The following discussion regarding our financial condition and results of operations for the three months ended March 31, 2008 and March 31, 2007 should be read in connection with the more detailed financial information contained in our consolidated financial statements and their notes included elsewhere in this quarterly report.

Overview of the Business

M & F Worldwide Corp. (''M & F Worldwide'' and, together with its subsidiaries, the ''Company'') is a holding company that conducts its operations through its indirect, wholly owned subsidiaries, Harland Clarke Holdings, formerly known as Clarke American, and Mafco Worldwide. As a result of the acquisition of Harland, which was completed on May 1, 2007, the Company's business and corporate structure was reorganized along the following four business segments: Harland Clarke (which consists of the combined check business and related products and services of Clarke American and Harland), Harland Financial Solutions, Scantron and Licorice Products.

The Harland Clarke segment offers checks and related products, forms and treasury supplies, and related delivery and fraud prevention services. It also provides specialized marketing and contact center services to its financial and commercial institution clients. Harland Clarke's marketing offerings include turnkey marketing solutions, checkbook messaging and e-mail marketing. Through its contact centers, Harland Clarke provides financial institutions with both inbound and outbound support for its clients, including sales and ordering services for checks and related products and services, customer care and banking support, and marketing services.

The Harland Financial Solutions segment, which is comprised of operations acquired from Harland, provides products and services including lending and mortgage origination and servicing applications, business intelligence solutions, customer relationship management software, branch automation solutions and core processing systems and services, principally targeted to community banks and credit unions.

The Scantron segment, which is comprised of operations acquired from Harland and the Data Management Acquisition (as defined below), provides testing and assessment solutions to schools in North America, offers specialized data collection solutions to educational, commercial and governmental entities and collects and manages survey information for a wide variety of Fortune 1000 and other organizations. Scantron's products and services include scannable forms, scanning equipment, survey services and testing software and field maintenance services.

The Licorice Products segment, which is operated by Mafco Worldwide, produces a variety of licorice products from licorice root, intermediary licorice extracts produced by others and certain other ingredients. Approximately 67% of Mafco Worldwide's licorice product sales are to the worldwide tobacco industry for use as tobacco flavor enhancing and moistening agents in the manufacture of American blend cigarettes, moist snuff, chewing tobacco and pipe tobacco. In addition, Mafco Worldwide manufactures and sells natural products for use in the tobacco industry. Mafco Worldwide also sells licorice to confectioners, food processors, cosmetic companies and pharmaceutical manufacturers for use as flavoring or masking agents, including its Magnasweet brand flavor enhancer, which is used in various brands of chewing gum, energy bars, non-carbonated beverages, lip balm, chewable vitamins, aspirin and other products. Mafco Worldwide sells licorice root residue as garden mulch under the name Right Dress.

Recent Significant Acquisitions

On February 22, 2008, the Company's wholly owned subsidiary, Scantron Corporation, purchased all of the limited liability membership interests of Data Management from NCS Pearson, for $220.4 million in cash after giving effect to a preliminary working capital adjustment and subject to further post-closing adjustments (the ''Data Management Acquisition''). Data Management designs,

manufactures and services scannable data collection products, including printed forms, scanning equipment and related software, and provides survey consulting and tracking services, including medical device tracking, as well as field maintenance services to corporate and governmental clients. The Company financed the Data Management Acquisition and related fees and expenses with cash on hand at Harland Clarke Holdings.

On May 1, 2007, the Company consummated the acquisition of Harland (the ''Harland Acquisition''). The cash consideration paid was $52.75 per share, or a total of approximately $1,423.0 million, for the outstanding equity of Harland. Subsequent to the completion of the Harland Acquisition, Clarke American was renamed Harland Clarke Holdings on May 2, 2007.

To fund the purchase price in the Harland Acquisition, to refinance Harland Clarke Holdings' and Harland's prior existing indebtedness, and to pay the fees and expenses for the Harland Acquisition and the related financings:

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                  •                 Harland Clarke Holdings entered into a
                                    $1,800.0 million senior secured term loan
                                    facility and a $100.0 million revolving credit
                                    facility; and

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                  •                 Harland Clarke Holdings issued $305.0 million
                                    aggregate principal amount of senior floating
                                    rate notes due 2015 and $310.0 million
                                    aggregate principal amount of 9.50% senior
                                    fixed rate notes due 2015.

The Harland Acquisition and related financing transactions and the Data Management Acquisition have greatly increased the Company's revenues, cost of revenues, selling, general and administrative expenses and interest expense. As a result of the application of purchase accounting under SFAS No. 141, ''Business Combinations,'' the Company's depreciation and amortization expense has also increased significantly.

Having completed the Harland Acquisition and the Data Management Acquisition, the Company is focused on improving operating margins by reducing selling, general and administrative expenses, shared services costs and cost of sales.

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. Checks written remain one of the largest forms of non-cash payment in the United States.

The financial institution outsourcing services industry is highly competitive and fragmented with quality and breadth of service offerings and strength of customer relationships among the key competitive factors. Within this category, Harland Clarke competes with large outsourcing service providers that offer a wide variety of services including those that compete with Harland Clarke's primary offerings - specifically payment services, marketing services, and teleservices. There are also other competitors that specialize in providing one or more of these services.

The Harland Clarke segment's operating results are also modestly impacted by consumer confidence and employment. Consumer confidence directly correlates with consumer spending, while employment also impacts revenues through the number of new checking accounts being opened. To a lesser degree, business confidence impacts a portion of the Harland Clarke segment.

Harland Financial Solutions

Harland Financial Solutions' operating results are impacted by the overall demand for our products, software and related service 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 could result in reductions in the information technology, or IT, budgets for some portion of our clients.

The markets for our Harland Financial Solutions products are characterized by technological change, evolving industry standards, regulatory changes in client requirements and frequent new product introductions and enhancements. The markets for 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.

The market for providing technological solutions to financial institutions is highly competitive and fragmented. Harland Financial Solutions competes with several domestic and international companies. There are also other competitors that offer one or more specialized products or services that compete with Harland Financial Solutions. 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.

Scantron

While the number of tests given annually in K-12 and higher education markets continue to grow, the demand for Optical Mark Reader paper based testing has declined and is expected to continue to decline. Data collection for non-testing applications such as surveys 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. Changes in educational funding can impact 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.

Mafco Worldwide

Developments and trends within the tobacco industry may have a material effect on the operations of Mafco Worldwide. Worldwide consumption of American blend cigarettes has declined approximately 2% to 3% per year for the past five years. Changing public attitudes toward tobacco products, an increase in excise and other taxes on cigarettes and a constant expansion of tobacco regulations in a number of countries have contributed significantly to this worldwide decline in consumption. Consumption of chewing tobacco and moist snuff is concentrated primarily in the United States. Domestic consumption of chewing tobacco products has declined by approximately 4% to 5% per year over the past five years. Moist snuff consumption has increased approximately 4% to 5% per year over the past five years due at least in part to the shift away from cigarettes and other types of smoking and smokeless tobacco.

Producers of tobacco products are subject to regulation in the United States at the federal, state and local levels, as well as in foreign countries. During 2007, the United States Senate and House of Representatives each proposed legislation that would provide greater regulatory oversight for the manufacture of tobacco products including proposals that could grant government agencies the ability to regulate tobacco product additives. Such legislation, if enacted, could potentially limit the type or quantity of additives that may be used in the manufacture of tobacco products in the United States. Together with changing public attitudes toward tobacco products, a constant expansion of tobacco regulations worldwide has been a major cause for the decline in consumption. Moreover, the trend is toward increasing regulation of the tobacco industry. Restrictive foreign tobacco legislation has been

on the rise in recent years as well, including restrictions on where tobacco may be sold and used, warning labels and other graphic packaging images, product constituent limitations and a general increase in taxes.

Over the years, there has been substantial litigation between tobacco product manufacturers and individuals, various governmental units and private health care providers regarding increased medical expenditures and losses allegedly caused by use of tobacco products. In part, as a result of settlements in certain of this litigation, the cigarette companies have significantly increased the wholesale price of cigarettes in order to recoup the cost of the settlements. Since 1999, cigarette consumption in the United States has decreased due to the higher prices of cigarettes, the increased emphasis on the health effects of cigarettes and the continuing restrictions on smoking areas.

The tobacco industry, including cigarettes and smokeless tobacco, has been subject to federal, state, local and foreign excise taxes for many years. In recent years, federal, state, local and foreign governments have increased or proposed increases to such taxes as a means of both raising revenue and discouraging the consumption of tobacco products. Proposals to increase taxes on tobacco products are also pending in both the U.S. and in foreign countries.

Critical Accounting Policies and Estimates

There was no material change to the Company's Critical Accounting Policies and Estimates included in the Company's Annual Report on Form 10-K for the year ended December 31, 2007 as filed on February 29, 2008 with the United States Securities and Exchange Commission (''SEC''), which is available on the SEC's website at www.sec.gov.

See Note 2 to the consolidated financial statements included elsewhere in this quarterly report on Form 10-Q regarding the impact of recent accounting pronouncements on the Company's financial condition and results of operations.

Consolidated Operating Results

Subsequent to the completion of the Harland Acquisition on May 1, 2007, the Company reorganized its business along four reportable segments together with a corporate group for certain support services. The reorganization aligns the Company's operations on the basis of products, services and industry. The Company's previously existing Financial Institution and Direct to Consumer segments were combined with Harland's similar operations; this business segment now operates under the name of Harland Clarke and is referred to as the Harland Clarke segment. The Company also added two reportable segments for business lines acquired in the Harland Acquisition: the Harland Financial Solutions segment and the Scantron segment. The acquired Data Management operations are included in the Scantron segment. During the first quarter of 2008, the Company transferred its field maintenance services from the Harland Financial Solutions segment to the Scantron segment. This transfer was implemented to align the field maintenance services with Scantron as a result of the Data Management Acquisition. Management measures and evaluates the reportable segments based on operating income. Prior period results in the tables below have been restated to conform to the business segment changes.

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

The operating results for the three months ended March 31, 2008, as reflected in the accompanying consolidated statements of income and described below, include the acquired Harland operations. The operating results for the Scantron segment include the acquired Data Management operations from February 22, 2008, the date of the Data Management Acquisition.

                     M & F Worldwide Corp. and Subsidiaries

Net Revenues:

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                                                                                     March 31,                                                                                                   March 31,
$ in millions                                                                          2008                                                                                                        2007
Consolidated Net  [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
Revenues:                                                               [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]
Harland Clarke    [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
Segment                                                                                 $             332.1 [[Image Removed]]                                                                       $             164.6 [[Image Removed]]
Harland Financial [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
Solutions Segment                                                       [[Image Removed]]              71.2 [[Image Removed]]                                                       [[Image Removed]]                 - [[Image Removed]]
Scantron Segment  [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]              41.6 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                 - [[Image Removed]]
Licorice Products [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
Segment                                                                 [[Image Removed]]              27.5 [[Image Removed]]                                                       [[Image Removed]]              26.7 [[Image Removed]]

Net revenues increased by $280.7 million in the 2008 period as compared to the 2007 period, primarily as a result of the Harland Acquisition which accounted for $263.0 million of the increase, and the Data Management Acquisition, which accounted for $10.9 million of the increase.

Net revenues from the Harland Clarke segment increased by $167.5 million to $332.1 million in the 2008 period from $164.6 million in the 2007 period, primarily as a result of the Harland Acquisition which accounted for $161.5 million of the increase. The remaining $6.0 million of the increase was primarily due to higher revenues per unit, partially offset by a decline in units.

Net revenues from the Harland Financial Solutions and Scantron segments include reductions of $1.0 million and $0.2 million, respectively, for a fair value adjustment to deferred revenues recorded in the purchase accounting for the Harland Acquisition. The Scantron segment also includes $10.9 million of revenues for Data Management for the period from February 22, 2008 to March 31, 2008, which revenue is net of a $0.1 million reduction in revenues for a fair value adjustment to deferred revenues recorded in the purchase accounting for the Data Management Acquisition. The fair value adjustments are one-time reductions in revenues attributable to the purchase accounting for the Harland Acquisition and the Data Management Acquisition. Net revenues will continue to be affected by these adjustments until all acquired deferred revenue is recognized in the consolidated statements of income. The Company expects that the substantial majority of the reduction in net revenues resulting from the deferred revenue fair value adjustments will be recognized during the twelve-month periods following the Harland Acquisition and the Data Management Acquisition.

Net revenues from the Licorice Products segment increased by $0.8 million, or 3.0%, to $27.5 million in the 2008 period from $26.7 million in the 2007 period. Magnasweet and licorice derivatives sales increased $2.6 million due to increased shipment volumes and the consolidation of Wei Feng third-party sales beginning on July 2, 2007. Sales to the worldwide tobacco industry decreased by $0.8 million primarily as the result of lower shipment volume to Altria Group, Inc. (''Altria'') due to elimination of Altria's non-USA business as part of its worldwide restructuring and spin-off of Philip Morris International (''PMI''). This restructuring resulted in a change in the timing of shipments of licorice extract to both Altria and PMI during 2008. Sales of licorice extracts to non-tobacco customers increased $0.4 million primarily as a result of the favorable impact of the United States dollar translation of Mafco Worldwide's euro-denominated sales due to the weaker dollar in the 2008 period versus the 2007 period. Sales of raw materials from Mafco Worldwide to Wei Feng were $1.4 million in the 2007 period and were eliminated in the consolidation of the Company's accounts in the 2008 period as the result of the purchase of the remaining 50% of the outstanding shares of Wei Feng on July 2, 2007.

                     M & F Worldwide Corp. and Subsidiaries

Cost of Revenues:

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                                                                                     March 31,                                                                                                   March 31,
$ in millions                                                                          2008                                                                                                        2007
Consolidated Cost [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
of Revenues:                                                            [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]
Harland Clarke    [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
Segment                                                                                 $             215.4 [[Image Removed]]                                                                       $             101.5 [[Image Removed]]
Harland Financial [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
Solutions Segment                                                       [[Image Removed]]              30.4 [[Image Removed]]                                                       [[Image Removed]]                 - [[Image Removed]]
Scantron Segment  [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]              22.8 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                 - [[Image Removed]]
Licorice Products [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
Segment                                                                 [[Image Removed]]              14.8 [[Image Removed]]                                                       [[Image Removed]]              13.5 [[Image Removed]]

Cost of revenues increased by $168.0 million in the 2008 period as compared to the 2007 period, primarily as a result of the Harland Acquisition, which accounted for $159.5 million of the increase, and the Data Management Acquisition, which accounted for $6.8 million of the increase.

Cost of revenues from the Harland Clarke segment increased by $113.9 million to $215.4 million in the 2008 period from $101.5 million in the 2007 period, primarily as a result of the Harland Acquisition, which accounted for $113.5 million of the increase. The remaining $0.4 million resulted from increased delivery and facilities closure expenses, largely offset by cost reductions in labor, materials and facilities expenses. Cost of revenues in the 2008 period includes $15.2 million of amortization expenses for intangible assets compared to $7.3 million in the prior year. The increase in amortization expense resulted from the addition of amortizable intangible assets recorded in connection with the Harland Acquisition.

Cost of revenues for the Harland Financial Solutions and Scantron segments were $30.4 million and $22.8 million, respectively, in the 2008 period. Included in . . .