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CORRESP
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  [Company Letterhead]

  2701 E. Grauwyler Rd.

  Irving, TX 75061

  972-579-6000

December 9, 2005

VIA Edgar Electronic Transmission

Ms. Kathleen Collins

Accounting Branch Chief

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20002

RE:                              BancTec, Inc.

Form 10K for the year ended December 31,
2004

Dear Ms. Collins:

This letter contains the response of BancTec, Inc. (the “Company”)
to the additional comments regarding the referenced filing contained in the
letter dated November 9, 2005 (the “Staff’s Letter”), from the Staff of
the Securities and Exchange Commission.
The numbered responses that follow correspond by number to the comments
in the Staff’s Letter.

Sincerely,

  /s/ Coley Clark

  Coley Clark

  President and Chief Executive Officer

Consolidated Financial Statements

Notes to the Consolidated Financial
Statements

Note A-Summary of Significant Accounting
Policies

Revenue Recognition, page 28 and 29

1.                           We note
your response to our prior comment no. 2 with regards to your accounting for
multiple-element arrangements.  In future
filings, revise the disclosures in your revenue recognition policy to include a
discussion of the Company’s accounting for multiple-element arrangements
pursuant to SOP 97-2 and EITF 00-21, as applicable.

Response

In order to provide further clarification of
the Company’s accounting policies with regard to revenue recognition, the
Company has modified the language in the 10Q filing for the third quarter of
2005 and proposes to modify the language of future filings in the discussion of
critical accounting policies dealing with revenue recognition as follows:

“The Company’s revenue recognition policies
are in accordance with Statement of Position (“SOP”) 97-2, “Software Revenue Recognition,” as amended
by SOP 98-9, “Modification of SOP 97-2,
Software Revenue Recognition with Respect to
Certain Transactions,” Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition,” and Emerging
Issues Task Force (“EITF”) No. 00-21, “Revenue
Arrangements with Multiple Deliverables.”  In the case of
software arrangements that require significant production, modification, or
customization of software, or the license agreement requires the Company to
provide implementation services that are determined to be essential to other
elements of the arrangement; the Company follows the guidance in SOP 81-1, “Accounting for Performance of Construction–Type and
Certain Production–Type Contracts.”

In the case of non-software arrangements, the
Company applies EITF No. 00-21 and revenues related to arrangements with
multiple elements are allocated to each element based on the element’s relative
fair value.  Revenue allocated to separate elements is recognized for each
element in accordance with the accounting policies described below.  If
the Company cannot account for items included in a multiple-element arrangement
as separate units of accounting, they are combined and accounted for as a
single unit of accounting and generally recognized as the undelivered items or
services are provided to the customer.
The Company specifically uses the residual method, under which revenue
is recognized on the delivered elements only when the remaining undelivered
element is postcontract customer support (PCS).

The Company recognizes hardware and software
revenue when persuasive evidence of an arrangement exists, delivery has
occurred, the sales price is fixed or determinable and collectibility is
probable. At the time of the transaction, the Company determines whether the
fee associated with revenue transactions is fixed or determinable and whether
or not collection is reasonably assured. The Company determines whether the fee
is fixed or determinable based on the payment terms associated with the
transaction. If a significant portion of a fee is due after the normal payment
terms, which are generally 30 days from invoice date, the

Company recognizes revenue as the fees are
invoiced. The Company assesses collectibility based on a number of factors,
including past transaction history with the customer and the credit-worthiness
of the customer. The Company does not request collateral from customers. If the
Company determines that collection of the fee is not reasonably assured, the
Company defers the revenue and recognizes revenue at the time collection
becomes reasonably assured, which is generally upon receipt of cash. For all
sales, the Company generally uses either a binding purchase order or signed
sales agreement as evidence of an arrangement.

The Company
recognizes revenue from sales of equipment and supplies upon delivery and
transfer of title or upon customer acceptance.”

Stock-based Compensation, page 30 and 31

2.                           We note
your response to our previous comment no. 4 where you indicate that the Company
uses a discounted cash flow model to determine the fair value of the shares of
common stock underlying your option grants.
Revise your disclosures to (a) disclose whether you obtained a
contemporaneous valuation performed by an unrelated valuation specialist or
disclose the valuation alternative selected and the reason management chose not
to obtain a contemporaneous valuation by an unrelated valuation specialist and (b) include
a discussion of the significant factors, assumptions and methodologies used in
determining fair value.  See the AICPA
Practice Aid “Valuation of Privately-Held-Company Equity Securities Issued as
Compensation”.

Response

According to the AICPA Practice Aid, for
Companies that have established financial histories of profitable operations or
generation of positive cash flows, the use of both market approaches and income
approaches is appropriate. In 2002, as part of the analysis required for implementation
and compliance with SFAS No. 142, “Goodwill and Other Intangible Assets”, the
Company retained an independent valuation specialist to assess the value of the
Company’s goodwill.  The specialist
valuation report relied on the discounted cash flow method, which is an income
approach. The Company has continued to employ the same basic methodology in
assessing the value of the common stock underlying the option grants.

Under the discounted cash flow method, value
is dependent on the present worth of future economic benefits to be derived
from ownership.  Future net cash flows
available for distribution are discounted at market-based rates of return to
provide indications of value.  The
stabilized future cash flow is also capitalized and discounted back to present
value.  The summation of the discounted
annual cash flows plus the stabilized cash flow after capitalization and
discounting indicates the current value of the business enterprise.  The discounting rate is based on a weighted
average cost of capital (“WACC”) analysis which considers the costs of equity
and debt and a proportionate weighting of these costs to develop a base cost of
capital.

Once the business enterprise value is
determined, this value is allocated between the common and preferred stock,
with preferred stock being valued at its redemption value plus accumulated but
unpaid dividends.  The application of
this method resulted in a value of the

Company’s common stock of $0.48 per
share.  For purposes of preparing the
proforma disclosures required by SFAS No. 123, the Company used the exercise
price of $9.25 per share in the Black-Scholes model used to value the stock
options for purposes of the disclosure.
The Company chose to use the $9.25 per share price to conservatively
reflect the worst case scenario for purposes of the SFAS No. 123
disclosures.  Using the $0.48 per share
price would have resulted in no fair value on the stock options as computed
using the Black-Scholes method.

For the Fiscal year ended December 31,
2005, the Company will be obtaining an independent valuation to assess the
accuracy of the value assigned to the stock options.  Based on guidance provided as a result of the
issuance of SFAS No. 123R, “Share-Based Payment,” the valuation done at December 31,
2005 is expected to be based on the lattice model.  As a result, the Company proposes that the
disclosures to be included in the Form 10K for the Fiscal year ended December 31,
2005, contain a full discussion of the valuation model used and the significant
factors, assumptions and methodologies used in determining the fair value.

3.                           Please
provide a sample copy of the Company’s valuation analysis for options granted
in fiscal 2004.

Response

Exhibit 1 included with this document
illustrates the valuation at year end 2004 using the discounted cash flow
model.  The value computed using this
model is $0.48 per share of common stock, which is clearly below the exercise
price for the options of $9.25.
Therefore the Company conservatively used the exercise price of $9.25
per share in the Black-Scholes model used to value the stock options for
purposes of the disclosure.

Note C-Discontinued Operations,
Restructuring, Impairment and Change in Accounting Estimate

Change in Accounting Estimate, page 33

4.                           We note
your response to prior comment 5 where you indicate that the Company recorded a
revenue adjustment of $4.3 million in 2004 which relates to the years 2000
through 2003 and the first quarter of 2004.
With respect to such information, please provide the following:

•                  Tell
us the amount of revenue that was overstated or understated for each period
affected by the adjustment.  Further,
tell us how you assessed materiality for each period impacted by your
adjusted.  Include in your discussion,
not only the impact on total revenues but also include a discussion of
materiality as it related to pre-tax net income.

Response

As described in our previous response and
disclosed in our financial statements, the adjustment recorded in 2004 was the
result of a change in estimate as new information and developments occurred in
relation to the service contracts with Dell.
The new information included contract and incident file information on
individual service calls from Dell that had not previously been provided to
us.  Additionally, contract terms around
the definition of a

service year were clarified.  The contracts do not provide a definition of
a year and the Company had interpreted a year to run on a 365 day basis and
accounted for revenue accordingly.  Dell
interpreted a year to run on a 360 day/52-53 week basis.  Through discussion and negotiation with Dell,
the definition of a year was clarified and we agreed to use Dell’s
interpretation of a year.  Had such
information been known in previous periods, revenue would have been increased
for each period as follows:

  2001

  $

  53,000

  2002

  $

  2,294,000

  2003

  $

  1,690,000

  2004

  $

  306,000

  Total

  $

  4,343,000

We disclosed the nature and amount of the
change in estimate in our 2004 financial statements in accordance with the
guidance in APB 20.  We made the
disclosure because we believe the information is material to investors.

•                  We
note your statement that the revenue adjustment was reflected as a change in
accounting estimate.  We further note
that the adjustment resulted in part from service calls being estimated at the
year one contract rate instead of the higher year two contract rate.  Tell us your consideration of paragraph 13 of
APB 20 in determining whether the use of incorrect rates was an oversight or
misuse of facts that existed at the time the financial statements were prepared.

Response

As discussed above, we believe the use of the
year one rate instead of the year two rate is neither on oversight or a misuse
of facts, but rather resulted from new information communicated by Dell to the
Company.  Prior to the adjustment, the
Company used the calendar months to determine the cut-off between year one and
year two.  The use of the calendar months
was based on the Company’s reading of the contract terms.  During the second quarter of 2004, however,
the Company discovered from Dell that they used their own 52-53 week year
calendar to determine the cut-off between year one and year two.  As the contract did not specify which
application was appropriate, the Company agreed to use Dell’s calendar.  The information was not known in the years
previous to 2004, and therefore could not have resulted from an oversight or
misuse of facts.  As is stated in APB 20,
paragraph 13, “In contrast, a change in accounting estimate results from new
information or subsequent developments and accordingly from better insight or
improved judgment.”

•                  We
note your statement that the Company recognizes revenue related to Dell
warranty and extended service contracts as service calls are run.  Tell us your basis for recognizing revenue in
this manner rather than ratably over the term of the agreement and tell us the
authoritative accounting guidance you relied on.

Response

Topic 13 of the Staff Accounting Bulletins, “Revenue
Recognition”, provides four criteria in evaluating the recognition of revenue:

1.               Persuasive evidence
of an arrangement exists

2.               Delivery has
occurred or services have been rendered

3.               Seller’s price to
the buyer is fixed or determinable

4.               Collectibility is
reasonably assured

Under the Company’s current contracts with
Dell, the Company is entitled to a fixed amount per service call.  Dell advances an amount estimated to cover
the contracted period of service to the Company, which the Company records in
the Consolidated Balance Sheets as “Maintenance Contract Deposits”.  The Company only earns revenue under this
arrangement when a service call is actually run.  Therefore, under this arrangement, if the
Company runs 2 service calls, the revenue the Company is entitled to is 2 times
the contractual rate.  If 3 calls are
run, the revenue is 3 times the contractual rate, etc.  Therefore, in applying the criteria of Topic
13, evidence exists in the form of the contract with Dell, the price per call
is determined from the contract, collection occurs substantially in advance,
and revenue is earned when the call is actually run.  Likewise, at the end of the contract period,
if more calls are run than were advanced, Dell owes the Company additional
money.  Based on these facts, the Company
feels that recognizing revenue on a ratable basis would not be appropriate
under the revenue recognition guidelines.

•                  As
previously requested, revise your Critical Accounting Policies disclosures to
include a more detailed discussion of the estimates and assumptions used in
accounting for these service arrangements.
Discuss the factors used to arrive at the estimate, how accurate the
estimate/assumption has been in the past, how much the estimate/assumption has
changed in the past, and whether the estimate/assumption is reasonably likely
to change in the future.

Response

In order to provide further clarification of
the Company’s Critical Accounting Policies disclosures, the Company has
modified the language in the 10Q filing for the third quarter of 2005 and
proposes to modify the language of future filings as follows:

“The Company’s services revenue is primarily
billed based on contractual rates and terms, and the Company generally
recognizes revenue as these services are performed which, in some cases, is
ratably over the contract term. Certain
customers advance funds prior to the performance of the services. The
Company recognizes revenue related to these advances as services are performed
over time or on a “per call” basis.
Certain estimates are used in recognizing revenue on a “per call” basis
related to breakdown rates, contract types, calls related to specific contract
types, and contract periods.  The Company
uses it