AMERICAN BANKNOTE CORP, 10-Q, 1997-11-14

AMERICAN BANKNOTE CORP
10-Q, 1997-11-14
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<PAGE>
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended September 30, 1997

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

For the transition period from _________to _________

Commission File Number 1-3410

AMERICAN BANKNOTE CORPORATION

(Exact name of Registrant as specified in its charter)

A Delaware I.R.S. Employer
Corporation No. 13-0460520

200 Park Avenue, New York, New York 10166-4999

Telephone - Area Code 212-557-9100

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing for
the past 90 days. Yes X No

At November 10, 1997 - 20,853,717 shares of common stock were
outstanding.<PAGE>
<PAGE>
AMERICAN BANKNOTE CORPORATION

FORM 10-Q

I N D E X

PAGE
NO.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Unaudited Condensed Consolidated Balance Sheets
September 30, 1997 and December 31, 1996 . . .. . . . 3

Unaudited Condensed Consolidated Statements of Operations
For the Nine and Three Months Ended September 30, 1997
and 1996. . . . . . . . . . . . . . . . . . . . . . . 4

Unaudited Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September, 1997 and 1996 . . 5

Unaudited Condensed Consolidated Statement of Stockholders'
Equity For the Nine Months Ended September 30, 1997 . . 6

Notes to Unaudited Condensed Consolidated
Financial Statements. . . . . . . . . . . . . . . . . 7

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . 10

PART II - OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . 18

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 19<PAGE>
<PAGE>
PART I - Financial Information
ITEM 1. Financial Statements
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except for share data)
<TABLE>
<CAPTION>
September December
30, 1997 31, 1996
ASSETS (Unaudited)
<S>
Current assets <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . $ 3,611 $ 14,256
Marketable securities - at market,
(cost $1,746 in 1996) . . . . . . . . . . . . . . 2,133
Accounts receivable, net of allowance for
doubtful accounts of $767 and $981. . . . . . . . 56,640 47,501
Inventories . . . . . . . . . . . . . . . . . . . . 41,130 35,622
Deferred income taxes . . . . . . . . . . . . . . . 4,616 4,261
Prepaid expenses and other. . . . . . . . . . . . . 16,161 9,362
Total current assets . . . . . . . . . . . . . 122,158 113,135
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization of $112,020 and $96,385. . . . . . . . 250,326 253,987
Other assets . . . . . . . . . . . . . . . . . . . . 24,815 27,974
Excess of cost of investment in subsidiaries
over net assets acquired, net of accumulated
amortization of $8,156 and $5,662 . . . . . . . . . 93,846 85,282
$491,145 $480,378

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving credit. . . . . . . . . . . . . . . . . . $ 3,191 $ 3,103
Current portion of long-term debt . . . . . . . . . 17,797 14,450
Accounts payable and accrued expenses . . . . . . . 63,922 60,049
Total current liabilities. . . . . . . . . . . 84,910 77,602
Long-term debt . . . . . . . . . . . . . . . . . . . 260,779 263,548
Other liabilities. . . . . . . . . . . . . . . . . . 25,623 24,706
Deferred income taxes . . . . . . . . . . . . . . . 42,372 47,456
Minority interest. . . . . . . . . . . . . . . . . . 20,353 20,789
434,037 434,101
Commitments and Contingencies

Stockholders' equity
Preferred Stock, authorized 5,000,000 shares,
no shares issued or outstanding . . . . . . . . .
Zero Coupon Convertible Subordinated Debenture. . . 3,620
Common Stock, par value $.01 per share,
authorized 50,000,000 shares; issued
21,134,717 shares and 20,137,880 shares . . . . . 211 202
Capital surplus . . . . . . . . . . . . . . . . . . 73,173 68,609
Retained-earnings (deficit) . . . . . . . . . . . . (16,739) (21,362)
Treasury stock, at cost (281,000 shares) . . . . . (1,253) (1,253)
Cumulative currency translation adjustment . . . . (1,904) 81
Total stockholders' equity . . . . . . . . . . 57,108 46,277
$491,145 $480,378
</TABLE>
See notes to Condensed Consolidated Financial Statements.
<PAGE>
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Amounts in thousands, except per share data)

<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
1997 1996 1997 1996

<S> <C> <C> <C> <C>
Sales. . . . . . . . . . . . . . . . $248,416 $217,560 $88,152 $86,879

Costs and expenses:
Cost of goods sold. . . . . . . . . 166,263 142,793 58,435 54,223
Selling and administrative . . . . 34,881 33,327 11,962 14,099
Depreciation and amortization . . . 17,799 14,731 6,346 6,034
218,943 190,851 76,743 74,356

29,473 26,709 11,409 12,523
Other (expense) income:
Interest expense. . . . . . . . . . (24,353) (20,124) (8,451) (7,483)
Foreign translation losses, net . . (122) (201) (15) (65)
Other, net. . . . . . . . . . . . . 2,519 711 860 331
(21,956) (19,614) (7,606) (7,217)
Income before taxes on income
and minority interest . . . . . . . 7,517 7,095 3,803 5,306

Taxes on income. . . . . . . . . . . 371 877 807 1,378

Income before minority interest . . 7,146 6,218 2,996 3,928

Minority interest. . . . . . . . . . (2,458) (3,427) (564) 1,700

Net Income . . . . . . . . . . . . $ 4,688 $ 2,791 $ 2,432 $ 2,228

Weighted average number of common
and common equivalent shares
outstanding . . . . . . . . . . . . 21,430 20,300 21,720 20,420

Net income per share. . . . . . . . $ .22 $ .14 $ .11 $ .11

</TABLE>

See notes to Condensed Consolidated Financial Statements.<PAGE>
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)

<TABLE>
<CAPTION>
Nine Months Ended
September 30
1997 1996
<S> <C> <C>
Operating Activities:
Net cash from operations, after adjustments
to reconcile income to net cash provided
operating activities. . . . . . . . . . . . . . . $21,829 $ 17,850
Marketable securities . . . . . . . . . . . . . . 2,077 (718)
Accounts receivables. . . . . . . . . . . . . . . (3,075) (9,774)
Inventories . . . . . . . . . . . . . . . . . . . (7,021) (7,032)
Prepaid and other assets. . . . . . . . . . . . . (5,757) 325
Accounts payable and accrued expenses . . . . . . (5,198) 5,611
Other . . . . . . . . . . . . . . . . . . . . . . (975) (6,677)
Net cash provided by (used in)
operating activities . . . . . . . . . . . . . . 1,880 (415)

Investing Activities:
Acquisitions . . . . . . . . . . . . . . . . . . . (5,546) 1,789
Capital expenditures . . . . . . . . . . . . . . . (7,491) (16,775)
Net cash used in investing activities. . . . . . . (13,037) (14,986)

Financing Activities:
Borrowings . . . . . . . . . . . . . . . . . . . . 6,280 8,178
Zero Coupon Convertible Subordinated Debenture . . 4,700
Revolving credit borrowings. . . . . . . . . . . . 88 854
Dividend to minority shareholder . . . . . . . . . (2,587) (1,623)
Proceeds from exercise of options and warrants . . 626
Payment of long-term debt. . . . . . . . . . . . . (8,813) (25)
Net cash (used in) or provided by
financing activities . . . . . . . . . . . . . . 294 7,384

Effect of foreign currency exchange rate
changes on cash and cash equivalents . . . . . . . 218 (51)

Decrease in cash and cash equivalents. . . . . . . . (10,645) (8,068)

Cash and cash equivalents beginning of period. . . . 14,256 23,525

Cash and cash equivalents end of period. . . . . . . $ 3,611 $15,457

Supplemental cash payments:
Taxes. . . . . . . . . . . . . . . . . . . . . . . $ 3,400 $ 7,000
Interest . . . . . . . . . . . . . . . . . . . . . $14,200 $15,600
<?Table>

See Notes to Condensed Consolidated Financial Statements.
<PAGE>
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - UNAUDITED
NINE MONTHS ENDED SEPTEMBER 30, 1997
(Amounts in thousands)

</TABLE>
<TABLE>
<CAPTION>
Zero Coupon Cumulative
Convertible Retained Currency
Common Stock Subordinated Capital Earnings Treasury Transl. Total
Shares Amount Debenture Surplus (Deficit) Stock Adjust. Equity

<S> <S> <S> <C> <C> <C> <C> <C> <C>
Balance-January
1, 1997 20,138 $202 $68,609 $(21,362) $(1,253) $ 81 $46,277

Issuances in
connection with:
Options, warrants
and compensation
plans 349 3 1,291 1,294
Sati Group
acquisition 423 4 2,130 2,134

Sale of
convertible
debenture and
warrants net of
expenses $4,455 245 4,700

Imputed interest
on debenture 65 (65)

Conversion of
debenture 225 2 (900) 898

Foreign
currency
translation
adjustment
for period (1,985) (1,985)

Net income 4,688 4,688

Balance-September
30, 1997 21,135 $211 $3,620 $73,173 $(16,739) $(1,253) $(1,904) $57,108

</TABLE>

See Notes to Condensed Consolidated Financial Statements.<PAGE>
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Note A - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements
do not contain all disclosures required by generally accepted
accounting principles. Reference should be made to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. The
accompanying unaudited condensed consolidated financial statements
reflect all adjustments (consisting of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
statement of the results of the interim periods presented and are not
necessarily indicative of the results which may be expected for a full
year.

Primary and fully-diluted income per share are the same and have been
computed after deducting from net income the imputed interest
attributable to the Zero Coupon Convertible Subordinated Debenture.

Note B - Acquisition of the Sati Group

In August 1997, the Company acquired in France, the Sati Group's check
personalization, electronic printing and document management business.
Sales of the Sati Group for the seven months ended July 31, 1997 and
for the year ended December 31, 1996 were approximately $11.7 million
and $22.2 million, respectively. The results of the Sati Group from
August 1, 1997 are reported within the Company's Printing Services &
Document Management product line. The acquisition purchase price of
$11.2 million was financed with approximately $9.1 million of non-recourse
term loans in France through the issuance of and
approximately 423,000 shares of the Company's Common Stock. The
acquisition was accounted for by the purchase method of accounting.
The purchase price was allocated on a preliminary basis before final
purchase accounting adjustments as follows: assets acquired $13.2
million; liabilities assumed $7.8 million; and excess cost of
investment in subsidiaries over net assets acquired $5.8 million. The
Company has agreed to file a registration statement under the
Securities Act within 90 days following the acquisition date to
register the shares of Common Stock for resale.

Note C - Zero Coupon Convertible Subordinated Debenture

On July 24, 1997, the Company sold in a private placement $5 million
principal amount of a Zero Coupon Subordinated Convertible Debenture,
due August 2, 2002 (the "Security") plus warrants. At maturity, the
outstanding Security is automatically converted into Common Stock <PAGE>
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -

Note C - Zero Coupon Convertible Subordinated Debenture - continued

resulting in the Security being treated as a component of
stockholders' equity. In September 1997, $1.0 million principal
amount of the Security was converted into 224,688 shares of Common
Stock. Interest accretes at 6% per annum on the Security.

Holders may convert the Security, from time to time, at 100% of the
average of the two consecutive trading days' closing prices yielding
the lowest average price during 25 trading days prior to conversion or
$6.00, whichever is lower, except during the 25 days following
issuance when the conversion price is $4.5625 (the closing price on
the date of issuance). The Security may be redeemed in cash at the
election of the Company in lieu of issuing shares of Common Stock if
the closing price is below $3.50 per share and, at any time the
closing price during 10 consecutive days is greater than $6.50 per
share. Redemption prices vary depending on the type of redemption
transaction from the closing price on the date of conversion (or an
average of 5 days prices) multiplied by the number of shares that
would have been issued upon conversion to 110% of the principal amount
called for redemption. No more than 20% of the Security may be
converted during the first 90-day period and each successive 60-day
period until the 210th day, and 20% each 90 days thereafter following
closing unless the closing price exceeds $6.50 or is greater than 115%
of the prior day's closing price, whereupon full conversion is
permitted on that day.

In connection with the Security, the Company issued 140,000 two-year
warrants exercisable at $5.70 (125% above the closing price on the
date of issuance) and 75,000 three-year warrants at $6.4125, (140%
above the closing price on the date of issuance), and the value of the
warrants ($245,000) will be accreted over the 5-year term of the
Security. If the Company redeems the Security, additional warrants for
21 shares for each $1,000 redeemed are issuable with an exercise price
equal to the closing price. The Security is subordinated to all
existing or future bank, institutional, financial transaction or
acquisition indebtedness.

Note D - Inventories
September December
30, 1997 31, 1996
(in thousands)
Finished goods. . . . . . . . . . . . . $ 3,984 $ 6,288
Work in process . . . . . . . . . . . . 17,766 14,905
Raw materials and supplies. . . . . . . 19,380 14,429
$41,130 $35,622<PAGE>
<PAGE>
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Note E - Commitments and Contingencies

The Company is involved in various litigation, reference is made to
"Part II - Other Information, Item 1. Legal Proceedings"

The Company and its subsidiaries are parties to various additional
lawsuits (as both plaintiff and defendant) related to various matters
in the normal course of business, which in the opinion of management,
are not anticipated to have a material adverse impact on its
consolidated financial position or results of operation.

Note F - Accounting Pronouncements

Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings
per Share", was issued in February 1997 and is effective for interim
and annual periods ending after December 15, 1997. SFAS No. 128,
establishes standards for comparing and presenting earnings per share
and will require the restatement of all prior-period earnings-per-share data.
The implementation of SFAS No. 128 will not have a
material impact on the Company's earnings per share. SFAS No. 129,
"Disclosure of Information about Capital Structure", was issued in
February 1997 and is effective for periods ending after December 15,
1997. This statement establishes standards for disclosing information
about an entity's capital structure by superseding and consolidating
previously issued accounting standards. The financial statements of
the Company are prepared in accordance with the requirements of SFAS
No. 129.

In June 1997, SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," was issued which will be
effective for the Company beginning January 1, 1998. SFAS No. 131
redefines how operating segments are determined and requires
disclosure of certain financial and descriptive informative about a
company's operating segments. The Company does not currently
anticipate that the adoption of SFAS No. 131 will result in expanded
disclosures.

<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

General

On June 3, 1996, the Company acquired a 55% equity interest in ABN
Australasia Limited ("ABAL"), and as of October 1, 1996, acquired the
remaining 45% equity interest. The acquisition of ABAL, also known as
Leigh-Mardon ("LM"), was accounted for as a purchase transaction and
its operations have been included in the consolidated operations since
the acquisition dates. The acquisition had a significant impact on
the operations of the Company beginning in the third quarter of 1996.
In August 1997, the Company acquired the Sati Group's check
personalization, electronic printing and document management business
and accounted for the acquisition as a purchase transaction and
consolidated its operations since August 1, 1997. The operations of
the Sati Group in France did not have a significant effect on the
results of operations in 1997.

COMPARISON OF RESULTS OF THE NINE MONTHS ENDED SEPTEMBER 30, 1997
WITH THE NINE MONTHS ENDED SEPTEMBER 30, 1996

The Company operates in a single industry, secured products and
systems, with three principal product lines. The following table
presents these product lines for the nine-month periods ended
September 30:
1997 1996
(in millions)
$ % $ %

Transaction Cards & Systems . . . . 83.3 33.5 84.1 38.7
Printing Services
& Document Management . . . . . . 43.6 17.6 36.0 16.5
Security Printing Solutions . . . . 121.5 48.9 97.5 44.8
248.4 100.0 217.6 100.0

Sales increased by $30.8 million or 14.2% from the 1996 period.
Transaction Cards & Systems ("TCS") sales decreased $0.8 million or
1.0%, Printing Services & Document Management ("PSDM") sales increased
$7.6 million or 21.1% and Security Printing Solutions ("SPS") sales
increased $24.0 million or 24.6%. The net increase in sales is due
primarily to the inclusion of LM's sales for the entire 1997 period
and the Sati Group sales in 1997, aggregating $41.8 million. This
increase in sales was partially offset by reduced TCS sales of stored-value
telephone cards ($20.9 million). Sales by foreign subsidiaries
represented 70.7% of the Company's consolidated sales in the 1997
period as compared to 67.8% in the 1996 period, primarily due to the
acquisitions discussed above.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - continued

Cost of goods sold increased $23.5 million or 16.4%, primarily due to
the inclusion of LM's cost of sales for the entire 1997 period. As a
percentage of sales, cost of goods sold was 66.9% in the 1997 period
as compared to 65.6% in the 1996 period. This increase is primarily
attributable to additional fixed costs associated with the expanded
manufacturing capacity in Brazil. Cost of goods sold can be impacted
by the mix of product sold. The product mix in any given period is
not indicative of the expected product mix in future periods.

Selling and administrative expenses increased $1.6 million (4.7%) from
1996, primarily due to the LM acquisition. As a percentage of sales,
selling and administrative expenses were 14.0% in the 1997 period as
compared to 15.3% in the 1996 period.

Depreciation expense increased $3.1 million, primarily due to the LM
acquisition and the expansion of manufacturing capacity.

Interest expense increased $4.2 million in the 1997 period, primarily
due to debt incurred in Australia and New Zealand to acquire LM and
debt in Brazil to fund increased manufacturing capacity.

Foreign translation losses, net, are a result of the translation of
Brazilian local currency financial statements into US dollars.

Other income, net, increased $1.8 million, primarily due to gains on
marketable securities, increased interest income and a decrease in
other expenses.

The cumulative tax provision is calculated using an estimated annual
effective income tax rate at the end of each reporting period. The
rate is reviewed and adjusted periodically to reflect changes in
estimates by tax jurisdictions in regulations, rates, deductibility of
expenses, utilization of tax credits, potential tax exposures, and
state and local taxes. Reductions in liabilities for taxes no longer
required considerably impacted the estimated annual effective income
tax rate.

Minority interest in 1997 and 1996 represents the 22.5% minority
interest in ABNB, and in 1996 also included a 45% minority interest in
LM.

<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - continued

COMPARISON OF RESULTS OF THE THREE MONTHS ENDED SEPTEMBER 30, 1997
WITH THE THREE MONTHS ENDED SEPTEMBER 30, 1996

The following table presents the three product lines for the three-
month periods ended September 30:
1997 1996
(in millions)
$ % $ %

Transaction Cards & Systems . . . . 27.9 31.6 35.7 41.1
Printing Services
& Document Management . . . . . . 17.0 19.3 10.5 12.1
Security Printing Solutions . . . . 43.3 49.1 40.7 46.8
88.2 100.0 86.9 100.0

Sales increased by $1.3 million or 1.5% from the 1996 period. TCS
sales decreased $7.8 million or 21.9%, PSDM sales increased $6.5
million or 61.9%, and SPS sales increased $2.6 million or 6.4%. The
Sati Group sales for the quarter in 1997 was approximately $3.5
million. The net decrease in TCS sales was principally due to reduced
sales of stored-value telephone cards ($12.3 million).

Cost of goods sold increased $4.2 million or 7.8%. As a percentage of
sales, cost of goods was 66.3% in 1997 as compared to 62.4% in the
1996 period. This increase is primarily attributable to additional
fixed costs associated with the expanded manufacturing capacity in
Brazil. Cost of goods sold can be impacted by the mix of product
sold. The product mix in any given period is not indicative of the
expected product mix in future periods.

Selling and administrative expenses decreased $2.1 million (15.2%)
from 1996. The decrease was primarily due to decreases in commissions,
compensation and other cost reductions. As a percentage of sales
selling and administrative expenses were 13.6% in 1997, as compared to
16.2% in 1996.

Depreciation expense increased $0.3 million, primarily due to the
expansion of manufacturing capacity.

Interest expense increased $1.0 million in 1997, primarily due to debt
in Brazil to fund increased manufacturing capacity.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - continued

Foreign translation losses, net, are a result of the translation of
Brazilian local currency financial statements into US dollars.

Other income, net, increased $0.5 million, due to increased interest
income and a decrease in other expenses.

Minority interest in 1997 and 1996 represents the 22.5% minority
interest in ABNB, and in 1996 also included a 45% minority interest in
LM.

<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

Operating cash flows increased $4.0 million for the nine months ended
September 30, 1997 as compared to the same period in 1996 (before
changes in operating assets and liabilities) primarily as a result of
increased earnings and higher depreciation and amortization partially
offset by reduced non-cash minority interest charges. The increase in
certain non-cash charges, such as depreciation and amortization, is
due mainly to the LM and Sati Group acquisitions and increased capital
expenditures in the prior year.

Operating assets and liabilities also affected cash flows. The net
decrease in operating cash flows from such changes of $1.7 million, in
the nine months ended September 30, 1997 as compared to the same
period in 1996 primarily due to the timing of accounts receivable
collections and payments of accounts payable and accrued expenses.

Investing activities for the nine months ended September 30, 1997
included $5.5 million primarily for an acquisition in Brazil of the
leading manufacturer of personalized financial transaction cards. The
acquisition did not have a significant effect on the Company's results
of operations. The reduced level of capital expenditures in the 1997
period reflected the completion of the expansion of manufacturing
capacity in Brazil.

Financing activities for the nine months ended September 30, 1997
included the issuance of a Zero Coupon Convertible Subordinated
Debenture, exercise of warrants and stock options, increased debt
payments, reduced borrowings and an increased dividend payment to
ABNB's minority shareholder.

At September 30, 1997, the Company had approximately $3.6 million in
cash and cash equivalents and marketable securities. The Company's
subsidiaries, ABN and ABNH, are parties to a three-year, $20.0 million
revolving credit facility for general working capital and letters of
credit. At September 30, 1997, the Company has approximately $13.3
million of availability under its Credit Facility before reductions
for $3.6 million of outstanding letters of credit and $3.2 million of
borrowings. In November 1997, the Credit Agreement was amended
through May 1998, to increase the facility to $25.0 million and also
increase the current availability by $10.0 million. In addition, LM
and the Sati Group had available unused lines of credit of
approximately $2.4 million and $1.4 million, respectively.<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES - continued

The Company's long-term debt included $126.5 million of 10 3/8% Notes
outstanding, $65.0 million of 11 5/8% Notes outstanding, $57.8 million
of LM debt, $11.7 million of borrowings in Brazil, $9.5 million of the
Sati Group debt and $8.6 million of other debt.

The Company's Brazilian subsidiary has received an extension of its
current stored-value telephone card contract to November 1997. During
the extension period, a proposal will be submitted for a two-year
supply contract beginning December 1, 1997.

Management of the Company believes that cash flows from operations
together with cash balances and availability of funds under its and
its subsidiaries credit facilities and asset sales will be sufficient
to service debt and fund capital expenditures for the foreseeable
future. The Company also believes that it and its subsidiaries
possess sufficient unused debt capacity and access to debt and equity
markets to pursue additional acquisition opportunities and meet
extraordinary working capital needs as they arise.

TAX LAW CHANGES

As a result of Brazilian tax legislation, effective for 1996, the 15%
dividend withholding tax on earnings after 1995 was eliminated.
Additionally, in 1996, tax legislation was passed which permits
Brazilian companies to elect, subject to certain limitations, to
deduct dividends in computing taxable income; however, there is a 15%
withholding tax on dividends distributed in this manner. The statutory
tax rate in Brazil is approximately 33%.

Reference is made to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 "Liquidity and Capital Resources."

<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES - concluded

IMPACT OF INFLATION

Reference is made to the Company's Form 10-K for the year ended
December 31, 1996 "Impact of Inflation."

In 1994, the Brazilian government introduced a new currency as part of
the government's economic stabilization program designed to reduce the
country's hyper-inflation. As a result of this program, the inflation
rate has decreased substantially to approximately 6.0% for the first
nine months of 1997, 10% for 1996 and 23% for 1995 as compared to 941%
for 1994. The Company translates ABNB's financial statements as if
ABNB were operating in a hyperinflationary economy. Currently, gains
and losses resulting from translation and transactions are determined
using a combination of current and historical rates and are reflected
in earnings. If inflation rates in Brazil remain at current levels,
the method of translating ABNB's financial statements will be changed
in the fourth quarter of 1997 to the method used to translate LM's
financial statements, with such gains and losses reflected in a
separate component of equity. The Company's domestic, LM's and the
Sati Group's operations are not significantly affected by inflation.
ABNB sales for the first nine months of 1997 and for 1996 contributed
43% and 56%, respectively, of the Company's consolidated sales.

The Company has from time to time reorganized and restructured, and
may in the future reorganize and restructure, its foreign operations
based on certain assumptions about the various tax laws (including
capital gains and withholding tax), foreign currency exchange and
capital repatriation laws and other relevant laws of a variety of
foreign jurisdictions.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RECENT DEVELOPMENTS

Due to market conditions, the Company's previously announced
refinancing of outstanding indebtedness has been postponed. The
Company determined that the opportunity to refinance its long term
debt at advantageous lower interest rates was not available and is
considering alternative financing proposals. While the Company and
its advisors continue to consider alternatives, there can be no
assurance that prevailing interest rates will be attractive or whether
the Company and the underwriters will complete a refinancing
transaction. In connection with the anticipated refinancing described
above, the Company entered into certain Treasury interest rate
agreements in October 1997 that will result in a pre tax loss of
approximately $2.3 million. The loss will be recorded in the fourth
quarter of 1997. Additionally, in connection with the anticipated
refinancing described above, the Company announced a cash tender offer
for its 11 5/8% Notes due in 2002. The tender offer is conditional
based on the consummation of the refinancing, and will expire unless
extended by the Company on November 14, 1997.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q and in certain documents
incorporated by reference herein constitute "forward-looking"
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Reform Act"). Such "forward-looking"
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the Company, or industry results, to be materially
different from any future results, performance, or achievements
expressed or implied by such "forward-looking" statements. Such
factors are more fully described in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 which should be
considered in connection with a review of this report.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company has reached a settlement in Vladimir v. United States
Banknote Corporation, et al., the class action pending in the United
States District Court for the Southern District of New York, pursuant
to a Stipulation of Class Action Settlement executed on June 17, 1997.
On September 30, 1997, the Court approved the settlement dismissing
the action, with prejudice. The settlement terms provide that the
Company deposit into escrow by December 1, 1997 $500,000, plus
interest from July 1, 1997, or $800,000 thereafter, the remainder to
be contributed by the Company's insurers.

On November 1, 1994, the Company filed an action against Thomas De La
Rue, AG ("DLR") and its parent, De La Rue Plc in New York State
Supreme Court, which in December 1994 was removed to the United States
District Court for the Southern District of New York. The complaint
alleges breach of contract in connection with the 1993 purchase of the
Company's Brazilian subsidiary from DLR and seeks approximately $1.5
million in damages. DLR has asserted approximately $400,000 in
counterclaims. On September 17, 1997, the Court denied DLR's motions
for summary judgement, ruling the contract language ambiguous, and
directed as an issue for the jury whether the Company may pierce the
corporate veil and proceed with its claims against DLR's parent, De La
Rue, Plc. A trial is expected to be scheduled for late 1997 or early
1998.

On November 2, 1994, Thomas De La Rue AG v. United States Banknote
Corporation, et al. was commenced in the United States District Court
for the Southern District of New York. DLR seeks approximately $4.0
million in connection with its claims. On September 30, 1997, the
Court denied DLR's motion that sought to have the jury verdict which
has been vacated by virtue of the Court's approval of the settlement
in the Vladimir Class Action given collateral estoppel effect in DLR's
breach of representation claim against the Company which decision DLR
has appealed to the Second Circuit Court of Appeals.

Reference is made to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.

<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:
Exhibit
Number

4.1 Amendment to Credit Agreement dated as of November 14, 1997
among American Bank Note Company and American Bank Note
Holographics, Inc., the Company and The Chase Manhattan
Bank as Agent and Lender **

10.1 Amendment to Long-Term Performance Plan for
Key employees adopted June 11, 1997 **

27 Article 5 Financial Data Schedule **

** Filed electronically herewith

(b) Reports on Form 8-K
Form 8-K filed September 25, 1997 - Item 5 - Other Events
Form 8-K filed October 9, 1997 - Item 5 - Other Events
Form 8-K filed October 24, 1997 - Item 5 - Other Events
Form 8-K filed October 29, 1997 - Item 5 - Other Events
Form 8-K filed November 4, 1997 - Item 5 - Other Events
Form 8-K filed November 7, 1997 - Item 5 - Other Events
Form 8-K filed November 10, 1997 - Item 5 - Other Events
Form 8-K filed November 10, 1997 - Item 5 - Other Events

SIGNATURE

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

AMERICAN BANKNOTE CORPORATION

By: s/ John T. Gorman
John T. Gorman
Executive Vice President,
Chief Financial Officer and
Chief Accounting Officer
Date: November 14, 1997<PAGE>
<PAGE>

Exhibit Index

List of Exhibits Pursuant to Item 601 of Regulation S-K:
Exhibit

10.1 Amendment to Long-Term Performance Plan for
Key employees adopted June 11, 1997

27 Article 5 Financial Data Schedule

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the financial
statements contained in the body of the accompanying Form 10-Q and is qualified
in its entirety by reference to such financial statements.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 3611
<SECURITIES> 0
<RECEIVABLES> 57407
<ALLOWANCES> 767
<INVENTORY> 41130
<CURRENT-ASSETS> 122158
<PP&E> 362346
<DEPRECIATION> 112020
<TOTAL-ASSETS> 491145
<CURRENT-LIABILITIES> 84910
<BONDS> 260779
0
0
<COMMON> 211
<OTHER-SE> 56897
<TOTAL-LIABILITY-AND-EQUITY> 491145
<SALES> 248416
<TOTAL-REVENUES> 248416
<CGS> 166263
<TOTAL-COSTS> 218943
<OTHER-EXPENSES> (2297)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24353
<INCOME-PRETAX> 7517
<INCOME-TAX> 371
<INCOME-CONTINUING> 7146
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4688
<EPS-PRIMARY> .22
<EPS-DILUTED> .22

</TABLE>

<PAGE>
EXHIBIT 4.1
WAIVER AND AMENDMENT TO CREDIT AGREEMENT

WAIVER AND AMENDMENT TO CREDIT AGREEMENT dated as of
November __, 1997 (this "Waiver and Amendment"), among American Bank
Note Company, a New York corporation ("ABN"), American Bank Note
Holographics, Inc., a Delaware corporation (together with ABN, the
"Borrowers"), American Banknote Corporation, a Delaware corporation
("ABNC"), the Guarantors (the "Guarantors") named in the Credit
Agreement (as hereinafter defined), the lenders (the "Lenders") named
in Schedule 2.01 to the Credit Agreement and The Chase Manhattan Bank
(formerly known as Chemical Bank), a New York banking corporation, as
agent (in such capacity, the "Agent") for the Lenders.

WHEREAS, the Borrowers, ABNC, the Guarantors, the Lenders
and the Agent are party to the Credit Agreement dated as of
January 29, 1996 (as amended, modified or supplemented from time to
time in accordance with its terms, the "Credit Agreement");

WHEREAS, the Borrowers have requested that the Lenders
amend and waive certain provisions of the Credit Agreement.

NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as
follows:

1. Defined Terms. Unless otherwise specifically defined
herein, all capitalized terms used herein shall have the respective
meanings ascribed to such terms in the Credit Agreement.

2. Amendments to Credit Agreement. Subject to the
conditions as to effectiveness set forth in Paragraph 5 of this Waiver
and Amendment, the Credit Agreement is hereby amended as follows:

(a) The reference in the preamble to "$20,000,000" is
hereby amended to read "$25,000,000 (as subsequently reduced pursuant
to the terms hereof)" and Article I - Definitions of the Credit
Agreement is hereby amended by adding the following definitions in the
appropriate alphabetical order:

"Overadvance Amount" shall mean $10,000,000, reducing
to $5,000,000 if ABN Australasia Limited shall have entered
into credit facilities aggregating $90,000,000 (Australian)
or more.

"Overadvance Termination Date" shall mean the earliest
to occur of: (x) May 31, 1998 and (y) the sale by ABNC of
equity or debt securities in any single or series of
transactions resulting in net proceeds of $25,000,000 or
greater.
<PAGE>
<PAGE>
(b) Section 2.01 of the Credit Agreement is hereby
amended in its entirety to read as follows:

SECTION 2.01. Revolving Credit Commitments.
Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each
Lender, severally and not jointly, agrees to make Revolving
Credit Loans to the Borrowers, at any time and from time to
time from the date hereof to the Revolving Credit
Termination Date, in an aggregate principal amount at any
time outstanding not to exceed the amount of such Lender's
Revolving Credit Commitment set forth opposite its name in
Schedule 2.01 annexed hereto, as such Revolving Credit
Commitment may be reduced from time to time in accordance
with the provisions of this Agreement, including, without
limitation, Section 2.07 hereof. Notwithstanding the
foregoing, (A) the aggregate principal amount of Revolving
Credit Loans outstanding at any time to the Borrowers shall
not exceed (i) the lesser of (x) the Total Commitment (as
such amount may be reduced from time to time pursuant to
this Agreement) and (y) the Borrowing Base (as hereinafter
defined) plus the Overadvance Amount until the Overadvance
Termination Date minus (ii) all accrued interest, fees and
expenses at such time and (B) the aggregate principal amount
of Revolving Credit Loans outstanding at any time to (i) ABN
shall not exceed an amount equal to the sum (the "ABN
Borrowing Base") of (x) up to 85% of the Net Amount of
Eligible Accounts of ABN, plus (y) up to 50% of the Net
Amount of Eligible Inventory of ABN and, plus 50% of the
Overadvance Amount until the Overadvance Termination Date
minus the Letter of Credit Usage of ABN at such time and
(ii) ABNH shall not exceed an amount equal to the sum (the
"ABNH Borrowing Base" and, together with the ABN Borrowing
Base, the "Borrowing Base") of (x) up to 85% of the Net
Amount of Eligible Accounts of ABNH plus (y) up to 50% of
the Net Amount of Eligible Inventory of ABNH and, plus 50%
of the Overadvance Amount until the Overadvance Termination
Date minus the Letter of Credit Usage of ABNH at such time.

Notwithstanding the foregoing, it is hereby
acknowledged and agreed that (i) the advance rate with
respect to Eligible Receivables may be reduced at any time
by the Agent in its reasonable discretion if a receivable
dilution percentage in excess of five percent (5%) is
confirmed in any field examination conducted by or on behalf
of the Agent and (ii) reserves may be reasonably established
at any time by the Agent in its sole reasonable discretion
including, without limitation, reserves with respect to
(x) exposure under foreign exchange contracts, hedging and
other financial instruments and (y) collateral locations for
which landlord waiver and consent agreements in form and
substance satisfactory to the Agent have not been obtained.<PAGE>

<PAGE>
Subject to the foregoing and within the foregoing
limits, the Borrowers may borrow, repay (or, subject to the
provisions of Section 2.09 hereof, prepay) and reborrow
Revolving Credit Loans, on and after the Closing Date and
prior to the Revolving Credit Termination Date, subject to
the terms, provisions and limitations set forth herein,
including, without limitation, the requirement that no
Revolving Credit Loan shall be made hereunder if after
giving effect thereto (A) with respect to all Borrowers, the
sum of (I) the aggregate principal amount of the Revolving
Credit Loans outstanding hereunder, plus (ii) the Letter of
Credit Usage, plus (iii) accrued interest, fees and
expenses, would exceed the lesser of (i) the Total
Commitment (as such amount may be reduced pursuant to the
provisions of this Agreement) and (ii) the Borrowing Base
plus the Overadvance Amount until the Overadvance
Termination Date, (B) with respect to ABN, the sum of
(i) the aggregate principal amount of the Revolving Credit
Loans outstanding hereunder to ABN plus (ii) the Letter of
Credit Usage with respect to Letters of Credit issued for
the account of ABN, would exceed the lesser of (i) the Total
Commitment (as such amount may be reduced pursuant to the
provisions of this Agreement) and (ii) the ABN Borrowing
Base plus 50% of the Overadvance Amount until the
Overadvance Termination Date and (C) with respect to ABNH,
the sum of (i) the aggregate principal amount of Revolving
Credit Loans outstanding hereunder to ABNH plus (ii) the
Letter of Credit Usage with respect to Letters of Credit
issued for the account of ABNH, would exceed the lesser of
(i) the Total Commitment (as such amount may be reduced
pursuant to the provisions of this Agreement) and (ii) the
ABNH Borrowing Base plus 50% of the Overadvance Amount until
the Overadvance Termination Date. In accordance with
Section 6.05(i) hereof, a Responsible Officer of each
Borrower shall furnish on each date required thereunder a
separate Borrowing Base Certificate substantially in the
form of Exhibit E hereto with respect to such Borrower with
appropriate modification satisfactory to the Agent to
reflect the Overadvance Amount until the Overadvance
Termination Date.

<PAGE>
<PAGE>
(c) The proviso in Section 2.17 of the Credit
Agreement is hereby amended in its entirety to read as follows:

"; provided, however, that the face amount of any
Letter of Credit that (A) the Borrowers may request the
Agent to open at any time shall not exceed the lesser of
(i) the Total Commitment at such time (as such may have been
reduced in accordance with the terms of this Agreement) and
(ii) the Borrowing Base at such time plus the Overadvance
Amount until the Overadvance Termination Date minus (i) the
Letter of Credit Usage at such time and (ii) the aggregate
principal amount of Revolving Credit Loans, accrued
interest, fees and expenses outstanding at such time,
(B) ABN may request the Agent to open at any time shall not
exceed the ABN Borrowing Base plus 50% of the Overadvance
Amount until the Overadvance Termination Date minus the
undrawn amount of all outstanding Letters of Credit at such
time as to which ABN is the account party and the aggregate
principal amount of the Revolving Credit Loans outstanding
to ABN at such time, and (C) ABNH may request the Agent to
open at any time shall not exceed the ABNH Borrowing Base
plus 50% of the Overadvance Amount until the Overadvance
Termination Date minus the undrawn amounts of all Letters of
Credit at such time as to which ABNH is the account party
and the aggregate outstanding principal amount of the
Revolving Credit Loans outstanding to ABNH at such time."

(d) Section 2.05 of the Credit Agreement is hereby
amended by adding thereto a new subsection (d) to read in its entirety
as follows:

"(d) Subject to the provisions of Section 2.05(c)
and Section 2.08 hereof, and notwithstanding the provisions
of Sections 2.05(a) and (b) hereof, each Loan which
constitutes an Overadvance Amount as determined by the Agent
shall bear interest at a rate per annum equal to the
Alternate Base Rate plus the applicable Interest Margin."

(e) The first sentence of Section 2.09(c) of the
Credit Agreement is hereby amended in its entirety to read as follows:

"The Borrowers shall make prepayments of the
Revolving Credit Loans from time to time such that each of
ABN Availability (plus 50% of the Overadvance Amount until
the Overadvance Termination Date), ABNH Availability (plus
50% of the Overadvance Amount until the Overadvance
Termination Date) and Total Availability (plus the
Overadvance Amount until the Overadvance Termination Date)
equals or exceeds zero at all times."

<PAGE>
<PAGE>
(f) Section 4.14 of the Credit Agreement is hereby
amended by adding thereto the following sentence at the end thereof:

"From time to time proceeds constituting the
Overadvance Amount up to $10,000,000 may be dividended or
loaned to ABNC to be utilized for general corporate
purposes, without requiring the delivery of a Compliance
Certificate."

(g) Schedule 2.01 annexed to the Credit Agreement
shall be replaced by Schedule 2.01 annexed hereto.

3. Waivers to Credit Agreement. Subject to the
conditions as to effectiveness set forth in Paragraph 5 of this Waiver
and Amendment, the Lenders hereby waive (x) until the Overadvance
Termination Date the requirement set forth in Section 10.01(a) of the
Credit Agreement that collections be immediately applied to reduce
Revolving Credit Loans once Total Availability is less than $2,500,000
(but not the requirement that such application be made upon the
occurrence of a Default or Event of Default) and (y) the restrictions
set forth in Section 7.03 of the Credit Agreement to permit the
issuance of up to $5,000,000 of convertible subordinated debentures by
ABNC and the guarantee by ABNC of a $650,000 loan made by CoreStates
Bank, N.A. to American BankNote Card Services, Inc. and American
BankNote Merchant Services, Inc.

4. Representations and Warranties. Each of the Borrowers
hereby jointly and severally represents and warrants as of the date
hereof, after giving effect to the amendments and waivers set forth in
Paragraphs 2 and 3 of this Waiver and Amendment, as follows (which
representations and warranties shall survive the execution and
delivery of this Waiver and Amendment):

(a) All representations and warranties contained in
the Credit Agreement and each of the other Loan Documents are true and
correct as of the date hereof with the same force and effect as if
made on such date (except to the extent that any such representation
or warranty relates expressly to an earlier date).

(b) Each of the Loan Parties has the power to
execute, deliver and carry out the terms and provisions of this Waiver
and Amendment.

(c) This Waiver and Amendment has been duly executed
and delivered and constitutes the legal, valid and binding obligation
of each Loan Party, and is enforceable in accordance with its terms.

(d) No event has occurred and is continuing which
constitutes or would constitute, with the giving of notice or the
lapse of time or both, a Default or an Event of Default under the
Credit Agreement.
<PAGE>
<PAGE>
5. Conditions Precedent. Notwithstanding any term or
provision of this Waiver and Amendment to the contrary, Paragraphs 2
and 3 hereof shall not become effective until the Agent shall have
determined that each of the following conditions precedent shall have
been satisfied:

(a) All required corporate actions in connection with
the execution and delivery of this Waiver and Amendment shall have
been taken, and each shall be satisfactory in form and substance to
the Agent, and the Agent shall have received all information and
copies of all documents, including, without limitation, records of
requisite corporate action that the Agent may reasonably request, to
be certified by the appropriate corporate person or government
authorities.

(b) All fees, costs and expenses of the Agent in
connection with this Waiver and Amendment, including, without
limitation, reasonable fees, costs and expenses of counsel to the
Agent, shall have been paid in full to the persons entitled thereto in
immediately available funds.

(c) All representations and warranties made by
the Borrowers contained in Paragraph 4 hereof shall be true and
correct with the same effect as though such representations and
warranties had been made on the date of effectiveness of the
amendments and waivers contained in this Waiver and Amendment after
giving effect to such amendments and waivers (unless any such
representation or warranty speaks expressly to an earlier date).

(d) Counterparts of this Waiver and Amendment shall
have been duly executed and delivered on behalf of the Borrowers,
ABNC, the Guarantors, the Lenders and the Agent.

(e) The Agent shall have received a structuring fee
in the amount of $25,000 and an additional fee of $50,000 at the time
that the Overadvance Amount (as defined in the Credit Agreement) is
drawn and an additional fee of $75,000 on May 31, 1998 unless prior to
May 31, 1998 The Chase Manhattan Bank has been designated as the lead
manager and agent with respect to the Loan Parties' hi-yield debt
issue and restated credit facilities (the failure to pay such
additional fees constituting an Event of Default).

(f) The Agent shall have received a replacement
Revolving Credit Note.

6. References to Credit Agreements. The term
"Agreement", "hereof", "herein" and similar terms as used in the
Credit Agreement, and references in the other Loan Documents to the
Credit Agreement, shall mean and refer to, from and after the
effective date of the amendments contained herein as determined in
accordance with Paragraph 5 hereof, the Credit Agreement as amended by
this Waiver and Amendment.<PAGE>
<PAGE>

7. Continued Effectiveness. Except for the specific
waivers set forth in Paragraph 3 hereof, nothing herein shall be
deemed to be a waiver of any covenant or agreement contained in, or
any Default or Event of Default under, the Credit Agreement, and each
of the parties hereto agrees that, as amended by this Waiver and
Amendment, all of the covenants and agreements and other provisions
contained in the Credit Agreement and the other Loan Documents are
hereby ratified and confirmed in all respects and shall remain in full
force and effect from and after the date of this Waiver and Amendment.

8. Counterparts. This Waiver and Amendment may be
executed in two or more counterparts, each of which shall be an
original, and all of which, taken together, shall constitute a single
instrument. Delivery of an executed counterpart of a signature page
to this Waiver and Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this Waiver and
Amendment.

9. Governing Law. This Waiver and Amendment shall be
construed in accordance with and governed by the laws of the State of
New York (other than the conflicts of laws principles thereof).

<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Waiver and Amendment to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.

AMERICAN BANK NOTE COMPANY, as
a Borrower and Guarantor