cash utilization of $1.0, $0.1 and $2.7 in 2012, 2011 and 2010, respectively, in the table above, includes adjustments to the carrying value of other property, plant and equipment. The Company expects to incur in future periods an additional $1.7 for costs related to these plans. Ongoing lease commitments related to these plans continue through 2017. Harland Financial Solutions During 2009, the Company initiated a multi-year plan to reorganize certain operations and sales and support functions within the Harland Financial Solutions segment. The plan, which was completed in 2011, focused on moving from a product-centric organization to a functional organization in order to enhance customer support. During 2012, the Company adopted a plan to realize additional cost savings in the Harland Financial Solutions segment by eliminating certain selling, general and administrative expenses.

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The following table details the Company's restructuring accruals related to the Harland Financial Solutions segment for 2012, 2011 and 2010:

Beginning Non-cash Ending Balance Expensed Paid in Cash Utilization Balance Successor: Year ended December 31, 2012: Severance and severance-related $ — $ 0.6 $ (0.5) $ — $ 0.1 Facilities and other costs 1.5 (0.2) (0.3) 0.3 1.3 Total $ 1.5 $ 0.4 $ (0.8) $ 0.3 $ 1.4

Predecessor: Year ended December 31, 2011: Severance and severance-related $ 0.1 $ 0.3 $ (0.4) $ — $ — Facilities and other costs 2.2 0.1 (0.8) — 1.5 Total $ 2.3 $ 0.4 $ (1.2) $ — $ 1.5 Year ended December 31, 2010: Severance and severance-related $ 1.0 $ 0.7 $ (1.6) $ — $ 0.1 Facilities and other costs 0.1 2.1 (0.1) 0.1 2.2 Total $ 1.1 $ 2.8 $ (1.7) $ 0.1 $ 2.3

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period. Scantron The Company adopted plans during recent years to realize cost savings in the Scantron segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. The following table details the components of the Company's restructuring accruals related to the Scantron segment for 2012, 2011 and 2010:

Beginning Non-cash Ending Balance Expensed Paid in Cash Utilization Balance Successor: Year ended December 31, 2012: Severance and severance-related $ 2.0 $ 4.6 $ (3.4) $ — $ 3.2 Facilities and other costs 1.4 1.2 (1.7) — 0.9 Total $ 3.4 $ 5.8 $ (5.1) $ — $ 4.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Severance and severance-related $ 0.5 $ 1.9 $ (2.3) $ — $ 0.1 Facilities and other costs — 4.7 (1.2) 0.2 3.7 Total $ 0.5 $ 6.6 $ (3.5) $ 0.2 $ 3.8

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period.

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Ongoing lease commitments related to these plans continue to October 2013. The Company expects to make payments for severance and severance-related costs through 2014. Faneuil The Company adopted a plan in 2012 to realize cost savings in the Faneuil segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. In 2010, The Company adopted and completed a plan to realize cost savings in the Faneuil segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. The following table details the components of the Company's restructuring accruals related to the Faneuil segment for 2012 and 2010:

Beginning Paid in Ending Balance Expensed Cash Balance Successor: Year ended December 31, 2012: Severance and severance-related $ — $ 1.0 $ (0.4) $ 0.6 Facilities and other costs — 0.7 (0.5) 0.2 Total $ — $ 1.7 $ (0.9) $ 0.8

Predecessor: Year ended December 31, 2010: Severance and severance-related $ — $ 0.6 $ (0.6) $ — Facilities and other costs — — — — Total $ — $ 0.6 $ (0.6) $ —

Restructuring accruals for all of the segments' plans are reflected in other current liabilities and other liabilities in the accompanying consolidated balance sheets. The Company expects to pay the remaining severance, facilities and other costs related to the segments' restructuring plans through 2017. 16. Commitments and Contingencies Lease and Purchase Commitments The Company leases property, equipment and vehicles under operating leases that expire at various dates through 2020. Certain leases contain renewal options for one- to five-year periods. Rental payments are typically fixed over the initial term of the lease and usually contain escalation factors for the renewal term. At December 31, 2012, future minimum lease payments under non-cancelable operating leases with terms of one year or more are as follows:

2013 $ 26.0 2014 20.0 2015 12.1 2016 10.3 2017 7.6 Thereafter 6.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document At December 31, 2012, the Company had obligations of $56.6 payable under contracts with third-party service providers primarily for information technology services and obligations to purchase approximately $16.6 of raw materials.

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Other Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, intellectual property matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations.

17. Transactions with Related Parties The Company participates in MacAndrews directors and officers insurance program, which covers the Company as well as MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews for its allocable portion of the premiums for such coverage, which the Company believes is more favorable than the premiums the Company could secure were it to secure its own coverage. At December 31, 2012, the Company recorded prepaid expenses and other assets of $0.7 and $1.0, respectively, related to the directors and officers insurance program in the accompanying consolidated balance sheets. At December 31, 2011, the Company had no prepaid expenses related to the directors and officers insurance program recorded in the accompanying consolidated balance sheets. The Company paid $2.0, $0.0, $0.1 and $0.0 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, to MacAndrews under the insurance program. Notes Receivable On December 27, 2011, the Company entered into a revolving credit agreement with its indirect parent, MacAndrews, whereby MacAndrews could borrow an amount not exceeding $30.0. The facility is unsecured, bears interest at LIBOR plus 2% and matures in December 2013. The facility was drawn in full by MacAndrews on December 27, 2011 and remained outstanding at December 31, 2012. Interest income of $0.8 was recorded and related payments were received during 2012. In 2008, Harland Clarke Holdings acquired the senior secured credit facility and outstanding note of Delphax Technologies, Inc. ("Delphax"), the supplier of Imaggia printing machines and related supplies and service for the Harland Clarke segment. The senior secured credit facility was comprised of a revolving credit facility of up to $14.0, subject to borrowing limitations set forth therein that originally matured in September 2011. Contemporaneous with its acquisition of the senior secured credit facility and the note, Harland Clarke Holdings also acquired 250,000 shares of Delphax common stock from the previous holder of the Delphax note. The senior secured credit facility and note were paid in full and cancelled on November 9, 2011. Interest income of $0.0, $0.2, and $0.4 was recorded during the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal year 2010, respectively. Other The Company expensed $2.7 for the fiscal year 2012 and $0.0 and $2.7 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $2.7 for fiscal year 2010, for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses. During fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, the Company paid cash dividends of $32.3, $12.6, $48.7 and $31.2, respectively, to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements. On March 19, 2012, the Company completed the Faneuil Acquisition from affiliates of MacAndrews, its indirect parent (see Note 3). In connection with the Faneuil Acquisition, Faneuil's revolving credit facility with an affiliate of MacAndrews, which was entered into on January 25, 2012, was extinguished (see Note 11). As discussed in Note 8, the Company made net payments to and had net receivables with MacAndrews related to the 2011 Tax Sharing Agreement.

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18. Significant Customers The Company's top 20 clients accounted for approximately 32% of the Company's consolidated net revenues during fiscal year 2012 and 30% during each of the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 and 32% for fiscal year 2010, with sales to Bank of America and Wells Fargo representing a significant portion of such revenues in the Harland Clarke segment. 19. Business Segment Information The Company has organized its business along four reportable segments together with a corporate group for certain support services. The Company's operations are aligned on the basis of products, services and industry. Management measures and evaluates the reportable segments based on operating income. The current segments and their principal activities consist of the following: • Harland Clarke segment — Provides checks and related products, direct marketing services and customized business and home office products to financial and commercial institutions, as well as consumers and other businesses. This segment operates primarily in the United States and Puerto Rico. • Harland Financial Solutions segment — Provides technology products and related services to financial institutions worldwide. This segment operates primarily in the United States, Israel, Ireland and India. • Scantron segment — Provides data management and decision support solutions and related services to educational, commercial and governmental entities worldwide. This segment operates primarily in the United States, Canada and India. • Faneuil segment — Provides call center services, back office operations, staffing services and toll collection services to government and regulated commercial clients and patient information collection and tracking, managed technical services and related field maintenance services to educational, commercial, healthcare and governmental entities. This segment operates primarily in the United States and Canada. As discussed in Note 1, the Company made business segment changes in the second quarter of 2012. Prior period results in the tables below have been reclassified to reflect these business segment changes.

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Selected summarized financial information for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010 is as follows:

Harland Harland Financial Corporate Clarke(1) Solutions(1)(2) Scantron(1)(3) Faneuil(1)(4) and Other(5) Total Successor Product revenues, net: 2012 $ 1,107.9 $ 78.6 $ 91.8 $ 6.8 $ — $ 1,285.1 December 22 to December 31, 2011 23.9 1.1 2.4 — — 27.4 Service revenues, net: 2012 $ 34.5 $ 175.1 $ 26.3 $ 147.9 $ — $ 383.8 December 22 to December 31, 2011 0.4 5.2 2.0 2.7 — 10.3 Intersegment revenues: 2012 $ 0.2 $ — $ 1.8 $ 0.3 $ (2.3) $ — December 22 to December 31, 2011 — — — — — — Operating income (loss):(6) 2012 $ 214.0 $ 23.3 $ (26.6) $ 8.8 $ (18.7) $ 200.8 December 22 to December 31, 2011 (0.6) (0.9) (1.4) 0.2 (0.3) (3.0) Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees): (7) 2012 $ 146.2 $ 38.4 $ 17.9 $ 11.1 $ — $ 213.6 December 22 to December 31, 2011 4.3 1.0 0.6 0.1 — 6.0 Non-cash asset impairment charges: 2012 $ 0.8 $ 0.1 $ — $ 0.8 $ — $ 1.7 December 22 to December 31, 2011 — — — — — — Capital expenditures (excluding capital leases): 2012 $ 36.9 $ 9.6 $ 6.5 $ 4.8 $ — $ 57.8 December 22 to December 31, 2011 — — — 0.1 — 0.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2010 241.2 48.6 9.0 13.1 (15.2) 296.7 Depreciation and amortization (excluding amortization of deferred financing fees): (7) January 1 to December 21, 2011 $ 89.2 $ 26.1 $ 34.6 $ 8.5 $ — $ 158.4 2010 103.5 28.5 20.2 5.7 — 157.9 Non-cash asset impairment charges: January 1 to December 21, 2011 $ 0.6 $ — $ 108.3 $ 2.7 $ — $ 111.6 2010 3.7 — — — — 3.7 Capital expenditures (excluding capital leases): January 1 to December 21, 2011 $ 39.2 $ 7.0 $ 11.7 $ 0.7 $ — $ 58.6 2010 24.3 8.3 5.0 1.0 — 38.6

Total assets: December 31, 2012 $ 1,409.4 $ 413.2 $ 184.0 $ 117.0 $ 862.8 $ 2,986.4 December 31, 2011(8) $ 1,498.5 $ 426.7 $ 173.1 $ 114.9 $ 890.5 $ 3,103.7

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______(1) See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results. (2) Includes results of the acquired Parsam business from the date of acquisition. (3) Includes results of the acquired Spectrum K12 and GlobalScholar businesses from their respective dates of acquisition. (4) Includes results of the acquired Faneuil business from the date of common control. (5) Total assets include goodwill of $761.6 and $758.6 as of December 31, 2012 and 2011, respectively. (6) Includes (gain) loss from revaluation of contingent consideration arrangements of $(0.6), $0.0, $(24.3) and $0.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and restructuring costs of $18.9, $0.0, $12.6 and $22.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, (see Note 15) and non-cash impairment charges of $1.7, $0.0, $111.6 and $3.7 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. (7) Includes allocation of depreciation of $0.7, $0.0, $0.8 and $0.8 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, from the Scantron segment to the Faneuil segment for assets that are assigned to the Scantron segment. (8) As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

20. Subsequent Event Issuance of Revolving Credit Facility due 2018 On February 20, 2013, Harland Clarke Holdings Corp. terminated the Revolver and along with certain of its domestic subsidiaries, as co-borrowers, and its direct parent, CA Acquisition Holdings, Inc. and certain of its other domestic subsidiaries as guarantors, entered into a senior secured asset based revolving credit facility (the "Revolving Facility") with Citibank, N.A., as administrative agent and collateral agent. The Revolving Facility provides for a facility equal to the lesser of $80.0 and a calculated borrowing base consisting of: • 85% of eligible receivables less unearned revenue; plus • the lesser of (i) 85% of the orderly liquidation value of eligible inventory and (ii) 70% of eligible inventory (in each case, at the lower of book value and market); minus • eligibility reserves in effect at the time. The borrowing base at closing, based on December 31, 2012 balances, was $56.6. The Revolving Facility includes an up to $30.0 subfacility for letters of credit and an up to $10.0 subfacility in the form of short-term swingline loans. Borrowings and other obligations under the Revolving Facility are guaranteed by CA Acquisition Holdings, Inc., Harland Clarke Holdings Corp. and certain of its domestic subsidiaries and secured by a lien on substantially all of the assets of such loan parties, including inventory, receivables, equipment, intellectual property and real property. The obligations under the Revolving Facility are secured by a first priority lien on inventory, receivables, payment intangibles and other current assets and other assets arising therefrom and proceeds thereof and second priority liens on the remaining collateral, subject to the first priority liens securing the Company's Non- Extended Term Loans, Extended Term Loans and 2018 Senior Secured Notes. The Revolving Facility will terminate on February 20, 2018, with springing maturities 91 days prior to the scheduled maturity date of the Company's Non-Extended Term Loans, Extended Term Loans and 2015 Senior Notes, all of which mature prior to the termination date of this Revolving Facility. Borrowings against the Revolving Facility will be, at the Company's option: • A LIBOR rate borrowing, bearing interest at a rate per annum equal to a reserve-adjusted LIBOR rate, plus an applicable margin ranging from 1.75% to 2.25% per annum based on the average excess availability for the prior fiscal quarter; or • An Alternate Base Rate ("ABR") borrowing, bearing interest at a rate per annum equal to the greatest of: • The prime rate of CitiBank; ▪ Federal Funds Effective Rate plus 0.5%; and ▪ LIBOR rate for a one-month interest period plus 1%,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document plus an applicable margin ranging from 0.75% to 1.25% per annum based on the average excess availability for the prior fiscal quarter.

F-44

The Revolving Facility has a commitment fee of 0.5% per annum if the average utilization of the Revolving Facility for the preceding fiscal quarter is less than 50% of the total commitments and 0.375% per annum if the average utilization for the preceding fiscal quarter is greater than or equal to 50% of the total commitments.

The Revolving Facility contains covenants that, among other things, limit the ability of the Company and its subsidiaries to (i) incur or guarantee additional indebtedness or capitalized lease obligations, or issue disqualified or preferred stock; (ii) grant liens on assets; (iii) transfer or sell assets; (iv) pay dividends or make distributions to stockholders; (v) enter into transactions with affiliates; (vi) make investments or acquisitions; (vii) enter into sale/leaseback transactions; (viii) amend certain of the Company's indebtedness; (ix) engage in substantially different lines of business; (x) change the Company's fiscal year; and (xi) engage in speculative hedging transactions. These covenants are subject to important exceptions and qualifications. The Revolving Facility also contains a fixed charge coverage ratio test that may apply if the Company's excess availability falls below specified levels, as well as affirmative covenants and events of default that are customary for such facilities.

F-45

Schedule II - Valuation and Qualifying Accounts and Reserves (in millions)

The following is a summary of the valuation and qualifying accounts and reserves for the period from January 2010 to 2012.

Effect of Beginning Acquisition Amounts Balance Ending Balance Accounting Reserved Written Off Balance Allowance for Doubtful Accounts and Sales Returns and Allowance Reserves Year Ended December 31, 2012 $ 1.8 $ — $ 3.1 $ (3.4) $ 1.5 December 22 to December 31, 2011 $ 3.0 $ (1.2) $ 0.2 $ (0.2) $ 1.8 January 1 to December 21, 2011 $ 2.8 $ — $ 1.7 $ (1.5) $ 3.0 Year Ended December 31, 2010 $ 3.0 $ — $ 4.0 $ (4.2) $ 2.8

F-46

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this "Agreement"), dated as of August 14, 2012, and effective as of August 20, 2012, among Harland Clarke Holdings Corp., a Delaware corporation ("Harland Clarke Holdings"), Scantron Corporation, a Delaware corporation (the "Company"), and Kevin Brueggeman (the "Executive").

WHEREAS the Company wishes to employ the Executive and the Executive wishes to accept such employment according to the terms set forth in this Agreement.

ACCORDINGLY, Harland Clarke Holdings, the Company and the Executive agree as follows:

1. Employment, Duties and Acceptance.

1.1 Employment, Duties. The Company hereby employs the Executive for the Term (as defined in Section 2.1), to render exclusive and full-time services to the Company as the Chief Executive Officer of the Company, to include the GlobalScholar education business and the Scantron commercial data collection business (the "Business Unit"), or in such other executive position as may be mutually agreed upon by the Company and the Executive, and to perform such other duties consistent with such position or as may be assigned to the Executive by the Chief Executive Officer of Harland Clarke Holdings (the "CEO") or his designee or the Board of Directors of Harland Clarke Holdings (the "Board"). During the Term, the Executive shall report solely to the CEO (or his designee).

1.2 Acceptance. The Executive hereby accepts such employment and agrees to render the services described above. During the Term, the Executive agrees to serve the Company faithfully and to the best of the Executive's ability to devote the Executive's entire business time, energy and skill to such employment, and to use the Executive's best efforts, skill and ability to promote the Company's interests. The Executive further agrees to accept election, and to serve during all or any part of the Term, as an officer or director of the Company and of any subsidiary or affiliate of the Company, without any compensation therefor other than that specified in this Agreement, if properly appointed to any such position.

1.3 Location. The duties to be performed by the Executive hereunder shall be performed at the offices of San Antonio, Texas, Eagan, Minnesota and Bellevue, Washington and other locations mutually agreed with the CEO, subject to reasonable travel requirements on behalf of the Company.

1.4 Other Board Memberships. Without prejudice to any other provision of this Agreement, the Executive shall be entitled to continue to serve on the board of directors of Shooting for Success and Campus2Careers.com for so long as no actual or potential conflict of interest is created with Harland Clarke Holdings or the Company or their ultimate parent. The Executive will provide prompt notice to the Company and Harland Clarke Holdings of any potential conflict of interest.

2.1 The Term. This Agreement and the term of the Executive's employment under this Agreement (the "Term") shall become effective as of August 20, 2012 (the "Effective Date") and will continue until December 31, 2015 (the "Termination Date"), subject to earlier termination pursuant to Section 4.

2.2 End-of-Term Provisions. At least six months prior to the end of the Term, the Company and the Executive shall meet to discuss whether the Term should be renewed or non-renewed. The Company must give six (6) months prior written notice of non-renewal of the Term should it make that decision. In the event of non-renewal of the Term by the Company and the Executive's employment is terminated by the Company after the end of the Term, other than for (i) Cause (as defined below), (ii) Disability (as defined below) or (iii) death, in each case following such Company notice of non-renewal, then such termination shall be treated as a termination without Cause and the Restricted Period (as defined below) shall be reduced to a period of one year post termination of employment (the "Reduced Restricted Period"). During such Reduced Restricted Period, the Executive shall receive as severance pay, an amount equal to the greater of (A) 50% of the payments set forth in Sections 4.4(i) and 4.4(ii) or (B) severance and benefits in accordance with Company policy as in effect at that time, in each case payable in installments in accordance with the Company's normal payroll practices, subject to Executive's signing and not revoking the release of claims as set forth in Section 4.6. For the avoidance of doubt, if the Executive's employment is terminated by the Company after the end of the Term (x) for Cause, the Executive will not be entitled to receive any severance or other benefits, or (y) for death or Disability, the Executive will receive severance and benefits in accordance with Company policy as in effect at that time. For the avoidance of doubt, if the Company is willing to extend the Term and Executive does not agree to extend the Term, then upon termination of employment at or after the end of the Term, the Executive shall be bound by the restrictive covenants set forth in Section 5 below, the Restricted Period shall not be reduced and Executive shall not be entitled to receive any severance benefits with respect to such termination. Notwithstanding the foregoing, the terms of this Section 2.2 will not impact any payments or other benefits to which the Executive would then be entitled under the LTIP (as defined below) pursuant to the terms thereof.

3. Compensation; Benefits.

3.1 Salary. As compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Executive a base salary, payable in accordance with the Company's normal payroll practices, at the annual rate of not less than $400,000 (effective on the Effective Date of this agreement) less such deductions or amounts to be withheld as required by applicable law and regulations (the "Base Salary"). In the event that the Company, in its sole discretion, from time to time determines to increase the Base Salary, such increased amount shall, from and after the effective date of the increase, constitute "Base Salary" for purposes of this Agreement.

3.2 Incentive Compensation.

3.2.1 Annual Bonus. Commencing with the 2012 fiscal year, the Executive shall receive a bonus with respect to 2012 and each later fiscal year ending during the Term computed in accordance with the provisions hereafter. If, with respect to any such fiscal year, the Business Unit achieves "EBITDA" (as defined below) of at least the percentage set forth in the table below of its business plan for such fiscal year, such bonus shall be the percentage set forth in the table below of Base Salary with respect to the fiscal year for which the bonus (any such bonus,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document an "Annual Bonus") was earned. For the 2012 fiscal year, the Annual Bonus will be prorated from the Effective Date and the Executive shall be guaranteed a minimum bonus payment of $125,000.

Percentage of Business Unit EBITDA in Business Plan Percentage of Base Salary 89.9% and below Nil 90 - 94.9 90 95 - 99.9 95 100 - 105 100 105.1 - 110 105.56 110.1 - 115 111.11 115.1 - 120 116.67 120.1 - 125 122.22 125.1 - 130 127.78 130.1 - 135 133.33 135.1 - 140 138.89 140.1 - 145 144.44 145.1 and over 150

An Annual Bonus if earned in accordance with this Agreement shall be paid no later than the fifteenth day of the third month next following the year with respect to which such bonus was earned, provided that, except as otherwise specifically provided in this Agreement (including, without limitation, Section 4.4), as a condition precedent to any bonus entitlement the Executive must remain in employment with the Company at the time that the Annual Bonus is paid. Notwithstanding the foregoing, to the extent that Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), may be applicable, such Annual Bonus shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the Annual Bonus to qualify as "performance-based compensation" under Section 162(m) of the Code and the regulations promulgated thereunder as well as any other required approvals.

For the purposes of this Agreement, "EBITDA" means for any fiscal year of the Business Unit, consolidated operating income for such fiscal year of the Business Unit plus, without duplication and to the extent reflected as a charge in the statement of such operating income for such fiscal year, the sum of (i) depreciation and amortization expense (excluding amounts of prepaid incentives under customer contracts), (ii) any extraordinary non-cash expenses or losses, (iii) allocation of fees charged by M&F Worldwide Corp. ("MFW") or a subsidiary to the Business Unit relating to the operation of the Business Unit, (iv) all restructuring costs (as defined under U.S. generally accepted accounting principles ("GAAP"), (v) fees paid to the Business Unit's external advisors in connection with acquisitions for the business (whether or not consummated) and (vi) effects of changes in accounting policy and GAAP, in the case of clauses (i) through (vi) above, solely with respect to the Business Unit, and minus without duplication and to the extent included in the statement of such operating income for such period, the sum of (a) any extraordinary or non-recurring non-cash income or gains (including, whether or not otherwise includable as a separate item in the statement of such operating income for such period, gains on the sales of assets outside of the ordinary course of business), (b) effects of changes in accounting policy and GAAP, and (c) any cash payments made during such period in respect of items described in clause (ii) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document reflected as a charge in the statement of operating income, in the case of clauses (a) through (c) above, solely with respect to the Business Unit, all as determined on a consolidated basis, all of the foregoing to be determined by the Board or any other relevant committee or person. For the purposes of determining compensation milestones for any fiscal year, Consolidated EBITDA will be adjusted by the Board or any

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document other relevant committee or person, as applicable, as appropriate for material acquisitions or dispositions of any business or assets of or by the Business Unit or its subsidiaries for such fiscal year and thereafter; and EBITDA will be (x) increased for the acquired Software Businesses for the amount of billed or collected fees and payments from customers received by the Company during such period that is not recognized as revenue during such period (or any prior period) in accordance with GAAP because the Company has not yet obtained vendor specific objective evidence in respect thereof or the Company is subject to other GAAP revenue recognition rules, and decreased for the acquired Software Businesses for any amount included in operating income for such period in accordance with GAAP that is attributable to any amount that was included in EBITDA in a prior period pursuant to the preceding clause (x).

3.2.2 Long Term Incentive Plan. During the Term, the Executive shall participate in the 2013-15 M&F Worldwide Corp. Long Term Incentive Plan (the "LTIP"), as referenced in the offer letter dated August 10, 2012 and in a target amount no less than referenced in that offer letter, to be implemented beginning with respect to 2013. The specific terms of award or awards under the LTIP shall be set forth in one or more Award Agreements to be entered into with the Executive Notwithstanding the foregoing, to the extent that Section 162(m) of the Code may be applicable, the LTIP (and any subsequent Long Term Incentive Plan) shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the LTIP to qualify as "performance-based compensation" under Section 162(m) of the Code and the regulations promulgated thereunder.

3.3 Business Expenses. The Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive during the Term in the performance of the Executive's services under this Agreement, upon presentation of expense statements or vouchers or such other supporting information as the Company customarily may require of its officers; provided, however, that the maximum amount available for such expenses during any period may be fixed in advance by the CEO.

3.4 Paid Time Off. During the Term, the Executive shall be entitled to Paid Time Off in accordance with the Paid Time Off policy of the Company during each year of the Term and as referenced in the offer letter dated August 10, 2012.

3.5 Fringe Benefits. During the Term, the Executive shall be entitled to all benefits for which the Executive shall be eligible under any 401(k) plan, group insurance or other so-called "fringe" benefit plan and all benefits, as referenced in the offer letter dated August 10, 2012, as well as all benefits which the Company provides to its executive employees generally, which benefits may be amended, modified or terminated in the Company's discretion.

4. Termination.

4.1 Death. If the Executive dies during the Term, the Term shall terminate forthwith upon the Executive's death. The Company shall pay to the Executive's estate: (i) any Base Salary earned but not paid; (ii) a pro rated Annual Bonus based on the number of days of the fiscal year worked by the Executive, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment; (iii) amounts payable under the LTIP in accordance with the terms thereof, and (iv) Annual Bonus for the year prior to the year in which the Executive dies if at the time of death the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such Annual Bonus, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document prior year Annual Bonus. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement, except to the extent already earned and vested as of the day immediately prior to his death, or as earned, vested, or accrued by virtue of his death. 4.2 Disability. If, during the Term the Executive is unable to perform his duties hereunder due to a physical or mental incapacity for a period of 6 months within any 12 month period (hereinafter a "Disability"), the Company shall have the right at any time thereafter to terminate the Term upon sending written notice of termination to the Executive. If the Company elects to terminate the Term by reason of Disability, the Company shall pay to the Executive promptly after the notice of termination: (i) any Base Salary earned but not paid, (ii) a pro rated Annual Bonus based on the number of days of the fiscal year worked by the Executive until the date of the notice of termination, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment; (iii) amounts payable under the LTIP in accordance with the terms thereof and (iv) Annual Bonus for the year prior to the year in which the Executive is terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such Annual Bonus, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such prior year Annual Bonus, in each case less any other benefits payable to the Executive under any disability plan provided for hereunder or otherwise furnished to the Executive by the Company. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement except to the extent already earned and vested as of the day immediately prior to his termination by reason of Disability, or as earned, vested, or accrued by virtue of his Disability.

4.3 Cause. The Company may at any time by written notice to the Executive terminate the Term for "Cause" (as defined below) and, upon such termination, this Agreement shall terminate and the Executive shall be entitled to receive no further amounts or benefits hereunder, except for any Base Salary earned but not paid prior to such termination. For the purposes of this Agreement, "Cause" means: (i) continued neglect by the Executive of the Executive's duties hereunder, (ii) continued incompetence or unsatisfactory attendance, (iii) conviction of any felony, (iv) violation of the rules, regulations, procedures or instructions relating to the conduct of employees, directors, officers and/or consultants of the Company, (v) willful misconduct by the Executive in connection with the performance of any material portion of the Executive's duties hereunder, (vi) breach of fiduciary obligation owed to the Company or commission of any act of fraud, embezzlement, disloyalty or defalcation, or usurpation of a Company opportunity, (vii) breach of any provision of this Agreement, including any non-competition, non-solicitation and/or confidentiality provisions hereof, (viii) any act that has a material adverse effect upon the reputation of and/or the public confidence in the Company, (ix) failure to comply with a reasonable order, policy or rule that constitutes material insubordination, (x) engaging in any discriminatory or sexually harassing behavior, or (xi) using, possessing or being impaired by or under the influence of illegal drugs or the abuse of controlled substances or alcohol on the premises of the Company or any of its subsidiaries or affiliates or while working or representing the Company or any of its subsidiaries or affiliates. A termination for Cause by the Company of any of the events described in clauses (i), (ii), (iv), (ix), (x) and (xi) shall only be effective on 15 days advance written notification, providing Executive the opportunity to cure, if reasonably capable of cure within said 15-day period; provided, however, that no such notification is required if the Cause event is not reasonably capable of cure or the Board determines that its fiduciary obligation requires it to effect a termination of Executive for Cause immediately.

4.4 Termination by Company without Cause or by the Executive for Good Reason. If the Executive's employment is terminated by the Company without Cause (other than by

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document reason of death or Disability) or by the Executive for Good Reason (as defined below), the Executive shall receive: (i) as severance pay, an amount equal to two times the Base Salary payable in installments in accordance with the Company's normal payroll practices, (ii) continuation for a 12-month period following the date of termination of group health plan benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as "COBRA"), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the Executive as in effect on the date of termination (provided that the Company shall not be required to pay any portion of the premium if such payment would result in penalty taxes imposed on the Company), (iii) Annual Bonus for the year in which termination occurred if the Executive would have been eligible to receive such bonus hereunder (including due to satisfaction by the Company of performance milestones) had the Executive been employed at the time such Annual Bonus is normally paid, which Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment, (iv) Annual Bonus for the year prior to the year in which the Executive is so terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such due to such termination, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such prior year Annual Bonus and (v) amounts payable, if any, under the LTIP in accordance with the terms thereof. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement. For purposes of this Agreement, "Good Reason" means, without the advance written consent of the Executive: (i) a reduction in Base Salary, unless such reduction is made generally to other senior executives of the Company or (ii) a material reduction in the Executive's title and/or responsibilities, provided, that a change in reporting responsibilities shall not constitute Good Reason and further provided, that a termination by the Executive for Good Reason shall be effective only if the Executive provides the Company with written notice specifying the event which constitutes Good Reason within thirty (30) days following the occurrence of such event or date Executive became aware or should have become aware of such event and the Company fails to cure the circumstances giving rise to Good Reason within 30 days after such notice.

4.5 Termination by Executive other than for Good Reason. The Executive is required to provide the Company with 30 days' prior written notice of termination to the Company. Subject to Section 4.4, upon termination of employment by the Executive, the Executive shall receive any Base Salary earned but not paid prior to such termination and shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement, except to the extent already earned and vested as of the day immediately prior to such termination. 4.6 Release. Notwithstanding any other provision of this Agreement to the contrary, the Executive acknowledges and agrees that any and all payments, other than payment of any accrued and unpaid Base Salary to which the Executive is entitled under this Section 4 are conditioned upon and subject to the Executive's execution of a general waiver and release (for the avoidance of doubt, the restrictive covenants contained in Section 5 of this Agreement shall survive the termination of this Agreement), in such form as may be prepared by the Company, of all claims in the form materially similar to that attached hereto as Exhibit A, except for such matters covered by provisions of this Agreement which expressly survive the termination of this Agreement. Notwithstanding anything to the contrary, the severance payments and benefits are conditioned on the Executive's execution, delivery and nonrevocation of the general waiver and release of claims within fifty- five days following the Executive's termination of employment (the "Release Condition"). Payments and benefits of amounts which do not constitute nonqualified deferred compensation and are not subject to Section 409A (as defined below) shall commence five (5) days after the Release Condition is satisfied and payments and benefits which are

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document subject to Section 409A shall commence on the 60th day after termination of employment (subject to further delay, if required pursuant to Section 4.7.2 below) provided that the Release Condition is satisfied.

4.7 Section 409A.

4.7.1 This Agreement is intended to satisfy the requirements of Section 409A of the Code ("Section 409A") with respect to amounts, if any, subject thereto and shall be interpreted and construed and shall be performed by the parties consistent with such intent. If either party notifies the other in writing that one or more or the provisions of this Agreement contravenes any Treasury Regulations or guidance promulgated under Section 409A or causes any amounts to be subject to interest, additional tax or penalties under Section 409A, the parties shall agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith are necessary or desirable, to (i) maintain to the maximum extent reasonably practicable the original intent of the applicable provisions without violating the provisions of Section 409A or increasing the costs to the Company of providing the applicable benefit or payment and (ii) to the extent possible, to avoid the imposition of any interest, additional tax or other penalties under Section 409A upon the parties.

4.7.2 To the extent the Executive would otherwise be entitled to any payment or benefit under this Agreement, or any plan or arrangement of the Company or its affiliates, that constitutes a "deferral of compensation" subject to Section 409A and that if paid during the six (6) months beginning on the date of termination of the Executive's employment would be subject to the Section 409A additional tax because the Executive is a "specified employee" (within the meaning of Section 409A and as determined by the Company), the payment or benefit will be paid or provided to the Executive on the earlier of the first day following the six (6) month anniversary of the Executive's termination of employment or death.

4.7.3 Any payment or benefit due upon a termination of the Executive's employment that represents a "deferral of compensation" within the meaning of Section 409A shall be paid or provided to the Executive only upon a "separation from service" as defined in Treas. Reg. § 1.409A-1(h). Each payment made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A. Amounts payable under this Agreement shall be deemed not to be a "deferral of compensation" subject to Section 409A to the extent provided in the exceptions in Treasury Regulation §§ 1.409A-1(b)(4) ("short-term deferrals") and (b)(9) ("separation pay plans," including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation § 1.409A-1 through A-6.

4.7.4 Notwithstanding anything to the contrary in Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation § 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided to the Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which the Executive's "separation from service" occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which the Executive's "separation from service" occurs. To the extent any expense reimbursement or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), and in no event shall any expenses be reimbursed after the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

5. Protection of Confidential Information; Restrictive Covenants.

5.1 Prior to the Effective Date, the Company has shared confidential and trade secret information of the Company and its subsidiaries and affiliates with the Executive. From the Effective Date, the Company will share with Executive confidential and trade secret information regarding not only the Company but also its subsidiaries and affiliates. In view of the fact that the Executive's work for the Company will bring the Executive into close contact with many confidential affairs of the Company not readily available to the public, trade secret information and plans for future developments, the Executive agrees:

5.1.1 To keep and retain in the strictest confidence all confidential matters of the Company, including, without limitation, "know how", trade secrets, customer lists, pricing policies, operational methods, technical processes, formulae, inventions and research projects, other business affairs of the Company, and any material confidential information whatsoever concerning any director, officer, employee, shareholder, partner, customer or agent of the Company or their respective family members learned by the Executive heretofore or hereafter, and not to disclose them to anyone outside of the Company, either during or after the Executive's employment with the Company, except in the course of performing the Executive's duties hereunder or with the Company's express written consent. The foregoing prohibitions shall include, without limitation, directly or indirectly publishing (or causing, participating in, assisting or providing any statement, opinion or information in connection with the publication of) any diary, memoir, letter, story, photograph, interview, article, essay, account or description (whether fictionalized or not) concerning any of the foregoing, publication being deemed to include any presentation or reproduction of any written, verbal or visual material in any communication medium, including any book, magazine, newspaper, theatrical production or movie, or television or radio programming or commercial; and

5.1.2 To deliver promptly to the Company on termination of the Executive's employment by the Company, or at any time the Company may so request, all memoranda, notes, records, reports, manuals, drawings, blueprints and other documents (and all copies thereof), including data stored in computer memories or on other media used for electronic storage or retrieval, relating to the Company's business and all property associated therewith, which the Executive may then possess or have under the Executive's control, and not retain any copies, notes or summaries; provided Executive shall be entitled to keep a copy of this Agreement and compensation and benefit plans to which Executive is entitled to receive benefits thereunder.

5.3 If the Executive commits a breach, or poses a serious and objective threat to commit a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company shall have the following rights and remedies:

5.3.1 The right and remedy to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company;

5.3.2 The right and remedy to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by the Executive as the result of any transactions constituting a breach of any of the provisions of the preceding paragraph, and the Executive hereby agrees to account for and pay over such benefits to the Company. Each of the rights and remedies enumerated above shall be independent of the other, and shall be severally enforceable, and all of such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity; and

5.3.3 In addition to any other remedy which may be available (i) at law or in equity, or (ii) pursuant to any other provision of this Agreement, the payments by the Company of Base Salary and the regular premium for group health benefits pursuant to Section 4.4 will cease as of the date on which such violation first occurs. In addition, if the Executive breaches any of the covenants contained in Sections 5.1 and 5.2 and the Company obtains injunctive relief with respect thereto (that is not later reversed or otherwise terminated or vacated by judicial order), the period during which the Executive is required to comply with that particular covenant shall be extended by the same period that the Executive was in breach of such covenant prior to the effective date of such injunctive relief.

5.4 If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, hereafter are held by a court to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to those portions found invalid.

5.5 If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, are held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and, in its reduced form, said provision shall then be enforceable.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 5.6 The parties agree (whether during or after the Executive's employment with the Company) not to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the other (including the Company or its affiliates or the officers,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document directors, managers, customers, partners, or shareholders of the Company or its affiliates), provided that nothing herein shall prohibit the parties from providing truthful testimony if such testimony is required by law. 5.7 For purposes of this Section 5 only, the term "Company" includes the Company and its subsidiaries and affiliates.

6. Inventions and Patents.

6.1 The Executive agrees that all processes, technologies and inventions (collectively, "Inventions"), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made by him during the Term shall belong to the Company, provided that such Inventions grew out of the Executive's work with the Company or any of its subsidiaries or affiliates, are related in any manner to the business (commercial or experimental) of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company's time or with the use of the Company's facilities or materials. The Executive shall further: (a) promptly disclose such Inventions to the Company; (b) assign to the Company, without additional compensation, all patent and other rights to such Inventions for the United States and foreign countries; (c) sign all papers necessary to carry out the foregoing; and (d) give testimony in support of the Executive's inventorship.

6.2 If any Invention is described in a patent application or is disclosed to third parties, directly or indirectly, by the Executive within two years after the termination of the Executive's employment by the Company, it is to be presumed that the Invention was conceived or made during the Term.

6.3 The Executive agrees that the Executive will not assert any rights to any Invention as having been made or acquired by the Executive prior to the date of this Agreement, except for Inventions, if any, disclosed to the Company in writing prior to the date hereof.

7. Intellectual Property. The Company shall be the sole owner of all the products and proceeds of the Executive's services hereunder, including, but not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages, programs and other intellectual properties that the Executive may acquire, obtain, develop or create in connection with and during the Term, free and clear of any claims by the Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than the Executive's right to receive payments hereunder). The Executive shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title or interest in or to any such properties.

8. Notices. All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by overnight courier or mailed first class, postage prepaid, by registered or certified mail (notices mailed shall be deemed to have been given on the date mailed), as follows (or to such other address as either party shall designate by notice in writing to the other in accordance herewith):

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If to the Company, to: Harland Clarke Holdings Corp. 10931 Laureate Drive San Antonio, TX 78249 Attention: General Counsel

If to the Executive, to:

Such address as shall most currently appear on the records of the Company.

9. Governing Law; Dispute Resolution.

9.1 It is the intent of the parties hereto that all questions with respect to the construction of this Agreement and the rights and liabilities of the parties hereunder shall be determined in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws thereof that would call for the application of the substantive law of any jurisdiction other than the State of Delaware. 9.2 Each party irrevocably agrees for the exclusive benefit of the other that any and all suits, actions or proceedings relating to Section 5 of this Agreement (a "Proceeding") shall be maintained in either the courts of the State of Delaware or the federal District Courts sitting in Essex County, New Jersey or Wilmington, Delaware (collectively, the "Chosen Courts") and that the Chosen Courts shall have exclusive jurisdiction to hear and determine or settle any such Proceeding and that any such Proceedings shall only be brought in the Chosen Courts. Each party irrevocably waives any objection that it may have now or hereafter to the laying of the venue of any Proceedings in the Chosen Courts and any claim that any Proceedings have been brought in an inconvenient forum and further irrevocably agrees that a judgment in any Proceeding brought in the Chosen Courts shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction.

9.3 Each of the parties hereto agrees that this Agreement involves at least $100,000 and that this Agreement has been entered into in express reliance on Section 2708 of Title 6 of the Delaware Code. Each of the parties hereto irrevocably and unconditionally agrees (i) that, to the extent such party is not otherwise subject to service of process in the State of Delaware, it will appoint (and maintain an agreement with respect to) an agent in the State of Delaware as such party's agent for acceptance of legal process and notify the other parties hereto of the name and address of said agent, (ii) that service of process may also be made on such party by pre-paid certified mail with a validated proof of mailing receipt constituting evidence of valid service sent to such party at the address set forth in Section 8 of this Agreement, as such address may be changed from time to time pursuant hereto, and (iii) that service made pursuant to clause (i) or (ii) above shall, to the fullest extent permitted by applicable law, have the same legal force and effect as if served upon such party personally within the State of Delaware.

9.4 Any controversy or claim arising out of or related to any other provision of this Agreement shall be settled by final, binding and non-appealable arbitration in Essex County, New Jersey or Wilmington, Delaware by a single arbitrator. Subject to the following provisions, the arbitration shall be conducted in accordance with the applicable rules of JAMS then in effect. Any award entered by the arbitrator shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrator shall have no authority to modify any provision of this Agreement or to award a

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement. Each party shall be responsible for its

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document own expenses relating to the conduct of the arbitration or litigation (including reasonable attorneys' fees and expenses) and shall share the fees of JAMS and the arbitrator, if applicable, equally.

10. General.

10.1 JURY TRIAL WAIVER. THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE EVENT ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE EXECUTIVE'S EMPLOYMENT WITH THE COMPANY IS LITIGATED OR HEARD IN ANY COURT.

10.2 Continuation of Employment. Unless the parties otherwise agree in writing, continuation of the Executive's employment with the Company beyond the expiration of the Term shall be deemed an employment at will and shall not be deemed to extend any of the provisions of this Agreement, and Executive's employment may thereafter be terminated "at will" by the Executive or the Company and Executive will be entitled to fringe benefits which the Executive is eligible to receive for so long as the Executive continues to be employed with the Company and the Executive shall be eligible for severance in accordance with the terms of the Company's severance policy then in effect. Notwithstanding the foregoing, the Executive shall be subject to the restrictive covenants set forth in Section 5.2 for the Restricted Period or if applicable, the Reduced Restricted Period in accordance with Section 2.2.

10.3 Headings. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

10.5 Assignment. This Agreement, and the Executive's rights and obligations hereunder, may not be assigned by the Executive. The Company may assign its rights, together with its obligations, hereunder (i) to any affiliate or (ii) to third parties in connection with any sale, transfer or other disposition of all or substantially all of the business or assets of the Company; in any event the obligations of the Company hereunder shall be binding on its successors or assigns, whether by merger, consolidation or acquisition of all or substantially all of its business or assets.

10.6 Waiver. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived, only by a written instrument executed by all of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.7 Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state, local and other taxes as may be required to be withheld pursuant to any applicable law or regulation.

11. Subsidiaries and Affiliates.

11.1 As used herein, the term "subsidiary" shall mean any corporation or other business entity controlled directly or indirectly by the corporation or other business entity in question, and the term "affiliate" shall mean and include any corporation or other business entity directly or indirectly controlling, controlled by or under common control with the corporation or other business entity in question.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

HARLAND CLARKE HOLDINGS CORP.

By: ______Name: Charles Dawson Title: President and Chief Executive Officer

SCANTRON CORPORATION

By: ______Name: Title:

EXECUTIVE

______Kevin Brueggeman

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"), dated as of August 20, 2010, between Faneuil, Inc., a company incorporated under the laws of Delaware (the "Company") and Anna Van Buren (the "Executive").

WHEREAS, the Company and the Executive are signatories to an Agreement dated as of February 23, 2007 (with all appendices and amendments thereto, the "Prior Agreement"); and

WHEREAS, the Company and the Executive desire to enter into a new contractual arrangement whereby the Company will employ the Executive on the terms and conditions set forth in this Agreement, such that the Prior Agreement shall be superseded and of no further force and effect; and

WHEREAS, the Company wishes to employ the Executive, and the Executive wishes to accept such employment, on the terms and conditions set forth in this Agreement;

Accordingly, in consideration of the mutual covenants set out herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by each of the parties hereto, the Company and the Executive hereby agree as follows:

1. Employment, Duties and Acceptance.

1.1 Employment, Duties. The Company hereby employs the Executive for the Term (as defined in Section 2.1), to render exclusive and full-time services to the Company as Chief Executive Officer or in such other executive position as may be mutually agreed upon by the Company and the Executive, and to perform such duties as are consistent with such position as may be assigned to the Executive by the Board of Directors or similar managing entity of the Company (the "Board"). The Executive shall serve as a Director of the Board and that of any subsidiary for no additional compensation or benefits.

1.2 Acceptance. The Executive hereby accepts such employment and agrees to render the services described above. During the Term, the Executive agrees to serve the Company faithfully and to the best of the Executive's ability, to devote the Executive's entire business time, energy and skill to such employment, and to use the Executive's best efforts, skill and ability to promote the Company's interests. The Executive further agrees to accept election, and to serve during the Term, as an officer and director of the Company and of any subsidiary of the Company, without any compensation therefor other than that specified in this Agreement, if elected to any such position by the shareholders or by the Board, as the case may be. The Executive hereby represents and warrants that the Executive is not subject to any other agreement, including without limitation any agreement not to compete or confidentiality agreement, which would be violated by the Executive's performance of services hereunder.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1.3 Location. The duties to be performed by the Executive hereunder shall be performed primarily at the offices of the Company in Norfolk, Virginia and Florida, subject to reasonable travel requirements on behalf of the Company.

2.1 The Term. This Agreement and the term of the Executive's employment under this Agreement (the "Term") shall become effective as of January 1, 2010 (the "Effective Date") and will continue for a period of three (3) years from the Effective Date (the final date of the three (3) year period being referred to herein as the "Termination Date"), subject to earlier termination pursuant to Section 4.

2.2 Non-renewal of Term. The Term shall end earlier than the Termination Date provided in Section 2.1 if sooner terminated pursuant to Section 4. Expiration of the Term shall not be deemed to be a termination of this Agreement entitling the Executive to receive severance benefits or any other additional payment except as provided herein.

3. Compensation; Benefits.

3.1 Salary. As compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Executive a base salary, payable in accordance with the Company's normal payroll practices, at the annual rate of $400,000 less such deductions or amounts to be withheld as required by applicable law (the "Base Salary"). The Board shall, at least annually, review the Base Salary, and consider an increase as appropriate, in light of the circumstances. Any such increased amount shall, from and after the effective date of the increase, constitute "Base Salary" for purposes of this Agreement. All monetary references in this Agreement are to U.S. Dollars.

3.2 Incentive Compensation

3.2.1 Annual Bonus. The Executive shall be eligible for a performance-based annual bonus for each fiscal year of the Term (the "Annual Bonus") based on Consolidated EBITDA thresholds determined by the Board or on any other basis as determined by the Board in its reasonable discretion. Subject to Section 4 below, an Annual Bonus, if earned in accordance with this Agreement, shall be paid no later than the fifteenth (15th) day of the third (3rd) month following the fiscal year with respect to which the Annual Bonus was earned. Notwithstanding the foregoing, to the extent that Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), may be applicable, such Annual Bonus shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the Annual Bonus to qualify as "performance-based compensation" under Section 162(m) of the Code and the regulations promulgated thereunder.

For the purposes of this Agreement, "Consolidated EBITDA" means for any fiscal year of the Company, consolidated net income for such fiscal year plus, without duplication and to the extent reflected as a charge in the statement of such consolidated net income for such fiscal year, the sum of (i) income tax expense, (ii) interest expense, amortization or write-off of debt discount and debt issuance costs and commissions (to the extent not already captured in interest expense), discounts and other fees and charges associated with indebtedness, (iii) depreciation and amortization expense, (iv) any extraordinary non-cash expenses or losses, and (v) any costs and expenses incurred in connection with the compensation of the Chairman of the Board of Directors of the Company, and minus (x) to the extent included in the statement of such consolidated net income for such period, the sum of (a) interest income, (b) any extraordinary or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such consolidated net income for such period, gains on the sales of assets outside of the ordinary course of business), and (c) income tax credits (to the extent not netted from income tax expense) and (y) any cash payments made during such

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document period in respect of items described in clause (iv) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document were reflected as a charge in the statement of consolidated net income, all as determined on a consolidated basis, all of the foregoing to be determined by the Board. For the purposes of determining compensation milestones for any fiscal year pursuant to the terms of the Annual Bonus or the LTIP (defined below), Consolidated EBITDA will be adjusted by the Board as appropriate for material acquisitions or dispositions of any business or assets of or by the Company or its subsidiaries for such fiscal year and thereafter.

3.2.2 Long Term Incentive Plan. From January 1, 2010 to December 31, 2012 (the "LTIP Period"), the Executive shall participate in the Company's Long Term Incentive Plan ("LTIP"). Pursuant to the terms of the LTIP, the Executive shall be eligible to receive an award (the "LTIP Award") equal to 7.5% of Cumulative Consolidated EBITDA earned by the Company in excess of Targeted Cumulative Consolidated EBITDA. "Targeted Cumulative Consolidated EBITDA" shall have the meaning set forth on Schedule A attached hereto. "Cumulative Consolidated EBITDA" means the sum of Consolidated EBITDA earned in each fiscal year during the LTIP Period. The LTIP Award shall vest on the last day of the LTIP Period, provided that the Executive is employed with the Company on such date, unless the Executive is terminated without Cause or resigns for Good Reason prior to the last day of the LTIP Period, or this Agreement has terminated because of the death or disability of the Executive prior to the last day of the LTIP Period, in which case no such requirement shall apply, and Executive shall receive a pro-rated LTIP Award equal to the LTIP Award multiplied by a fraction, the numerator of which is the number of days elapsed between the first day of the LTIP Period and the date of termination of employment, and the denominator of which is 1095. The LTIP Award (or pro-rated LTIP Award, applicable) shall be paid in a lump sum to the Executive as soon as practicable following the last day of the LTIP Period, but in no event on a date that is more than two and a half months from the last day of the LTIP Period. Notwithstanding the foregoing, to the extent that Section 162(m) of the Code may be applicable, the LTIP (and any subsequent Long Term Incentive Plan) shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the LTIP to qualify as "performance- based compensation" under Section 162(m) of the Code and the regulations promulgated thereunder.

3.4 Vacation. The Executive shall be entitled to paid vacation annually to be taken in accordance with the vacation policy of the Company.

3.5 Fringe Benefits. During the Term, the Executive shall be entitled to all benefits for which the Executive is eligible under any qualified pension plan, medical, welfare and other group insurance or fringe benefit plans which the Company provides from time to time to its executive employees.

3.6 Indemnity. The Company shall indemnify the Executive with respect to any actions taken or failed to be taken by the Executive after the Effective Date of the Prior Agreement in the course of her employment with the Company and consistent with her obligations pursuant to this Agreement to the fullest extent permitted by applicable law.

4.1 Death. The Term shall terminate forthwith upon the Executive's death. The Company shall pay to the Executive's estate: (i) any Base Salary earned but not paid; (ii) pro-rated Annual Bonus for the year in which termination occurred if the Executive would have been eligible to receive such bonus hereunder (including due to satisfaction by the Company of performance milestones) had the Executive been employed at the time such Annual Bonus is normally paid, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives, (iii) Annual Bonus for the year prior to the year in which the Executive is so terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid due to such termination, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives; and (iv) a pro rated LTIP award, pursuant to Section 3.2.2 hereof. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement except as may otherwise be permitted under the terms of the Company's benefit plans or as required by law.

4.2 Disability. If, during the Term the Executive is unable to perform her duties hereunder due to a physical or mental incapacity for a period of six (6) consecutive months within any twelve (12) month period (hereinafter a "Disability"), the Company shall have the right at any time thereafter to terminate the Term upon sending written notice of termination to the Executive. If the Company elects to terminate the Term by reason of Disability, the Company shall pay to the Executive promptly after the notice of termination: (i) any Base Salary earned but not paid; (ii) pro-rated Annual Bonus for the year in which termination occurred if the Executive would have been eligible to receive such bonus hereunder (including due to satisfaction by the Company of performance milestones) had the Executive been employed at the time such Annual Bonus is normally paid, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives, (iii) Annual Bonus for the year prior to the year in which the Executive is so terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such due to such termination, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives and (iv) a pro rated LTIP award, pursuant to Section 3.2.2 hereof. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement except as may otherwise be permitted under the terms of the Company's benefit plans or as required by law.

4.4 Termination by Company without Cause. If the Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability), the Executive shall

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document receive: (i) as severance pay, an amount equal to Base Salary through the later of (x) the three (3)-year anniversary of the Effective Date or (y) the one (1)-year anniversary of the date of termination (such applicable period, the "Severance Period"), payable ratably in accordance with the Company's normal payroll practices, (ii) continuation for a 12-month period following the date of termination of employment of group health plan benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as "COBRA"), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the Employee as in effect on the date of termination, (iii) pro-rated Annual Bonus for the year in which termination occurred if the Executive would have been eligible to receive such bonus hereunder (including due to satisfaction by the Company of performance milestones) had the Executive been employed at the time such Annual Bonus is normally paid, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives, and (iv) Annual Bonus for the year prior to the year in which the Executive is so terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such due to such termination, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement except as may otherwise be permitted under the terms of the Company's benefit plans or as required by law.

4.5 Termination by Executive. The Executive is required to provide the Company with thirty (30) days' prior written notice of termination to the Company. Upon termination of employment by the Executive for other than Good Reason, the Executive shall receive any Base Salary earned but not paid prior to such termination and shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement except as may otherwise be permitted under the terms of the Company's benefit plans or as required by law.

4.6 Good Reason. The Executive may elect at any time during the Term to terminate her employment with the Company for Good Reason (following ten (10) days prior written notice delivered to the Company detailing the circumstances constituting Good Reason). "Good Reason" shall mean a material breach by the Company of its obligations under this Agreement. Upon termination by the Executive for Good Reason, the Executive shall be entitled to receive the same payments as if the Executive had been terminated by the Company without Cause as set forth in Section 4.4 of the Agreement.

4.7 Release. Notwithstanding any other provision of this Agreement to the contrary, the Executive acknowledges and agrees that any and all payments, other than payment of any accrued and unpaid Base Salary, to which the Executive is entitled under this Section 4 are conditioned upon and subject to the Executive's execution of a general waiver and release, in a form mutually acceptable to the parties, of all claims except for such matters covered by the provisions of this Agreement which expressly survive the termination of this Agreement, including but not limited to the indemnification set forth in Section 3.6. Notwithstanding anything to the contrary, the severance payments and benefits are conditioned on the Executive's execution, delivery and nonrevocation of the general waiver and release of claims within fifty-five days following the Executive's termination of employment (the "Release Condition"). Payments and benefits will commence five business days after the Release Condition is satisfied.

5. Protection of Confidential Information; Restrictive Covenants.

5.1 From the Effective Date, the Company will share with Executive confidential and trade secret information regarding not only the Company but also its subsidiaries and affiliates. In view of the fact that the Executive's work for the Company will bring the Executive into close contact with many

5.1.1 To keep and retain in the strictest confidence all confidential matters of the Company, including, without limitation, "know how", trade secrets, customer lists, pricing policies, operational methods, technical processes, formulae, inventions and research projects, other business affairs of the Company, and any information whatsoever concerning any director, officer, employee, shareholder, partner, customer or agent of the Company or their respective family members learned by the Executive heretofore or hereafter, and not to disclose them to anyone outside of the Company, either during or after the Executive's employment with the Company, except in the course of performing the Executive's duties hereunder or with the Company's express written consent. The foregoing prohibitions shall include, without limitation, directly or indirectly publishing (or causing, participating in, assisting or providing any statement, opinion or information in connection with the publication of) any diary, memoir, letter, story, photograph, interview, article, essay, account or description (whether fictionalized or not) concerning any of the foregoing, publication being deemed to include any presentation or reproduction of any written, verbal or visual material in any communication medium, including any book, magazine, newspaper, theatrical production or movie, or television or radio programming or commercial; and

5.2 In support of Executive's commitments to maintain the confidentiality of the Company's confidential and trade secret information, (i) during the Term, and (ii) until the expiration of the Severance Period, as applicable, or otherwise the date which is twelve (12) months following termination of the Executive's employment for any reason, the Executive shall not, in the United States or in any other jurisdiction where the Company may then do business: (a) directly or indirectly, enter the employ of, or render any services to, any person, firm or corporation engaged in any business directly competitive with the business of the Company or of any of its respective subsidiaries; (b) engage in such business on the Executive's own account; and the Executive shall not become interested in any such business, directly or indirectly, as an individual, partner, shareholder of more than five percent of the outstanding shares, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity; (c) directly or indirectly, solicit, encourage or cause any client, customer or supplier of the Company to cease doing business with the Company, or to reduce the amount of business such client, customer or supplier does with the Company or (d) directly or indirectly, solicit or encourage to cease to work with the Company, or directly or indirectly hire, any person who is an employee of or consultant then under contract with the Company or who was an employee of or consultant then under contract with the Company within the six (6) month period preceding such activity without the Company's written consent.

5.3 For purposes of Section 5 of this Agreement, the term "Company" includes the Company and its subsidiaries.

6. Remedies for Breach of Section 5.

6.1 If the Executive commits a breach, or threatens to commit a breach, of any of the provisions of Section 5 hereof, the Company shall have the following rights and remedies:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6.2 The right and remedy to have the provisions of this Agreement specifically enforced by any court or tribunal having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.

6.3 In addition to any other remedy which may be available (i) at law or in equity, or (ii) pursuant to any other provision of this Agreement, the payments by the Company of Base Salary and the regular premium for group health benefits pursuant to Section 4.4 will cease as of the date a determination has been made by a court of competent jurisdiction that a violation has occurred, subject to applicable law. In addition, if the Executive breaches any of the covenants contained in Section 5 and the Company obtains injunctive relief with respect thereto, the period during which the Executive is required to comply with that particular covenant shall be extended by the same period that the Executive was in breach of such covenant prior to the effective date of such injunctive relief.

6.4 If any of the covenants contained in Section 5 or any part thereof, hereafter are held by a court to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to those portions found invalid.

6.5 If any of the covenants contained in Section 5, or any part thereof, are held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and, in its reduced form, said provision shall then be enforceable.

7. Non-Disparagement. The Executive agrees (whether during or after the Executive's employment with the Company) not to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the Company or its affiliates or the officers, directors, managers, customers, or shareholders of the Company or its affiliates, unless giving truthful testimony under subpoena or as otherwise required by law. The Company agrees not to and shall not authorize, direct or encourage any of its officers, directors, employees, partners or shareholders to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the Executive or in any way impugn Executive's reputation.

8. Inventions and Patents.

8.1 The Executive agrees that all processes, technologies and inventions (collectively, "Inventions"), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made by her during the Term shall belong to the Company, provided that such Inventions grew out of the Executive's work with the Company or any of its subsidiaries or affiliates, are related in any manner to the business (commercial or experimental) of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company's time or with the use of the Company's facilities or materials. The Executive shall further: (a) promptly disclose such Inventions to the Company; (b) assign to the Company, without additional compensation, all patent and other rights to such Inventions for the United States and foreign countries; (c) sign all papers necessary to carry out the foregoing; and (d) give testimony in support of the Executive's inventorship.

8.2 If any Invention is described in a patent application or is disclosed to third parties, directly or indirectly, by the Executive within six (6) months after the termination of the Executive's employment by the Company, it is to be presumed that the Invention was conceived or made during the Term.

9. Intellectual Property.

9.1 The Company shall be the sole owner of all the products and proceeds of the Executive's services hereunder, including, but not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages, programs and other intellectual properties that the Executive may acquire, obtain, develop or create in connection with her employment during the Term, free and clear of any claims by the Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than the Executive's right to receive payments hereunder). The Executive shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title or interest in or to any such properties.

10. Notices.

10.1 All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by overnight courier or mailed first class, postage prepaid, by registered or certified mail (notices mailed shall be deemed to have been given on the date mailed), as follows (or to such other address as either party shall designate by notice in writing to the other in accordance herewith):

If to the Company, to:

Faneuil, Inc. 2 Eaton Street, Suite 1007 Hampton, VA 22669

If to the Executive, to:

Anna Van Buren 9671 25th Bay Norfolk, VA

11. Governing Law; Dispute Resolution.

11.1 This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of laws provisions. Any controversy or claim arising out of or relating to Section 5 of this Agreement (or the breach thereof) shall be resolved by an action commenced in the United States District Court for the Southern District of New York or the State Court of New York if that court lacks subject matter jurisdiction; additionally each of the parties hereto specifically waives any objection that it may otherwise have to the jurisdiction or venue of any such courts or that such courts are an inconvenient forum and acknowledges that service of process may be made by prepaid certified mail or overnight courier delivery of a copy thereof to the addresses stated in Section 10 above.

12.1 Continuation of Employment. Unless the parties otherwise agree in writing, continuation of the Executive's employment with the Company beyond the expiration of the Term shall be deemed an employment at will and shall not be deemed to extend any of the provisions of this Agreement, and Executive's employment may thereafter be terminated "at will" by the Executive or the Company.

12.2 Headings. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

12.3 Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the Executive's employment by the Company, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the Executive's employment by the Company or any of its affiliates, including but not limited to the Prior Agreement. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

12.4 Assignment. This Agreement, and the Executive's rights and obligations hereunder, may not be assigned by the Executive. The Company may assign its rights, together with its obligations, hereunder to third parties in connection with any sale, transfer or other disposition of all or substantially all of the business or assets of the Company; in any event the obligations of the Company hereunder shall be binding on its successors or assigns, whether by merger, consolidation or acquisition of all or substantially all of its business or assets.

12.5 Waiver. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived, only by a written instrument executed by all of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

12.6 Survival. To the extent necessary to give effect to such provisions, the provisions of this Agreement (including without limitation, Sections 5, 6, 7, 8, and 9 hereof) shall survive the termination hereof, whether such termination shall be by expiration of the Term or otherwise. This Section 12.6 imposes no additional obligations and/or restrictions on the Executive other than those set forth in this Agreement.

12.7 Formalities; Authorization. All corporate formalities necessary to make this Agreement a binding agreement of the Company have been undertaken and approved. When executed and delivered on behalf of the Company, it shall be bound thereby, and the execution, delivery and performance of this Agreement are fully and duly authorized, and not prohibited by any law, rule, regulation, resolution, contract, court or administrative order or decree to which the Company is a party, or by which it is bound. The person executing this Agreement on behalf of the Company represents and warrants that he or she is fully authorized to do so.

12.8 Facsimile; Counterparts. This Agreement may be executed by facsimile and in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

13.1 As used herein, the term "subsidiary" shall mean any corporation or other business entity controlled directly or indirectly by the corporation or other business entity in question, and the term "affiliate" shall mean and include any corporation or other business entity directly or indirectly controlling, controlled by or under common control with the corporation or other business entity in question.

14. Section 409A.

14.1 This Agreement is intended to satisfy the requirements of Section 409A of the Code ("Section 409A") with respect to amounts, if any, subject thereto and shall be interpreted and construed and shall be performed by the parties consistent with such intent. If either party notifies the other in writing that one or more or the provisions of this Agreement contravenes any Treasury Regulations or guidance promulgated under Section 409A or causes any amounts to be subject to interest, additional tax or penalties under Section 409A, the parties shall agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith are necessary or desirable, to (i) maintain to the maximum extent reasonably practicable the original intent of the applicable provisions without violating the provisions of Section 409A or increasing the costs to the Company of providing the applicable benefit or payment and (ii) to the extent possible, to avoid the imposition of any interest, additional tax or other penalties under Section 409A upon the parties.

14.2 To the extent the Executive would otherwise be entitled to any payment or benefit under this Agreement, or any plan or arrangement of the Company or its affiliates, that constitutes a "deferral of compensation" subject to Section 409A and that if paid during the six (6) months beginning on the date of termination of the Executive's employment would be subject to the Section 409A additional tax because the Executive is a "specified employee" (within the meaning of Section 409A and as determined by the Company), the payment or benefit will be paid or provided to the Executive on the earlier of the first day following the six (6) month anniversary of the Executive's termination of employment or death.

14.3 Any payment or benefit due upon a termination of the Executive's employment that represents a "deferral of compensation" within the meaning of Section 409A shall be paid or provided to the Executive only upon a "separation from service" as defined in Treas. Reg. § 1.409A-1(h). Each payment made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A. Amounts payable under this Agreement shall be deemed not to be a "deferral of compensation" subject to Section 409A to the extent provided in the exceptions in Treasury Regulation §§ 1.409A-1(b)(4) ("short-term deferrals") and (b)(9) ("separation pay plans," including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation § 1.409A-1 through A-6.

14.4 Notwithstanding anything to the contrary in Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation § 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided to the Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which the Executive's "separation from service" occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which the Executive's "separation from service" occurs. To the extent any indemnification payment, expense reimbursement or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document indemnification payment or expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the indemnification payment or

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), and in no event shall any indemnification payment or expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such indemnification payment or expenses, and in no event shall any right to indemnification payment or reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit."

FANEUIL, INC.

By: Name: Title:

EXECUTIVE

Anna Van Buren

Targeted Cumulative Consolidated EBITDA

Targeted Consolidated EBITDA for 2010 $7,500,000 Targeted Consolidated EBITDA for 2011 $7,500,000 Targeted Consolidated EBITDA for 2012 $7,500,000 Targeted Cumulative Consolidated EBITDA $22,500,000

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 1, 2013, and effective as of January 1, 2013, among Harland Clarke Holdings Corp., a Delaware corporation ("Harland Clarke Holdings"), Faneuil, Inc., a Delaware corporation (the "Company"), and Anna Van Buren (the "Executive").

WHEREAS the Company wishes to employ the Executive and the Executive wishes to accept such employment according to the terms set forth in this Agreement.

ACCORDINGLY, Harland Clarke Holdings, the Company and the Executive agree as follows:

1. Employment, Duties and Acceptance.

1.1 Employment, Duties. The Company hereby employs the Executive for the Term (as defined in Section 2.1), to render exclusive and full-time services to the Company as the President and Chief Executive Officer of the Company, to include the Medical Device Tracking (MDT), Harland Technology Services (HTS) and the legacy Faneuil business (the "Business Unit"), or in such other executive position as may be mutually agreed upon by the Company and the Executive, and to perform such other duties consistent with such position or as may be assigned to the Executive by the Chief Executive Officer of Harland Clarke Holdings (the "CEO") or his designee or the Board of Directors of Harland Clarke Holdings (the "Board"). During the Term, the Executive shall report solely to the CEO (or his designee).

1.3 Location. The duties to be performed by the Executive hereunder shall be performed at the offices of Hampton, Virginia and other locations mutually agreed with the CEO, subject to reasonable travel requirements on behalf of the Company.

2. Term of Employment; Certain Post-Term Benefits.

2.1 The Term. This Agreement and the term of the Executive's employment under this Agreement (the "Term") shall become effective as of January 1, 2013 (the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document "Effective Date") and will continue until December 31, 2015 (the "Termination Date"), subject to earlier termination pursuant to Section 4.

2.2 End-of-Term Provisions. Prior to the end of the Term, the Company and the Executive shall meet to discuss whether the Term should be renewed or non-renewed. The Company must give six (6) months prior written notice of non-renewal of the Term should it make that decision. In the event of non- renewal of the Term by the Company and the Executive's employment is terminated by the Company after the end of the Term, other than for (i) Cause (as defined below), (ii) Disability (as defined below) or (iii) death, in each case following such Company notice of non-renewal, then such termination shall be treated as a termination without Cause and the Restricted Period (as defined below) shall be reduced to a period of one year post termination of employment (the "Reduced Restricted Period"). During such Reduced Restricted Period, the Executive shall receive as severance pay, an amount equal to the greater of (A) 50% of the payments set forth in Sections 4.4(i) and 4.4(ii) or (B) severance and benefits in accordance with Company policy as in effect at that time, in each case payable in installments in accordance with the Company's normal payroll practices, subject to Executive's signing and not revoking the release of claims as set forth in Section 4.6. For the avoidance of doubt, if the Executive's employment is terminated by the Company after the end of the Term (x) for Cause, the Executive will not be entitled to receive any severance or other benefits, or (y) for death or Disability, the Executive will receive severance and benefits in accordance with Company policy as in effect at that time. For the avoidance of doubt, if the Company is willing to extend the Term and Executive does not agree to extend the Term, then upon termination of employment at or after the end of the Term, the Executive shall be bound by the restrictive covenants set forth in Section 5 below, the Restricted Period shall not be reduced and Executive shall not be entitled to receive any severance benefits with respect to such termination. Notwithstanding the foregoing, the terms of this Section 2.2 will not impact any payments or other benefits to which the Executive would then be entitled under the LTIP (as defined below) pursuant to the terms thereof.

3. Compensation; Benefits. Salary. As compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Executive a base salary, payable in accordance with the Company's normal payroll practices, at the annual rate of not less than $420,000 (effective on the effective date of this Agreement) less such deductions or amounts to be withheld as required by applicable law and regulations (the "Base Salary"). In the event that the Company, in its sole discretion, from time to time determines to increase the Base Salary, such increased amount shall, from and after the effective date of the increase, constitute "Base Salary" for purposes of this Agreement.

3.1 Incentive Compensation.

3.1.1 Annual Bonus. Commencing with the 2013 fiscal year, the Executive shall receive a bonus with respect to 2013 and each later fiscal year ending during the Term computed in accordance with the provisions hereafter. If, with respect to any such fiscal year, the Business Unit achieves "EBITDA" (as defined below) of at least the percentage set forth in the table below of its business plan for such fiscal year, such bonus shall be the percentage set forth in the table below of Base Salary with respect to the fiscal year for which the bonus (any such bonus, an "Annual Bonus") was earned:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Percentage of Business Unit EBITDA in Business Plan Percentage of Base Salary 89.9% and below Nil 90 - 94.9 90 95 - 99.9 95 100 - 105 100 105.1 - 110 105.56 110.1 - 115 111.11 115.1 - 120 116.67 120.1 - 125 122.22 125.1 - 130 127.78 130.1 - 135 133.33 135.1 - 140 138.89 140.1 - 145 144.44 145.1 and over 150

For the purposes of this Agreement, "EBITDA" means for any fiscal year of the Business Unit, consolidated operating income for such fiscal year of the Business Unit plus, without duplication and to the extent reflected as a charge in the statement of such operating income for such fiscal year, the sum of (i) depreciation and amortization expense (excluding amounts of prepaid incentives under customer contracts), (ii) any extraordinary non-cash expenses or losses, (iii) allocation of fees charged by M&F Worldwide Corp. ("MFW") or a subsidiary to the Business Unit relating to the operation of the Business Unit, (iv) all restructuring costs (as defined under U.S. generally accepted accounting principles ("GAAP")), (v) fees paid to the Business Unit's external advisors in connection with acquisitions for the business (whether or not consummated) and (vi) effects of changes in accounting policy and GAAP, in the case of clauses (i) through (vi) above, solely with respect to the Business Unit, and minus without duplication and to the extent included in the statement of such operating income for such period, the sum of (a) any extraordinary or non-recurring non-cash income or gains (including, whether or not otherwise includable as a separate item in the statement of such operating income for such period, gains on the sales of assets outside of the ordinary course of business), (b) effects of changes in accounting policy and GAAP, and (c) any cash payments made during such period in respect of items described in clause (ii) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of operating income, in the case of clauses (a) through (c) above, solely with respect to the Business Unit, all as determined on a consolidated basis, all of the foregoing to be determined by the Board or any other relevant committee or person. For the purposes of determining compensation

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document milestones for any fiscal year, EBITDA will be adjusted by the Board or any other relevant committee or person, as applicable, as appropriate for material acquisitions or dispositions of any business or assets of or by the Business Unit or its subsidiaries for such fiscal year and thereafter.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3.1.2 Long Term Incentive Plan. During the Term, the Executive shall participate in the 2013-15 M&F Worldwide Corp. Long Term Incentive Plan (the "LTIP"), to be implemented beginning with respect to 2013. The specific terms of award or awards under the LTIP shall be set forth in one or more Award Agreements to be entered into with the Executive Notwithstanding the foregoing, to the extent that Section 162(m) of the Code may be applicable, the LTIP (and any subsequent Long Term Incentive Plan) shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the LTIP to qualify as "performance-based compensation" under Section 162(m) of the Code and the regulations promulgated thereunder.

3.2 Business Expenses. The Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive during the Term in the performance of the Executive's services under this Agreement, upon presentation of expense statements or vouchers or such other supporting information as the Company customarily may require of its officers; provided, however, that the maximum amount available for such expenses during any period may be fixed in advance by the CEO.

3.3 Paid Time Off. During the Term, the Executive shall be entitled to Paid Time Off in accordance with the Paid Time Off policy of the Company during each year of the Term.

3.4 Fringe Benefits. During the Term, the Executive shall be entitled to all benefits for which the Executive shall be eligible under any 401(k) plan, group insurance or other so-called "fringe" benefit plan as well as all benefits which the Company provides to its executive employees generally, which benefits may be amended, modified or terminated in the Company's discretion.

4. Termination.

4.2 Disability. If, during the Term the Executive is unable to perform his duties hereunder due to a physical or mental incapacity for a period of 6 months within any 12 month period (hereinafter a "Disability"), the Company shall have the right at any time thereafter to terminate the Term upon sending written notice of termination to the Executive. If the Company elects to terminate the Term by reason of Disability, the Company shall pay to the Executive promptly after the notice of termination: (i) any Base Salary earned but not paid, (ii) a pro-rated Annual Bonus based on the number of days of the fiscal year worked by the Executive until the date of the notice of termination, which pro-rated Annual Bonus will be paid at the time and in the manner

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document such Annual Bonus is paid to other executives receiving such bonus payment, (iii) amounts payable under the LTIP in accordance with the terms thereof

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and (iv) Annual Bonus for the year prior to the year in which the Executive is terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such Annual Bonus, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such prior year Annual Bonus, in each case less any other benefits payable to the Executive under any disability plan provided for hereunder or otherwise furnished to the Executive by the Company. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement except to the extent already earned and vested as of the day immediately prior to his termination by reason of Disability, or as earned, vested, or accrued by virtue of his Disability.

4.4 Termination by Company without Cause or by the Executive for Good Reason. If the Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability) or by the Executive for Good Reason (as defined below), the Executive shall receive: (i) as severance pay, an amount equal to two times the Base Salary payable in installments in accordance with the Company's normal payroll practices, (ii) continuation for a 12-month period following the date of termination of group health plan benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as "COBRA"), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the Executive as in effect on the date of termination (provided that the Company shall not be required to pay any portion of the premium if such payment would result in penalty taxes imposed on the Company), (iii) Annual Bonus for the year in which termination occurred if the Executive would have been eligible to receive such bonus hereunder (including due to satisfaction by the Company of performance milestones) had the Executive been employed at the time such Annual Bonus is normally paid, which Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment, (iv) Annual Bonus for the year prior to the year in which the Executive is so terminated if at the time of

4.6 Release. Notwithstanding any other provision of this Agreement to the contrary, the Executive acknowledges and agrees that any and all payments, other than payment of any accrued and unpaid Base Salary to which the Executive is entitled under this Section 4 are conditioned upon and subject to the Executive's execution of a general waiver and release (for the avoidance of doubt, the restrictive covenants contained in Section 5 of this Agreement shall survive the termination of this Agreement), in such form as may be prepared by the Company, of all claims in the form substantially similar to that attached hereto as Exhibit A, except for such matters covered by provisions of this Agreement which expressly survive the termination of this Agreement. Notwithstanding anything to the contrary, the severance payments and benefits are conditioned on the Executive's execution, delivery and nonrevocation of the general waiver and release of claims within fifty- five days following the Executive's termination of employment (the "Release Condition"). Payments and benefits of amounts which do not constitute nonqualified deferred compensation and are not subject to Section 409A (as defined below) shall commence five (5) days after the Release Condition is satisfied provided, however, if the fifty-five day period for return of the release begins in one calendar year and ends in a second calendar year, then such payments shall not commence until the second calendar year (even if the Release Condition is satisfied in the first calendar year). Payments and benefits which are subject to Section 409A shall commence on the 60th day after termination of employment (subject to further delay, if required pursuant to Section 4.7.2 below) provided that the Release Condition is satisfied.

4.7 Section 409A.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document causes any amounts to be subject to interest, additional tax or penalties under Section 409A, the parties shall agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith are necessary or desirable, to (i) maintain to the maximum extent reasonably practicable the original intent of the applicable provisions without violating the provisions of Section 409A or increasing the costs to the Company of providing the applicable benefit or payment and (ii) to the extent possible, to avoid the imposition of any interest, additional tax or other penalties under Section 409A upon the parties.

4.7.4 Notwithstanding anything to the contrary in Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation § 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided to the Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which the Executive's "separation from service" occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which the Executive's "separation from service" occurs. To the extent any expense reimbursement or the provision of any in- kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), and in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

5. Protection of Confidential Information; Restrictive Covenants.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document regarding not only the Company but also its subsidiaries and affiliates. In view of the fact that the Executive's work for the Company will bring the Executive into close contact with many confidential affairs of the Company not readily available to the public, trade secret information and plans for future developments, the Executive agrees:

5.2 In support of Executive's commitments to maintain the confidentiality of the Company's confidential and trade secret information, (i) during the Term and for any period the Executive is employed by the Company after the Term, and (ii) for a period of two years following termination of the Executive's employment for any reason (the "Restricted Period"), the Executive shall not in the United States and in any non-US jurisdiction where the Company may then do business: (a) directly or indirectly, enter the employ of, or render any services to, any person, firm or entity engaged in any business competitive with any business of the Company or of any of its subsidiaries or affiliates; (b) engage in such business on the Executive's own account, and the Executive shall not become interested in any such business, directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity; (c) directly or indirectly, solicit or encourage (or cause to be solicited or encouraged) or cause any client, customer or supplier of the Company to cease doing business with the Company, or to reduce the amount of business such client, customer or supplier does with the Company or (d) directly or indirectly, solicit or encourage (or cause to be solicited or encouraged) to cease to work with the Company, or hire (or cause to be hired), any person who is an employee of or consultant then under contract with the Company or who was an employee of or consultant then under contract with the Company within the six month period preceding such activity without the Company's written consent, provided however that this clause (d) shall not apply during the Restricted Period to a consulting or advisory firm which is also then currently

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document engaged or under a retainer relationship (in each case, without any action by the Executive, whether directly or indirectly) by a subsequent employer of the Executive.

5.6 The Executive agrees (whether during or after the Executive's employment with the Company) not to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the Company or its affiliates or the officers, directors, managers, customers, partners, or shareholders of the Company or its affiliates, provided that nothing herein shall prohibit the Executive from providing truthful testimony if such testimony is required by law.

5.7 For purposes of this Section 5 only, the term "Company" includes the Company and its subsidiaries and affiliates.

7. Intellectual Property.

The Company shall be the sole owner of all the products and proceeds of the Executive's services hereunder, including, but not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages, programs and other intellectual properties that the Executive may acquire, obtain, develop or create in connection with and during the Term, free and clear of any claims by the Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than the Executive's right to receive payments hereunder). The Executive shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title or interest in or to any such properties.

If to the Company, to: Harland Clarke Holdings Corp. 10931 Laureate Drive San Antonio, TX 78249 Attention: General Counsel

If to the Executive, to:

9. Governing Law; Dispute Resolution.

9.2 Each party irrevocably agrees for the exclusive benefit of the other that any and all suits, actions or proceedings relating to Section 5 of this Agreement (a "Proceeding") shall be maintained in either the courts of the State of Delaware or the federal District Courts sitting in Wilmington, Delaware (collectively, the "Chosen Courts") and that the Chosen Courts shall have exclusive jurisdiction to hear and determine or settle any such Proceeding and that any such Proceedings shall only be brought in the Chosen Courts. Each party irrevocably waives any objection that it may have now or hereafter to the laying of the venue of any Proceedings in the Chosen Courts and any claim that any Proceedings have been brought in an inconvenient forum and further irrevocably agrees that a judgment in any Proceeding brought in the Chosen Courts shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction.

Each of the parties hereto agrees that this Agreement involves at least $100,000 and that this Agreement has been entered into in express reliance on Section 2708 of Title 6 of the Delaware Code. Each of the parties hereto irrevocably and unconditionally agrees (i) that, to the extent such party is not otherwise subject to service of process in the State of Delaware, it will appoint (and maintain an agreement with respect to) an agent in the State of Delaware as such party's agent for acceptance of legal process and notify the other parties hereto of the name and address of said agent, (ii) that service of process may also be made on such party by pre-paid certified mail with a validated proof of mailing receipt constituting evidence of valid service sent to such party at the address set forth in Section 8 of this Agreement, as such address may be changed from time to time pursuant hereto, and (iii) that service made pursuant to clause (i) or (ii) above shall, to the fullest extent permitted by applicable law, have the same legal force and effect as if served upon such party personally within the State of Delaware.

9.3 Any controversy or claim arising out of or related to any other provision of this Agreement shall be settled by final, binding and non-appealable arbitration in Wilmington, Delaware by a single arbitrator. Subject to the following provisions, the arbitration shall be conducted in accordance with the applicable rules of JAMS then in effect. Any award entered by the arbitrator shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrator shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement. Each party shall be responsible for its own expenses relating to the conduct of the arbitration or litigation (including reasonable attorneys' fees and expenses) and shall share the fees of JAMS and the arbitrator, if applicable, equally.

10. General.

10.1 JURY TRIAL WAIVER. THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE EVENT ANY ACTION ARISING

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10.3 Headings. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

10.4 Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the Executive's employment by the Company, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the Executive's employment by the Company and its affiliates including without limitation the prior Amended and Restated Employment Agreement dated August 20, 2010, and any severance, retention, change in control or similar types of benefits. Notwithstanding the preceding sentence, to the extent not yet paid, the Executive will be entitled to receive payment of (i) her Annual Bonus, if any, for 2012, and (ii) amounts payable in accordance with the LTIP, if any, with respect to 2010, 2011, 2012, in each case in accordance with the terms of (and at the times provided for in) the prior Amended and Restated Employment Agreement. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

10.7 Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state, local and other taxes as may be required to be withheld pursuant to any applicable law or regulation.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

HARLAND CLARKE HOLDINGS CORP.

By: ______Name: Charles Dawson Title: President and Chief Executive Officer

FANEUIL, INC.

By: ______Name: Title:

EXECUTIVE

______Anna Van Buren

Form of Release

GENERAL WAIVER AND RELEASE: In consideration of the Company's actions set out in this [Agreement], you agree to and by signing this [Agreement] do hereby voluntarily and knowingly release and discharge the Company, all related, affiliated, parent and subsidiary entities, and all of their past and present officers, directors, agents, employees, employee benefit plans, and insurers, in all capacities, including individually, together with their predecessors, successors and/or assigns (all of which organizations and persons are hereinafter collectively identified as the "Released Parties"), from any and all claims, demands, actions, or liabilities which you may have had, may now have, or may hereafter claim to have through the date this [Agreement] becomes "effective", whether known or unknown, contingent or otherwise, at law or in equity, including, without limitation, any claim relating to your employment with and separation from the Company; all compensation and benefits relating to your employment (with the sole exceptions of the compensation and benefits set out in this letter and your vested rights, if any, in the [Company] 401 (k) Plan); any claim of discrimination based on your race, color, disability, religion, sex, national origin, age, genetic information, pregnancy, childbirth or related medical condition, HIV, or workers' compensation, if any; any claim that any of the Released Parties has violated any federal, state or local statute, regulation, or ordinance with respect to your employment or the cessation thereof, including, without limitation, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act of 1990, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act, the National Labor Relations Act, the Fair Labor Standards Act, the Sarbanes-Oxley Act, the Genetic Information Nondiscrimination Act, the [State] Commission on Human Rights Act, [specific relevant State codes]; [State] Workers' Compensation Act; and the ordinances of the [County], the [City], and [State]; any claim that any of the Released Parties has wrongfully terminated your employment or breached any oral, written, express, or implied employment agreement; any claim that any of the Released Parties has intentionally or negligently inflicted emotional distress, mental anguish or humiliation on you; any claim of the breach of any implied covenant of good faith and fair dealing; any claim of damages, monetary or other personal relief, and/or attorney's fees in any administrative and/or judicial proceeding initiated by you, by any third party on your behalf, or by any governmental authority prior to or following your execution of this [Agreement]; any claim of libel, slander and/or defamation of character; any retaliation, "whistleblower", or public policy claim; and any other claim of whatever kind, even if not specifically identified in this [Agreement]. You acknowledge that you have not previously assigned, sold, conveyed, or otherwise transferred any claim released in this [Agreement].

SUBSIDIARIES

DOMESTIC SUBSIDIARIES OF THE COMPANY:

NAME OF SUBSIDIARY STATE OF INCORPORATION Harland Clarke Corp. Delaware Checks In the Mail, Inc. Delaware HFS Scantron Holdings Corp. New York Scantron Corporation Delaware Harland Financial Solutions, Inc. Oregon HFS Research & Development, Inc. Delaware John H. Harland Company of Puerto Rico Georgia Harland Financial Solutions India, LLC Delaware Spectrum K12 School Solutions, Inc. Delaware GlobalScholar, Inc. Delaware GlobalScholar Sub I, LLC Delaware GlobalScholar Sub II, LLC Delaware Faneuil, Inc. Delaware Faneuil Toll Operations LLC Delaware

FOREIGN SUBSIDIARIES OF THE COMPANY:

NAME OF SUBSIDIARY JURISDICTION Harland Financial Solutions Worldwide Limited Ireland Harland Israel Limited Israel Scantron Canada, Limited Canada HFS Software India Private Limited India Harland Clarke Holdings Software India Private Limited India Faneuil Canada, Inc. Canada

Harland Clarke Holdings Corp. and Subsidiaries Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, Charles T. Dawson, certify that:

1. I have reviewed this Annual Report on Form 10-K of Harland Clarke Holdings Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 25, 2013 /s/ Charles T. Dawson Name: Charles T. Dawson Title: Chief Executive Officer (Principal Executive Officer)

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Harland Clarke Holdings Corp. and Subsidiaries Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, Peter A. Fera, Jr., certify that:

1. I have reviewed this Annual Report on Form 10-K of Harland Clarke Holdings Corp.;

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 25, 2013 /s/ Peter A. Fera, Jr. Name: Peter A. Fera, Jr. Title: Chief Financial Officer (Principal Financial Officer)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivative Financial 12 Months Ended Instruments (Tables) Dec. 31, 2012 Derivative Financial Instruments [Abstract] Derivative Financial Instruments The following presents the fair values of these derivative instruments and the classification in the consolidated balance sheets.

Derivatives Designated as Cash Flow Balance Sheet December 31, December 31, Hedging Instruments: Classification 2012 2011 Other current Interest rate swaps liabilities $ 1.3 $ 6.1 Other liabilities — 2.9

Derivative Financial Instruments The following presents the effect of these derivative instruments (effective and ineffective portion) on other comprehensive income and amounts reclassified from accumulated other comprehensive income into interest expense.

Successor Predecessor December 22 Year ended to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 Interest Rate Swaps: Loss recognized in other comprehensive income (effective portion) $ — $ 0.1 $ 5.8 $ 23.3 Loss reclassified from other comprehensive income into interest expense (effective portion) 0.1 — 12.9 19.7 Loss recognized in interest expense (ineffective portion) 1.8 0.1 — — Changes in Accumulated Other The following presents the balances and net changes in the accumulated other Comprehensive Income (Loss) comprehensive income related to these derivative instruments, net of income taxes:

Related to Derivative Instruments Successor Predecessor December 22 Year ended to January 1 to December 31, December 31, December 21, Balances and Net Changes: 2012 2011 2011 Balance at beginning of period $ 0.1 $ 6.5 $ 10.9 Change in ownership — (6.5) — Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0, $0.0 and $5.0 (0.1) — (7.9) Net change in fair value of interest rate swaps (effective portion), net of taxes of $0.0, $0.0 and $2.3 — 0.1 3.5 Balance at end of period $ — $ 0.1 $ 6.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 12 12 0 Months 12 Months 0 Months 0 Months 12 Months 0 Months 0 Months 12 Months 0 Months 0 Months 0 Months 12 Months 0 Months 12 Months Ended Months Months Months 12 Months Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Dec. 31, 2011 Dec. 31, 2012 Dec. 31, Dec. 31, 2011 Dec. 31, 2012 Dec. 31, Dec. 21, Dec. 31, Successor Successor 2011 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, Goodwill and Other Dec. 21, Dec. 31, Successor Successor 2011 2011 Dec. 21, Dec. 21, 2012 [Member] [Member] Successor Dec. 31, Successor Successor Dec. 31, Successor Successor 2011 Intangible Assets 1 (Details) 2011 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2012 [Member] [Member] Successor Dec. 21, Predecessor 2011 2011 Successor Harland Harland [Member] 2012 [Member] [Member] 2012 [Member] [Member] Successor (USD $) Dec. 21, Predecessor Dec. 31, Successor Successor 2011 Successor Harland Harland [Member] Dec. Dec. 2011 [Member] PredecessorPredecessor [Member] Financial Financial Harland Successor Scantron Scantron Successor Faneuil Faneuil [Member] In Millions, unless otherwise 2011 [Member] 2012 [Member] [Member] Successor [Member] Clark Clark Harland 31, 31, Scantron Harland [Member] [Member] Harland Solutions Solutions Financial [Member] Segment Segment [Member] Segment Segment Faneuil specified Predecessor Harland Successor MacAndrewsMacAndrews[Member] Harland Segment Segment Clark 20122010 Segment Financial Scantron Faneuil Financial Segment Segment Solutions Scantron [Member] [Member] Faneuil [Member] [Member] Segment [Member] Clark [Member] Acquisition Acquisition Faneuil Clark [Member] [Member] Segment [Member] Solutions Segment Segment Solutions [Member] [Member] Segment Segment MacAndrewsMacAndrews Segment MacAndrewsMacAndrews[Member] Segment [Member] [Member] [Member] Segment MacAndrewsMacAndrews[Member] Segment [Member] [Member] Segment MacAndrewsMacAndrews[Member][Member] Acquisition Acquisition [Member] Acquisition Acquisition Faneuil [Member] [Member] Acquisition Acquisition Faneuil [Member] [Member] Acquisition Acquisition Faneuil [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] Goodwill [Roll Forward] Balance $ 1,526.8 $ 785.2 $ 452.2 $ 228.4 $ 61.0 $ 758.6 $ 415.0 $ 281.8 $ 40.1 $ 21.7 Goodwill, Allocation (2.8) 0 (1.4) (1.4) 0 2.8 2.0 0.8 0 0 Adjustment Goodwill, Acquired During 90.2 0 0 90.2 0 745.6 13.0 415.0 0 281.8 0 40.1 8.7 13.0 Period Goodwill, Written off Related (1,511.8) (785.2) (450.6) (215.0) (61.0) to Sale of Business Unit Goodwill, Impairment Loss 0 0 (102.2) (102.2) 0 0 (102.2) 0 Effect of exchange rate (0.2) 0 (0.2) 0 0 0.2 0 0.1 0.1 0 changes Balance $ 1,511.8 $ 785.2 $ 450.6 $ 215.0 $ 61.0 $ 761.6 $ 417.0 $ 282.7 $ 40.2 $ 21.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended 12 Months Ended Summary of Significant Dec. 21, 2011 Accounting Policies 3 Dec. 21, 2011 Tradenames (Details) (USD $) Dec. 31, Dec. 31, Dec. 31, Scantron Segment [Member] In Millions, unless otherwise 2012 2010 2011 [Member] Scantron Segment specified [Member] Goodwill and Acquired Intangible Assets [Abstract] Goodwill, Impairment Loss $ 0 $ 0 $ 102.2 Useful Life (in years) 15 years Self Insurance [Abstract] Self Insurance Reserve $ 10.0 $ 9.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 12 Months Months Ended Ended Dec. 31, Dec. 31, Dec. 31, 2011 2012 2011 Investments 2 (Details) (USD Portion at Dec. 31, Dec. 31, Portion at Portion at $) Dec. 31, Dec. 31, Fair Value, 2012 2011 Fair Value, Fair Value, In Millions, unless otherwise 2011 2012 Fair Value US US Fair Value Fair Value specified Equity Equity Disclosure Treasury Treasury Disclosure Disclosure Securities Securities [Member] Securities Securities [Member] [Member] [Member][Member] US [Member][Member] Equity Equity Treasury Securities Securities Securities [Member] [Member] [Member] Schedule of Available-for- sale Securities [Line Items] Available-for-sale Securities, $ 0.1 $ 0.1 $ 56.5 Amortized Cost Basis Available-for-sale Securities, 0 0 0.1 Gross Unrealized Gains Available-for-sale Securities, 0 0 0 Gross Unrealized Losses Available-for-sale Securities, 0.1 0.1 56.6 Fair Value Disclosure Proceeds from sale of 13.4 56.3 marketable securities Available-for-sale Securities, 0.2 Gross Realized Losses Available-for-sale Securities, $ 13.2 Gross Realized Gains

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 12 12 Months 0 Months 0 Months Months 12 Months Ended 12 Months Ended 12 Months Ended Months 12 Months Ended Ended Ended Ended Ended Ended Dec. 21, 2011 Dec. 21, 2011 Dec. 31, 2012 Predecessor Predecessor Successor Dec. 21, 2011 [Member] Dec. 21, [Member] Goodwill and Other [Member] Predecessor Fair Value, Dec. 21, 2011 Dec. 21, Fair Value, Intangible Assets 2 (Details) Dec. 31, 2012 Dec. 31, 2012 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Fair Value, Dec. 21, Dec. 31, [Member] Measurements, Dec. 21, 2011 Predecessor 2011 Measurements, (USD $) Dec. 31, Dec. 31, Dec. 31, 2012 Dec. 31, 2011 Customer Customer Dec. 31, Dec. 31, 2012 2012 Dec. 31, Dec. 31, 2012 2012 Dec. 31, Dec. 31, 2011 2012 Measurements, Dec. 21, Dec. 31, 2011 2010 Fair Value, Nonrecurring Dec. Dec. Dec. 2011 Tradenames [Member] Predecessor Nonrecurring In Millions, unless otherwise 2012 2011 Customer Customer RelationshipsRelationships 2012 2011 TradenamesTradenames 2012 2011 Software Software 2011 2012 Successor Successor Nonrecurring 2011 2010 PredecessorPredecessorMeasurements, [Member] 31, 31, 31, Scantron [Member] Harland [Member] [Member] specified TradenamesTradenamesRelationshipsRelationships [Member] [Member] TradenamesTradenames [Member] [Member] Software Software [Member] [Member] Successor Successor [Member][Member] [Member] PredecessorPredecessor [Member] [Member] Nonrecurring Scantron 2012 2010 2011 Segment Scantron Financial Scantron Faneuil [Member] [Member] [Member] [Member] Minimum Maximum [Member] [Member] Minimum Maximum [Member][Member] Minimum Maximum[Member][Member] Software Software Harland [Member] [Member] Software Software [Member] Segment [Member] Segment Solutions Segment [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member][Member] Financial [Member] [Member] Scantron [Member] [Member] Segment [Member] Asset Solutions Segment Asset [Member] impairment Segment [Member] impairment charges [Member] charges [Member] [Member] Finite-Lived Intangible Assets, Net [Abstract] Useful Life (in years) 3 years 19 years 15 years 15 years 25 years 3 years 9 years Gross Carrying Amount $ $ $ 1,528.0 $ 1,528.0 $ 101.4 $ 101.4 $ 56.5 $ 42.2 1,685.9 1,671.6 Accumulated Amortization 151.1 13.4 132.7 12.3 5.3 0.1 13.1 1.0 Net Carrying Amount 1,534.8 1,658.2 1,395.3 1,515.7 96.1 101.3 43.4 41.2 Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] Indefinite-lived intangible 0.8 0.8 assets Intangible Assets Excluding Goodwill [Abstract] Gross Carrying Amount 1,686.7 1,672.4 Amortization of Intangible 4.1 137.7 0.4 12.1 117.5 109.0 9.0 9.1 Assets Net Carrying Amount 1,535.6 1,659.0 Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] Year ending December 31, 128.9 2013 Year ending December 31, 120.8 2014 Year ending December 31, 112.7 2015 Year ending December 31, 101.5 2016 Year ending December 31, 97.0 2017 Goodwill, Impairment Loss 0 0 102.2 102.2 0 102.2 102.2 Impairment of Intangible Assets, Indefinite-lived 4.2 4.2 (Excluding Goodwill) Impairment of Intangible $ 0.1 $ 1.9 $ 2.7 Assets, Finite-lived

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 0 Months Ended 12 Months Ended Accounting Policies 1 (Details) (USD $) Dec. 31, 2011 Dec. 31, 2012Dec. 21, 2011Dec. 31, 2010 In Millions, unless otherwise specified Contract Acquisition Payments [Abstract] Revenue related to contract terminations $ 0 $ 2.2 $ 7.5 $ 5.8 Contract acquisition payments, net 0 17.6 Advertising Expense [Abstract] Advertising Expense 0.4 20.1 21.5 19.6 Prepaid and other current assets [Member] Advertising Expense [Abstract] Prepaid Advertising $ 0.1 $ 2.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Property Plant and 12 Months Ended Equipment (Tables) Dec. 31, 2012 Property, Plant and Equipment [Abstract] Property, Plant and Equipment Property, plant and equipment consists of the following:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 0 Months 0 Months 12 Months 0 Months Months 12 Months Ended 0 Months Ended 12 Months Ended Ended Ended Ended Ended Ended Dec. 31, Dec. 31, Dec. 21, Dec. 31, 2011 2012 2011 2010 Dec. 31, 2011 Dec. 31, 2012 Dec. 21, 2011 Dec. 31, 2010 Successor Successor PredecessorPredecessor Transactions with Related Dec. 31, 2012 Sep. 30, 2012 Successor Successor Dec. 31, 2012 Dec. 31, Dec. 31, Predecessor Predecessor Dec. 21, Dec. 31, [Member] [Member] [Member] [Member] Parties (Details) (USD $) MacAndrewsMacAndrews Dec. 27, 2011 [Member] [Member] Successor Dec. 31, 2011 2012 [Member] [Member] Dec. 21, Dec. 31, 2011 2010 M&F M&F M&F M&F In Millions, except Share [Member] [Member] MacAndrews Dec. 31, Dec. 31, Dec. 31, MacAndrewsMacAndrews [Member] 2011 Successor Successor Dec. 21, Dec. 31, MacAndrewsMacAndrews 2011 2010 PredecessorPredecessor Dec. Dec. WorldwideWorldwide Worldwide Worldwide data, unless otherwise Directors Directors [Member] 2008 2011 2012 [Member] [Member] MacAndrews Successor [Member] [Member] 2011 2010 [Member] [Member] PredecessorPredecessor [Member] [Member] 31, 31, Corp. Corp. Corp. Corp. specified and Officers and Officers Notes Delphax Successor Successor Directors Directors [Member] [Member] M&F M&F PredecessorPredecessor Directors Directors [Member] [Member] M&F M&F 20122011 [Member] [Member] [Member] [Member] Insurance Insurance Receivable [Member][Member][Member] and Officers and Officers Notes Delphax WorldwideWorldwide [Member] [Member] and Officers and Officers Delphax Delphax Worldwide Worldwide Services Services Services Services Program Program [Member] Insurance Insurance Receivable [Member] Corp. Corp. Insurance Insurance [Member] [Member] Corp. Corp. provided provided provided to provided to [Member] [Member] Program Program [Member] [Member] [Member] Program Program [Member] [Member] to the to the the the [Member] [Member] [Member] [Member] Company Company Company Company [Member] [Member] [Member] [Member] Related Party Transaction [Line Items] Prepaid expenses and other $ $ $ 0.7 current assets 56.7 54.0 Other assets 63.0 27.3 1.0 Related Party Transaction, 0 2.0 0.1 0 Purchases from Related Party Maximum Lending Amount 30.0 14.0 Per Agreement Loans Receivable, Basis 2.00% Spread on Variable Rate Notes Receivable, Related 0 30.0 30.0 Parties, Noncurrent Notes Receivable, Related 30.0 Parties, Current Related Party Interest Income 0.8 0 0.2 0.4 Proceeds from Interest 0.8 Received Investment Owned, Balance, 250,000 Shares Related Party Transaction, Selling, General and Administrative Expenses from 0 2.7 2.7 2.7 Transactions with Related Party Dividends paid to parent $ 12.6 $ 32.3 $ 12.6 $ 32.3 $ 48.7 $ 31.2 $ 48.7 $ 31.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes 2 (Details) 12 Months Ended (USD $) In Millions, unless otherwise Dec. 31, 2012 Dec. 31, 2011 specified Components of Deferred Tax Assets and Liabilities [Abstract] Net long-term deferred tax liability $ 622.7 $ 726.5 Net deferred tax liabilities 577.6 701.0 Valuation Allowance, Amount 3.0 Valuation Allowance Change In Period (0.8) Current [Member] Components of Deferred Tax Assets and Liabilities [Abstract] Prepaid expenses 0.4 4.1 Inventory 0.9 (4.4) Deferred revenues 5.4 (11.1) Deferred gain on debt repurchases (5.3) 0 Accelerated gain on debt repurchases 5.5 0 Net operating loss carryforwards 7.0 7.1 Accrued expenses and other liabilities 32.4 31.7 Net current deferred tax asset before valuation allowance 46.3 27.4 Valuation allowance (1.2) (1.9) Net current deferred tax asset 45.1 25.5 Long-term [Member] Components of Deferred Tax Assets and Liabilities [Abstract] Deferred gain on debt repurchases (20.2) (25.4) Accelerated gain on debt repurchases 19.3 0 Net operating loss carryforwards 4.0 11.0 Property, plant and equipment (22.7) (29.8) Intangible assets (557.5) (591.4) Debt fair value adjustments (103.0) (161.0) Deferred financing fees 2.9 7.1 Accrued rebates 22.3 33.8 Other 34.0 31.1 Net long-term deferred tax liability before valuation allowance 620.9 724.6 Valuation allowance (1.8) (1.9) Net long-term deferred tax liability 622.7 726.5 Domestic Tax Authority [Member] Components of Deferred Tax Assets and Liabilities [Abstract] Operating Loss Carryforwards 21.1 State and Local Jurisdiction [Member] Components of Deferred Tax Assets and Liabilities [Abstract] Operating Loss Carryforwards 1.5 Operating Loss Carryforwards Subject To Expiration By Year 20200.5 Foreign Tax Authority [Member] Components of Deferred Tax Assets and Liabilities [Abstract]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subsequent Event (Details) 0 Months (USD $) Ended In Millions, unless otherwise Feb. 20, 2013 specified Revolving Facility [Member] Subsequent Event [Line Items] Line of Credit Facility, Maximum Borrowing Capacity 80.0 Percentage of eligible receivables less unearned revenues used to calculate borrowing base of 85.00% revolving loan Percentage of liquidation value of eligible inventory to calculate borrowing base 85.00% Percentage of eligible inventory to calculate borrowing base 70.00% Revolving Loan, borrowing capacity at closing 56.6 Springing maturity date expressed in number of days prior to the maturity date of outstanding 91 days debt Percentage Applied to Prior Quarter Average Avalability to Determine Commitment Fee 50.00% Percentage Revolving Facility [Member] | Minimum [Member] Subsequent Event [Line Items] Line of Credit Facility, Unused Capacity, Commitment Fee Percentage 0.375% Revolving Facility [Member] | Maximum [Member] Subsequent Event [Line Items] Line of Credit Facility, Unused Capacity, Commitment Fee Percentage 0.50% Revolving Facility [Member] | LIBOR [Member] | Minimum [Member] Subsequent Event [Line Items] Debt Instrument, Basis Spread on Variable Rate 1.75% Revolving Facility [Member] | LIBOR [Member] | Maximum [Member] Subsequent Event [Line Items] Debt Instrument, Basis Spread on Variable Rate 2.25% Revolving Facility [Member] | Alternative Base Rate [Member] Subsequent Event [Line Items] Fixed Percentage Added to the Federal Funds Effective Rate 0.50% Fixed Percentage Added to the one month LIBOR rate 1.00% Revolving Facility [Member] | Alternative Base Rate [Member] | Minimum [Member] Subsequent Event [Line Items] Debt Instrument, Basis Spread on Variable Rate 0.75% Revolving Facility [Member] | Alternative Base Rate [Member] | Maximum [Member] Subsequent Event [Line Items] Debt Instrument, Basis Spread on Variable Rate 1.25% Letter of Credit Subfacility [Member] Subsequent Event [Line Items] Line of Credit Facility, Maximum Borrowing Capacity 30.0 Swingline Subfacility [Member] Subsequent Event [Line Items] Line of Credit Facility, Maximum Borrowing Capacity 10.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Valuation And Qualifying 0 Months 12 Months Ended Accounts (Details) Ended (Allowance for Doubful Accounts and Sales Returns Dec. 31, Dec. 21, Dec. 31, [Member], USD $) Dec. 31, 2011 2012 2011 2010 In Millions, unless otherwise specified Allowance for Doubful Accounts and Sales Returns [Member] Movement in Valuation Allowances and Reserves [Roll Forward] Beginning Balance $ 3.0 $ 1.8 $ 2.8 $ 3.0 Effect of Acquisition Accounting (1.2) 0 0 0 Amounts Reserved 0.2 3.1 1.7 4.0 Balance Written Off (0.2) (3.4) (1.5) (4.2) Ending Balance $ 1.8 $ 1.5 $ 3.0 $ 2.8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 0 Months 12 Months Ended Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2012 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2012 Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2011 2010 Dec. 31, Dec. 31, Dec. 31, 2012 Harland 2011 2010 2012 2011 2010 Harland Dec. 31, Dec. 31, Dec. 31, 2012 Dec. 31, Dec. 31, 2012 Dec. 31, 2011 2010 Dec. 31, Dec. 31, Dec. 31, Harland Harland 2011 2010 2010 Dec. 31, Dec. 31, Harland Clarke Harland Harland Harland Harland Harland Financial 2012 2011 2010 Scantron 2012 2010 Faneuil Dec. 31, 2012 Harland Harland 2012 2011 2010 Financial Financial Dec. 31, Dec. 31, Dec. 31, Scantron Scantron Dec. 31, Dec. 31, Faneuil Restructuring (Details) (USD 2011 2010 Clarke and Clarke and Clarke and Financial Financial Financial Solutions Scantron Scantron Scantron Segment Faneuil Faneuil Segment 2012 Harland Clarke and Clarke and Harland Harland Harland Solutions Solutions 2012 2011 2010 Segment Segment 2012 2010 Segment $) Dec. 31, Dec. 31, Dec. 21, Dec. 31, Harland Harland and Corporate Corporate Corporate Solutions Solutions Solutions Segment Segment Segment Segment [Member] Segment Segment [Member] Harland Clarke Corporate Corporate Financial Financial Financial Segment Segment Scantron Scantron Scantron [Member] [Member] Faneuil Faneuil [Member] In Millions, unless otherwise 2011 2012 2011 2010 Clarke and Clarke and Corporate [Member] [Member] [Member] Segment Segment Segment [Member] [Member] [Member] [Member] Facilities [Member] [Member] Facilities Clarke and [Member] [Member] Solutions Solutions Solutions [Member] [Member] Segment Segment Segment Facilities Facilities Segment Segment Facilities specified Successor Successor PredecessorPredecessor Corporate Corporate [Member] Facilities Facilities Facilities [Member] [Member] [Member] Facilities Employee Employee Employee closure Employee Employee closure and Corporate Employee Employee Segment Segment Segment Facilities Facilities [Member] [Member] [Member] closure and closure and [Member] [Member] closure and [Member][Member] [Member] [Member] [Member] [Member] Employee closure closure and closure and Employee Employee Employee closure Severance Severance Severance and other Severance Severance and other Corporate [Member] Severance Severance [Member] [Member] [Member] closure and closure and Successor PredecessorPredecessor other costs other costs Successor Predecessor other costs PredecessorPredecessor Severance and other other costs other costs Severance Severance Severance and other [Member] [Member] [Member] costs [Member] [Member] costs [Member] Successor [Member] [Member] Successor PredecessorPredecessor other costs other costs [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] costs [Member] [Member] [Member] [Member] [Member] costs Successor PredecessorPredecessor[Member] Successor Predecessor[Member] [Member] PredecessorPredecessor [Member] [Member] [Member] [Member] [Member] PredecessorPredecessor Predecessor Successor [Member] PredecessorPredecessor Successor PredecessorPredecessor[Member] [Member] [Member] [Member] Successor [Member] [Member] Successor [Member] [Member] PredecessorPredecessor [Member] [Member] [Member] [Member] Successor [Member] [Member] [Member] [Member] [Member] Successor [Member] [Member] [Member] [Member] [Member] [Member] Restructuring Reserve [Roll Forward] Beginning Balance $ 7.5 $ 6.0 $ 5.0 $ 4.5 $ 1.5 $ 2.5 $ 3.0 $ 4.5 $ 2.5 $ 1.5 $ 2.3 $ 1.1 $ 0 $ 0.1 $ 1.0 $ 1.5 $ 2.2 $ 0.1 $ 3.4 $ 3.8 $ 0.5 $ 2.0 $ 0.1 $ 0.5 $ 1.4 $ 3.7 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Expensed 0 18.9 12.6 22.3 11.0 7.7 12.3 8.8 6.1 5.1 2.2 1.6 7.2 0.4 0.4 2.8 0.6 0.3 0.7 (0.2) 0.1 2.1 5.8 4.5 6.6 4.6 5.2 1.9 1.2 (0.7) 4.7 1.7 0.6 1.0 0.6 0.7 0 Paid in Cash (8.7) (6.1) (8.6) (6.9) (3.1) (6.1) (1.8) (3.0) (2.5) (0.8) (1.2) (1.7) (0.5) (0.4) (1.6) (0.3) (0.8) (0.1) (5.1) (5.0) (3.5) (3.4) (3.3) (2.3) (1.7) (1.7) (1.2) (0.9) (0.6) (0.4) (0.6) (0.5) 0 Non-Cash Utilization (1.0) (0.1) (2.7) 0 0 0 (1.0) (0.1) (2.7) 0.3 0 0.1 0 0 0 0.3 0 0.1 0 0.1 0.2 0 0 0 0 0.1 0.2 Ending Balance 8.8 7.5 6.0 6.4 4.5 1.5 2.4 3.0 4.5 1.4 1.5 2.3 0.1 0 0.1 1.3 1.5 2.2 4.1 3.4 3.8 3.2 2.0 0.1 0.9 1.4 3.7 0.8 0 0.6 0 0.2 0 Restructuring and Related $ 1.7 Cost, Expected Cost

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Significant Customers Dec. 31, 2012 Significant Customers [Abstract] Concentration Risk Disclosure Significant Customers [Text Block] The Company's top 20 clients accounted for approximately 32% of the Company's consolidated net revenues during fiscal year 2012 and 30% during each of the periods December 22 to December 31, 2011 and January 1 to December 21, 2011 and 32% for fiscal year 2010, with sales to Bank of America and Wells Fargo representing a significant portion of such revenues in the Harland Clarke segment.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 12 0 Months 3 Months 0 Months Months 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended Months Ended Ended Ended Ended Ended Mar. 19, Dec. 21, 2011 Dec. 21, 2011 Dec. 21, 2011 Acquisitions (Details) (USD Mar. 19, 2012 Dec. 21, 2011 MacAndrews Dec. 21, 2011 Dec. 21, 2011 Mar. 19, Dec. 21, 2011 MacAndrewsMacAndrews $) 2012 Faneuil MacAndrews Acquisition MacAndrewsMacAndrews Dec. 31, Dec. 21, Dec. 31, Jul. 21, Dec. 31, Mar. 19, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 21, 2011 MacAndrews Acquisition Acquisition Mar. 31, Dec. 31, Dec. 21, Dec. 31, Dec. 06, Dec. 31, Dec. 31, In Millions, unless otherwise Faneuil [Member] Acquisition [Member] Acquisition Acquisition Dec. 31, 2012 Dec. 21, 2011 Dec. 31, 2011 Jan. 03, 2011 2012 2011 2010 2010 2012 2012 Faneuil MacAndrewsMacAndrewsMacAndrewsMacAndrews Acquisition [Member] [Member] 2011 2012 2011 2010 2010 2011 2012 specified [Member] Computer [Member] Harland [Member] [Member] GlobalScholar GlobalScholar GlobalScholar GlobalScholar Spectrum Spectrum Spectrum Spectrum Faneuil Faneuil [Member] Acquisition Acquisition Acquisition Acquisition [Member] Developed Harland Parsum Parsum Parsum Parsum Parsum Successor Successor Customer Software, Customer Financial Scantron Faneuil [Member] [Member] [Member] [Member] K12 K12 K12 K12 [Member][Member]Tradenames [Member] [Member] [Member] [Member] Tradenames Technology Clark [Member][Member][Member][Member][Member] [Member][Member] RelationshipsIntangible Relationships Solutions Segment Segment [Member][Member][Member][Member] [Member] [Member] Rights Segment [Member] Asset [Member] Segment [Member] [Member] [Member] [Member] [Member] [Member] Business Acquisition [Line Items] Date of Acquisition Mar. 19, Dec. 06, Jul. 21, Dec. 21, 2011 Jan. 03, 2011 2012 2010 2010 Percentage of issued and 100.00% 100.00% outstanding shares acquired Cash paid for acquisition $ 70.0 $ 134.9 $ 32.8 $ 28.6 Paid in excess of the carrying amount of the assets and 33.8 (33.8) liabilities assumed Business Acquisition, Purchase Price Allocation [Abstract] Cash 2.3 185.2 Accounts receivables 11.8 110.1 Property, plant and equipment 10.3 207.1 Goodwill 13.0 748.4 [1] 417.0 282.6 40.1 8.7 93.1 26.2 25.2 Other intangible assets: [Abstract] Amortizable intangible assets 0.2 0.3 1,519.0 101.4 39.8 92.3 7.8 6.6 Acquired Indefinite-lived 0.8 Intangible Asset, Amount Total other intangible assets 1.3 1,660.2 Other assets 7.2 147.6 [1] Total assets acquired 45.9 3,058.6 [1] Deferred revenues 1.2 96.8 11.6 0.4 5.0 Long-term debt 1,787.4 Capital leases 1.0 Deferred tax liabilities 723.8 [1] Other liabilities 7.5 308.4 [1] Net assets acquired 36.2 142.2 [1] Initial Preliminary Business Acquisition Purchase Price 222.3 Allocation Assets Acquired Liabilities Expected tax deductible 178.7 5.6 23.1 1.5 amount of goodwil Expected tax deductible amount of intangible assets 142.7 other than goodwill Goodwill, Subsequent Recognition of Deferred Tax (2.8) 2.9 1.4 Asset Inventory Adjustments 17.5 Inventory fair value 3.6 13.9 adjustment expensed Debt discount recognized as part of the fair value of long 417.8 term-debt Unamortized fair value adjustment to deferred 68.1 14.9 1.6 10.5 revenues Non-cash interest expense 4.1 115.6 Amortization of deferred 3.9 50.8 5.2 1.0 3.6 1.8 revenue fair value adjustment Write-off of non-cash fair value adjusment to long-term 0.1 34.2 debt resulting from financing transactions Pro Forma Financial Information [Abstract] Net revenues 1,596.9 Operating income 151.3 Net loss (65.7) Depreciation and amortization (excluding amortization of 156.5 deferred financing fees) Pro forma estimated effective 39.00% tax rate Fair value of contingent 18.5 1.2 4.0 consideration Total estimated consideration 153.4 34.0 32.7 Total acquisition related 1.6 transaction costs Acquisition related transaction 0.2 costs Contingent consideration maximum potential cash 20.0 25.0 20.0 payment Goodwill, Other Changes 1.6 Revaluation of contingent 1.6 0 (0.6) consideration Business Acquisition Contingent Consideration Potential Cash Payment 5.0 Incentive Compensation Portion Business Acquisition Contingent Consideration At 4.9 Fair Value Including Incentive Compensation Business Acquisition Contingent Consideration At 0.9 Fair Value Incentive Compensation Portion Payments of contingent $ 0 $ 0 $ 0 $ 0 $ 0 consideration arrangements [1] * As discussed above, amounts have been adjusted from the preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Restructuring (Tables) Dec. 31, 2012 Harland Clarke and Corporate [Member] Restructuring Cost and Reserve [Line Items] Components of Restructuring The following table details the components of the Company's restructuring accruals under its Accruals plans related to the Harland Clarke segment and Corporate for 2012, 2011 and 2010:

Beginning Paid in Non-cash Ending Balance Expensed Cash Utilization Balance Successor: Year ended December 31, 2012: Severance and severance-related $ 4.5 $ 8.8 $ (6.9) $ — $ 6.4 Facilities closures and other costs 3.0 2.2 (1.8) (1.0) 2.4 Total $ 7.5 $ 11.0 $ (8.7) $ (1.0) $ 8.8

Harland Financial Solutions Segment [Member] Restructuring Cost and Reserve [Line Items] Components of Restructuring The following table details the Company's restructuring accruals related to the Harland Accruals Financial Solutions segment for 2012, 2011 and 2010:

Beginning Paid in Non-cash Ending Balance Expensed Cash Utilization Balance Successor: Year ended December 31, 2012: Severance and severance-related $ — $ 0.6 $ (0.5) $ — $ 0.1 Facilities and other costs 1.5 (0.2) (0.3) 0.3 1.3 Total $ 1.5 $ 0.4 $ (0.8) $ 0.3 $ 1.4

Predecessor: Year ended December 31, 2011: Severance and severance-related $ 0.1 $ 0.3 $ (0.4) $ — $ — Facilities and other costs 2.2 0.1 (0.8) — 1.5 Total $ 2.3 $ 0.4 $ (1.2) $ — $ 1.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Year ended December 31, 2010: Severance and severance-related $ 1.0 $ 0.7 $ (1.6) $ — $ 0.1 Facilities and other costs 0.1 2.1 (0.1) 0.1 2.2 Total $ 1.1 $ 2.8 $ (1.7) $ 0.1 $ 2.3

Scantron Segment [Member] Restructuring Cost and Reserve [Line Items] Components of Restructuring The following table details the components of the Company's restructuring accruals related to Accruals the Scantron segment for 2012, 2011 and 2010:

Beginning Paid in Non-cash Ending Balance Expensed Cash Utilization Balance Successor: Year ended December 31, 2012: Severance and severance-related $ 2.0 $ 4.6 $ (3.4) $ — $ 3.2 Facilities and other costs 1.4 1.2 (1.7) — 0.9 Total $ 3.4 $ 5.8 $ (5.1) $ — $ 4.1

Predecessor: Year ended December 31, 2011: Severance and severance-related $ 0.1 $ 5.2 $ (3.3) $ — $ 2.0 Facilities and other costs 3.7 (0.7) (1.7) 0.1 1.4 Total $ 3.8 $ 4.5 $ (5.0) $ 0.1 $ 3.4 Year ended December 31, 2010: Severance and severance-related $ 0.5 $ 1.9 $ (2.3) $ — $ 0.1 Facilities and other costs — 4.7 (1.2) 0.2 3.7 Total $ 0.5 $ 6.6 $ (3.5) $ 0.2 $ 3.8

Faneuil Segment [Member] Restructuring Cost and Reserve [Line Items] Components of Restructuring The following table details the components of the Company's restructuring accruals related Accruals to the Faneuil segment for 2012 and 2010:

Predecessor: Year ended December 31, 2010: Severance and severance-related $ — $ 0.6 $ (0.6) $ — Facilities and other costs — — — — Total $ — $ 0.6 $ (0.6) $ —

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 0 Months 0 Months 0 Months 0 Months 0 Months 0 Months 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended Ended Ended Ended Ended Ended Ended Dec. 31, Dec. 31, Dec. 31, Dec. 21, Dec. 31, Dec. 31, 2011 Dec. 31, 2012 Dec. 21, 2011 Dec. 31, 2010 Business Segment 2011 Dec. 31, Dec. 21, Dec. 31, Dec. 31, Dec. 21, Dec. 31, 2011 2012 2011 2010 Harland Harland Harland Harland Dec. 31, 2011 Dec. 31, 2012 Dec. 21, 2011 Dec. 31, 2010 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Information (Details) (USD Harland 2011 2011 2010 2012 2011 2010 Dec. 31, Dec. 31, Dec. 21, Dec. 31, Harland Harland Harland Harland Financial Financial Financial Financial Scantron Scantron Scantron Scantron Faneuil Faneuil Corporate $) Dec. Financial Scantron Faneuil Faneuil Corporate Corporate Corporate Dec. 31, 2012 2011 2012 2011 2010 Clark Clark Clark Clark Solutions Solutions Solutions Solutions Segment Segment Segment Segment Segment Segment and Other In Millions, unless otherwise 31, Solutions Segment Segment Segment and Other and Other and Other Business_Segments Successor Successor PredecessorPredecessor Segment Segment Segment Segment Segment Segment Segment Segment [Member] [Member] [Member] [Member] [Member] [Member] [Member] specified 2011 Segment [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] Successor Successor Predecessor Predecessor Successor Successor Successor [Member] Predecessor Predecessor Predecessor Successor PredecessorPredecessor Successor Successor Predecessor Predecessor Successor Successor Predecessor Predecessor [Member] [Member] [Member] [Member] [Member] [Member] [Member] Predecessor [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] Business Segment Information [Abstract] Number of Reportable 4 Segments Product revenues, net: Product revenues, net $ $ $ $ $ $ $ $ $ $ $ $ $ 27.4 $ 1,273.2 $ 1,344.8 $ 23.9 [1] [1] [1] [1] $ 1.1 [1],[2] [1],[2] [1],[2] [1],[2] $ 2.4 [1],[3] [1],[3] [1],[3] [1],[3] $ 0 [1],[4] $ 6.8 [1],[4] [1],[4] [1],[4] $ 0 $ 0 $ 0 $ 0 1,285.1 1,107.9 1,092.0 1,156.6 78.6 69.4 72.0 91.8 103.2 110.3 8.6 5.9 Service revenues, net: Service revenues, net 10.3 383.8 312.8 326.4 0.4 [1] 34.5 [1] 28.1 [1] 46.5 [1] 5.2 [1],[2] 175.1 [1],[2] 210.1 [1],[2] 210.7 [1],[2] 2.0 [1],[3] 26.3 [1],[3] 14.7 [1],[3] 9.2 [1],[3] 2.7 [1],[4] 147.9 [1],[4] 59.9 [1],[4] 60.0 [1],[4] 0 0 0 0 Intersegment revenues: Intersegment revenues 0 0 0 0 0 [1] 0.2 [1] 0.1 [1] 0.3 [1] 0 [1],[2] 0 [1],[2] 0 [1],[2] 0 [1],[2] 0 [1],[3] 1.8 [1],[3] 0.3 [1],[3] 0 [1],[3] 0 [1],[4] 0.3 [1],[4] 0.3 [1],[4] 0.4 [1],[4] 0 (2.3) (0.7) (0.7) Operating income (loss):(6) Operating income (loss) (3.0) [5] 200.8 [5] 161.6 [5] 296.7 [5] (0.6) [1],[5] 214.0 [1],[5] 242.8 [1],[5] 241.2 [1],[5] (0.9) [1],[2],[5] 23.3 [1],[2],[5] 54.8 [1],[2],[5] 48.6 [1],[2],[5] (1.4) [1],[3],[5] (26.6) [1],[3],[5] (130.6) [1],[3],[5] 9.0 [1],[3],[5] 0.2 [1],[4],[5] 8.8 [1],[4],[5] 9.4 [1],[4],[5] 13.1 [1],[4],[5] (0.3) [5] (18.7) [5] (14.8) [5] (15.2) [5] Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees): (7) Depreciation and amortization (excluding amortization of debt fair value adjustments, 6.0 213.6 158.4 157.9 4.3 [1] 146.2 [1] 89.2 [1] 103.5 [1] 1.0 [1],[2] 38.4 [1],[2] 26.1 [1],[2] 28.5 [1],[2] 0.6 [1],[3] 17.9 [1],[3] 34.6 [1],[3] 20.2 [1],[3] 0.1 [1],[4],[6] 11.1 [1],[4],[6] 8.5 [1],[4],[6] 5.7 [1],[4],[6] 0 0 0 0 original issue discount and deferred financing fees): (7) Non-cash asset impairment charges: Asset impairment charges 0 1.7 111.6 3.7 0 [1] 0.8 [1] 0.6 [1] 3.7 [1] 0 [1],[2] 0.1 [1],[2] 0 [1],[2] 0 [1],[2] 0 [1],[3] 0 [1],[3] 108.3 [1],[3] 0 [1],[3] 0 [1],[4] 0.8 [1],[4] 2.7 [1],[4] 0 [1],[4] 0 0 0 0 Capital expenditures (excluding capital leases): Capital expenditures 0.1 57.8 58.6 38.6 0 36.9 39.2 24.3 0 [2] 9.6 [2] 7.0 [2] 8.3 [2] 0 [3] 6.5 [3] 11.7 [3] 5.0 [3] 0.1 [4] 4.8 [4] 0.7 [4] 1.0 [4] 0 0 0 0 (excluding capital leases) Total assets: Assets 2,986.4 3,103.73,103.7 [1],[7] 2,986.4 [1] 1,498.5 [1],[7] 1,409.4 [1] 426.7 [1],[2],[7] 413.2 [1],[2] 173.1 [1],[3],[7] 184.0 [1],[3] 114.9 [1],[4],[7] 117.0 [1],[4] 890.5 [1],[7],[8] 862.8 [1],[8] Segment Reporting Information, Additional Information [Abstract] Goodwill 761.6 758.6 Revaluation of contingent 0 (0.6) (24.3) 0.3 consideration Restructuring Charges 0 18.9 12.6 22.3 0.4 0.4 2.8 5.8 4.5 6.6 1.7 0.6 Asset impairment charges 0 1.7 111.6 3.7 0 [1] 0.8 [1] 0.6 [1] 3.7 [1] 0 [1],[2] 0.1 [1],[2] 0 [1],[2] 0 [1],[2] 0 [1],[3] 0 [1],[3] 108.3 [1],[3] 0 [1],[3] 0 [1],[4] 0.8 [1],[4] 2.7 [1],[4] 0 [1],[4] 0 0 0 0 Depreciation $ $ $ 1.9 $ 75.9 $ 40.9 $ 48.9 $ 0 [1],[4] $ 0.7 [1],[4] [1],[4] [1],[4] 0.8 0.8 [1]See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results. [2]Includes results of the acquired Parsam business from the date of acquisition. [3]Includes results of the acquired Spectrum K12 and GlobalScholar businesses from their respective dates of acquisition. [4]Includes results of the acquired Faneuil business from the date of common control. [5]Includes (gain) loss from revaluation of contingent consideration arrangements of $(0.6), $0.0, $(24.3) and $0.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and restructuring costs of $18.9, $0.0, $12.6 and $22.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, (see Note 15) and non-cash impairment charges of $1.7, $0.0, $111.6 and $3.7 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. [6]Includes allocation of depreciation of $0.7, $0.0, $0.8 and $0.8 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, from the Scantron segment to the Faneuil segment for assets that are assigned to the Scantron segment. [7]As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011. [8]Total assets include goodwill of $761.6 and $758.6 as of December 31, 2012 and 2011, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Other Postretirement Benefit 12 Months Ended Plans (Tables) Dec. 31, 2012 Other Postretirement Benefit Plans [Abstract] Changes in Accumulated The following table presents the beginning and ending balances of the APBO, the changes in Postemployment Benefit the APBO, and reconciles the plans' status to the accrued postretirement healthcare and life Obligations insurance liability reflected on the accompanying consolidated balance sheets as of December 31, 2012 and 2011:

Successor Predecessor Year ended December 22 to January 1 to December 31, December 31, December 21, 2012 2011 2011 APBO at beginning of period $ 11.4 $ 11.2 $ 10.1 Changes in APBO: Interest cost 0.5 — 0.5 Benefits paid (0.6) — (0.8) Retiree contributions 0.2 — 0.3 Health benefits subsidy — — 0.1 Actuarial loss 0.8 0.2 1.0 APBO at end of period $ 12.3 $ 11.4 $ 11.2

Included in accrued salaries, wages and employee benefits $ 0.7 $ 0.6 $ 0.6 Included in other liabilities 11.6 10.8 10.6 APBO at end of period $ 12.3 $ 11.4 $ 11.2

Changes in Fair Value of Plan The following table presents the changes in the fair value of plan assets and the funded status Assets for the periods presented:

Successor Predecessor Year ended December 22 to January 1 to December 31, December 31, December 21, 2012 2011 2011 Fair value of plan assets at beginning of period $ — $ — $ — Employer contributions 0.4 — 0.4 Retiree contributions 0.2 — 0.3 Health benefits subsidy — — 0.1 Benefits paid (0.6) — (0.8) Fair value of plan assets at end of period $ — $ — $ — Funded status $ (12.3) $ (11.4) $ (11.2)

Net Periodic Benefit Cost Not As of December 31, 2012 and 2011, amounts recognized in accumulated other yet Recognized comprehensive income (loss), which have not yet been recognized as a component of net postretirement benefit cost, consist of:

2012 2011 Unrecognized actuarial net loss $ 1.0 $ 0.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net Benefit Costs Net periodic postretirement benefit costs and other changes in benefit obligations recognized in other comprehensive income for these plans were as follows:

Successor Predecessor Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 Interest on accumulated postretirement benefit obligation $ 0.5 $ — $ 0.5 $ 0.9 Amortization of prior service credits — — (0.4) (0.1) Amortization of net actuarial loss — — — 0.1 Net postretirement benefit cost $ 0.5 $ — $ 0.1 $ 0.9 Other changes in benefit obligations recognized in other comprehensive income, before taxes: Unrecognized actuarial net loss (gain) $ 0.8 $ 0.2 $ 1.0 $ (0.6) Amortization of net actuarial loss — — — (0.1) Prior service credits — — — (8.6) Amortization of prior service credits — — 0.4 0.1 Total changes in benefit obligations recognized in other comprehensive income, before taxes $ 0.8 $ 0.2 $ 1.4 $ (9.2)

Assumptions Used Weighted average discount rates used to determine benefit obligations and net periodic benefit cost were as follows:

Successor Predecessor Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 Weighted average discount rates used to determine benefit obligations 3.63% 4.15% 4.30% 5.25% Weighted average discount rates used to determine the net periodic postretirement benefit cost 4.15% 5.25% 5.25% 5.75%

Effect of One-Percentage- The healthcare cost trend rate assumptions, which are net of participant contributions, could Point Change in Assumed have a significant effect on amounts reported. A change in the assumed trend rate of 1 percentage Health Care Cost Trend Rates point would have the following effects:

1 Percentage 1 Percentage Point Increase Point Decrease Effect on total interest cost for 2012 $ — $ —

Expected Benefit Payments The following reflects the estimated future benefit payments, net of estimated participant contributions:

2013 $ 0.7 2014 0.7 2015 0.7 2016 0.7 2017 0.7 2018-2022 3.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 0 Months 0 Months 12 Months Ended 12 Months Ended Ended Ended Dec. 31, 2012 Dec. 31, 2012 Dec. 21, 2011 Dec. 31, 2010 Successor Successor Predecessor Predecessor [Member] [Member] [Member] [Member] Dec. 31, Dec. 31, Harland Clark Faneuil Harland Clark Harland Clark Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 21, Dec. 31, Property Plant and Dec. 31, Dec. 31, Dec. 31, 2012 Dec. 31, 2011 2012 2011 Segment Segment Segment Segment 2012 2011 2011 2012 2011 2010 Equipment (Details) (USD $) 2012 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Furniture, Furniture, Dec. 31, Dec. 31, Dec. 31, 2012 Dec. 31, 2011 Assets Assets Dec. 31, Dec. 31, [Member] [Member] Dec. 21, Dec. 31, [Member] [Member] Dec. Dec. ComputerComputer Successor Successor PredecessorPredecessor In Millions, unless otherwise MachineryMachinery Leasehold Leasehold Building and Building and fixtures and fixtures and 2012 2011 Construction-Construction- Held Held 2011 2012 Fair Value, Fair Value, 2011 2010 Fair Value, Fair Value, 31, 31, software software [Member][Member] [Member] [Member] specified and and ImprovementsImprovementsImprovementsImprovementstransportationtransportation Land Land in-progress in-progress under under Successor Successor Measurements, Measurements,PredecessorPredecessorMeasurements,Measurements, 2012 2011 and and Faneuil Faneuil Faneuil Faneuil equipment equipment [Member] [Member] [Member] [Member] equipment equipment [Member][Member] [Member] [Member] Capital Capital [Member][Member] Nonrecurring Nonrecurring [Member] [Member] Nonrecurring Nonrecurring hardware hardware Segment Segment Segment Segment [Member] [Member] [Member] [Member] Leases Leases [Member] [Member] [Member] [Member] [Member] [Member] [Member][Member] [Member] [Member] [Member][Member] Asset Asset Asset Asset impairment impairment impairment impairment charges charges charges charges [Member] [Member] [Member] [Member] Property, Plant and Equipment [Line Items] Property, Plant and $ $ $ 92.3 $ 67.0 $ 91.0 $ 60.2 $ 22.2 $ 18.1 $ 29.1 $ 29.0 $ 9.1 $ 7.9 $ 8.2 $ 8.3 $ 17.6 $ 26.2 $ 4.6 $ 4.6 Equipment, Gross 269.5 216.7 Accumulated Depreciation, Depletion and Amortization, (79.5)(6.0) (1.9) (1.1) Property, Plant, and Equipment Property, plant and equipment, 190.0 210.7 net Depreciation 1.9 75.9 0 [1],[2] 0.7 [1],[2] 40.9 48.9 0.8 [1],[2] 0.8 [1],[2] Impairment of Long-Lived $ 0.6 $ 0.8 $ 0.5 $ 2.8 Assets Held-for-use [1] Includes results of the acquired Faneuil business from the date of common control. [2] See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair Value Measurements 2 12 Months Ended (Details) (Contingent consideration arrangements Dec. 31, Dec. 31, [Member], USD $) 2012 2011 In Millions, unless otherwise specified Contingent consideration arrangements [Member] Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] Balance at beginning of period $ 0.6 $ 8.2 Businesses acquired 0 17.0 Net changes in fair value (0.6) (24.3) Payment of contingent consideration 0 (0.3) Balance at end of period $ 0 $ 0.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Other Postretirement Benefit 0 Months Months 12 Months Ended Plans (Details) (Health and Ended Ended Life Insurance Benefit Plans Dec. Dec. 31, Dec. 31, Dec. 21, Dec. 31, Sep. 30, [Member], USD $) 31, 2011 2012 2011 2010 2010 In Millions, unless otherwise 2012 Successor Successor PredecessorPredecessorPredecessor specified Plans [Member][Member] [Member] [Member] [Member] Defined Benefit Plan Disclosure [Line Items] Number Of Postretirement Benefit Plans 2 Minimum number of years of service at December 31, 2000 for retirees who reitred 20 prior to December 31, 2002 to be eligible years to participate in the medical postretirement plan Weighted average discount rates used to 4.15% 3.63% 4.30% 5.25% 5.00% determine benefit obligations Defined Benefit Plan, Plan Amendments $ 7.0 Defined Benefit Plan, Benefit Obligation 11.4 12.3 11.2 10.1 Employer contributions 0 0.4 0.4 0.5 Defined Benefit Plan, Estimated Future Employer Contributions in Next Fiscal 0.7 Year Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] APBO at beginning of period 11.2 11.4 10.1 Interest cost 0 0.5 0.5 0.9 Benefits paid 0 (0.6) (0.8) Retiree contributions 0 0.2 0.3 Health benefits subsidy 0 0 0.1 Actuarial loss 0.2 0.8 1.0 APBO at end of period 11.4 12.3 11.2 10.1 Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract] Included in accrued salaries, wages and 0.6 0.7 0.6 employee benefits Included in other liabilities 10.8 11.6 10.6 APBO at end of period 11.4 12.3 11.2 Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] Fair value of plan assets at beginning of 0 0 0 period Employer contributions 0 0.4 0.4 0.5 Retiree contributions 0 0.2 0.3 Health benefits subsidy 0 0 0.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Benefits paid 0 (0.6) (0.8) Fair value of plan assets at end of period 0 0 0 0 Funded status (11.4) (12.3) (11.2) Unrecognized postretirement amounts in accumulated other comprehensive income (loss), before tax Unrecognized actuarial net loss 0.2 1.0 Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] Interest cost 0 0.5 0.5 0.9 Amortization of prior service credits 0 0 (0.4) (0.1) Amortization of net actuarial loss 0 0 0 0.1 Net postretirement benefit cost 0 0.5 0.1 0.9 Other changes in benefit obligations recognized in other comprehensive income: Unrecognized actuarial net loss (gain) 0.2 0.8 1.0 (0.6) Amortization of net actuarial loss 0 0 0 (0.1) Prior service credits 0 0 0 (8.6) Amortization of prior service credits 0 0 0.4 0.1 Total changes in benefit obligations recognized in other comprehensive 0.2 0.8 1.4 (9.2) income, before taxes Defined Benefit Plan, Assumptions Used in Calculations [Abstract] Weighted average discount rates used to determine the net periodic postretirement 5.25% 4.15% 5.25% 5.75% benefit cost Defined Benefit Plan, Assumed Health Care Cost Trend Rates [Abstract] Defined Benefit Plan, Health Care Cost 8.00% Trend Rate Assumed for Next Fiscal Year Defined Benefit Plan, Ultimate Health 5.00% Care Cost Trend Rate Defined Benefit Plan, Year that Rate 2019 Reaches Ultimate Trend Rate Defined Benefit Plan, Effect of One- Percentage Point Change in Assumed Health Care Cost Trend Rates [Abstract] One percent increase effect on total interest 0 cost for 2012 One percent decrease effect on total 0 interest cost for 2012

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document One percent increase effect on postretirement benefit obligation at 0.3 December 31, 2012 One percent decrease effect on postretirement benefit obligation at (0.2) December 31, 2012 Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract] 2013 0.7 2014 0.7 2015 0.7 2016 0.7 2017 0.7 2018-2022 $ 3.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 0 Months 12 Months Ended Accounting Policies 2 Ended (Details) (USD $) Dec. 31, Dec. 21, Dec. 31, In Millions, unless otherwise Dec. 31, 2011 2012 2011 2010 specified Software and Other Development Costs [Abstract] Research and Development Expense $ 0.1 $ 25.6 $ 29.2 $ 21.9 Machinery and equipment [Member] | Minimum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 3 years Machinery and equipment [Member] | Maximum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 15 years Computer software and hardware [Member] | Minimum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 3 years Computer software and hardware [Member] | Maximum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 5 years Leasehold Improvements [Member] | Minimum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 1 year Leasehold Improvements [Member] | Maximum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 20 years Building and Improvements [Member] | Minimum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 20 years Building and Improvements [Member] | Maximum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 30 years Furniture, fixtures and transportation equipment [Member] | Minimum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 5 years Furniture, fixtures and transportation equipment [Member] | Maximum [Member] Property, Plant and Equipment [Abstract] Property, Plant and Equipment, Useful Life 8 years

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies Dec. 31, 2012 Summary of Significant Accounting Policies [Abstract] Significant Accounting Summary of Significant Accounting Policies Policies [Text Block] Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition The Company recognizes product and service revenue when persuasive evidence of a non- cancelable arrangement exists, products have been shipped and/or services have been rendered, the price is fixed or determinable, collectability is reasonably assured, legal title and economic risk is transferred to the customer and an economic exchange has taken place. Revenues are recorded net of any applicable discounts, contract acquisition payments amortization, accrued incentives and allowances for sales returns. As a result of the accounting required in connection with the MacAndrews Acquisition, deferred revenues at December 31, 2011 represent the fair value of the cost to complete contractual obligations for which funds have already been received. Deferred revenues at December 31, 2012 represent amounts billed to the customer during 2012 in excess of amounts earned as well as the remaining balance of deferred revenues at December 31, 2011 that were not recognized as revenues in 2012. Revenues for direct response marketing services are recognized from the Company's fixed price direct mail and marketing contracts based on the proportional performance method for specific projects. For multiple-element software arrangements, total revenue is allocated to each element based on vendor specific objective evidence ("VSOE"), of its fair value represented by the price charged when the elements are sold separately. VSOE must exist for the undelivered elements to allocate the total revenue among all delivered elements and non-essential undelivered elements of the arrangement. When VSOE of fair value has been established for maintenance and professional services but not for software licenses, the residual method is used to allocate revenue to the license portion of multiple element arrangements. VSOE for certain elements of an arrangement is based upon the pricing in comparable transactions when the element is sold separately. VSOE for maintenance is primarily based upon customer renewal history when the services are sold separately. VSOE for professional services is also based upon the price charged when the services are sold separately. If the undelivered elements of the arrangement are essential to the functionality of the software product(s), revenue is deferred until the essential elements are delivered. If VSOE does not exist for one or more non-essential undelivered elements, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. If VSOE of all non-essential undelivered elements exist but VSOE does not exist for one or more of the delivered elements, revenue is recognized using the residual method. Under the residual method, the revenue for the undelivered elements is deferred based upon VSOE and the remaining portion of the arrangement fee is recognized as revenue for the delivered elements, assuming all other criteria for revenue recognition have been met. When VSOE does not exist for maintenance and/or non-essential undelivered elements of multiple element arrangements, revenue is deferred until all elements are delivered or VSOE is established for the undelivered elements, whichever is earlier.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document For licenses that are hosted (cloud services), revenue is allocated to separate units of accounting based on the hierarchy of VSOE, third-party evidence ("TPE") or relative selling price. VSOE and TPE are not available so the relative selling price is used. Under the relative selling price method the concept of the residual method is eliminated and discounts are allocated across all deliverables in proportion to the best estimated selling price. Separate units of accounting exist if they have standalone value. Standalone value exists if the Company or other vendors sell the same item separately or the customer could resell the item on a standalone basis. Standalone value exists for most individual modules of the Company's hosted licenses because they are sold separately or as a group depending on the needs of customers. For each module, revenue is deferred until related professional services are complete. If standalone value does not exist then revenue for all modules and professional services in an arrangement are deferred until services are complete. Under either scenario, once services are complete, revenue is recognized on a straight-line basis over the remaining term of the contract. For arrangements that include both licenses and cloud services, each is accounted for under its relevant guidance. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period, as defined in the applicable agreement. Each new license includes maintenance, including the right to receive telephone support, "bug fixes" and unspecified upgrades and enhancements, for a specified duration of time, usually one year. Maintenance revenue is recognized ratably over the life of the related maintenance contract. Maintenance contracts on perpetual licenses generally renew annually. Maintenance fees are typically invoiced on an annual basis prior to the anniversary date of the license. Time-based and usage-based licenses include maintenance as a bundled item that is committed for the period of the agreement. Revenue from licensing of software under usage-based contracts is recognized ratably over the term of the agreement or on an actual usage basis. Non-essential professional services revenue includes fees derived from the delivery of certain training, installation, and consulting services. Revenue from non-essential training, installation, and consulting services is recognized on a time and materials basis or after delivery is complete. Essential professional services typically involve significant production, modification or customization of the software. Revenue from essential services is combined with license revenue and recognized using either a percentage-of-completion or completed contract basis. Percentage- of-completion recognizes both license and services revenue as the services are performed using an input method based on labor hours. Estimates of efforts to complete a project are used in the percentage-of-completion calculation. Due to the uncertainties inherent in these estimates, actual results could differ from those estimates. Completed contract basis is used either when reliable estimates of effort are not available, or if VSOE does not exist for one or more elements, or if there are substantive customer acceptance provisions. Under this methodology all revenue is deferred until all services are complete, or the acceptance conditions have been met. Revenue from outsourced data processing services and other transaction processing services is recognized in the month the transactions are processed or the services are rendered. The contractual terms of software sales do not provide for product returns or allowances. However, on occasion the Company may allow for returns or allowances primarily in the case of a new product release. Provisions for estimated returns and sales allowances are established by the Company concurrently with the recognition of revenue and are based on a variety of factors including actual return and sales allowance history and projected economic conditions. Service revenues are comprised of revenues derived from software maintenance agreements, software implementation services, software as a service, field maintenance services, direct marketing services, certain contact center services, core processing service bureau deliverables, consulting services, training services, survey services, back office services, toll collection services, staffing services and other services. Customer Incentives

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company's Harland Clarke segment has contracts with certain clients that provide both fixed and volume-based incentives. These incentives are recorded as a reduction of revenues to which they apply and as accrued liabilities. Contract Acquisition Payments Certain contracts with customers of the Company's Harland Clarke segment involve upfront payments to the customer. These payments are capitalized and amortized on a straight-line basis as a reduction of revenue over the life of the related contract. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance. These payments are generally refundable from the customer on a prorated basis if the contract is canceled prior to the contract termination date. When such a termination occurs, the amounts repaid are offset against any unamortized contract acquisition payment balance related to the terminating customer, with any resulting excess reported as an increase in revenue. The Company recorded revenue related to these contract terminations of $2.2, $0.0, $7.5 and $5.8 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. Shipping and Handling Revenue received from shipping and handling fees is reflected in product revenues, net in the accompanying consolidated statements of operations. Costs related to shipping and handling are included in cost of products sold. Cash and Cash Equivalents The Company considers all cash on hand, money market funds and other highly liquid debt instruments with a maturity, when purchased, of three months or less to be cash and cash equivalents. Investments The Company has investments consisting of corporate equity securities and United States treasury securities which are classified as available-for-sale securities and are stated at fair value with unrealized gains and losses on such investments reflected net of tax, as other comprehensive income (loss). Realized gains and losses on investments are included in other (expense) income, net in the accompanying consolidated statements of operations. The cost of securities sold is based on the specific identification method. The United States treasury securities are classified as current and included in marketable securities in the accompanying consolidated balance sheets. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14. The Company also has an investment consisting of corporate equity securities which is accounted for using the equity method. Under the equity method, the original investment is recorded at cost and is adjusted periodically to recognize the Company's share of earnings and losses after the date of the acquisition. Dividends received reduce the basis of the investment. The Company's share of earnings and losses are shown as a separate line item in the accompanying consolidated statements of operations. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14. If the market value of an investment declines below its cost, the Company evaluates whether the decline is temporary or other than temporary. The Company considers several factors in determining whether a decline is temporary including the length of time market value has been below cost, the magnitude of the decline, financial prospects of the issuer or business and the Company's intention to hold the security. If a decline in market value of an investment is determined to be other than temporary, a charge to earnings is recorded for the loss and a new cost basis in the investment is established. Accounts Receivable and Allowance for Doubtful Accounts

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable losses in its existing accounts receivable based on historical losses and current economic conditions. Account balances are charged against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance sheet credit exposure related to its customers. Inventories The Company states inventories at the lower of cost or market value. The Company determines cost by average costing or the first-in, first-out method. Advertising Advertising costs, which are recorded predominately in selling, general and administrative expenses, consist mainly of marketing new and existing products, re-branding existing products and launching new initiatives throughout the Company. Direct-response advertising is capitalized and amortized over its expected period of future benefit, while all other advertising costs are expensed as incurred. Direct-response advertising consists primarily of inserts that include order coupons for products offered by a division of the Company's Harland Clarke segment, which are amortized for a period up to 18 months. These costs are amortized following their distribution, and are charged to match the advertising expense with the related revenue streams. At December 31, 2012 and 2011, the Company had prepaid advertising costs of $2.6 and $0.1, respectively, which are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. The Company's advertising expense was $20.1, $0.4, $21.5 and $19.6 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. Property, Plant and Equipment The Company states property, plant and equipment at cost. Maintenance and repairs are charged to expense as incurred. Additions, improvements and replacements that extend the asset life are capitalized. Depreciation is provided on a straight-line basis over the estimated useful lives of such assets. The Company amortizes leasehold improvements over the shorter of the useful life of the related asset or the lease term. Certain leases also contain tenant improvement allowances, which are recorded as a leasehold improvement and deferred rent and amortized over the lease term. The Company eliminates cost and accumulated depreciation applicable to assets retired or otherwise disposed of from the accounts and reflects any gain or loss on such disposition in operating results. As further discussed below, the Company capitalizes the qualifying costs incurred during the development stage on software to be sold, leased or otherwise marketed, internally developed software and software obtained for internal use and amortizes the costs over the estimated useful life of the software. The Company capitalizes interest on qualified long-term projects and depreciates it over the life of the related asset. The useful lives for computing depreciation are as follows:

Years Machinery and equipment 3 - 15 Computer software and hardware 3 - 5 Leasehold improvements 1 - 20 Buildings and improvements 20 - 30 Furniture, fixtures and transportation equipment 5 - 8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document capitalization. The amounts expensed totaled $25.6, $0.1, $29.2 and $21.9 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and were primarily costs incurred related to the development of software. Software development costs incurred for sold, leased, or otherwise marketed software prior to the establishment of technological feasibility are expensed as incurred. Software development costs incurred after establishing the technological feasibility of the subject software product and before its availability for sale are capitalized and are included in other intangible assets, net on the accompanying consolidated balance sheets. Capitalized software development costs are amortized on a product-by-product basis over the estimated economic life of the product using a straight-line method with related amortization expense in cost of products sold on the accompanying consolidated statements of operations. Unamortized software development costs in excess of estimated net realizable value from a particular product are written down to their estimated net realizable value. The Company capitalizes costs to develop or obtain computer software for internal use once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll- related costs for employees who are directly associated with and who devote time to the internal- use software project and (3) interest costs incurred, when significant, while developing internal- use software. Capitalization of costs ceases when the project is substantially complete and ready for its intended use and is included in property, plant and equipment, net on the accompanying consolidated balance sheets. Capitalized costs to develop or obtain computer software for internal use are amortized over the estimated useful life using a straight-line method with related amortization expense in cost of revenues and selling, general and administrative expenses on the accompanying consolidated statements of operations. Goodwill and Acquired Intangible Assets Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets acquired. Acquired intangibles are recorded at fair value as of the date acquired. Goodwill and other intangibles determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired, such as a significant adverse change in the business climate. The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of the Company's reporting units. The Company utilizes both the income and market approaches to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit's estimated cost of equity and debt ("cost of capital") derived using, both known and estimated, customary market metrics. The Company performs sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies; evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies; and applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. The Company weights the results of the income and market approaches equally, except where guideline companies are not similar enough to provide a reasonable value using the market approach. When that occurs, the market approach is weighted less than the income approach. If the estimated fair value of a reporting unit is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of the Company's "implied fair value" requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to the corresponding carrying value. The results of the Company's annual test for 2012 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values. The Company's step one annual impairment test for 2011 indicated goodwill impairment for the Scantron reporting unit as the estimated fair value for the Scantron reporting unit was less than its carrying value. The Company performed the second step of the test to determine the "implied fair value" of goodwill for the Scantron reporting unit, resulting in a non-cash impairment charge of $102.2 (see Notes 7 and 13 regarding the non-cash goodwill impairment charge recorded in 2011). No goodwill impairment was indicated for the Company's other two reporting units as a result of the 2011 test. The results of the Company's annual test for 2010 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values. The Company measures impairment of its indefinite-lived tradename based on the relief- from-royalty-method. Under the relief-from-royalty method of the income approach, the value of an intangible asset is determined by quantifying the cost savings a company obtains by owning, as opposed to licensing, the intangible asset. Assumptions about royalty rates are based on the rates at which similar tradenames are licensed in the marketplace. The Company also re-evaluates the useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life. In 2011, an impairment charge was recorded and the useful life for the Scantron reporting unit tradename was reclassified from an indefinite life to a definite life of 15 years (see Notes 7 and 13). The annual impairment evaluations for goodwill and the indefinite-lived intangible asset involve significant estimates made by management. The discounted cash flow analyses require various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Changes in estimates could have a material effect on the carrying amount of goodwill and indefinite-lived intangible assets in future periods. Intangible assets that are deemed to have a finite life are amortized over their estimated useful life generally using accelerated methods that are based on expected cash flows. They are also evaluated for impairment as discussed below in "Long-Lived Assets." Costs to renew or extend the term of a recognized intangible asset are expensed as incurred and are not significant. Long-Lived Assets When events or changes in circumstances indicate that the carrying amount of a long-lived asset other than goodwill and indefinite-lived intangible assets may not be recoverable, the Company assesses the recoverability of such asset based on estimates of future undiscounted cash flows compared to net book value. If the future undiscounted cash flow estimates are less than net book value, net book value would then be reduced to estimated fair value, which generally approximates discounted cash flows. The Company also evaluates the amortization periods of assets to determine whether events or circumstances warrant revised estimates of useful lives. Assets held for sale are carried at the lower of carrying amount or fair value, less estimated costs to sell such assets. Income and Other Taxes The Company computes income taxes under the liability method. Under the liability method, the Company generally determines deferred income taxes based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company records net deferred tax assets when it is more likely than not that it will realize the tax benefits.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As part of the process of preparing its consolidated financial statements, the Company is required to calculate the amount of income tax in each jurisdiction in which it operates. On a regular basis, the amount of taxable income is reviewed by various federal, state and foreign taxing authorities. As such, the Company routinely provides reserves for unrecognized tax benefits for items that it believes could be challenged by these taxing authorities. The Company records any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer, which may include, but is not limited to, sales, use, value added, and excise taxes, on a net basis in the accompanying consolidated statements of operations. Pensions and Other Postretirement Benefits The Company has defined benefit postretirement plans and defined contribution 401(k) plans, which cover certain current and former employees of the Company who meet eligibility requirements. The Company recognizes in its balance sheet the funded status of its defined benefit postretirement benefit plans, measured as the difference between the fair value of the plan assets and the benefit obligation and recognizes changes in the funded status of a defined benefit postretirement benefit plan within accumulated other comprehensive income (loss), net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost (see Note 10). Translation of Foreign Currencies The functional currency for each of the Company's foreign subsidiaries is its local currency. The Company translates all assets and liabilities denominated in foreign functional currencies into United States dollars at rates of exchange in effect at the balance sheet date and statement of operations items at the average rates of exchange prevailing during the period. The Company records translation gains and losses as a component of accumulated other comprehensive income (loss) in the stockholder's equity section of the Company's balance sheets. Gains and losses resulting from transactions in other than functional currencies are reflected in operating results, except for transactions of a long-term nature. The Company considers undistributed earnings of certain foreign subsidiaries to be permanently invested. As a result, no income taxes have been provided on these undistributed earnings or on the foreign currency translation adjustments recorded as a part of other comprehensive income (loss). Self-Insurance The Company is self-insured for certain workers' compensation and group medical costs subject to stop-loss limits. Provisions for losses expected under these programs are recorded based on the Company's estimates of the aggregate liabilities for the claims incurred. Payments for estimated claims beyond one year have been discounted. As of December 31, 2012 and 2011, the combined liabilities for self-insured workers' compensation and group medical were $10.0 and $9.5, respectively. Derivative Financial Instruments The Company uses derivative financial instruments to manage interest rate risk related to a portion of its long-term debt. The Company recognizes all derivatives at fair value as either assets or liabilities in the consolidated balance sheets and changes in the fair values of such instruments are recognized in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, the Company recognizes the changes in fair value of these instruments in other comprehensive income (loss) until the underlying debt instrument being hedged is settled or the Company determines that the specific hedge accounting criteria are no longer met. On the date the interest rate derivative contract is entered into, the Company designates the derivative as either a fair value hedge or a cash flow hedge. The Company formally documents the relationship between hedging instruments and the hedged items, as well as its risk- management objectives and strategy for undertaking various hedge transactions. The Company

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. The Company links all hedges that are designated as cash flow hedges to forecasted transactions or to liabilities on the balance sheet. The Company also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. If an existing derivative were to become not highly effective as a hedge, the Company would discontinue hedge accounting prospectively. Deferred Financing Fees Deferred financing fees are being amortized to interest expense using the effective interest method over the term of the respective financing agreements. Unamortized balances are reflected in other assets in the accompanying consolidated balance sheets and were $11.7 and $0.1 as of December 31, 2012 and 2011, respectively. As part of the accounting required in connection with the MacAndrews Acquisition (see Note 3), unamortized balances were recorded at $0.0 in December 2011 in accordance with applicable accounting guidance. Restructuring Charges The Company has restructuring costs related primarily to facility consolidations and workforce rationalization. The costs primarily consist of employee termination benefits which are accrued when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. In addition to employee termination benefits and facility closure costs, other restructuring costs include, but are not limited to, equipment moves, training and travel, which are expensed as incurred. Additional restructuring charges related to the Company's existing operations will be incurred as the Company completes its restructuring plans. Fair Value Measurements The Company measures fair value using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (see Note 13). Reclassifications Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2012. These reclassifications had no effect on previously reported net income. Prior period amounts have been reclassified in Notes 7, 15 and 19 in accordance with applicable accounting guidance to reflect the business segment changes described in Note 1 above. Prior period deferred revenues have been reclassified between current and non-current based on further review of fair value adjustments related to the MacAndrews Acquisition. Recently Adopted Accounting Guidance Effective January 1, 2012, the Company adopted amended guidance related to the requirement for an annual goodwill impairment test. The amendment provides entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. This amendment affects testing steps only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows. Effective January 1, 2012, the Company adopted amended guidance related to the presentation of comprehensive income. The amendment requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two separate but consecutive statements. It eliminates the option to report other comprehensive income and its components as part of the statement of changes in shareholder's equity. This amendment affects presentation and disclosure only, and therefore adoption did not affect the Company's consolidated financial position, results of operations or cash flows.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Effective January 1, 2012, the Company adopted amended guidance related to fair value measurement. The guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between United States generally accepted accounting principles and International Financial Reporting Standards. The adoption of this amended guidance did not have a material effect on the Company's consolidated financial position, results of operations, cash flows or related disclosures. New Accounting Guidance In July 2012, the Financial Accounting Standards Board amended its guidance related to the testing of indefinite-lived intangible assets for impairment. Under this standard, entities testing indefinite-lived intangible assets for impairment now have an option of performing a qualitative assessment to determine whether further impairment testing is necessary. If an entity determines, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset is more-likely-than-not less than the carrying amount, the existing quantitative impairment test is required. Otherwise, no further impairment testing is required. For the Company, this amended guidance is effective beginning January 1, 2013, with early adoption permitted under certain conditions. As this amendment affects testing steps only, the adoption of this standard will not have a material impact on the Company's consolidated results of operations or financial condition.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 12 0 Months 0 Months 12 Months 1 Months Ended Months Months Ended Ended Ended Ended Ended Apr. 04, Apr. 04, Jul. 24, Jul. 24, Apr. 04, Jul. 24, 2007 2007 2012 2012 2007 2012 Non- Non- Extended Extended Non- Extended Extended Extended Jan. 25, Term Term Extended Jan. 25, Term Term Term 2012 Loans Loans Term 2012 Loans Loans Loans Faneuil Apr. 04, [Member][Member] Loans May 01, 2007 Jul. 24, Jul. 24, Faneuil [Member] Dec. 31, Apr. 04, [Member][Member] Jul. 24, Revolving Jan. 25, Dec. 31, Dec. 31, Jan. 25, 2007 Jul. 24, Dec. 31, Apr. 04, Secured Secured [Member] Dec. 31, Apr. 04, Apr. 04, Senior Floating Dec. 31, Dec. 31, May 01, 2012 2012 Revolving Dec. 31, Dec. 31, Mar. 31, Mar. 31, Apr. 04, Secured 2012 2007 Secured Secured Dec. 31, Apr. 04, Dec. 31, Dec. 31, May 01, Dec. 31, Jul. 24, Dec. 31, 2012 Credit 2012 2011 2012 2012 Long-Term Debt 1 (Details) 1,900.0 Jul. 24, 2012 2012 2007 Debt Debt Dec. 31, Jul. 24, Dec. 31, Secured 2012 2007 2007 Rate Notes due 2012 2011 2007 9.75% 9.75% Dec. 31, Dec. 31, Credit 2012 2011 2012 2011 2007 Dec. 31, Jul. 24, Dec. 31, Debt Non- Non- Debt Debt Dec. 31, 2012 2007 2012 2011 2007 2012 2012 2011 9.75% Facility Faneuil Faneuil Revolving Revolving (USD $) Senior 2012 Extended Extended Extended [Member][Member] 2012 2012 2011 Debt Revolving Revolving Subfacility May 01, 2007 2015 [Member] 9.50% 9.50% 9.50% Senior Senior 2012 2011 Facility 1,900.0 1,900.0 Term Term Term 2012 2012 2011 [Member] Extended Extended [Member][Member] 2012 Letter of Letter of Senior Senior Senior 9.75% 9.75% 9.75% Senior [Member] Revolving Revolving Credit Credit In Millions, unless otherwise Dec. Dec. Apr. Secured Total Term Term Term Option 1 Option 1 Non- Non- Non- [Member] Credit Credit Swing Senior Applicable Senior Senior Senior Secured Secured Faneuil Faneuil [Member] Senior Senior Loan Loan Loan Extended Extended Extended Option 2 Term Term Option 1 Option 1 Revolving Credit Credit Floating Floating Floating Senior Senior Senior Secured Faneuil Credit Credit Agreement Agreement specified 31, 31, 04, Credit Extended Loans Loans Loans Rate Per Rate Per Extended Extended Extended Option 2 Facility Facility Loans Subordinated LIBOR Rate As Fixed Fixed Fixed Notes due Notes due Revolving Revolving Faneuil Secured Secured [Member][Member][Member] Term Term Term Rate Per Loans Loans Rate Per Rate Per Credit [Member][Member] Rate Rate Rate Secured Secured Secured Notes due Option 2 Facility Facility With With 2012 2011 2007 Facilities Term [Member][Member][Member] Annum Annum Term Term Term Rate Per [Member][Member] [Member] Notes Defined in the Rate Rate Rate 2018 2018 Credit Credit Option 1 Credit Credit Secured Secured Secured Loans Loans Loans Annum [Member][Member] Annum Annum Facility Secured Secured Notes due Notes due Notes due Notes due Notes due Notes due 2018 Rate Per [Member][Member]MacandrewsMacandrews [Member] Loans Secured Secured Secured equal to equal to Loans Loans Loans Annum Secured Secured Secured [Member] Indenture Notes due Notes due Notes due [Member][Member] Facility Facility Rate Per Facilities Facilities Debt Debt Debt [Member][Member][Member] equal to Secured Secured equal to equal to [Member] Debt Debt 2015 2015 2015 2018 2018 2018 [Member] Annum Secured Secured & Forbes & Forbes Secured [Member] Debt Debt Debt the the [Member][Member][Member] equal to Debt Debt Debt Subject To a 2015 2015 2015 For 2014 Secured [Member][Member] Annum [Member][Member] [Member][Member][Member] [Member] Debt Debt the the [Member][Member] [Member][Member][Member] [Member][Member][Member] For 2013 Equal To Debt Debt Group Llc Group Llc Debt [Member][Member][Member] higher of higher of [Member] [Member][Member] [Member] Floor of [Member][Member][Member] and After Debt Equal To Reserve [Member][Member] higher of higher of [Member] [Member][Member][Member] [Member] [Member] [Member] [Member][Member] Reserve 1.25%[Member] [Member][Member] [Member] Adjusted [Member][Member] Prime Federal Prime Adjusted LIBOR LIBOR Federal Prime Rate Funds Rate of LIBOR [Member] Interest Funds Rate of [Member] Rate Plus Credit Interest Rate Rate Plus Credit 0.5% Suisse Rate [Member] 0.5% Suisse [Member][Member] [Member] [Member][Member] Debt Instrument [Line Items] Secured Debt $ 1,406.0 $ 1,719.0 $ 973.0 $ 677.4 $ 692.8 $ 0 $ 728.6 $ 729.0 $ 1,719.0 $ 0 $ 235.0 $ 0 $ 0 $ 25.6 Subordinated Debt 204.3 204.3 271.3 271.3 Capital Lease Obligations 3.1 4.5 Unamortized original issue discount and acquisition (271.9) (412.7) accounting-related fair value discount Less current maturities (78.5) (45.1) Long-term debt, net of current 1,769.31,766.9 maturities Springing maturity date expressed in number of days 90 days prior to the maturity date of 2015 Senior Notes Repayments of Long-term 280.2 25.6 Debt Annual Repayment of a Loan Expressed as a Percentage of 10.00% 1.00% the Original Principal Amount Debt Instrument, Interest Rate 5.50% 2.70% 6.00% at Period End Fixed Percentage added to Federal Funds Rate prior to 0.50% 0.50% Applicable Margin Percentage Applicable Margin Percentage Added to Interest Rate Index 4.25% 4.25% 5.25% 1.50% 1.50% 2.50% 4.75% 2.50% (1.25%) to determine Interest Rate Original Loan Principal 1,800.0 Amount Line of Credit Facility, Maximum Borrowing 100.0 60.0 30.0 35.5 25.0 Capacity Debt Instrument, Unused 92.2 Borrowing Capacity, Amount Letters of Credit Outstanding, 7.8 Amount Aggregate Principal Amount Of Incremental Indebtedness 250.0 Permitted Under Certain Circumstances Line of Credit Facility, Unused Capacity, Commitment Fee 0.50% Percentage Debt, Weighted Average 2.51% Interest Rate Percent of Outstanding Voting 65.00% Stock Percentage Of Excess Cash Flow As Defined In The 50.00% Credit Agreement Percentage Of The Net Proceeds Of Certain Issuances, 100.00% Offerings Or Placements Of Debt Obligations Excess Cash Flow Prepayment 12.5 3.5 of Long-term debt Percentage of Principal Amt to be Prepaid with proceeds of 100.00% certain asset sales Percentage of Outstanding principal Amount to Prepay if 101.00% 101.00% Change of Control Occurs Percentage of Principal Amount to be prepaid with 100.00% proceeds of certain asset sales Debt Instrument, Face Amount 305.0 310.0 235.0 Debt Instrument, Interest Rate, 9.50% 9.75% Stated Percentage Floor Interest Index Rate Percentage Of A Variable 1.25% Interest Rate Instrument Secured Debt Ratio Threshold 3.25 3 Amt of Notes Required to be Repurchased by Company (If Greater Than 50% of Excess 15.0 Cash Flows) in the event secured leverage ratio exceeds certain levels Percentage of Excess Cash Flows to be used to 50.00% Repurchase Notes Redemption Price Expressed As a Percentage of Principal 100.00% Amt Line of Credit Facility, Interest 3.25% Rate at Period End Extinguishment of Faneuil $ 25.0 debt to parent

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Commitments and 12 Months Ended Contingencies (Tables) Dec. 31, 2012 Commitments and Contingencies [Abstract] Future Minimum Lease Payments Under At December 31, 2012, future minimum lease payments under non-cancelable Non-Cancelable Operating Leass operating leases with terms of one year or more are as follows: 2013 $ 26.0 2014 20.0 2015 12.1 2016 10.3 2017 7.6 Thereafter 6.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies (Policies) Dec. 31, 2012 Summary of Significant Accounting Policies [Abstract] Consolidation The consolidated financial statements include the accounts of the Company and its majority- owned subsidiaries after the elimination of all material intercompany accounts and transactions. The Company has consolidated the results of operations and accounts of businesses acquired from the date of acquisition or the date of common control (see Note 3).

Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition The Company recognizes product and service revenue when persuasive evidence of a non- cancelable arrangement exists, products have been shipped and/or services have been rendered, the price is fixed or determinable, collectability is reasonably assured, legal title and economic risk is transferred to the customer and an economic exchange has taken place. Revenues are recorded net of any applicable discounts, contract acquisition payments amortization, accrued incentives and allowances for sales returns. As a result of the accounting required in connection with the MacAndrews Acquisition, deferred revenues at December 31, 2011 represent the fair value of the cost to complete contractual obligations for which funds have already been received. Deferred revenues at December 31, 2012 represent amounts billed to the customer during 2012 in excess of amounts earned as well as the remaining balance of deferred revenues at December 31, 2011 that were not recognized as revenues in 2012. Revenues for direct response marketing services are recognized from the Company's fixed price direct mail and marketing contracts based on the proportional performance method for specific projects. For multiple-element software arrangements, total revenue is allocated to each element based on vendor specific objective evidence ("VSOE"), of its fair value represented by the price charged when the elements are sold separately. VSOE must exist for the undelivered elements to allocate the total revenue among all delivered elements and non-essential undelivered elements of the arrangement. When VSOE of fair value has been established for maintenance and professional services but not for software licenses, the residual method is used to allocate revenue to the license portion of multiple element arrangements. VSOE for certain elements of an arrangement is based upon the pricing in comparable transactions when the element is sold separately. VSOE for maintenance is primarily based upon customer renewal history when the services are sold separately. VSOE for professional services is also based upon the price charged when the services are sold separately. If the undelivered elements of the arrangement are essential to the functionality of the software product(s), revenue is deferred until the essential elements are delivered. If VSOE does not exist for one or more non-essential undelivered elements, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. If VSOE of all non-essential undelivered elements exist but VSOE does not exist for one or more of the delivered elements, revenue is recognized using the residual method. Under the residual method, the revenue for the undelivered elements is deferred based upon VSOE and the remaining portion of the arrangement fee is recognized as revenue for the delivered elements, assuming all other criteria for revenue recognition have been met. When VSOE does not exist for maintenance and/or non-essential undelivered elements of multiple element arrangements, revenue is deferred until all elements are delivered or VSOE is established for the undelivered elements, whichever is earlier.

Cash and Cash Equivalents The Company considers all cash on hand, money market funds and other highly liquid debt instruments with a maturity, when purchased, of three months or less to be cash and cash equivalents.

Investments The Company has investments consisting of corporate equity securities and United States treasury securities which are classified as available-for-sale securities and are stated at fair value with unrealized gains and losses on such investments reflected net of tax, as other comprehensive income (loss). Realized gains and losses on investments are included in other (expense) income, net in the accompanying consolidated statements of operations. The cost of securities sold is based on the specific identification method. The United States treasury securities are classified as current and included in marketable securities in the accompanying consolidated balance sheets. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14. The Company also has an investment consisting of corporate equity securities which is accounted for using the equity method. Under the equity method, the original investment is recorded at cost and is adjusted periodically to recognize the Company's share of earnings and losses after the date of the acquisition. Dividends received reduce the basis of the investment. The Company's share of earnings and losses are shown as a separate line item in the accompanying consolidated statements of operations. The corporate equity securities are classified as noncurrent and are included in other assets in the accompanying consolidated balance sheets. See Note 14. If the market value of an investment declines below its cost, the Company evaluates whether the decline is temporary or other than temporary. The Company considers several factors in determining whether a decline is temporary including the length of time market value has been below cost, the magnitude of the decline, financial prospects of the issuer or business and the Company's intention to hold the security. If a decline in market value of an investment is determined to be other than temporary, a charge to earnings is recorded for the loss and a new cost basis in the investment is established.

Accounts Receivable and Trade accounts receivable are recorded at the invoiced amount and generally do not bear Allowance for Doubtful interest. The allowance for doubtful accounts is the Company's best estimate of the amount of Accounts probable losses in its existing accounts receivable based on historical losses and current economic conditions. Account balances are charged against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance sheet credit exposure related to its customers.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Inventories The Company states inventories at the lower of cost or market value. The Company determines cost by average costing or the first-in, first-out method.

Advertising Advertising costs, which are recorded predominately in selling, general and administrative expenses, consist mainly of marketing new and existing products, re-branding existing products and launching new initiatives throughout the Company. Direct-response advertising is capitalized and amortized over its expected period of future benefit, while all other advertising costs are expensed as incurred. Direct-response advertising consists primarily of inserts that include order coupons for products offered by a division of the Company's Harland Clarke segment, which are amortized for a period up to 18 months. These costs are amortized following their distribution, and are charged to match the advertising expense with the related revenue streams.

Years Machinery and equipment 3 - 15 Computer software and hardware 3 - 5 Leasehold improvements 1 - 20 Buildings and improvements 20 - 30 Furniture, fixtures and transportation equipment 5 - 8

Software and Other The Company expenses research and development expenditures as incurred, including Development Costs expenditures related to the development of software products that do not qualify for capitalization. The amounts expensed totaled $25.6, $0.1, $29.2 and $21.9 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and were primarily costs incurred related to the development of software. Software development costs incurred for sold, leased, or otherwise marketed software prior to the establishment of technological feasibility are expensed as incurred. Software development costs incurred after establishing the technological feasibility of the subject software product and before its availability for sale are capitalized and are included in other intangible assets, net on the accompanying consolidated balance sheets. Capitalized software development costs are amortized on a product-by-product basis over the estimated economic life of the product using a straight-line method with related amortization expense in cost of products sold on the accompanying consolidated statements of operations. Unamortized software development costs in excess of estimated net realizable value from a particular product are written down to their estimated net realizable value. The Company capitalizes costs to develop or obtain computer software for internal use once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document services consumed in developing or obtaining internal-use software, (2) payroll and payroll- related costs for employees who are directly associated with and who devote time to the internal- use software project and (3) interest costs incurred, when significant, while developing internal- use software. Capitalization of costs ceases when the project is substantially complete and ready for its intended use and is included in property, plant and equipment, net on the accompanying consolidated balance sheets. Capitalized costs to develop or obtain computer software for internal use are amortized over the estimated useful life using a straight-line method with related amortization expense in cost of revenues and selling, general and administrative expenses on the accompanying consolidated statements of operations.

Goodwill and Acquired Goodwill represents the excess of consideration transferred over the fair value of identifiable Intangible Assets net assets acquired. Acquired intangibles are recorded at fair value as of the date acquired. Goodwill and other intangibles determined to have an indefinite life are not amortized, but are tested for impairment annually in the fourth quarter, or when events or changes in circumstances indicate that the assets might be impaired, such as a significant adverse change in the business climate. The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of the Company's reporting units. The Company utilizes both the income and market approaches to estimate the fair value of the reporting units. The income approach involves discounting future estimated cash flows. The discount rate used is the value-weighted average of the reporting unit's estimated cost of equity and debt ("cost of capital") derived using, both known and estimated, customary market metrics. The Company performs sensitivity tests with respect to growth rates and discount rates used in the income approach. In applying the market approach, valuation multiples are derived from historical and projected operating data of selected guideline companies; evaluated and adjusted, if necessary, based on the strengths and weaknesses of the reporting unit relative to the selected guideline companies; and applied to the appropriate historical and/or projected operating data of the reporting unit to arrive at an indication of fair value. The Company weights the results of the income and market approaches equally, except where guideline companies are not similar enough to provide a reasonable value using the market approach. When that occurs, the market approach is weighted less than the income approach. If the estimated fair value of a reporting unit is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of the Company's "implied fair value" requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to the corresponding carrying value. The results of the Company's annual test for 2012 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values. The Company's step one annual impairment test for 2011 indicated goodwill impairment for the Scantron reporting unit as the estimated fair value for the Scantron reporting unit was less than its carrying value. The Company performed the second step of the test to determine the "implied fair value" of goodwill for the Scantron reporting unit, resulting in a non-cash impairment charge of $102.2 (see Notes 7 and 13 regarding the non-cash goodwill impairment charge recorded in 2011). No goodwill impairment was indicated for the Company's other two reporting units as a result of the 2011 test. The results of the Company's annual test for 2010 indicated no goodwill impairment as the estimated fair values for each reporting unit were greater than the carrying values. The Company measures impairment of its indefinite-lived tradename based on the relief- from-royalty-method. Under the relief-from-royalty method of the income approach, the value of an intangible asset is determined by quantifying the cost savings a company obtains by owning, as opposed to licensing, the intangible asset. Assumptions about royalty rates are based on the rates at which similar tradenames are licensed in the marketplace. The Company also re-evaluates

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life. In 2011, an impairment charge was recorded and the useful life for the Scantron reporting unit tradename was reclassified from an indefinite life to a definite life of 15 years (see Notes 7 and 13). The annual impairment evaluations for goodwill and the indefinite-lived intangible asset involve significant estimates made by management. The discounted cash flow analyses require various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Changes in estimates could have a material effect on the carrying amount of goodwill and indefinite-lived intangible assets in future periods. Intangible assets that are deemed to have a finite life are amortized over their estimated useful life generally using accelerated methods that are based on expected cash flows. They are also evaluated for impairment as discussed below in "Long-Lived Assets." Costs to renew or extend the term of a recognized intangible asset are expensed as incurred and are not significant.

Long-Lived Assets When events or changes in circumstances indicate that the carrying amount of a long-lived asset other than goodwill and indefinite-lived intangible assets may not be recoverable, the Company assesses the recoverability of such asset based on estimates of future undiscounted cash flows compared to net book value. If the future undiscounted cash flow estimates are less than net book value, net book value would then be reduced to estimated fair value, which generally approximates discounted cash flows. The Company also evaluates the amortization periods of assets to determine whether events or circumstances warrant revised estimates of useful lives. Assets held for sale are carried at the lower of carrying amount or fair value, less estimated costs to sell such assets.

Income and Other Taxes The Company computes income taxes under the liability method. Under the liability method, the Company generally determines deferred income taxes based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company records net deferred tax assets when it is more likely than not that it will realize the tax benefits.

Pensions and Other The Company has defined benefit postretirement plans and defined contribution 401(k) Postretirement Benefits plans, which cover certain current and former employees of the Company who meet eligibility requirements. The Company recognizes in its balance sheet the funded status of its defined benefit postretirement benefit plans, measured as the difference between the fair value of the plan assets and the benefit obligation and recognizes changes in the funded status of a defined benefit postretirement benefit plan within accumulated other comprehensive income (loss), net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost (see Note 10).

Translation of Foreign The functional currency for each of the Company's foreign subsidiaries is its local currency. Currencies The Company translates all assets and liabilities denominated in foreign functional currencies

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document into United States dollars at rates of exchange in effect at the balance sheet date and statement of operations items at the average rates of exchange prevailing during the period. The Company records translation gains and losses as a component of accumulated other comprehensive income (loss) in the stockholder's equity section of the Company's balance sheets. Gains and losses resulting from transactions in other than functional currencies are reflected in operating results, except for transactions of a long-term nature. The Company considers undistributed earnings of certain foreign subsidiaries to be permanently invested. As a result, no income taxes have been provided on these undistributed earnings or on the foreign currency translation adjustments recorded as a part of other comprehensive income (loss).

Self-Insurance The Company is self-insured for certain workers' compensation and group medical costs subject to stop-loss limits. Provisions for losses expected under these programs are recorded based on the Company's estimates of the aggregate liabilities for the claims incurred. Payments for estimated claims beyond one year have been discounted.

Derivative Financial The Company uses derivative financial instruments to manage interest rate risk related to a Instruments portion of its long-term debt. The Company recognizes all derivatives at fair value as either assets or liabilities in the consolidated balance sheets and changes in the fair values of such instruments are recognized in earnings unless specific hedge accounting criteria are met. If specific cash flow hedge accounting criteria are met, the Company recognizes the changes in fair value of these instruments in other comprehensive income (loss) until the underlying debt instrument being hedged is settled or the Company determines that the specific hedge accounting criteria are no longer met. On the date the interest rate derivative contract is entered into, the Company designates the derivative as either a fair value hedge or a cash flow hedge. The Company formally documents the relationship between hedging instruments and the hedged items, as well as its risk- management objectives and strategy for undertaking various hedge transactions. The Company links all hedges that are designated as fair value hedges to specific assets or liabilities on the balance sheet or to specific firm commitments. The Company links all hedges that are designated as cash flow hedges to forecasted transactions or to liabilities on the balance sheet. The Company also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. If an existing derivative were to become not highly effective as a hedge, the Company would discontinue hedge accounting prospectively.

Deferred Financing Fees Deferred financing fees are being amortized to interest expense using the effective interest method over the term of the respective financing agreements.

Restructuring Charges The Company has restructuring costs related primarily to facility consolidations and workforce rationalization. The costs primarily consist of employee termination benefits which are accrued when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. In addition to employee termination benefits and facility closure costs, other restructuring costs include, but are not limited to, equipment moves, training and travel, which are expensed as incurred. Additional restructuring charges related to the Company's existing operations will be incurred as the Company completes its restructuring plans.

Fair Value Measurements The Company measures fair value using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (see Note 13).

Reclassifications Certain amounts in previously issued financial statements have been reclassified to conform with the presentation in the consolidated balance sheet for 2012. These reclassifications had no effect on previously reported net income. Prior period amounts have been reclassified in Notes 7, 15 and 19 in accordance with applicable accounting guidance to reflect the business segment changes described in Note 1 above. Prior period deferred revenues have been reclassified

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document between current and non-current based on further review of fair value adjustments related to the MacAndrews Acquisition.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Valuation And Qualifying 12 Months Ended Accounts Dec. 31, 2012 Valuation and Qualifying Accounts [Abstract] Schedule of Valuation and Qualifying Schedule II - Valuation and Qualifying Accounts and Reserves Accounts Disclosure [Text Block] (in millions) The following is a summary of the valuation and qualifying accounts and reserves for the period from January 2010 to 2012.

Effect of Balance Beginning Acquisition Amounts Written Ending Balance Accounting Reserved Off Balance Allowance for Doubtful Accounts and Sales Returns and Allowance Reserves Year Ended December 31, 2012 $ 1.8 $ — $ 3.1 $ (3.4) $ 1.5 December 22 to December 31, 2011 $ 3.0 $ (1.2) $ 0.2 $ (0.2) $ 1.8 January 1 to December 21, 2011 $ 2.8 $ — $ 1.7 $ (1.5) $ 3.0 Year Ended December 31, 2010 $ 3.0 $ — $ 4.0 $ (4.2) $ 2.8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes 1 (Details) 0 Months Ended 12 Months Ended (USD $) Dec. 31, 2011 Dec. 31, 2012 Dec. 21, 2011 Dec. 31, 2010 In Millions, unless otherwise Successor Successor Predecessor Predecessor specified [Member] [Member] [Member] [Member] Income Taxes [Line Items] Domestic $ (9.7) $ (55.7) $ 69.1 $ 185.6 Foreign 0 1.3 1.3 (3.6) (Loss) income before income (9.7) (54.4) 70.4 182.0 taxes Current: Federal 2.0 88.3 61.2 83.8 State and local 0.3 18.3 14.6 15.8 Foreign 0 0.6 0.9 0.1 Current Income Tax Expense 2.3 107.2 76.7 99.7 (Benefit) Deferred: Federal (5.5) (114.3) (29.8) (28.7) State and local (0.6) (12.1) (5.6) (3.0) Foreign 0 (0.2) (0.1) (0.2) Deferred Income Tax Expense (6.1) (126.6) (35.5) (31.9) (Benefit) Total (benefit) provision for $ (3.8) $ (19.4) $ 41.2 $ 67.8 income taxes

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Business Segment 12 Months Ended Information (Tables) Dec. 31, 2012 Business Segment Information [Abstract] Business Segment Information Selected summarized financial information for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010 is as follows:

Harland Corporate Harland Financial and Clarke(1) Solutions(1)(2) Scantron(1)(3) Faneuil(1)(4) Other(5) Total Successor Product revenues, net: 2012 $1,107.9 $ 78.6 $ 91.8 $ 6.8 $ — $1,285.1 December 22 to December 31, 2011 23.9 1.1 2.4 — — 27.4 Service revenues, net: 2012 $ 34.5 $ 175.1 $ 26.3 $ 147.9 $ — $ 383.8 December 22 to December 31, 2011 0.4 5.2 2.0 2.7 — 10.3 Intersegment revenues: 2012 $ 0.2 $ — $ 1.8 $ 0.3 $ (2.3) $ — December 22 to December 31, 2011 — — — — — — Operating income (loss):(6) 2012 $ 214.0 $ 23.3 $ (26.6) $ 8.8 $ (18.7) $ 200.8 December 22 to December 31, 2011 (0.6) (0.9) (1.4) 0.2 (0.3) (3.0) Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees): (7) 2012 $ 146.2 $ 38.4 $ 17.9 $ 11.1 $ — $ 213.6 December 22 to December 31, 2011 4.3 1.0 0.6 0.1 — 6.0 Non-cash asset impairment charges: 2012 $ 0.8 $ 0.1 $ — $ 0.8 $ — $ 1.7 December 22 to December 31, 2011 — — — — — — Capital expenditures (excluding capital leases): 2012 $ 36.9 $ 9.6 $ 6.5 $ 4.8 $ — $ 57.8 December 22 to December 31, 2011 — — — 0.1 — 0.1

Predecessor Product revenues, net:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document January 1 to December 21, 2011 $1,092.0 $ 69.4 $ 103.2 $ 8.6 $ — $1,273.2 2010 1,156.6 72.0 110.3 5.9 — 1,344.8 Service revenues, net: January 1 to December 21, 2011 $ 28.1 $ 210.1 $ 14.7 $ 59.9 $ — $ 312.8 2010 46.5 210.7 9.2 60.0 — 326.4 Intersegment revenues: January 1 to December 21, 2011 $ 0.1 $ — $ 0.3 $ 0.3 $ (0.7) $ — 2010 0.3 — — 0.4 (0.7) — Operating income (loss): (6) January 1 to December 21, 2011 $ 242.8 $ 54.8 $ (130.6) $ 9.4 $ (14.8) $ 161.6 2010 241.2 48.6 9.0 13.1 (15.2) 296.7 Depreciation and amortization (excluding amortization of deferred financing fees): (7) January 1 to December 21, 2011 $ 89.2 $ 26.1 $ 34.6 $ 8.5 $ — $ 158.4 2010 103.5 28.5 20.2 5.7 — 157.9 Non-cash asset impairment charges: January 1 to December 21, 2011 $ 0.6 $ — $ 108.3 $ 2.7 $ — $ 111.6 2010 3.7 — — — — 3.7 Capital expenditures (excluding capital leases): January 1 to December 21, 2011 $ 39.2 $ 7.0 $ 11.7 $ 0.7 $ — $ 58.6 2010 24.3 8.3 5.0 1.0 — 38.6

Total assets: December 31, 2012 $1,409.4 $ 413.2 $ 184.0 $ 117.0 $ 862.8 $2,986.4 December 31, 2011(8) $1,498.5 $ 426.7 $ 173.1 $ 114.9 $ 890.5 $3,103.7 ______(1) See Notes 1 and 3 for information regarding the effect of acquisition accounting related to the MacAndrews Acquisition on operating results. (2) Includes results of the acquired Parsam business from the date of acquisition. (3) Includes results of the acquired Spectrum K12 and GlobalScholar businesses from their respective dates of acquisition. (4) Includes results of the acquired Faneuil business from the date of common control. (5) Total assets include goodwill of $761.6 and $758.6 as of December 31, 2012 and 2011, respectively. (6) Includes (gain) loss from revaluation of contingent consideration arrangements of $(0.6), $0.0, $(24.3) and $0.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and restructuring costs of $18.9, $0.0, $12.6 and $22.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, (see Note 15) and non-cash impairment charges of $1.7, $0.0, $111.6 and $3.7 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. (7) Includes allocation of depreciation of $0.7, $0.0, $0.8 and $0.8 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, from the Scantron segment to the Faneuil segment for assets that are assigned to the Scantron segment.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (8) As discussed in Note 3, amounts have been adjusted from preliminary amounts set forth in the Company's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant 12 Months Ended Accounting Policies (Tables) Dec. 31, 2012 Summary of Significant Accounting Policies [Abstract] Property Plant And Equipment Estimated Useful Lives The useful lives for computing depreciation are as follows:

Years Machinery and equipment 3 - 15 Computer software and hardware 3 - 5 Leasehold improvements 1 - 20 Buildings and improvements 20 - 30 Furniture, fixtures and transportation equipment 5 - 8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Acquisitions (Tables) Dec. 31, 2012 Faneuil [Member] Business Acquisition [Line Items] Assets and Liabilities The following table summarizes the historical cost of assets and liabilities assumed on March Assumed 19, 2012, the date of the Faneuil Acquisition:

MacAndrews Acquisition [Member] Business Acquisition [Line Items] Assets and Liabilities The following table summarizes the estimated fair values of the Company's assets and Assumed liabilities assumed at the date of the MacAndrews Acquisition:

Cash $ 185.2 Accounts receivable 110.1 Property, plant and equipment 207.1 Goodwill * 748.4 Other intangible assets: Customer relationships $1,519.0 Tradenames 101.4 Technology 39.8 Total other intangible assets 1,660.2 Other assets * 147.6 Total assets acquired * 3,058.6 Deferred revenues 96.8 Long-term debt 1,787.4 Deferred tax liabilities * 723.8 Other liabilities * 308.4

Business Acquisition, Pro The unaudited financial information in the table below summarizes the results of operations Forma Information of the Company, on a pro forma basis, as though the acquisition had occurred as of the beginning of the year presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if this transaction had taken place at the beginning of the year presented, nor does it purport to represent results of operations for future periods.

Unaudited Pro Forma Year ended December 31, 2011 Net revenues $ 1,596.9 Operating income 151.3 Net loss (65.7) Depreciation and amortization (excluding amortization of deferred financing fees) 156.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Description of Business and 12 Months Ended Basis of Presentation Dec. 31, 2012 Description of Business and Basis of Presentation [Abstract] Organization, Consolidation Description of the Business and Basis of Presentation and Presentation of Financial Harland Clarke Holdings Corp. ("Harland Clarke Holdings" and, together with its Statements Disclosure [Text subsidiaries, the "Company") is a holding company that conducts its operations through its direct Block] and indirect, wholly owned operating subsidiaries and was incorporated in Delaware on October 19, 2005. The Company is an indirect, wholly owned subsidiary of M & F Worldwide Corp. ("M & F Worldwide"), which is, as of December 21, 2011, an indirect, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews"). MacAndrews is wholly owned by Ronald O. Perelman. On September 12, 2011, M & F Worldwide agreed to merge with an indirect wholly owned subsidiary of MacAndrews, and following a vote of stockholders of M & F Worldwide and the satisfaction or waiver of closing conditions, that merger was effected on December 21, 2011 (hereafter referred to as the "MacAndrews Acquisition"). As a result of the MacAndrews Acquisition, which resulted in a change in ownership of M & F Worldwide, the Company was required to use the acquisition method of accounting to revalue its assets and liabilities as of the date of the MacAndrews Acquisition. Such accounting results in a number of changes (see Note 3), including, but not limited to, decreased revenues as a result of fair value adjustments to deferred revenues, increased depreciation and amortization as a result of the revaluation of assets and increased non-cash interest expense that results from adjusting the Company's long-term debt to fair value as of the date of the MacAndrews Acquisition. Accordingly, the accompanying financial statements for the Predecessor and Successor periods are not comparable in all material respects and the Company is required to present separately its operating results for periods before and after the MacAndrews Acquisition. The periods prior to the MacAndrews Acquisition (the period January 1 to December 21, 2011 and the year ended December 31, 2010) are presented in the accompanying consolidated financial statements as "Predecessor." The periods subsequent to the MacAndrews Acquisition (the year ended December 31, 2012 and the period December 22 to December 31, 2011) are presented in the accompanying consolidated financial statements as "Successor." On March 19, 2012, the Company purchased Faneuil, Inc. ("Faneuil") from affiliates of MacAndrews (see Note 3). Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Faneuil is a separate business segment for financial reporting purposes. The Company has organized its business and corporate structure along the following four business segments: Harland Clarke, Harland Financial Solutions, Scantron and Faneuil. During the second quarter of 2012, the Company transferred certain product and service lines from the Scantron segment to other segments to better align complementary products and services. The Harland Technology Services and Medical Device Tracking businesses were transferred to the Faneuil segment and the Survey Services business was transferred to the Harland Clarke segment. Prior period segment information has been reclassified to reflect this change. The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention products to financial and commercial institutions. It also provides direct marketing services to their clients including direct marketing campaigns, direct mail, database marketing, telemarketing and digital marketing. In addition to these products and services, the Harland Clarke segment offers stationery, business cards, survey services and other business and home office products to consumers and businesses.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Harland Financial Solutions segment provides technology products and related services to financial institutions worldwide including lending and mortgage compliance and origination applications, risk management solutions, business intelligence solutions, Internet and mobile banking applications, branch automation solutions, self-service solutions, electronic payment solutions and core processing systems. The Scantron segment provides data management and decision support solutions and related services to educational, commercial and governmental entities worldwide. Scantron products and services provide solutions for testing and assessment, instruction and performance management and business operational data collection. Scantron's solutions combine a variety of data collection, analysis, and management tools including web-based solutions, software, scanning equipment and forms. The Faneuil segment provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients. The Faneuil segment also provides patient information collection and tracking services, managed technical services and related field maintenance services to education, commercial, healthcare and governmental entities. The consolidated financial statements include the accounts of the Company and its majority- owned subsidiaries after the elimination of all material intercompany accounts and transactions. The Company has consolidated the results of operations and accounts of businesses acquired from the date of acquisition or the date of common control (see Note 3). The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries are guarantors and may also be co-issuers under the 2015 Senior Notes and 2018 Senior Secured Notes (as hereinafter defined) (see Note 11). Harland Clarke Holdings is a holding company and has no significant assets at December 31, 2012 and no operations. The guarantees and the obligations of the subsidiaries of the Company are full and unconditional and joint and several, and any subsidiaries of the Company other than the subsidiary guarantors and obligors are not significant. See Note 3 for information regarding recent acquisitions.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Inventories (Tables) Dec. 31, 2012 Inventories [Abstract] Inventories Inventories consist of the following:

December 31, December 31, 2012 2011 Finished goods $ 7.7 $ 12.4 Work-in-process 8.2 17.9 Raw materials 13.1 12.9 $ 29.0 $ 43.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair Value Measurements 12 Months Ended (Tables) Dec. 31, 2012 Fair Value Measurements [Abstract] Nonrecurring Fair Value Measurements The following table presents the Company's nonfinancial assets that were measured at fair value on a nonrecurring basis during 2011:

Fair Value at November 1, (Level (Level (Level Impairment 2011 1) 2) 3) Charges Goodwill - Scantron $ 281.9 $ — $ — $281.9 $ 102.2 Indefinite-lived tradename - Scantron 6.8 — — 6.8 4.2

Recurring Fair Value Measurements Fair values of financial instruments subject to recurring fair value measurements as of December 31, 2012 and 2011, are as follows:

Balance at December 31, 2012 (Level 1) (Level 2) (Level 3) Corporate equity securities $ 0.1 $ 0.1 $ — $ — Liability for interest rate swaps 1.3 — 1.3 —

Reconciliation of the Fair Value of The following table presents the Company's liability for contingent Contingent Consideration Measured using consideration related to business combinations measured at fair value on a Significant Unobservable Inputs recurring basis using significant unobservable inputs (Level 3):

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1 Months 1 Months 12 Months Ended Ended Ended Dec. 31, Dec. 21, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2012 2011 2010 Dec. 31, Dec. 31, Jun. 30, 2010 2012 2011 2012 2011 Assets Held For Sale Harland Harland Harland Jun. 30, 2012 2011 Restructuring Land Land Building Building (Details) (USD $) Clark Clark Clark Dec. 2010 Prepaid Prepaid costs [Member][Member][Member][Member] In Millions, unless otherwise Segment Segment Segment 31, Greensboro and other and other [Member] Prepaid Prepaid Prepaid Prepaid specified [Member] [Member] [Member] 2012 facility current current Greensboro and other and other and other and other Asset Asset Asset [Member] assets assets facility current current current current impairmentimpairmentimpairment [Member][Member] [Member] assets assets assets assets charges charges charges [Member][Member][Member][Member] [Member] [Member] [Member] Assets Held For Sale [Line Items] Asset Impairment Charges $ 0.2 $ 0.1 $ 0.9 Future period in months during which the Company believes 12 its held for sale facilities will months be sold Proceeds from sale of 1.3 property, plant and equipment Gain (Loss) on Sale of 0.3 Property Plant Equipment Assets held for sale $ 3.1 $ 3.3 $ 1.0 $ 1.0 $ 2.1 $ 2.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 0 Months 12 Months Ended 12 Months Ended Commitments and Ended Contingencies (Details) (USD Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 21, Dec. 31, $) Dec. 2012 2012 2012 2012 2011 2012 2011 2010 In Millions, unless otherwise 31, Information Raw Minimum Maximum Successor Successor PredecessorPredecessor specified 2012 Technology Materials [Member] [Member] [Member][Member] [Member] [Member] [Member] [Member] Long-term Purchase Commitment [Line Items] Non-cancelable operating 1 year lease terms in years Lease renewal option period in 1 year 5 years years Leases and Purchase Commitments [Abstract] 2013 $ 26.0 2014 20.0 2015 12.1 2016 10.3 2017 7.6 Thereafter 6.6 Operating Leases, Future Minimum Payments Due, 1.6 Future Minimum Sublease Rentals Operating Leases, Rent 0.5 22.8 20.8 22.4 Expense Purchase Obligation $ 56.6 $ 16.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Balance Sheets (USD $) Dec. 31, Dec. 31, In Millions, unless otherwise 2012 2011 specified Current assets: Cash and cash equivalents $ 102.0 $ 101.8 Marketable securities 0 56.6 Accounts receivable (net of allowances of $1.5 and $1.8) 132.1 121.3 Inventories 29.0 43.2 Income taxes receivable 23.7 15.7 Notes receivable - related party 30.0 0 Deferred tax assets 45.1 25.5 Prepaid expenses and other current assets 56.7 54.0 Total current assets 418.6 418.1 Property, plant and equipment, net 190.0 210.7 Goodwill 761.6 758.6 Other intangible assets, net 1,535.6 1,659.0 Contract acquisition payments, net 17.6 0 Notes receivable - related party 0 30.0 Other assets 63.0 27.3 Total assets 2,986.4 3,103.7 Current liabilities: Accounts payable 44.5 39.1 Deferred revenues 133.9 82.2 Current maturities of long-term debt 78.5 45.1 Accrued liabilities: Salaries, wages and employee benefits 55.9 58.1 Income and other taxes payable 11.9 12.8 Customer incentives 52.0 57.4 Payable to parent 0.1 0.2 Other current liabilities 42.1 33.7 Total current liabilities 418.9 328.6 Long-term debt 1,769.3 1,766.9 Deferred tax liabilities 622.7 726.5 Deferred revenues 54.2 28.5 Other liabilities 86.1 105.9 Commitments and contingencies Stockholder's equity: Common stock — 200 shares authorized; par value $0.01; 100 shares issued and 0 0 outstanding at December 31, 2012 and 2011 Additional paid-in capital 76.1 145.5 (Accumulated deficit) retained earnings (40.6) 1.9 Accumulated other comprehensive income (loss), net of taxes: Foreign currency translation adjustments 0.4 0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unrecognized amounts included in postretirement obligations (0.7) (0.1) Derivative fair-value adjustments 0 (0.1) Unrealized gains on investments, net 0 0.1 Total accumulated other comprehensive loss, net of taxes (0.3) (0.1) Total stockholder's equity 35.2 147.3 Total liabilities and stockholder's equity $ 2,986.4 $ 3,103.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Description of Business and 12 Months Ended Basis of Presentation Dec. 31, 2012 (Details) Business_Segments Descripiton of Business and Basis of Presentation [Abstract] Number of Business Segments 4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Predecessor Predecessor Successor Successor Predecessor Successor [Member] [Member] [Member] [Member] Consolidated Statement of Predecessor [Member] Successor [Member] Retained Accumulated Retained Accumulated Shareholder's Equity (USD Total Predecessor [Member] Additional Successor [Member]Additional Earnings Other Earnings Other $) USD [Member] Common Paid-in [Member] Common Paid-in (AccumulatedComprehensive (AccumulatedComprehensive In Millions, except Share ($) USD ($) Stock Capital USD ($) Stock Capital Deficit) (Loss) Income Deficit) (Loss) Income data [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] USD ($) USD ($) USD ($) USD ($) USD ($) USD ($) Balance, at Dec. 31, 2009 $ 246.0 $ 157.0 $ 98.0 $ (9.0) Shares, Outstanding at Dec. 100 31, 2009 Net (loss) income 114.2 114.2 Other comprehensive (loss) 9.8 9.8 income, net of tax Dividends declared to parent (31.2) (31.2) Balance, at Dec. 31, 2010 338.8 157.0 181.0 0.8 Shares, Outstanding at Dec. 100 31, 2010 Net (loss) income 29.2 29.2 Other comprehensive (loss) (5.4) (5.4) income, net of tax Dividends declared to parent (61.3) (61.3) Balance, at Dec. 21, 2011 301.3 157.0 148.9 (4.6) Shares, Outstanding at Dec. 100 21, 2011 Change in ownership (301.3) (157.0) (148.9) 4.6 Allocation of equity consideration from 142.2 142.2 MacAndrews Acquisition Faneuil balances at date of 11.1 3.3 7.8 common control Net (loss) income (5.9) (5.9) Other comprehensive (loss) (0.1) (0.1) income, net of tax Balance, at Dec. 31, 2011 147.3 147.3 145.5 1.9 (0.1) Shares, Outstanding at Dec. 100 31, 2011 Net (loss) income (35.0) (35.0) Other comprehensive (loss) (0.2) (0.2) income, net of tax Acquisition of business from (33.8) (33.8) parent Elimination of Faneuil (36.2) (28.7) (7.5) acquired balances Capital contribution from 25.4 25.4 parent Dividends declared to parent (32.3) (32.3) Balance, at Dec. 31, 2012 $ $ 35.2 $ 76.1 $ (40.6) $ (0.3) 35.2 Shares, Outstanding at Dec. 100 31, 2012

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 0 Months 12 Months Ended Months Income Taxes 4 (Details) Ended Ended (USD $) Dec. 21, Dec. 31, Dec. 31, Dec. 31, In Millions, unless otherwise Dec. Dec. 2011 2010 2011 2012 specified 31, 31, PredecessorPredecessor Successor Successor 2012 2011 [Member] [Member] [Member][Member] Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] Balance at beginning of period $ 12.0 $ 13.6 $ 10.9 $ 10.9 Additions based on tax positions related to the 0 0 0 0.8 current year Additions for tax positions for prior years 2.5 0.6 0 0.9 Reductions for tax positions for prior years (3.6) (2.2) 0 (2.4) Settlements 0 0 0 0 Balance at end of period 10.9 12.0 10.9 10.2 Unrecognized Tax Benefits that Would Impact 5.6 4.8 Effective Tax Rate Income Tax Examination, Penalties and Interest $ 5.4 $ 6.7 Accrued The Number of Months Following the Balance 12 Sheet Date The Company Does Not Expect A months Significant Change in Unrecognized Tax Benefits

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill and Other 12 Months Ended Intangible Assets (Tables) Dec. 31, 2012 Goodwill and Other Intangible Assets [Abstract] Goodwill The change in carrying amount of goodwill by business segment for the years ended December 31, 2012, 2011 and 2010 is as follows:

Harland Harland Financial Clarke Solutions Scantron Faneuil Total Predecessor Balance at December 31, 2010 $ 785.2 $ 452.2 $ 228.4 $ 61.0 $1,526.8 2010 acquisitions — (1.4) (1.4) — (2.8) 2011 acquisition — — 90.2 — 90.2 Impairment — — (102.2) — (102.2) Effect of exchange rate changes — (0.2) — — (0.2) Balance at December 21, 2011 785.2 450.6 215.0 61.0 $1,511.8 Successor Change in ownership (785.2) (450.6) (215.0) (61.0) (1,511.8) MacAndrews Acquisition 415.0 281.8 40.1 8.7 745.6 Faneuil balance at date of common control — — — 13.0 13.0 Balance at December 31, 2011 415.0 281.8 40.1 21.7 758.6 MacAndrews Acquisition 2.0 0.8 — — 2.8 Effect of exchange rate changes — 0.1 0.1 — 0.2 Balance at December 31, 2012 $ 417.0 $ 282.7 $ 40.2 $ 21.7 $ 761.6

Other Intangible Assets Useful lives, gross carrying amounts and accumulated amortization for other intangible assets are as follows:

Gross Carrying Accumulated Amount Amortization Net Carrying Amount December 31, December 31, December 31, Useful Life (in years) 2012 2011 2012 2011 2012 2011 Amortized intangible assets: Customer relationships 3 - 19 $1,528.0 $1,528.0 $132.7 $ 12.3 $1,395.3 $1,515.7 Trademarks and 15 - tradenames 25 101.4 101.4 5.3 0.1 96.1 101.3 Software 3 - 9 56.5 42.2 13.1 1.0 43.4 41.2 1,685.9 1,671.6 151.1 13.4 1,534.8 1,658.2 Indefinite-lived intangible assets: Tradename 0.8 0.8 — — 0.8 0.8 Total other intangible assets $1,686.7 $1,672.4 $151.1 $ 13.4 $1,535.6 $1,659.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Estimated Amortization Expense Estimated aggregate amortization expense for intangible assets through December 31, 2017 is as follows:

Year ending December 31, 2013 $ 128.9 Year ending December 31, 2014 120.8 Year ending December 31, 2015 112.7 Year ending December 31, 2016 101.5 Year ending December 31, 2017 97.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 0 Months 0 Months Months 12 Months Ended Ended Ended Ended Sep. 30, Jun. 30, Jun. 30, 2012 2012 2010 Dec. 31, Dec. 31, Designated Dec. 31, Dec. 31, Designated Designated 2012 2011 Dec. 31, Dec. 31, Dec. 21, Dec. 31, as Hedging 2012 2011 as Hedging as Hedging Designated Designated 2011 2012 2011 2010 Instrument Designated Designated Instrument Instrument as Hedging as Hedging Successor Successor PredecessorPredecessor [Member] as Hedging as Hedging Derivative Financial [Member] [Member] InstrumentInstrument [Member] [Member] [Member] [Member] Interest InstrumentInstrument Instruments (Details) (USD Interest Interest [Member] [Member] Designated Designated Designated Designated Rate Swap [Member] [Member] $) Rate Swap Rate Swap Cash Flow Cash Flow Dec. 31, Dec. 31, as Hedging as Hedging Dec. 21, Dec. 31, as Hedging as Hedging Dec. Dec. [Member] Cash Flow Cash Flow In Millions, unless otherwise [Member] [Member] Hedging Hedging 2011 2012 InstrumentInstrument 2011 2010 Instrument Instrument 31, 31, September Hedging Hedging specified June 30, June 30, [Member] [Member] Successor Successor [Member] [Member] PredecessorPredecessor [Member] [Member] 20122011 30, 2009 [Member] [Member] 2009 3-Yr 2010 3-Yr Interest Interest [Member][Member] Cash Flow Cash Flow [Member] [Member] Cash Flow Cash Flow 3-Yr Interest Interest Interest Interest Rate Swap Rate Swap Hedging Hedging Hedging Hedging Interest Rate Swap Rate Swap Rate Rate [Member] [Member] [Member] [Member] [Member] [Member] Rate [Member] [Member] Contract Contract Other Other Interest Interest Interest Interest Contract Other Other Notional Notional current current Rate Swap Rate Swap Rate Swap Rate Swap Notional liabilities liabilities Amount Amount liabilities liabilities [Member] [Member] [Member] [Member] Amount [Member] [Member] $350 $255 [Member] [Member] $250 [Member] [Member] [Member] Derivative [Line Items] Derivative, Notional Amount $ 350.0 $ 250.0 $ 255.0 Derivative, Fixed Interest Rate 2.353% 2.14% 1.264% Derivative Liabilities, Current 1.3 6.1 Derivative Liabilities, 0 2.9 Noncurrent Loss recognized in other comprehensive income 0.1 0 5.8 23.3 (effective portion) Loss reclassified from other comprehensive income into 0 0.1 12.9 19.7 interest expense (effective portion) Loss recognized in interest 0.1 1.8 0 0 expense (ineffective portion) Balances and net changes in other comprehensive loss (income) related to derivative instruments [Roll Forward] Balance at beginning of period 0 0.1 6.5 0.1 10.9 Change in ownership 301.3 (6.5) 0 0 Loss reclassified from accumulated other 0 (0.1) 0 (0.1) (7.9) (12.0) (7.9) comprehensive income into interest expense, net of taxes Net change in fair value of interest rate swaps (effective 0.1 0 0.1 0 3.5 14.3 3.5 portion), net of taxes Balance at end of period 0 0.1 0.1 0 6.5 10.9 Loss reclassified from accumulated other 0 0 0 0 5.0 7.7 5.0 comprehensive income into interest expense, tax Net change in fair value of interest rate swaps (effective $ 0 $ 0 $ 0 $ 0 $ 2.3 $ 9.0 $ 2.3 portion), tax

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Restructuring Dec. 31, 2012 Restructuring [Abstract] Restructuring Restructuring Harland Clarke and Corporate The Company adopted plans during recent years to realize cost savings in the Harland Clarke segment and Corporate by consolidating printing plants, contact centers and selling, general and administrative functions. The following table details the components of the Company's restructuring accruals under its plans related to the Harland Clarke segment and Corporate for 2012, 2011 and 2010:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Beginning Paid in Non-cash Ending Balance Expensed Cash Utilization Balance Successor: Year ended December 31, 2012: Severance and severance-related $ — $ 0.6 $ (0.5) $ — $ 0.1 Facilities and other costs 1.5 (0.2) (0.3) 0.3 1.3 Total $ 1.5 $ 0.4 $ (0.8) $ 0.3 $ 1.4

Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period. Scantron The Company adopted plans during recent years to realize cost savings in the Scantron segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. The following table details the components of the Company's restructuring accruals related to the Scantron segment for 2012, 2011 and 2010:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Note: Successor period amounts have not been bifurcated for the year ended December 31, 2011 in this table due to the insignificance of amounts applicable to the Successor period. Ongoing lease commitments related to these plans continue to October 2013. The Company expects to make payments for severance and severance-related costs through 2014. Faneuil The Company adopted a plan in 2012 to realize cost savings in the Faneuil segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. In 2010, The Company adopted and completed a plan to realize cost savings in the Faneuil segment by consolidating certain operations and eliminating certain selling, general and administrative expenses. The following table details the components of the Company's restructuring accruals related to the Faneuil segment for 2012 and 2010:

Predecessor: Year ended December 31, 2010: Severance and severance-related $ — $ 0.6 $ (0.6) $ — Facilities and other costs — — — — Total $ — $ 0.6 $ (0.6) $ —

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Income Taxes (Tables) Dec. 31, 2012 Income Tax [Abstract] Components of Income Tax Information pertaining to the Company's (loss) income before income taxes and the (Benefit) Expense applicable (benefit) provision for income taxes is as follows:

Successor Predecessor Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 (recasted) (Loss) income before income taxes: Domestic $ (55.7) $ (9.7) $ 69.1 $ 185.6 Foreign 1.3 — 1.3 (3.6) Total (loss) income before income taxes $ (54.4) $ (9.7) $ 70.4 $ 182.0 (Benefit) provision for income taxes: Current: Federal $ 88.3 $ 2.0 $ 61.2 $ 83.8 State and local 18.3 0.3 14.6 15.8 Foreign 0.6 — 0.9 0.1 107.2 2.3 76.7 99.7 Deferred: Federal (114.3) (5.5) (29.8) (28.7) State and local (12.1) (0.6) (5.6) (3.0) Foreign (0.2) — (0.1) (0.2) (126.6) (6.1) (35.5) (31.9) Total (benefit) provision for income taxes $ (19.4) $ (3.8) $ 41.2 $ 67.8

Deferred Tax Assets and Deferred income taxes reflect the net tax effects of temporary differences between the Liabilities carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net current deferred tax asset before valuation allowance 46.3 27.4 Valuation allowance (1.2) (1.9) Net current deferred tax asset 45.1 25.5 Long-term: Property, plant and equipment (22.7) (29.8) Intangible assets (557.5) (591.4) Net operating loss carryforwards and AMT credits 4.0 11.0 Deferred gain on debt repurchases (20.2) (25.4) Accelerated gain on amendment and extension of credit agreement 19.3 — Debt fair value adjustments (103.0) (161.0) Deferred financing fees 2.9 7.1 Accrued rebates 22.3 33.8 Other 34.0 31.1 Net long-term deferred tax liability before valuation allowance (620.9) (724.6) Valuation allowance (1.8) (1.9) Net long-term deferred tax liability (622.7) (726.5) Net deferred tax liabilities $ (577.6) $ (701.0)

Effective Income Tax Rate The effective tax rate varies from the current statutory federal income tax rate as follows: Reconciliation Successor Predecessor Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 Statutory rate 35.0 % 35.0 % 35.0 % 35.0 % State and local taxes 3.9 % 5.1 % 6.0 % 4.1 % Goodwill impairment — % — % 34.0 % — % Contingent consideration — % — % (11.4)% — % Domestic production activities deduction — % — % (4.0)% (2.1)% Uncertain tax positions 0.2 % — % (0.3)% (1.2)% Effect of state law change (3.5)% — % — % — % Other 0.1 % (0.9)% (0.7)% 1.5 % 35.7 % 39.2 % 58.6 % 37.3 %

Reconciliation of the A reconciliation of the beginning and ending amount of unrecognized tax benefits is as Beginning and Ending follows: Amount of Uunrecognized Tax Benefits Successor Predecessor December 22 Year ended to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 Balance at beginning of period $ 10.9 $ 10.9 $ 12.0 $ 13.6 Additions based on tax positions related to the current year 0.8 — — — Additions for tax positions for prior years 0.9 — 2.5 0.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Reductions for tax positions for prior years (2.4) — (3.6) (2.2) Settlements — — — — Balance at end of period $ 10.2 $ 10.9 $ 10.9 $ 12.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Transactions with Related 12 Months Ended Parties Dec. 31, 2012 Transactions with Related Parties [Abstract] Transactions with Related Transactions with Related Parties Parties The Company participates in MacAndrews directors and officers insurance program, which covers the Company as well as MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews for its allocable portion of the premiums for such coverage, which the Company believes is more favorable than the premiums the Company could secure were it to secure its own coverage. At December 31, 2012, the Company recorded prepaid expenses and other assets of $0.7 and $1.0, respectively, related to the directors and officers insurance program in the accompanying consolidated balance sheets. At December 31, 2011, the Company had no prepaid expenses related to the directors and officers insurance program recorded in the accompanying consolidated balance sheets. The Company paid $2.0, $0.0, $0.1 and $0.0 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, to MacAndrews under the insurance program. Notes Receivable On December 27, 2011, the Company entered into a revolving credit agreement with its indirect parent, MacAndrews, whereby MacAndrews could borrow an amount not exceeding $30.0. The facility is unsecured, bears interest at LIBOR plus 2% and matures in December 2013. The facility was drawn in full by MacAndrews on December 27, 2011 and remained outstanding at December 31, 2012. Interest income of $0.8 was recorded and related payments were received during 2012. In 2008, Harland Clarke Holdings acquired the senior secured credit facility and outstanding note of Delphax Technologies, Inc. ("Delphax"), the supplier of Imaggia printing machines and related supplies and service for the Harland Clarke segment. The senior secured credit facility was comprised of a revolving credit facility of up to $14.0, subject to borrowing limitations set forth therein that originally matured in September 2011. Contemporaneous with its acquisition of the senior secured credit facility and the note, Harland Clarke Holdings also acquired 250,000 shares of Delphax common stock from the previous holder of the Delphax note. The senior secured credit facility and note were paid in full and cancelled on November 9, 2011. Interest income of $0.0, $0.2, and $0.4 was recorded during the periods December 22 to December 31, 2011, January 1 to December 21, 2011, and fiscal year 2010, respectively. Other The Company expensed $2.7 for the fiscal year 2012 and $0.0 and $2.7 for the periods December 22 to December 31, 2011 and January 1 to December 21, 2011, respectively, and $2.7 for fiscal year 2010, for services provided to the Company by M & F Worldwide. This amount is reflected in selling, general and administrative expenses. During fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, the Company paid cash dividends of $32.3, $12.6, $48.7 and $31.2, respectively, to M & F Worldwide as permitted by restricted payment baskets within the Company's debt agreements. On March 19, 2012, the Company completed the Faneuil Acquisition from affiliates of MacAndrews, its indirect parent (see Note 3). In connection with the Faneuil Acquisition, Faneuil's revolving credit facility with an affiliate of MacAndrews, which was entered into on January 25, 2012, was extinguished (see Note 11).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As discussed in Note 8, the Company made net payments to and had net receivables with MacAndrews related to the 2011 Tax Sharing Agreement

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair Value Measurements 3 (Details) (USD $) Dec. 31, Dec. 31, In Millions, unless otherwise 2012 2011 specified Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 2 [Member] Fair Value of Financial Instruments [Abstract] Fair Value of Long-term Debt $ 1,984.4 $ 1,821.4 Carrying (Reported) Amount, Fair Value Disclosure [Member] Fair Value of Financial Instruments [Abstract] Carrying Value of Long-term Debt $ 1,847.8 $ 1,812.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 0 Months 12 Months Ended Consolidated Statements of Ended Cash Flows (USD $) Dec. 31, Dec. 31, Dec. 21, 2011 Dec. 31, 2010 In Millions, unless otherwise 2011 2012 Predecessor Predecessor specified Successor Successor [Member] [Member] [Member] [Member] Operating activities Net (loss) income $ (5.9) $ (35.0) $ 29.2 $ 114.2 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 1.9 75.9 40.9 48.9 Amortization of intangible assets 4.1 137.7 117.5 109.0 Amortization of debt fair value adjustments, original 4.1 117.4 6.7 7.0 issue discount and deferred financing fees Loss on early extinguishment of debt 0.1 34.2 0 0 Revaluation of contingent consideration 0 (0.6) (24.3) 0.3 Loss (gain) on sale of marketable securities 0 0.2 (13.2) (0.1) Deferred income taxes (6.1) (126.6) (35.5) (31.9) Asset impairments 0 1.7 111.6 3.7 Changes in operating assets and liabilities, net of effect of businesses acquired: Accounts receivable 0.1 (17.2) 15.0 (1.1) Inventories 3.7 14.2 2.3 0.9 Prepaid expenses and other assets (1.3) (15.8) (12.0) (17.0) Contract acquisition payments, net 0 (17.6) (8.9) 1.4 Accounts payable and accrued liabilities 5.8 (2.2) (13.8) 18.4 Deferred revenues 12.0 77.5 11.8 13.0 Income and other taxes 2.3 (8.7) (7.4) 0.6 Payable to parent (0.8) (0.1) 0.1 0.7 Other, net 0.1 2.6 0 5.0 Net cash provided by operating activities 20.1 237.6 220.0 273.0 Investing activities Purchase of businesses, net of cash acquired 0 (36.2) (135.1) (61.2) Faneuil cash at date of common control 5.3 0 0 0 Purchase of marketable securities (56.5) 0 0 0 Purchase of equity method investment 0 (7.0) 0 0 Funding of related party note receivable (30.0) 0 0 0 Repayments of related party notes receivable 0 0 4.0 3.0 Proceeds from sale of property, plant and equipment 0 0.1 0.2 2.5 Proceeds from sale of marketable securities 0 56.3 13.4 24.7 Capital expenditures (0.1) (57.8) (58.6) (38.6) Capitalized interest 0 (0.5) (0.3) (0.1) Computer software development (1.5) (14.5) (5.9) (4.2) Net cash used in investing activities (82.8) (59.6) (182.3) (73.9)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Financing activities Dividends to parent (12.6) (32.3) (48.7) (31.2) Acquisition of business from parent 0 (33.8) 0 0 Redemption of notes (1.7) 0 0 0 Payments of contingent consideration arrangements 0 0 (0.3) (0.7) Payments for hedge financing activities (1.9) (9.5) 0 0 Issuance of notes 0 225.6 0 0 Borrowings on credit agreements 0 25.0 0 0 Repayments of credit agreements and other borrowings (4.5) (340.1) (15.0) (19.6) Debt issuance costs 0 (12.7) 0 0 Net cash used in financing activities (20.7) (177.8) (64.0) (51.5) Net increase (decrease) in cash and cash equivalents (83.4) 0.2 (26.3) 147.6 Cash and cash equivalents at beginning of period 185.2 101.8 211.5 63.9 Cash and cash equivalents at end of period 101.8 102.0 185.2 211.5 Supplemental disclosure of cash paid for: Interest, net of amounts capitalized 5.4 91.9 94.4 108.0 Income taxes, net of refunds 0 115.1 84.1 97.7 Non-cash Financing Activities [Abstract] Extinguishment of Debt to Parent $ 0 $ 25.4 $ 0 $ 0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Balance Sheet Parentheticals (USD $) In Millions, except Share Dec. 31, 2012Dec. 31, 2011 data, unless otherwise specified Current Assets: Allowance for doubtful accounts $ 1.5 $ 1.8 Stockholder's Equity: Common stock, par value $ 0.01 $ 0.01 Common stock, shares authorized 200 200 Common stock, shares issued 100 100 Common stock, shares outstanding 100 100

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Other Postretirement Benefit 12 Months Ended Plans Dec. 31, 2012 Other Postretirement Benefit Plans [Abstract] Pension and Other Other Postretirement Benefit Plans Postretirement Benefits The Company sponsors two unfunded postretirement defined benefit plans that cover certain Disclosure [Text Block] former salaried and non-salaried employees. One plan provides healthcare benefits and the other provides life insurance benefits. The medical plan is contributory and contributions are adjusted annually based on actual claims experience. For retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000, the Company contributes a portion of the cost of the medical plan. For all other retirees, the Company's intent is that the retirees provide the majority of the actual cost of the medical plan. The life insurance plan is noncontributory for those employees that retired by December 31, 2002. During 2010, the Company amended the medical plan for benefits to be provided after December 31, 2010 for retirees who retired prior to December 31, 2002 with twenty or more years of service at December 31, 2000. As a result of these amendments, the Company remeasured its accumulated postretirement benefit obligation ("APBO") as of September 30, 2010. The remeasurement reflected a new discount rate of 5.0% and resulted in a $7.0 decrease in the APBO and the offsetting amount was recorded in other comprehensive income. As of December 31, 2012 and 2011, the APBO was $12.3 and $11.4, respectively. The Company contributed to these plans $0.4, $0.0, $0.4 and $0.5 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. The Company expects to contribute $0.7 to these plans in 2013. The following table presents the beginning and ending balances of the APBO, the changes in the APBO, and reconciles the plans' status to the accrued postretirement healthcare and life insurance liability reflected on the accompanying consolidated balance sheets as of December 31, 2012 and 2011:

Included in accrued salaries, wages and employee benefits $ 0.7 $ 0.6 $ 0.6 Included in other liabilities 11.6 10.8 10.6 APBO at end of period $ 12.3 $ 11.4 $ 11.2

The following table presents the changes in the fair value of plan assets and the funded status for the periods presented:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Successor Predecessor Year ended December 22 to January 1 to December 31, December 31, December 21, 2012 2011 2011 Fair value of plan assets at beginning of period $ — $ — $ — Employer contributions 0.4 — 0.4 Retiree contributions 0.2 — 0.3 Health benefits subsidy — — 0.1 Benefits paid (0.6) — (0.8) Fair value of plan assets at end of period $ — $ — $ — Funded status $ (12.3) $ (11.4) $ (11.2)

2012 2011 Unrecognized actuarial net loss $ 1.0 $ 0.2

Net periodic postretirement benefit costs and other changes in benefit obligations recognized in other comprehensive income for these plans were as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Weighted average discount rates used to determine benefit obligations and net periodic benefit cost were as follows:

1 Percentage 1 Percentage Point Increase Point Decrease Effect on total interest cost for 2012 $ — $ — Effect on postretirement benefit obligation at December 31, 2012 0.3 (0.2)

The following reflects the estimated future benefit payments, net of estimated participant contributions:

2013 $ 0.7 2014 0.7 2015 0.7 2016 0.7 2017 0.7 2018-2022 3.4

There will not be any amortization of accumulated actuarial net loss in 2013.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Document and Entity 12 Months Ended Information (USD $) In Millions, except Share Dec. 31, 2012 Feb. 25, 2013Jun. 30, 2012 data, unless otherwise specified Document Information [Line Items] Entity Registrant Name Harland Clarke Holdings Corp. Entity Central Index Key 0001354752 Current Fiscal Year End Date --12-31 Entity Current Reporting Status Yes EntityVoluntary Filers Yes Entity Filer Category Non-accelerated Filer Entity Well-known Seasoned Issuer No Entity Public Float $ 0 Document Type 10-K Document Period End Date Dec. 31, 2012 Document Fiscal Year Focus 2012 Document Fiscal Period Focus FY Amendment Flag false Entity Common Stock, Shares Outstanding 100

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Long-Term Debt Dec. 31, 2012 Long-term Debt, Unclassified [Abstract] Long-term Debt Long-Term Debt

December 31, December 31, 2012 2011 $1,900.0 Senior Secured Credit Facilities: Extended Term Loans due 2017 $ 677.4 $ — Non-Extended Term Loans due 2014 728.6 1,719.0 Total $1,900.0 Senior Secured Credit Facilities 1,406.0 1,719.0 9.75% Senior Secured Notes due 2018 235.0 — Senior Floating Rate Notes due 2015 204.3 204.3 9.50% Senior Fixed Rate Notes due 2015 271.3 271.3 Faneuil Revolving Credit Facility — 25.6 Capital lease obligations 3.1 4.5 Unamortized original issue discount and acquisition accounting- related fair value discount (271.9) (412.7) 1,847.8 1,812.0 Less: current maturities (78.5) (45.1) Long-term debt, net of current maturities $ 1,769.3 $ 1,766.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Non-Extended Term Loans On April 4, 2007, the Company and substantially all of its subsidiaries as co-borrowers entered into the Credit Agreement. The Credit Agreement provides for a $1,800.0 senior secured term loan (the "Term Loan"), which was fully drawn at closing on May 1, 2007 and matures on June 30, 2014 with respect to the Non-Extended Term Loans. The Company is required to repay the Non-Extended Term Loans in equal quarterly installments in aggregate annual amounts equal to 1% of the original principal amount multiplied by the ratio of Non-Extended Term Loans outstanding on the effective date of the Amendment to the total Non-Extended Term Loans and Extended Term Loans outstanding on the effective date of the Amendment prior to giving effect to the prepayment required as a condition precedent to the effectiveness of the Amendment. In addition, the Credit Agreement requires that a portion of the Company's excess cash flow be applied to prepay amounts borrowed, as further described below. The Credit Agreement also provides for a $100.0 revolving credit facility (the "Revolver") that matures on June 28, 2013. The Revolver includes an up to $60.0 subfacility in the form of letters of credit and an up to $30.0 subfacility in the form of short-term swing line loans. The weighted average interest rate on the principal amount of Non-Extended Term Loans outstanding was 2.7% at December 31, 2012. As of December 31, 2012, there were no outstanding borrowings under the Revolver and there was $92.2 available for borrowing (giving effect to the issuance of $7.8 of letters of credit). The Revolver was terminated on February 20, 2013 upon the execution of a new revolving credit facility. See Note 20 for a discussion of the new revolving credit facility. Under certain circumstances, the Company is permitted to incur additional term loan and/or revolving credit facility indebtedness in an aggregate principal amount of up to $250.0. In addition, the terms of the Credit Agreement, the 2015 Senior Notes (as defined hereinafter), and the 2018 Senior Secured Notes (as defined hereinafter) allow the Company to incur substantial additional debt. The Non-Extended Term Loans bear, at the Company's option, interest at: • 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 Credit Agreement has a commitment fee of 0.50% for the unused portion of the Revolver and a weighted average commitment fee of 2.51% for issued letters of credit. Interest rate margins and commitment fees under the Revolver are subject to reduction in increments based upon the Company achieving certain consolidated leverage ratios. The Company and each of its existing and future domestic subsidiaries, other than unrestricted subsidiaries, certain immaterial subsidiaries, subsidiaries that do not guarantee other debt of the Company and subject to certain other exceptions, are guarantors and may also be co- borrowers under the Credit Agreement. In addition, the Company's direct parent, CA Acquisition Holdings, Inc., is a guarantor under the Credit Agreement. The senior secured credit facilities are secured by a perfected first priority security interest in substantially all of the Company's, each of the co-borrowers' and the guarantors' tangible and intangible assets and equity interests (other than voting stock in excess of 65.0% of the outstanding voting stock of each direct foreign subsidiary and certain other excluded property). The Credit Agreement contains customary affirmative and negative covenants including, among other things, restrictions on indebtedness, liens, mergers and consolidations, sales of assets, loans, acquisitions, restricted payments, transactions with affiliates, dividends and other payment restrictions affecting subsidiaries and sale-leaseback transactions. The Credit Agreement requires the Company to maintain a maximum consolidated leverage ratio solely for the benefit of lenders under the Revolver. The Company has the right to prepay the term loans at any time without premium or penalty, subject to certain breakage costs, and the Company may also reduce any unutilized portion of the Revolver at any time, in minimum principal amounts set forth in the Credit Agreement. The Company is required to prepay the term loans with 50% of excess cash

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document flow (as defined in the Credit Agreement, with certain reductions set forth in the Credit Agreement, based on achievement and maintenance of leverage ratios) and 100% of the net proceeds of certain issuances, offerings or placements of debt obligations of the Company or any of its subsidiaries (other than permitted debt). Each such prepayment will be applied first to the next eight unpaid quarterly amortization installments on the term loans and second to the remaining amortization installments on the term loans on a pro rata basis. No such excess cash flow payment is required in 2013 with respect to 2012. Excess cash flow payments of $12.5 and $3.5 were paid in March 2012 and 2011, respectively, for 2011 and 2010, respectively. No such excess cash flow payments were required in 2010 and 2009. Under the terms of the Credit Agreement such excess cash flow payments were applied against other mandatory payments due in the same year of the excess cash flow payment. The Credit Agreement also contains certain customary affirmative covenants and events of default. Such events of default include, but are not limited to: non-payment of amounts when due; violation of covenants; material inaccuracy of representations and warranties; cross default and cross acceleration with respect to other material debt; bankruptcy and other insolvency events; certain ERISA events; invalidity of guarantees or security documents; and material judgments. Some of these events of default allow for grace periods. If a change of control (as defined in the Credit Agreement) occurs, the Company will be required to make an offer to prepay all outstanding term loans under the Credit Agreement at 101% of the outstanding principal amount thereof plus accrued and unpaid interest, and lenders holding a majority of the revolving credit commitments may elect to terminate the revolving credit commitments in full. The Company is also required to offer to prepay outstanding term loans at 100% of the principal amount to be prepaid, plus accrued and unpaid interest, with the proceeds of certain asset sales under certain circumstances. Senior Notes due 2015 On May 1, 2007, the Company issued $305.0 aggregate principal amount of Senior Floating Rate Notes due 2015 (the "Floating Rate Notes") and $310.0 aggregate principal amount of 9.50% Senior Fixed Rate Notes due 2015 (the "Fixed Rate Notes" and, together with the Floating Rate Notes, the "2015 Senior Notes"). The 2015 Senior Notes mature on May 15, 2015. The Fixed Rate Notes bear interest at a rate per annum of 9.50%, payable on May 15 and November 15 of each year. The Floating Rate Notes bear interest at a rate per annum equal to the Applicable LIBOR Rate (as defined in the indenture governing the 2015 Senior Notes (the "2015 Senior Notes Indenture")), subject to a floor of 1.25%, plus 4.75%, payable on February 15, May 15, August 15 and November 15 of each year. The interest rate on the Floating Rate Notes was 6.0% at December 31, 2012. The Senior Notes are unsecured and are therefore effectively subordinated to all of the Company's senior secured indebtedness, including outstanding borrowings under the Credit Agreement and the 2018 Senior Secured Notes. The Company and each of its existing subsidiaries, other than unrestricted subsidiaries and certain immaterial subsidiaries and certain other exceptions, are guarantors and may also be co-issuers under the 2015 Senior Notes. The 2015 Senior Notes Indenture contains customary restrictive covenants, including, among other things, restrictions on the Company's ability to incur additional debt, pay dividends and make distributions, make certain investments, repurchase stock, incur liens, enter into transactions with affiliates, enter into sale and lease back transactions, merge or consolidate and transfer or sell assets. The Company must offer to repurchase all of the 2015 Senior Notes upon the occurrence of a "change of control," as defined in the 2015 Senior Notes Indenture, at a purchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. The Company must also offer to repurchase the 2015 Senior Notes with the proceeds from certain sales of assets, if it does not apply those proceeds within a specified time period after the sale, at a purchase price equal to 100% of their aggregate principal amount, plus accrued and unpaid interest. 9.75% Senior Secured Notes due 2018 On July 24, 2012, the Company and Harland Clarke Corp., Harland Financial Solutions, Inc., Scantron Corporation and Checks in the Mail, Inc. (together, the "Co-Issuers") completed an offering of $235.0 aggregate principal amount of 9.75% Senior Secured Notes due 2018 (the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document "2018 Senior Secured Notes"). The Company used the net proceeds from the offering, together with cash on hand, to repay $280.2 aggregate principal amount of outstanding Extended Term Loans under its Credit Agreement. The 2018 Senior Secured Notes were issued pursuant to an indenture, dated as of July 24, 2012 (the "2018 Senior Secured Notes Indenture"), among the Company, the Co-Issuers, certain of the Company's domestic subsidiaries that guarantee the 2018 Senior Secured Notes (the "Guarantors") and Wells Fargo Bank, National Association, as trustee and collateral agent (the "Trustee"). The Guarantors have guaranteed (the "Guarantees") the Company's and Co-Issuers' obligations under the 2018 Senior Secured Notes and the 2018 Senior Secured Notes Indenture on a senior secured basis. The 2018 Senior Secured Notes and the Guarantees are secured pursuant to a Security Agreement, dated as of July 24, 2012, by and among the Company, the Co- Issuers, the Guarantors and Wells Fargo Bank, National Association, as collateral trustee (the "Collateral Trustee") and a Collateral Trust Agreement, dated as of July 24, 2012, by and among the Company, certain subsidiaries of Harland Clarke Holdings Corp. named therein, Credit Suisse AG, Cayman Islands branch, as credit agreement collateral agent, and Wells Fargo Bank, National Association, as trustee and as collateral trustee. The 2018 Senior Secured Notes will mature on August 1, 2018. The Company will pay interest on the 2018 Senior Secured Notes at 9.75% per annum, semiannually in arrears on each of February 1 and August 1 to holders of record at the close of business on the immediately preceding January 15 and July 15 of each year, commencing on February 1, 2013. The 2018 Senior Secured Notes are senior secured obligations of the Company and the Co- Issuers and the Guarantees are senior secured obligations of the Guarantors. The 2018 Senior Secured Notes and the Guarantees rank as follows: (i) secured on a first-priority basis, equally and ratably with all obligations of the Company, the Co-Issuers and the Guarantors that are secured by pari passu liens on the collateral, including their existing senior secured credit facilities; (ii) effectively junior to all of the Company's, Co-Issuers' and the Guarantors' obligations under any future asset-based revolving credit facility to the extent of the value of the current asset collateral held by the Company, the Co-Issuers and the Guarantors; (iii) structurally subordinated to any existing and future indebtedness and other liabilities of any existing and future subsidiaries of the Company that are not Guarantors; (iv) pari passu in right of payment with all of the existing and future senior indebtedness of the Company, the Co-Issuers and the Guarantors and effectively senior to the extent of the value of the collateral to any future unsecured indebtedness of the Company, the Co-Issuers and the Guarantors that is secured by liens on the collateral that are junior to the liens securing the Senior Secured Notes and the Guarantees or that is unsecured; and (v) senior in right of payment to any existing and future subordinated indebtedness of the Company, the Co-Issuers and the Guarantors. The 2018 Senior Secured Notes and the Guarantees are secured on a first-priority basis, equally and ratably with the indebtedness under the Credit Agreement, by substantially all of the Company's, the Co-Issuers' and the Guarantors' assets, subject to certain exceptions and permitted liens. Beginning with the fiscal year of the Company ending December 31, 2013, if the Company's secured leverage ratio exceeds 3.25 for 2013 and 3.00 for 2014 and after, the Company will be required to offer to purchase an amount of the 2018 Senior Secured Notes equal to the greater of (1) $15.0 and (2) 50% of its excess cash flow for the applicable period, less any voluntary prepayments of 2018 Senior Secured Notes or credit facility indebtedness and certain mandatory prepayments made during the applicable period and subject to certain other exceptions, at a purchase price equal to 100% of the principal amount of the 2018 Senior Secured Notes, plus accrued and unpaid interest and additional interest. Upon the occurrence of a change of control or if the Company sells certain assets, the Company may be required to make an offer to purchase the 2018 Senior Secured Notes at certain specified prices. The 2018 Senior Secured Notes Indenture contains covenants that, among other things, limit the Company's, the Co-Issuers' and the Guarantors' ability to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to stockholders; (iv) repurchase or redeem capital stock or subordinated

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company's subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company's affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all assets; and (x) transfer or sell assets. These covenants are subject to important exceptions and qualifications. The 2018 Senior Secured Notes Indenture contains affirmative covenants and events of default that are customary for indentures governing high-yield debt securities.

Faneuil Revolving Credit Facilities Faneuil had a $35.5 revolving credit facility (the "Revolving Credit Agreement"), which was to mature on June 1, 2012 and was paid in full on January 25, 2012. At December 31, 2011, Faneuil had $25.6 drawn under the Revolving Credit Agreement. The Revolving Credit Agreement allowed Faneuil to choose from two different interest rate options. The first option was LIBOR plus 2.5% per annum and the second option was Prime Rate minus 1.25%. The effective interest rate on the Revolving Credit Agreement at December 31, 2011 was 3.25%. The Revolving Credit Agreement contained certain covenants and restrictions including covenants and restrictions related to change of control, mergers, dissolution, accounting methodology, indebtedness, dividends and distributions. The Revolving Credit Agreement was collateralized by substantially all of the assets of Faneuil, and was secured by a pledge of the shares of Faneuil's parent. On January 25, 2012, Faneuil entered into a new $25.0, two-year, revolving credit agreement with MacAndrews & Forbes Group LLC, which is an indirect wholly owned subsidiary of MacAndrews. This revolver was drawn in full on January 25, 2012 and the proceeds, along with cash on hand, were used to pay in full the outstanding balance of $25.6 plus all accrued interest under the Revolving Credit Agreement. Faneuil terminated the Revolving Credit Agreement and it is no longer available for borrowing. On March 19, 2012, in connection with the Faneuil Acquisition, Faneuil's $25.0 revolving credit facility with MacAndrews & Forbes Group LLC was extinguished and Faneuil no longer has any loans outstanding. Loss on Early Extinguishment of Debt In connection with the repayment of $280.2 of the Extended Term Loans in the third quarter of 2012, the Company recorded a loss on early extinguishment of debt of $34.2 resulting from the write-off of unamortized acquisition accounting-related fair value discount, which was attributable to the MacAndrews Acquisition (see Note 3). During 2011, the Company extinguished debt with a total principal amount of $2.5 with a carrying value of $1.6, after acquisition accounting related fair value adjustments, by purchasing 2015 Senior Notes in an individually negotiated transaction for a purchase price of $1.7, resulting in a loss of $0.1. Capital Lease Obligations The Company has outstanding capital lease obligations with principal balances totaling $3.1 and $4.5 at December 31, 2012 and December 31, 2011, respectively. These obligations have imputed interest rates ranging from 0.0% to 9.6% and have required payments of $1.5 in 2013, $1.3 in 2014, $0.2 in 2015 and $0.1 in 2016. Annual Maturities Annual maturities of long-term debt (excluding capital lease obligations) during the next five years are as follows:

2013 $ 77.0 2014 790.1 2015 544.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 0 Months Ended 12 Months Ended Operations (USD $) Dec. 31, 2011 Dec. 31, 2012 Dec. 21, 2011 Dec. 31, 2010 In Millions, unless otherwise Successor Successor Predecessor Predecessor specified [Member] [Member] [Member] [Member] Product revenues, net $ 27.4 $ 1,285.1 $ 1,273.2 $ 1,344.8 Service revenues, net 10.3 383.8 312.8 326.4 Total net revenues 37.7 1,668.9 1,586.0 1,671.2 Cost of products sold 22.1 792.3 772.0 787.3 Cost of services provided 7.3 266.1 159.2 171.2 Total cost of revenues 29.4 1,058.4 931.2 958.5 Gross profit 8.3 610.5 654.8 712.7 Selling, general and administrative 11.3 389.7 393.3 389.7 expenses Revaluation of contingent 0 (0.6) (24.3) 0.3 consideration Asset impairment charges 0 1.7 111.6 3.7 Restructuring costs 0 18.9 12.6 22.3 Operating income (loss) (3.0) [1] 200.8 [1] 161.6 [1] 296.7 [1] Interest income 0 0.9 0.4 0.7 Interest expense (6.6) (221.6) (104.8) (115.5) Loss on early extinguishment of (0.1) (34.2) 0 0 debt Loss from equity method 0 (0.1) 0 0 investment Other (expense) income, net 0 (0.2) 13.2 0.1 (Loss) income before income taxes (9.7) (54.4) 70.4 182.0 (Benefit) provision for income taxes (3.8) (19.4) 41.2 67.8 Net (loss) income $ (5.9) $ (35.0) $ 29.2 $ 114.2 [1]Includes (gain) loss from revaluation of contingent consideration arrangements of $(0.6), $0.0, $(24.3) and $0.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, and restructuring costs of $18.9, $0.0, $12.6 and $22.3 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively, (see Note 15) and non-cash impairment charges of $1.7, $0.0, $111.6 and $3.7 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Property Plant and 12 Months Ended Equipment Dec. 31, 2012 Property, Plant and Equipment [Abstract] Property, Plant and Equipment Property, Plant and Equipment Disclosure [Text Block] Property, plant and equipment consists of the following:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Inventories Dec. 31, 2012 Inventories [Abstract] Inventories [Text Block] Inventories Inventories consist of the following:

December 31, December 31, 2012 2011 Finished goods $ 7.7 $ 12.4 Work-in-process 8.2 17.9 Raw materials 13.1 12.9 $ 29.0 $ 43.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Commitments and 12 Months Ended Contingencies Dec. 31, 2012 Commitments and Contingencies [Abstract] Commitments and Commitments and Contingencies Contingencies Disclosure Lease and Purchase Commitments [Text Block] The Company leases property, equipment and vehicles under operating leases that expire at various dates through 2020. Certain leases contain renewal options for one- to five-year periods. Rental payments are typically fixed over the initial term of the lease and usually contain escalation factors for the renewal term. At December 31, 2012, future minimum lease payments under non-cancelable operating leases with terms of one year or more are as follows:

2013 $ 26.0 2014 20.0 2015 12.1 2016 10.3 2017 7.6 Thereafter 6.6

Minimum annual rental payments in the above table have not been reduced by minimum sublease rentals of $1.6. Total operating lease expense, excluding operating lease expense included in restructuring costs was $22.8, $0.5, $20.8, and $22.4 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. At December 31, 2012, the Company had obligations of $56.6 payable under contracts with third-party service providers primarily for information technology services and obligations to purchase approximately $16.6 of raw materials. Other Various legal proceedings, claims and investigations are pending against the Company, including those relating to commercial transactions, intellectual property matters and other matters. Certain of these matters are covered by insurance, subject to deductibles and maximum limits. In the opinion of management based upon the information available at this time, the outcome of the matters referred to above will not have a material adverse effect on the Company's consolidated financial position or results of operations.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivative Financial 12 Months Ended Instruments Dec. 31, 2012 Derivative Financial Instruments [Abstract] Derivative Financial Derivative Financial Instruments Instruments Interest Rate Hedges The Company uses hedge transactions, which are accounted for as cash flow hedges, to limit the Company's risk on a portion of its variable-rate debt. During June 2009, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $350.0, which became effective on June 30, 2009 and expired on June 30, 2012. This hedge swapped the underlying variable rate for a fixed rate of 2.353%. During September 2009, the Company entered into an additional interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $250.0, which became effective on September 30, 2009 and expired on September 30, 2012. This hedge swapped the underlying variable rate for a fixed rate of 2.140%. During June 2010, the Company entered into an interest rate derivative transaction in the form of a three-year interest rate swap with a notional amount of $255.0, which became effective on June 30, 2010. This hedge swaps the underlying variable rate for a fixed rate of 1.264%. The following presents the fair values of these derivative instruments and the classification in the consolidated balance sheets.

Derivatives Designated as Cash Flow Hedging Balance Sheet December 31, December 31, Instruments: Classification 2012 2011 Other current Interest rate swaps liabilities $ 1.3 $ 6.1 Other liabilities — 2.9

Fair value of interest rate swaps is based on forward-looking interest rate curves as provided by the counterparty, adjusted for the Company's credit risk. These derivative instruments were ineffective during fiscal year 2012 and the period December 22 to December 21, 2011 and had no ineffective portions during the period January 1 to December 21, 2011 and fiscal year 2010. Accordingly, no amounts were required to be reclassified from accumulated other comprehensive income to the consolidated statements of operations in 2010 due to ineffectiveness. The following presents the effect of these derivative instruments (effective and ineffective portion) on other comprehensive income and amounts reclassified from accumulated other comprehensive income into interest expense.

The following presents the balances and net changes in the accumulated other comprehensive income related to these derivative instruments, net of income taxes:

Successor Predecessor December 22 Year ended to January 1 to December 31, December 31, December 21, Balances and Net Changes: 2012 2011 2011 Balance at beginning of period $ 0.1 $ 6.5 $ 10.9 Change in ownership — (6.5) — Loss reclassified from accumulated other comprehensive income into interest expense, net of taxes of $0.0, $0.0 and $5.0 (0.1) — (7.9) Net change in fair value of interest rate swaps (effective portion), net of taxes of $0.0, $0.0 and $2.3 — 0.1 3.5 Balance at end of period $ — $ 0.1 $ 6.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Income Taxes Dec. 31, 2012 Income Taxes [Abstract] Income Tax Disclosure [Text Income Taxes Block] Information pertaining to the Company's (loss) income before income taxes and the applicable (benefit) provision for income taxes is as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net operating loss carryforwards 7.0 7.1 Accrued expenses and other liabilities 32.4 31.7 Net current deferred tax asset before valuation allowance 46.3 27.4 Valuation allowance (1.2) (1.9) Net current deferred tax asset 45.1 25.5 Long-term: Property, plant and equipment (22.7) (29.8) Intangible assets (557.5) (591.4) Net operating loss carryforwards and AMT credits 4.0 11.0 Deferred gain on debt repurchases (20.2) (25.4) Accelerated gain on amendment and extension of credit agreement 19.3 — Debt fair value adjustments (103.0) (161.0) Deferred financing fees 2.9 7.1 Accrued rebates 22.3 33.8 Other 34.0 31.1 Net long-term deferred tax liability before valuation allowance (620.9) (724.6) Valuation allowance (1.8) (1.9) Net long-term deferred tax liability (622.7) (726.5) Net deferred tax liabilities $ (577.6) $ (701.0)

Successor Predecessor Year ended December 22 to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 Statutory rate 35.0 % 35.0 % 35.0 % 35.0 % State and local taxes 3.9 % 5.1 % 6.0 % 4.1 % Goodwill impairment — % — % 34.0 % — % Contingent consideration — % — % (11.4)% — %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Domestic production activities deduction — % — % (4.0)% (2.1)% Uncertain tax positions 0.2 % — % (0.3)% (1.2)% Effect of state law change (3.5)% — % — % — % Other 0.1 % (0.9)% (0.7)% 1.5 % 35.7 % 39.2 % 58.6 % 37.3 %

Successor Predecessor December 22 Year ended to January 1 to Year ended December 31, December 31, December 21, December 31, 2012 2011 2011 2010 Balance at beginning of period $ 10.9 $ 10.9 $ 12.0 $ 13.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Additions based on tax positions related to the current year 0.8 — — — Additions for tax positions for prior years 0.9 — 2.5 0.6 Reductions for tax positions for prior years (2.4) — (3.6) (2.2) Settlements — — — — Balance at end of period $ 10.2 $ 10.9 $ 10.9 $ 12.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Retirement Plans (Details) 0 Months 12 Months Ended (USD $) Ended In Millions, unless otherwise Dec. 31, Dec. 31, Dec. 21, Dec. 31, specified 2011 2012 2011 2010 Defined Contribution Plan and Deferred Compensation Agreements Disclosures [Line Items] Defined Contribution Plans, Cost Recognized $ 0.1 $ 12.0 $ 12.7 $ 13.2 Deferred Compensation Arrangement with Individual, Recorded $ 6.9 $ 6.7 Liability Maximum [Member] Defined Contribution Plan and Deferred Compensation Agreements Disclosures [Line Items] Defined Contribution Plan, Employer Matching Contribution, Percent 4.00%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Assets Held For Sale Dec. 31, 2012 Assets Held For Sale [Abstract] Assets Held For Sale Assets Held For Sale At December 31, 2012, assets held for sale consist of the following Harland Clarke segment facilities:

Location Former Use Year Closed Atlanta, GA Operations Support 2008 Atlanta, GA Printing 2008 Information Atlanta, GA Technology 2010

During 2010, the Company closed its information technology facility in Atlanta, GA and relocated those operations into an existing facility. The other listed Atlanta facilities were closed as part of the Company's plan to exit duplicative facilities related to an acquisition. Subsequent to the classification of the Atlanta facilities as assets held for sale, there have been significant changes in the real estate market. Non-cash impairment charges of $0.2, $0.1 and $0.9 were recorded in 2012, the Predecessor period in 2011 and 2010, respectively, to adjust the carrying values of the print facility and information technology facility to reflect an updated estimate of the fair values less costs to sell. These impairment charges are included in asset impairment charges in the accompanying consolidated statements of operations. The Company has made appropriate changes to its marketing plan and believes these facilities will be sold within 12 months. In June 2010, the Company sold its Greensboro facility, which was closed in 2009, for $1.3 and realized a gain of $0.3, which is included in restructuring costs in the accompanying consolidated statements of operations. Assets held for sale are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets and consist of the following:

December 31, December 31, 2012 2011 Land $ 1.0 $ 1.0 Buildings and improvements 2.1 2.3 $ 3.1 $ 3.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Goodwill and Other 12 Months Ended Intangible Assets Dec. 31, 2012 Goodwill and Other Intangible Assets [Abstract] Goodwill and Intangible Goodwill and Other Intangible Assets Assets The change in carrying amount of goodwill by business segment for the years ended December 31, 2012, 2011 and 2010 is as follows:

Harland Harland Financial Clarke Solutions Scantron Faneuil Total Predecessor Balance at December 31, 2010 $ 785.2 $ 452.2 $ 228.4 $ 61.0 $1,526.8 2010 acquisitions — (1.4) (1.4) — (2.8) 2011 acquisition — — 90.2 — 90.2 Impairment — — (102.2) — (102.2) Effect of exchange rate changes — (0.2) — — (0.2) Balance at December 21, 2011 785.2 450.6 215.0 61.0 $1,511.8 Successor Change in ownership (785.2) (450.6) (215.0) (61.0) (1,511.8) MacAndrews Acquisition 415.0 281.8 40.1 8.7 745.6 Faneuil balance at date of common control — — — 13.0 13.0 Balance at December 31, 2011 415.0 281.8 40.1 21.7 758.6 MacAndrews Acquisition 2.0 0.8 — — 2.8 Effect of exchange rate changes — 0.1 0.1 — 0.2 Balance at December 31, 2012 $ 417.0 $ 282.7 $ 40.2 $ 21.7 $ 761.6

Useful lives, gross carrying amounts and accumulated amortization for other intangible assets are as follows:

Accumulated Gross Carrying Amount Amortization Net Carrying Amount December 31, December 31, December 31, Useful Life (in years) 2012 2011 2012 2011 2012 2011 Amortized intangible assets: Customer relationships 3 - 19 $1,528.0 $1,528.0 $132.7 $ 12.3 $1,395.3 $1,515.7 Trademarks and 15 - tradenames 25 101.4 101.4 5.3 0.1 96.1 101.3 Software 3 - 9 56.5 42.2 13.1 1.0 43.4 41.2 1,685.9 1,671.6 151.1 13.4 1,534.8 1,658.2 Indefinite-lived intangible assets: Tradename 0.8 0.8 — — 0.8 0.8

Amortization expense was $137.7, $4.1, $117.5 and $109.0 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. See Note 1 for a discussion of the effect on amortization expense of the revaluation of the Company's assets as a result of the MacAndrews Acquisition. Amortization expense includes amortization of software of $12.1, $0.4, $9.0 and $9.1 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. Estimated aggregate amortization expense for intangible assets through December 31, 2017 is as follows:

Year ending December 31, 2013 $ 128.9 Year ending December 31, 2014 120.8 Year ending December 31, 2015 112.7 Year ending December 31, 2016 101.5 Year ending December 31, 2017 97.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Retirement Plans Dec. 31, 2012 Retirement Plans [Abstract] Retirement Plans [Text Block] Retirement Plans The Company, through its subsidiaries, sponsors certain defined contribution benefit plans whereby it generally matches employee contributions up to 4% of base wages. Contributions to the plans totaled $12.0, $0.1, $12.7 and $13.2 for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010, respectively. The Company has deferred compensation agreements with certain former officers. The present value of the cash benefits payable under these agreements was $6.7 and $6.9 at December 31, 2012 and 2011, respectively. Accretion expense recognized for these agreements was not significant.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Long-Term Debt 3 (Details) 12 Months Ended (USD $) Dec. 31, 2012 Dec. 31, Dec. 31, In Millions, unless otherwise Capital lease obligations 2012 2011 specified [Member] Capital Lease Obligations and Other Indebtedness [Abstract] Capital Lease Obligations $ 3.1 $ 4.5 Debt Instrument, Interest Rate, Effective Percentage Rate 0.00% Range, Minimum Debt Instrument, Interest Rate, Effective Percentage Rate 9.60% Range, Maximum 2013 1.5 2014 1.3 2015 0.2 2016 0.1 Annual Maturities [Abstract] 2013 77.0 2014 790.1 2015 544.9 2016 69.3 2017 $ 400.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended 12 Months Ended Nov. 01, 2011 Dec. 31, 2011 Dec. 31, 2011 Fair Value, Nov. 01, 2011 Nov. 01, 2011 Nov. 01, 2011 US Treasury Dec. 31, 2011 Dec. 31, 2011 Dec. 31, 2011 Equity Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Dec. 21, 2011 Measurements, Fair Value, Fair Value, Fair Value, Securities US Treasury US Treasury US Treasury Securities Equity Equity Equity Equity Equity Equity Interest Rate Interest Rate Interest Rate Interest Rate Interest Rate Interest Rate Dec. 31, 2011 Dec. 31, 2011 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2011 Predecessor Nonrecurring Measurements,Measurements,Measurements, [Member] Securities Securities Securities [Member] Securities Securities Securities Securities Securities Securities Swap Swap Swap Swap Swap Swap Dec. 21, Fair Value, Fair Value, Fair Value, Equity Interest Rate Interest Rate [Member] Fair Value Measurements 1 Dec. 21, Dec. 31, 2011 [Member] Nonrecurring Nonrecurring Nonrecurring Fair Value, [Member] [Member] [Member] Fair Value, [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] 2011 Measurements,Measurements,Measurements, Securities Swap Swap Dec. 21, Fair Value, (Details) (USD $) Dec. Dec. 2011 Fair Value, Estimate of [Member] [Member] [Member] Measurements, Fair Value, Fair Value, Fair Value, Measurements, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Predecessor Recurring Recurring Recurring [Member] [Member] [Member] 2011 Measurements, In Millions, unless otherwise 31, 31, Scantron Measurements, Fair Value, Fair Value, Fair Value, Fair Value, Recurring Measurements,Measurements,Measurements, Recurring Measurements,Measurements,Measurements,Measurements,Measurements,Measurements, Measurements,Measurements,Measurements,Measurements,Measurements,Measurements, [Member] [Member] [Member] [Member] Fair Value, Fair Value, Fair Value, Predecessor Nonrecurring specified 20122010 Segment Recurring Fair Value Inputs, Level 1 Inputs, Level 2 Inputs, Level 3 [Member] Recurring Recurring Recurring [Member] Recurring Recurring Recurring Recurring Recurring Recurring Recurring Recurring Recurring Recurring Recurring Recurring Scantron Fair Value, Fair Value, Fair Value, Measurements, Measurements,Measurements, [Member] [Member] [Member] [Member] Disclosure [Member] [Member] [Member] Estimate of [Member] [Member] [Member] Estimate of [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] Segment Inputs, Level 1 Inputs, Level 2 Inputs, Level 3 Recurring Recurring Recurring Scantron [Member] Scantron Scantron Scantron Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, Fair Value, [Member] [Member] [Member] [Member] [Member] [Member] [Member] Segment Scantron Segment Segment Segment Fair Value Inputs, Level 1 Inputs, Level 2 Inputs, Level 3 Fair Value Inputs, Level 1 Inputs, Level 1 Inputs, Level 2 Inputs, Level 2 Inputs, Level 3 Inputs, Level 3 Inputs, Level 1 Inputs, Level 1 Inputs, Level 2 Inputs, Level 2 Inputs, Level 3 Inputs, Level 3 [Member] Segment [Member] [Member] [Member] Disclosure [Member] [Member] [Member] Disclosure [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] [Member] Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] Goodwill, Fair Value $ 281.9 $ 0 $ 0 $ 281.9 Disclosure Goodwill, Impairment Loss 0 0 102.2 102.2 102.2 102.2 Indefinite-lived Intangible Assets (Excluding Goodwill), 6.8 0 0 6.8 Fair Value Disclosure Impairment of Intangible Assets, Indefinite-lived 4.2 (Excluding Goodwill) Available-for-sale Securities, 56.6 56.6 0 0 0.1 0.1 0.1 0.1 0 0 0 0 Fair Value Disclosure Interest Rate Cash Flow Hedge 1.3 9.0 0 0 1.3 9.0 0 0 Liability at Fair Value Contingent Consideration Arrangements Fair Value $ 0.6 $ 0 $ 0 $ 0.6 Disclosure

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Long-Term Debt 2 (Details) Dec. 31, 2012 Dec. 31, 2011 (USD $) Secured Debt [Member] Unsecured Debt [Member] In Millions, unless otherwise Extended Term Loans Senior Subordinated Notes specified [Member] [Member] Extinguishment of Debt [Line Items] Extinguishment of Debt, Amount $ 280.2 $ 2.5 Loss on early extinguishment of debt 34.2 0.1 Carrying Amount of Debt Extinguished Net of 1.6 Discounts Repayments of Long-term Debt $ 1.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Assets Held For Sale (Tables) 12 Months Ended (Harland Clark Segment Dec. 31, 2012 [Member]) Harland Clark Segment [Member] Assets Held For Sale [Line Items] Assets Held For Sale Assets held for sale are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets and consist of the following:

December 31, December 31, 2012 2011 Land $ 1.0 $ 1.0 Buildings and improvements 2.1 2.3 $ 3.1 $ 3.3

At December 31, 2012, assets held for sale consist of the following Harland Clarke segment facilities:

Location Former Use Year Closed Atlanta, GA Operations Support 2008 Atlanta, GA Printing 2008 Information Atlanta, GA Technology 2010

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Inventories (Details) (USD $) In Millions, unless otherwise Dec. 31, 2012Dec. 31, 2011 specified Inventories [Abstract] Finished goods $ 7.7 $ 12.4 Work-in-process 8.2 17.9 Raw materials 13.1 12.9 Inventories $ 29.0 $ 43.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Investments Dec. 31, 2012 Investments, Debt and Equity Securities [Abstract] Investments [Text Block] Investments Equity Method Investment During the fourth quarter of 2012, the Company purchased certain equity securities of Transactis, Inc. ("Transactis"), a privately held company, representing a 15.5% ownership interest for $7.0 in cash. The Company accounts for this investment using the equity method (See Note 2) due to its ability to influence operating and financial matters of Transactis through its representation on the Transactis board of directors and certain rights under the terms of the stock purchase agreement. The assets, liabilities and results of operations were not significant to the Company's financial position or results of operations in 2012. Marketable Securities

The Company's marketable securities are classified as available-for-sale and are reported at their fair values, which are as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Business Segment 12 Months Ended Information Dec. 31, 2012 Business Segment Information [Abstract] Segment Reporting Disclosure Business Segment Information [Text Block] The Company has organized its business along four reportable segments together with a corporate group for certain support services. The Company's operations are aligned on the basis of products, services and industry. Management measures and evaluates the reportable segments based on operating income. The current segments and their principal activities consist of the following: • Harland Clarke segment — Provides checks and related products, direct marketing services and customized business and home office products to financial and commercial institutions, as well as consumers and other businesses. This segment operates primarily in the United States and Puerto Rico. • Harland Financial Solutions segment — Provides technology products and related services to financial institutions worldwide. This segment operates primarily in the United States, Israel, Ireland and India. • Scantron segment — Provides data management and decision support solutions and related services to educational, commercial and governmental entities worldwide. This segment operates primarily in the United States, Canada and India. • Faneuil segment — Provides call center services, back office operations, staffing services and toll collection services to government and regulated commercial clients and patient information collection and tracking, managed technical services and related field maintenance services to educational, commercial, healthcare and governmental entities. This segment operates primarily in the United States and Canada. As discussed in Note 1, the Company made business segment changes in the second quarter of 2012. Prior period results in the tables below have been reclassified to reflect these business segment changes. Selected summarized financial information for fiscal year 2012, the period December 22 to December 31, 2011, the period January 1 to December 21, 2011, and fiscal year 2010 is as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2012 $ 214.0 $ 23.3 $ (26.6) $ 8.8 $ (18.7) $ 200.8 December 22 to December 31, 2011 (0.6) (0.9) (1.4) 0.2 (0.3) (3.0) Depreciation and amortization (excluding amortization of debt fair value adjustments, original issue discount and deferred financing fees): (7) 2012 $ 146.2 $ 38.4 $ 17.9 $ 11.1 $ — $ 213.6 December 22 to December 31, 2011 4.3 1.0 0.6 0.1 — 6.0 Non-cash asset impairment charges: 2012 $ 0.8 $ 0.1 $ — $ 0.8 $ — $ 1.7 December 22 to December 31, 2011 — — — — — — Capital expenditures (excluding capital leases): 2012 $ 36.9 $ 9.6 $ 6.5 $ 4.8 $ — $ 57.8 December 22 to December 31, 2011 — — — 0.1 — 0.1

Predecessor Product revenues, net: January 1 to December 21, 2011 $1,092.0 $ 69.4 $ 103.2 $ 8.6 $ — $1,273.2 2010 1,156.6 72.0 110.3 5.9 — 1,344.8 Service revenues, net: January 1 to December 21, 2011 $ 28.1 $ 210.1 $ 14.7 $ 59.9 $ — $ 312.8 2010 46.5 210.7 9.2 60.0 — 326.4 Intersegment revenues: January 1 to December 21, 2011 $ 0.1 $ — $ 0.3 $ 0.3 $ (0.7) $ — 2010 0.3 — — 0.4 (0.7) — Operating income (loss): (6) January 1 to December 21, 2011 $ 242.8 $ 54.8 $ (130.6) $ 9.4 $ (14.8) $ 161.6 2010 241.2 48.6 9.0 13.1 (15.2) 296.7 Depreciation and amortization (excluding amortization of deferred financing fees): (7) January 1 to December 21, 2011 $ 89.2 $ 26.1 $ 34.6 $ 8.5 $ — $ 158.4 2010 103.5 28.5 20.2 5.7 — 157.9 Non-cash asset impairment charges: January 1 to December 21, 2011 $ 0.6 $ — $ 108.3 $ 2.7 $ — $ 111.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2010 3.7 — — — — 3.7 Capital expenditures (excluding capital leases): January 1 to December 21, 2011 $ 39.2 $ 7.0 $ 11.7 $ 0.7 $ — $ 58.6 2010 24.3 8.3 5.0 1.0 — 38.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant Accounting Policies 4 Dec. 31, 2012 Dec. 31, 2011 (Details) (USD $) Dec. 21, 2011 Other assets [Member] Other assets [Member] In Millions, unless otherwise specified Deferred Finance Costs [Abstract] Deferred Finance Costs, Net $ 0 $ 11.7 $ 0.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Investments (Tables) Dec. 31, 2012 Marketable Securities [Abstract] Available-for-sale Securities The Company's marketable securities are classified as available-for-sale and are reported [Table Text Block] at their fair values, which are as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 0 Months Consolidated Statements of 12 Months Ended Ended Comprehensive Income Dec. 31, Dec. 31, Statement (USD $) Dec. 21, 2011 Dec. 31, 2010 2011 2012 In Millions, unless otherwise Predecessor Predecessor Successor Successor specified [Member] [Member] [Member] [Member] Net (loss) income $ (5.9) $ (35.0) $ 29.2 $ 114.2 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 0 0.4 (0.9) (0.4) Changes in derivative instruments: Changes in fair value of interest rate swaps during (0.1) 0 (3.5) (14.3) period Less reclassification adjustments for loss included in net 0 0.1 7.9 12.0 (loss) income Net changes in derivative instruments (0.1) 0.1 4.4 (2.3) Unrealized (losses) gains on investments: Unrealized (losses) gains on investments during period 0.1 (0.2) 0.3 6.9 Less reclassification adjustment for amounts included in 0 0.1 (8.1) 0 net (loss) income Net change in unrealized (losses) gains on investments 0.1 (0.1) (7.8) 6.9 Changes in postretirement benefit obligations recognized in other comprehensive income: Amortization of prior service credits included in net 0 0 (0.3) 0 income Prior service credits 0 0 0 5.3 Unrecognized actuarial (loss) gain (0.1) (0.6) (0.8) 0.3 Net change in postretirement benefit obligation (0.1) (0.6) (1.1) 5.6 recognized in other comprehensive income Total other comprehensive (loss) income, net of tax (0.1) (0.2) (5.4) 9.8 Comprehensive (loss) income (6.0) (35.2) 23.8 124.0 Changes in derivative instruments: Changes in fair value of interest rate swaps during 0 0 2.3 9.0 period Less reclassification adjustments for loss included in net 0 0 (5.0) (7.7) income Less reclassification adjustments for loss included in net income Unrealized (losses) gains on investments during period 0 0 (0.1) (4.4) Less reclassification adjustment for amounts included in 0 (0.1) 5.1 0 net income Changes in postretirement benefit obligations recognized in other comprehensive income: Amortization of prior service credits included in net 0 0 0.1 0 income Prior service credits 0 0 0 (3.3)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unrecognized actuarial gain (loss) 0.1 0.4 0.5 (0.3) Total net tax benefit (expense) included in other $ 0.1 $ 0.3 $ 2.9 $ (6.7) comprehensive (loss) income

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Acquisitions Dec. 31, 2012 Acquisitions [Abstract] Acquisitions Acquisitions Faneuil Acquisition On March 19, 2012, the Company entered into a Stock Purchase Agreement pursuant to which the Company purchased 100% of the issued and outstanding shares of capital stock of New Faneuil, Inc. ("New Faneuil") for $70.0 in cash (the "Faneuil Acquisition") from affiliates of MacAndrews. The Company financed the Faneuil Acquisition with Harland Clarke Holdings' cash on hand. New Faneuil, through its wholly owned subsidiary, Faneuil, provides business process outsourcing services including call center operations, back office operations, staffing services and toll collection services to government and regulated commercial clients across the United States. Under accounting guidance for transactions among entities under common control, the Company has accounted for the purchase at historical cost and has retrospectively recasted prior periods under common control to include Faneuil operations. The Company and Faneuil came under common control on December 21, 2011, the date of the MacAndrews Acquisition. Cash paid in excess of the carrying amount of the assets and liabilities assumed in the amount of $33.8 is treated as an equity transaction with the parent in accordance with accounting guidance for transactions among entities under common control. The following table summarizes the historical cost of assets and liabilities assumed on March 19, 2012, the date of the Faneuil Acquisition:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document equity basis amongst itself, the Company and another operating subsidiary of M & F Worldwide. M & F Worldwide had preliminarily allocated and pushed down $222.3 of the new equity basis to the Company as of the acquisition date. During the first quarter of 2012, M & F Worldwide revised the equity allocation amongst these entities, and, as a result, the equity allocated to the Company was reduced to $142.2. As required by accounting guidance for business combinations, this adjustment was recorded by the Company retrospectively as of the acquisition date resulting in changes to the preliminary amounts of goodwill and additional paid-in capital set forth in the Company's December 31, 2011 consolidated balance sheet included in its Annual Report on Form 10-K for the year ended December 31, 2011. This change had no effect on amounts reported in the consolidated statements of operations for 2011. As discussed in Note 1, the periods after the MacAndrews Acquisition have been bifurcated in these financial statements and indicated by the heading "Successor." The following table summarizes the estimated fair values of the Company's assets and liabilities assumed at the date of the MacAndrews Acquisition:

Cash $ 185.2 Accounts receivable 110.1 Property, plant and equipment 207.1 Goodwill * 748.4 Other intangible assets: Customer relationships $1,519.0 Tradenames 101.4 Technology 39.8 Total other intangible assets 1,660.2 Other assets * 147.6 Total assets acquired * 3,058.6 Deferred revenues 96.8 Long-term debt 1,787.4 Deferred tax liabilities * 723.8 Other liabilities * 308.4 Net assets acquired * $ 142.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document respectively. These fair value adjustments result in higher interest expense and lower revenues being recognized over the related earnings period, both of which are non-cash adjustments (of which $115.6 and $4.1was reflected as increased interest expense and $50.8 and $3.9 was reflected as reduced revenues in 2012 and during the period from December 22 to December 31, 2011, respectively). The Company also wrote-off $34.2 of the non-cash fair value adjustment to long-term debt in the third quarter of 2012 as a result of refinancing transactions (see Note 11). Pro Forma Financial Information The unaudited financial information in the table below summarizes the results of operations of the Company, on a pro forma basis, as though the acquisition had occurred as of the beginning of the year presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if this transaction had taken place at the beginning of the year presented, nor does it purport to represent results of operations for future periods.

Unaudited Pro Forma Year ended December 31, 2011 Net revenues $ 1,596.9 Operating income 151.3 Net loss (65.7) Depreciation and amortization (excluding amortization of deferred financing fees) 156.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document goodwill arises because the total consideration for GlobalScholar, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $5.6 is deductible for income tax purposes. The Company financed the GlobalScholar acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. The Company has recognized $1.6 of acquisition related costs for this acquisition, of which $0.2 was expensed and included in selling, general and administrative expenses in the consolidated statements of operations in 2011, with the remainder having been expensed and included in selling, general and administrative expenses in the fourth quarter of 2010. The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $20.0, based on the achievement of certain revenue targets of GlobalScholar measured during the calendar year 2011. The acquisition-date fair value of the contingent consideration arrangement of $18.5 was estimated utilizing a discounted cash flow analysis with significant inputs that were not observable in the market (Level 3 inputs). Key assumptions included a projection of certain GlobalScholar revenues for the measurement period. The application of fair value accounting for the contingent consideration arrangement required recurring remeasurement for changes in key assumptions (see Note 13). No amount was paid in 2012 because the revenue targets were not met. The application of acquisition accounting decreased acquired deferred revenues by $14.9 to $11.6 due to a fair value adjustment. This non-cash fair value adjustment resulted in lower revenue being recognized over the related earnings period (of which $5.2 was reflected as a reduction of revenues for the period January 1, 2011 to December 21, 2011). The fair value of financial assets acquired was not significant. The pro forma effects for the GlobalScholar acquisition on the consolidated results of operations were not material. Acquisition of Parsam On December 6, 2010, Harland Financial Solutions, Inc. ("HFS"), a wholly owned subsidiary of the Company, acquired all of the outstanding membership interests of Parsam Technologies, LLC and the equity of SRC Software Private Limited (collectively "Parsam"). Parsam's solutions allow financial institutions to provide services online, in branches and at call centers, from new account opening and funding to account-to-account money transfers, person- to-person payments, account and adviser-client relationship management, and bill presentment and payment. HFS has integrated Parsam's solutions into its existing solution offerings. The acquisition-date purchase price was $32.8 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $1.2, as described below, which resulted in total estimated consideration of $34.0 as of the acquisition date. Contingent consideration would be payable upon achievement of certain revenue targets of Parsam during calendar years 2011 and 2012. The transaction was accounted for as a business combination and Parsam's results of operations have been included in the Company's operations since the date of its acquisition. The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $25.0, which would have been payable upon the achievement of certain future revenue targets of Parsam measured during calendar years 2011 and 2012. The acquisition-date fair value of the contingent consideration arrangement was estimated utilizing a discounted cash flow analysis with significant inputs that were not observable in the market (Level 3 inputs). Key assumptions included a projection of certain Parsam revenues for the measurement periods. During the first quarter of 2011, the Company identified a $1.6 decrease in the initial estimate of acquisition-date fair value of contingent consideration with a corresponding $1.6 decrease in goodwill. The application of fair value accounting for the contingent consideration arrangement required recurring remeasurement for changes in key assumptions (see Note 13). No amounts will be paid because the revenue targets were not met. The allocation of purchase price resulted in identified intangible assets of $7.8 and goodwill of $26.2. The goodwill arises because the total consideration for Parsam, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Harland Financial Solutions segment. Of the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document goodwill recognized, $23.1 is expected to be deductible for income tax purposes. The Company financed the Parsam acquisition and related fees and expenses with Harland Clarke Holdings' cash on hand. Acquisition-related fees and expenses were not material. The application of acquisition accounting decreased acquired deferred revenues by $1.6 to $0.4 due to a fair value adjustment. This non-cash fair value adjustment resulted in lower revenues being recognized over the related earnings period (of which $1.0 was reflected as a reduction of revenues for the period January 1 to December 21, 2011). The reduction of revenues resulting from this acquisition accounting fair value adjustment was negligible for the period December 7, 2010 to December 31, 2010. The fair value of financial assets acquired was not significant. The pro forma effects for the Parsam acquisition on the consolidated results of operations were not material. Acquisition of Spectrum K12 On July 21, 2010, Scantron acquired 100% of the equity of Spectrum K12 School Solutions, Inc. ("Spectrum K12"). Spectrum K12 develops, markets and sells student achievement management, response to intervention and special education software solutions. Spectrum K12's software solutions complement Scantron's software solutions for educational assessments, content and data management. The acquisition-date purchase price was $28.6 in cash, net of cash acquired and after giving effect to working capital adjustments. In addition, the Company recorded the fair value of contingent consideration of $4.0, as described below, which resulted in total estimated consideration of $32.7 as of the acquisition date. The transaction was accounted for as a business combination and Spectrum K12's results of operations have been included in the Company's operations since the date of its acquisition. The allocation of purchase price resulted in identified intangible assets of $6.6 and goodwill of $25.2. During 2011, the Company recorded additional deferred tax assets of $1.4 in accordance with current accounting guidance with a corresponding decrease in goodwill. The goodwill arises because the total consideration for Spectrum K12, which reflects its future earnings and cash flow potential, exceeds the fair value of the net assets acquired. The goodwill resulting from the acquisition was assigned to the Scantron segment. Of the goodwill recognized, $1.5 is expected to be deductible for income tax purposes. The Company financed the Spectrum K12 acquisition and related fees and expenses with cash on hand. Acquisition-related fees and expenses were not material. The contingent consideration arrangement provided for cash payments of up to an aggregate maximum of $20.0, which would have been payable upon the achievement of certain future revenue targets of Spectrum K12 measured during the twelve-month periods ended June 30, 2011 and 2012. Certain of the contingent consideration payments would have been payable under the terms of the acquisition to eligible employees who remained employed by Spectrum K12 during the twelve-month periods ended June 30, 2011 and 2012. These contingent consideration payments of up to an aggregate of $5.0 to eligible employees were considered incentive compensation and recorded as compensation expense as earned. The acquisition-date fair value of the contingent consideration arrangement of $4.9, of which $0.9 was considered to be incentive compensation, was estimated utilizing a discounted cash flow analysis with significant inputs that are not observable in the market (Level 3 inputs). Key assumptions included a projection of Spectrum K12 revenues for the measurement periods. The application of fair value accounting for the contingent consideration arrangement requires recurring remeasurement for changes in key assumptions (see Note 13). No amount was paid because the revenue targets were not met. The application of acquisition accounting decreased acquired deferred revenues by $10.5 to $5.0 due to a fair value adjustment. This non-cash fair value adjustment resulted in lower revenues being recognized over the related earnings period (of which $3.6 and $1.8 was reflected as a reduction of revenues for the period January 1 to December 21, 2011 and the year ended December 31, 2010, respectively). The fair value of financial assets acquired was not significant. The pro forma effects for the Spectrum K12 acquisition on the consolidated results of operations were not material.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 0 Months 0 Months 12 Months Ended 12 Months Ended Ended Ended Dec. 31, Dec. 31, Income Taxes 3 (Details) 2011 2010 Dec. 31, 2012 (USD $) Dec. 31, Dec. 31, Successor Dec. 21, Dec. 31, Predecessor Successor In Millions, unless otherwise 2011 2012 [Member] 2011 2010 [Member] [Member] specified Successor Successor M&F PredecessorPredecessor M&F MacAndrews [Member][Member] Worldwide [Member] [Member] Worldwide [Member] Corp. Corp. [Member] [Member] Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] Statutory rate 35.00% 35.00% 35.00% 35.00% State and local taxes 5.10% 3.90% 6.00% 4.10% Goodwill impairment 0.00% 0.00% 34.00% 0.00% Contingent consideration 0.00% 0.00% (11.40%) 0.00% Domestic production activities 0.00% 0.00% (4.00%) (2.10%) deduction Uncertain tax positions 0.00% 0.20% (0.30%) (1.20%) Effect of state law change 0.00% (3.50%) 0.00% 0.00% Other (0.90%) 0.10% (0.70%) 1.50% Effective Income Tax Rate, 39.20% 35.70% 58.60% 37.30% Continuing Operations Related Party Transactions [Abstract] Related Party Transaction Payments Made Under Income $ 94.6 $ 0 $ 70.3 $ 83.5 Tax Sharing Agreements Related Party Transaction Receivables At End Of Period $ 16.0 $ 22.7 Related To Income Tax Sharing Agreements Percentage to Be Reimbursed By M & F WorldWide To The Company For Payments 100.00% Received Under A Certain Indemnification Agreement

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Investments 1 (Details) (Transactis, Inc. [Member], USD $) Dec. 31, 2012 In Millions, unless otherwise specified Transactis, Inc. [Member] Schedule of Equity Method Investments [Line Items] Equity Method Investment, Ownership Percentage 15.50% Equity Method Investment, Aggregate Cost $ 7.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Subsequent Event Dec. 31, 2012 Subsequent Event [Abstract] Subsequent Events [Text Subsequent Event Block] Issuance of Revolving Credit Facility due 2018 On February 20, 2013, Harland Clarke Holdings Corp. terminated the Revolver and along with certain of its domestic subsidiaries, as co-borrowers, and its direct parent, CA Acquisition Holdings, Inc. and certain of its other domestic subsidiaries as guarantors, entered into a senior secured asset based revolving credit facility (the "Revolving Facility") with Citibank, N.A., as administrative agent and collateral agent. The Revolving Facility provides for a facility equal to the lesser of $80.0 and a calculated borrowing base consisting of: • 85% of eligible receivables less unearned revenue; plus • the lesser of (i) 85% of the orderly liquidation value of eligible inventory and (ii) 70% of eligible inventory (in each case, at the lower of book value and market); minus • eligibility reserves in effect at the time. The borrowing base at closing, based on December 31, 2012 balances, was $56.6. The Revolving Facility includes an up to $30.0 subfacility for letters of credit and an up to $10.0 subfacility in the form of short-term swingline loans. Borrowings and other obligations under the Revolving Facility are guaranteed by CA Acquisition Holdings, Inc., Harland Clarke Holdings Corp. and certain of its domestic subsidiaries and secured by a lien on substantially all of the assets of such loan parties, including inventory, receivables, equipment, intellectual property and real property. The obligations under the Revolving Facility are secured by a first priority lien on inventory, receivables, payment intangibles and other current assets and other assets arising therefrom and proceeds thereof and second priority liens on the remaining collateral, subject to the first priority liens securing the Company's Non-Extended Term Loans, Extended Term Loans and 2018 Senior Secured Notes. The Revolving Facility will terminate on February 20, 2018, with springing maturities 91 days prior to the scheduled maturity date of the Company's Non-Extended Term Loans, Extended Term Loans and 2015 Senior Notes, all of which mature prior to the termination date of this Revolving Facility. Borrowings against the Revolving Facility will be, at the Company's option: • A LIBOR rate borrowing, bearing interest at a rate per annum equal to a reserve- adjusted LIBOR rate, plus an applicable margin ranging from 1.75% to 2.25% per annum based on the average excess availability for the prior fiscal quarter; or • An Alternate Base Rate ("ABR") borrowing, bearing interest at a rate per annum equal to the greatest of: • The prime rate of CitiBank; ▪ Federal Funds Effective Rate plus 0.5%; and ▪ LIBOR rate for a one-month interest period plus 1%, plus an applicable margin ranging from 0.75% to 1.25% per annum based on the average excess availability for the prior fiscal quarter. The Revolving Facility has a commitment fee of 0.5% per annum if the average utilization of the Revolving Facility for the preceding fiscal quarter is less than 50% of the total commitments and 0.375% per annum if the average utilization for the preceding fiscal quarter is greater than or equal to 50% of the total commitments.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Revolving Facility contains covenants that, among other things, limit the ability of the Company and its subsidiaries to (i) incur or guarantee additional indebtedness or capitalized lease obligations, or issue disqualified or preferred stock; (ii) grant liens on assets; (iii) transfer or sell assets; (iv) pay dividends or make distributions to stockholders; (v) enter into transactions with affiliates; (vi) make investments or acquisitions; (vii) enter into sale/leaseback transactions; (viii) amend certain of the Company's indebtedness; (ix) engage in substantially different lines of business; (x) change the Company's fiscal year; and (xi) engage in speculative hedging transactions. These covenants are subject to important exceptions and qualifications. The Revolving Facility also contains a fixed charge coverage ratio test that may apply if the Company's excess availability falls below specified levels, as well as affirmative covenants and events of default that are customary for such facilities.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Significant Customers 0 Months 12 Months Ended (Details) (Consolidated net Ended revenues [Member], Client Dec. 31, Dec. 31, 2012 Dec. 21, Dec. 31, Concentration Risk 2011 Clients 2011 2010 [Member]) Consolidated net revenues [Member] | Client Concentration Risk [Member] Concentration Risk [Line Items] Concentration Risk, Additional Characteristic The Company's top 20 clients accounted for approximately Concentration Risk, Percentage 30.00% 32.00% 30.00% 32.00% Concentration Risk, Benchmark Description the Company's consolidated net revenues Number of clients 20

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Long-Term Debt (Tables) Dec. 31, 2012 Debt Instruments [Abstract] Long-Term Debt December 31, December 31, 2012 2011 $1,900.0 Senior Secured Credit Facilities: Extended Term Loans due 2017 $ 677.4 $ — Non-Extended Term Loans due 2014 728.6 1,719.0 Total $1,900.0 Senior Secured Credit Facilities 1,406.0 1,719.0 9.75% Senior Secured Notes due 2018 235.0 — Senior Floating Rate Notes due 2015 204.3 204.3 9.50% Senior Fixed Rate Notes due 2015 271.3 271.3 Faneuil Revolving Credit Facility — 25.6 Capital lease obligations 3.1 4.5 Unamortized original issue discount and acquisition accounting- related fair value discount (271.9) (412.7) 1,847.8 1,812.0 Less: current maturities (78.5) (45.1) Long-term debt, net of current maturities $ 1,769.3 $ 1,766.9

Maturities of Long-term Debt Annual maturities of long-term debt (excluding capital lease obligations) during the next five years are as follows:

2013 $ 77.0 2014 790.1 2015 544.9 2016 69.3 2017 400.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Fair Value Measurements Dec. 31, 2012 Fair Value Measurements [Abstract] Fair Value Disclosures [Text Fair Value Measurements Block] Nonrecurring Fair Value Measurements The following table presents the Company's nonfinancial assets that were measured at fair value on a nonrecurring basis during 2011:

Fair Value at November 1, Impairment 2011 (Level 1) (Level 2) (Level 3) Charges Goodwill - Scantron $ 281.9 $ — $ — $ 281.9 $ 102.2 Indefinite-lived tradename - Scantron 6.8 — — 6.8 4.2

Goodwill and indefinite-lived tradename for the Scantron segment were measured for impairment during the fourth quarter of 2011 as part of the Company's annual measurements for impairment testing and resulted in non-cash impairment charges totaling $102.2 and $4.2, respectively. The impairments were primarily due to declines in projected revenues and margins and a higher discount rate for the Scantron segment. See Note 2 for more information on the fair value measurement process for goodwill and indefinite-lived trademarks and tradenames. Recurring Fair Value Measurements Fair values of financial instruments subject to recurring fair value measurements as of December 31, 2012 and 2011, are as follows:

Balance at December 31, 2012 (Level 1) (Level 2) (Level 3) Corporate equity securities $ 0.1 $ 0.1 $ — $ — Liability for interest rate swaps 1.3 — 1.3 —

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2012 2011 Balance at beginning of period $ 0.6 $ 8.2 Businesses acquired — 17.0 Net changes in fair value (0.6) (24.3) Payment on contingent consideration arrangement — (0.3) Balance at end of period $ — $ 0.6