##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 333-18221
 DOLLAR FINANCIAL GROUP, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 New York
    
    13-2997911(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)1436 Lancaster Avenue 
Berwyn, Pennsylvania
    
    19312-1288(Address of Principal Executive 
Offices)
    
    (Zip Code)
 Registrants telephone number, including area code (610) 296-3400
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act: None
 o þ
 þ o
 þ
  o o þ
 o þ
  (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



DOLLAR FINANCIAL GROUP, INC.
 Table of Contents
 2006 Report on Form 10-K
 ® ® ® ® ®
 PART IItem 1. Business
    
    
    3Item 1A.
Risk Factors
    
    
    22Item 2. Properties
    
    
    29Item 3. Legal Proceedings
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    34Item 6. Selected Financial Data
    
    
    35Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    37Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    50Item 8. Financial Statements and Supplementary Data
    
    
    51Item 9. Changes and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    93Item 9A. Controls and Procedures
    
    
    93Item 9B. Other Information
    
    
    93PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    94Item 11. Executive Compensation
    
    
    94Item 12. Security Ownership of Certain Beneficial Owners and Management
    
    
    94Item 13. Certain Relationships and Related Transactions
    
    
    94Item 14. Principal Accountant Fees and Services
    
    
    94PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    95Signatures
    
    
    101Service Agreement dated April 4, 2005Exhibit 10.49Certification of Chief Executive OfficerCertification of PresidentCertification of Chief Financial OfficerCertification of Chief Executive Officer Pursuant to Title 18Certification of President Pursuant to Title 18Certification of Chief Financial Officer Pursuant to Title 18
  2




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##### Table of Contents



Item 1. BUSINESS
 General
 ® ® ® ®
   United States
 ® ® ®
  Canada
   United Kingdom
  3




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##### Table of Contents



Industry Overview
   
    
    do not have sufficient assets to meet minimum balance requirements or
to achieve the benefits of savings with banks;
    
    do not write enough checks to make a bank account beneficial;
    
    need access to financial services outside of normal banking hours;
    
    desire not to pay fees for banking services that they do not use;
    
    require immediate access to cash from their paychecks;
    
    may have a dislike or distrust of banks; and
    
    do not have a neighborhood bank in close proximity to them.
  
    
    their immediate need for cash;
    
    irregular receipt of payments from their employers;
    
    their desire for convenience and customer service;
    
    the unavailability of bank loans in small denominations for short terms; and
    
    the high cost of overdraft advances through banks.
 4




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##### Table of Contents



Growth Opportunities
  
    
    growth of the service-sector workforce;
    
    failure of commercial banks and other traditional financial service
providers to address adequately the needs of working-class individuals; and
    
    trends favoring larger operators in the industry.
  
    
    economies of scale available to larger operations;
    
    use of technology to serve customers better and to control large store networks;
    
    inability of smaller operators to form the alliances necessary to deliver new products; and
    
    increased licensing and regulatory burdens.
  Competitive Strengths
  Leading position in core markets.
 
    
    Our domestic network is focused in rapidly growing markets in the western United States,
where we believe we have held leading market positions for over 10 years.
 5




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##### Table of Contents




    
    We are the industry leader in Canada, and we hold a dominant market share with a store
in almost every Canadian city with a population of over 50,000. Based on a public opinion
study of three major metropolitan markets in English speaking Canada, we have achieved
brand awareness of 85% of persons surveyed.
    
    We believe that we are the largest check cashing company in the United Kingdom,
comprising approximately 25% of the market measured by number of stores, although we believe that
we account for approximately 40% of all check cashing transactions performed at check
cashing stores.
 Diversified product and geographic mix. ®
 High-quality customer service.
 Diversification and management of credit risk.
 Management expertise.
 Our Strategy
  Growing through disciplined network expansion.
 6




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##### Table of Contents



Introducing related products and services. ® ® ®
 Capitalizing on our enhanced network and system capabilities.
 Maintaining our customer-driven retail philosophy.
 Expansion of our franchising strategy.
 Customers
  U.S.
customers.
  Canadian customers.
 7




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##### Table of Contents



United Kingdom customers.
 Products and Services
 ®
 Check cashing.
 8




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##### Table of Contents



Year ended June 30,2002
    
    2003
    
    2004
    
    2005
    
    2006(Unaudited)Consolidated operations:Face amount of checks
cashed
    
    $
    2,969,455,000
    
    
    $
    2,938,950,000
    
    
    $
    3,169,350,000
    
    
    $
    3,424,835,000
    
    
    $
    3,772,426,000Number of checks cashed
    
    
    8,627,526
    
    
    
    8,568,944
    
    
    
    8,427,990
    
    
    
    8,141,697
    
    
    
    8,373,342Average face amount per check
    
    $
    344.18
    
    
    $
    342.98
    
    
    $
    376.05
    
    
    $
    420.65
    
    
    $
    450.53Average fee per check
    
    $
    12.15
    
    
    $
    12.65
    
    
    $
    13.93
    
    
    $
    15.81
    
    
    $
    17.01Average fee as of % of
face amount
    
    
    3.53
    %
    
    
    3.69
    %
    
    
    3.70
    %
    
    
    3.76
    %
    
    
    3.78
    %United States operations:Face amount of checks
cashed
    
    $
    1,636,967,000
    
    
    $
    1,384,958,000
    
    
    $
    1,349,956,000
    
    
    $
    1,309,231,000
    
    
    $
    1,394,516,000Number of checks cashed
    
    
    4,317,534
    
    
    
    3,855,664
    
    
    
    3,621,174
    
    
    
    3,379,123
    
    
    
    3,410,668Average face amount per check
    
    $
    379.14
    
    
    $
    359.20
    
    
    $
    372.80
    
    
    $
    387.45
    
    
    $
    408.87Average fee per check
    
    $
    12.41
    
    
    $
    12.75
    
    
    $
    13.18
    
    
    $
    13.79
    
    
    $
    14.13Average fee as of % of
face amount
    
    
    3.27
    %
    
    
    3.55
    %
    
    
    3.53
    %
    
    
    3.56
    %
    
    
    3.46
    %Canadian operations:Face amount of checks
cashed
    
    $
    896,586,000
    
    
    $
    989,663,000
    
    
    $
    1,144,380,000
    
    
    $
    1,300,089,000
    
    
    $
    1,514,753,000Number of checks cashed
    
    
    3,359,225
    
    
    
    3,475,201
    
    
    
    3,476,375
    
    
    
    3,529,879
    
    
    
    3,607,553Average face amount per check
    
    $
    266.90
    
    
    $
    284.78
    
    
    $
    329.19
    
    
    $
    368.31
    
    
    $
    419.88Average fee per check
    
    $
    9.03
    
    
    $
    9.58
    
    
    $
    11.07
    
    
    $
    12.38
    
    
    $
    14.44Average fee as of % of
face amount
    
    
    3.38
    %
    
    
    3.36
    %
    
    
    3.36
    %
    
    
    3.36
    %
    
    
    3.44
    %United Kingdom operations:Face amount of checks
cashed
    
    $
    435,902,000
    
    
    $
    564,329,000
    
    
    $
    675,014,000
    
    
    $
    815,515,000
    
    
    $
    863,157,000Number of checks cashed
    
    
    950,767
    
    
    
    1,238,079
    
    
    
    1,330,441
    
    
    
    1,232,695
    
    
    
    1,355,121Average face amount per check
    
    $
    458.47
    
    
    $
    455.81
    
    
    $
    507.36
    
    
    $
    661.57
    
    
    $
    636.96Average fee per check
    
    $
    21.93
    
    
    $
    20.99
    
    
    $
    23.45
    
    
    $
    31.20
    
    
    $
    31.13Average fee as of % of
face amount
    
    
    4.78
    %
    
    
    4.60
    %
    
    
    4.62
    %
    
    
    4.72
    %
    
    
    4.89
    %
   9




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Year ended June 30,2002
    
    2003
    
    2004
    
    2005
    
    2006(Unaudited)Consolidated Operations:Face amount of returned checks
    
    $
    27,874,000
    
    
    $
    26,164,000
    
    
    $
    29,061,000
    
    
    $
    32,644,000
    
    
    $
    39,052,000Collections on returned checks
    
    
    20,812,000
    
    
    
    19,426,000
    
    
    
    21,399,000
    
    
    
    23,655,000
    
    
    
    29,070,000New write-offs of returned checks
    
    
    7,062,000
    
    
    
    6,738,000
    
    
    
    7,662,000
    
    
    
    8,989,000
    
    
    
    9,982,000Collestions as a percentage of returned
checks
    
    
    74.7
    %
    
    
    74.2
    %
    
    
    73.6
    %
    
    
    72.5
    %
    
    
    74.4
    %New write-offs as a percentage of
check cashing revenues
    
    
    6.7
    %
    
    
    6.2
    %
    
    
    6.5
    %
    
    
    7.0
    %
    
    
    7.0
    %Net write-offs as a percentage of face
amount of checks cashed
    
    
    0.24
    %
    
    
    0.23
    %
    
    
    0.24
    %
    
    
    0.26
    %
    
    
    0.26
    %United
States operations:Face amount of returned checks
    
    $
    15,411,000
    
    
    $
    12,046,000
    
    
    $
    13,761,000
    
    
    $
    14,749,000
    
    
    $
    16,846,000Collections on returned checks
    
    
    10,560,000
    
    
    
    8,335,000
    
    
    
    10,284,000
    
    
    
    10,881,000
    
    
    
    12,586,000Net write-offs of returned checks
    
    
    4,851,000
    
    
    
    3,711,000
    
    
    
    3,477,000
    
    
    
    3,868,000
    
    
    
    4,260,000Collections as a percentage of returned
checks
    
    
    68.5
    %
    
    
    69.2
    %
    
    
    74.7
    %
    
    
    73.8
    %
    
    
    74.7
    %Net write-offs as a percentage of check
cashing revenues
    
    
    9.1
    %
    
    
    7.6
    %
    
    
    7.3
    %
    
    
    8.3
    %
    
    
    8.8
    %Net write-offs as a percentage of face
amount of checks cashed
    
    
    0.30
    %
    
    
    0.27
    %
    
    
    0.26
    %
    
    
    0.30
    %
    
    
    0.31
    %Canadian operations:Face amount of returned checks
    
    $
    6,952,000
    
    
    $
    8,116,000
    
    
    $
    8,797,000
    
    
    $
    9,906,000
    
    
    $
    11,498,000Collections on returned checks
    
    
    6,452,000
    
    
    
    7,246,000
    
    
    
    7,320,000
    
    
    
    8,319,000
    
    
    
    9,831,000Net write-offs of returned checks
    
    
    500,000
    
    
    
    870,000
    
    
    
    1,477,000
    
    
    
    1,587,000
    
    
    
    1,667,000Collections as a percentage of returned
checks
    
    
    92.8
    %
    
    
    89.3
    %
    
    
    83.2
    %
    
    
    83.9
    %
    
    
    85.5
    %Net write-offs as a percentage of check
cashing revenues
    
    
    1.6
    %
    
    
    2.6
    %
    
    
    3.8
    %
    
    
    3.6
    %
    
    
    3.2
    %Net write-offs as a percentage of face
amount of checks cashed
    
    
    0.06
    %
    
    
    0.09
    %
    
    
    0.13
    %
    
    
    0.12
    %
    
    
    0.11
    %United
Kingdom operations:Face amount of returned checks
    
    $
    5,511,000
    
    
    $
    6,002,000
    
    
    $
    6,503,000
    
    
    $
    7,989,000
    
    
    $
    10,708,000Collections on returned checks
    
    
    3,800,000
    
    
    
    3,845,000
    
    
    
    3,795,000
    
    
    
    4,455,000
    
    
    
    6,653,000Net write-offs of returned checks
    
    
    1,711,000
    
    
    
    2,157,000
    
    
    
    2,708,000
    
    
    
    3,534,000
    
    
    
    4,055,000Collections as a percentage of returned
checks
    
    
    69.0
    %
    
    
    64.1
    %
    
    
    58.4
    %
    
    
    55.8
    %
    
    
    62.1
    %Net write-offs as a percentage of check
cashing revenues
    
    
    8.2
    %
    
    
    8.3
    %
    
    
    8.7
    %
    
    
    9.2
    %
    
    
    9.6
    %Net write-offs as a percentage of face
amount of checks cashed
    
    
    0.39
    %
    
    
    0.38
    %
    
    
    0.40
    %
    
    
    0.43
    %
    
    
    0.47
    %
 10




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Consumer lending
     TM
  11




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##### Table of Contents



Year ended June 30,2004
    
    2005
    
    2006U.S. company-funded consumer loan originations (1)(2)
    
    $
    65,868
    
    
    $
    73,762
    
    
    $
    236,025Canadian company-funded consumer loan originations (3)
    
    
    309,016
    
    
    
    447,940
    
    
    
    554,949U.K. company-funded consumer loan originations (3)
    
    
    115,283
    
    
    
    185,042
    
    
    
    204,220Total company-funded consumer loan originations
    
    $
    490,167
    
    
    $
    706,744
    
    
    $
    995,194U.S. Servicing revenues(2)
    
    $
    61,704
    
    
    $
    66,984
    
    
    $
    22,673U.S. company-funded consumer loan revenues(2)
    
    
    9,873
    
    
    
    11,511
    
    
    
    37,814Canadian company-funded consumer loan revenues
    
    
    31,479
    
    
    
    48,680
    
    
    
    69,999U.K. company-funded consumer loan revenues
    
    
    19,405
    
    
    
    25,829
    
    
    
    32,102Provision for loan losses and adjustment to servicing revenue
    
    
    (24,489
    )
    
    
    (29,425
    )
    
    
    (30,367
    )Total consumer lending revenues, net
    
    $
    97,972
    
    
    $
    123,579
    
    
    $
    132,221Gross charge-offs of company-funded consumer loans(2)
    
    $
    45,074
    
    
    $
    64,685
    
    
    $
    106,164Recoveries of company-funded consumer loans(2)
    
    
    (36,102
    )
    
    
    (50,352
    )
    
    
    (84,724
    )Net charge-offs on company-funded consumer loans
    
    $
    8,972
    
    
    $
    14,333
    
    
    $
    21,440Gross charge-offs of company-funded consumer loans
as a percentage of total company-funded consumer
loan originations
    
    
    9.2
    %
    
    
    9.2
    %
    
    
    10.7
    %Recoveries of company-funded consumer loans as a
percentage of total company-funded consumer loan
originations
    
    
    7.4
    %
    
    
    7.1
    %
    
    
    8.5
    %Net charge-offs on company-funded consumer loans
as a percentage of total company-funded consumer
loan originations
    
    
    1.8
    %
    
    
    2.0
    %
    
    
    2.2
    %
 
 (1)
    
    Our company-operated stores in the United States originate company-funded
and bank-funded single-payment consumer loans. Document transmitter locations in the United States
originated only bank-funded loans.(2)
    
    The variance between the fiscal years 2005 and 2006 is primarily related to our
transition in the United States for single-payment consumer loans from the bank-funded model in
2005 to the company-funded model in 2006.(3)
    
    All consumer loans originated in Canada and the United Kingdom are
company-funded.  12




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OTHER SERVICES AND PRODUCTS
 ®
  
    
    Money transfers- Through a strategic alliance with Western Union, customers can
transfer funds to any location providing Western Union money transfer services.
Western Union currently has 245,000 agents in more than 200 countries throughout the
world. We receive a percentage of the commission charged by Western Union for the
transfer. For fiscal 2005 and fiscal 2006, we generated total money transfer
revenues of $14.8 million and $17.2 million, respectively primarily at our check
cashing stores.
    
    Money orders- Our stores issue money orders for a minimal fee. Customers who do
not have checking accounts typically use money orders to pay rent and utility bills.
During fiscal 2006, money order transactions had an average face amount of $194.65
and an average fee of $1.19. For fiscal 2006, our customers purchased 2.1 million
money orders, generating total money order revenues of $2.5 million. During fiscal 2005, money
order transactions had an average face amount of $182.81 and an average fee of $1.17. For fiscal
2005 our customers purchased 2.1 million money orders, generating total money order
revenues of $2.4 million.
 13




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##### Table of Contents



Store Operations
 Locations
  June 30,Markets
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006CALIFORNIASouthern
    
    
    47
    
    
    
    47
    
    
    
    47
    
    
    
    47
    
    
    
    47Northern
    
    
    93
    
    
    
    91
    
    
    
    90
    
    
    
    90
    
    
    
    86ARIZONAPhoenix
    
    
    45
    
    
    
    43
    
    
    
    43
    
    
    
    51
    
    
    
    49Tucson
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    16OTHER UNITED STATESLouisiana
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    29
    
    
    
    27Ohio
    
    
    23
    
    
    
    22
    
    
    
    22
    
    
    
    22
    
    
    
    22Washington
    
    
    18
    
    
    
    18
    
    
    
    18
    
    
    
    18
    
    
    
    18Pennsylvania
    
    
    19
    
    
    
    17
    
    
    
    17
    
    
    
    17
    
    
    
    16Virginia
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    16Oklahoma
    
    
    13
    
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10Nevada
    
    
    11
    
    
    
    8
    
    
    
    8
    
    
    
    8
    
    
    
    7Colorado
    
    
    15
    
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    7Texas
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    6Utah
    
    
    5
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    3New Mexico
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    4Hawaii
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3Maryland/D.C.
    
    
    10
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    1Wisconsin
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    0Oregon
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    0
    
    
    
    0Franchised locations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    6
    
    
    
    7WE THE PEOPLECompany operated
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    3
    
    
    
    13Franchised locations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    172
    
    
    
    132Total United States
    
    
    351
    
    
    
    321
    
    
    
    319
    
    
    
    528
    
    
    
    490CANADACompany operated
    
    
    167
    
    
    
    181
    
    
    
    194
    
    
    
    214
    
    
    
    242Franchised locations
    
    
    87
    
    
    
    109
    
    
    
    117
    
    
    
    129
    
    
    
    128Total Canada
    
    
    254
    
    
    
    290
    
    
    
    311
    
    
    
    343
    
    
    
    370UNITED KINGDOMCompany operated
    
    
    123
    
    
    
    122
    
    
    
    125
    
    
    
    152
    
    
    
    172Franchised locations
    
    
    290
    
    
    
    351
    
    
    
    355
    
    
    
    312
    
    
    
    218Total United Kingdom
    
    
    413
    
    
    
    473
    
    
    
    480
    
    
    
    464
    
    
    
    390Total stores
    
    
    1,018
    
    
    
    1,084
    
    
    
    1,110
    
    
    
    1,335
    
    
    
    1,250
 14




---



##### Table of Contents



Acquisitions
        Facilities and hours of operation
  15




---



##### Table of Contents



Operational structure
    Technology
   Security
   16




---



##### Table of Contents



Advertising and Marketing
  Competition
      17




---



##### Table of Contents



Regulation
  Regulation of check cashing
     Regulation of consumer lending
 ® ® ®
  ®
 18




---



##### Table of Contents



Currency reporting regulation
 United States.
  19




---



##### Table of Contents



Canada.
 United Kingdom. 
 Regulation of legal document preparation services business
  
    
    state laws which prohibit: (1) the unauthorized practice of law, or UPL; and (2)
fraudulent, deceptive and unfair business practices generally; and
    
    section 110 of the U.S. Bankruptcy Code.
    Privacy regulation
  20




---



##### Table of Contents



Other regulation
   Proprietary Rights
  Insurance Coverage
  Employees
   Available Information
  Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995
  
    
    effectively compete in the financial services or legal document preparation services industries and
maintain our share of the market;
    
    manage risks inherent in an international operation, including foreign currency fluctuation;
    
    maintain our key banking relationships;
    
    sustain demand for our products and services;
    
    manage changes in applicable laws and regulations governing consumer protection and lending practices;
    
    manage our growth effectively;
 21




---



##### Table of Contents




    
    compete in light of technological advances; or
    
    safeguard against employee error and theft.
 
 Item 1A. RISK FACTORS
  If we do not generate a sufficient amount of cash, which depends on many factors beyond our
control, our liquidity and our ability to service our indebtedness and fund our operations would be
harmed.
  Changes in applicable laws and regulations governing consumer protection and lending
practices, both domestically and abroad, may have a significant negative impact on our business,
results of operations and financial condition.
  
    
    check cashing fees;
    
    licensing and posting of fees;
    
    lending practices, such as truth in lending and installment and single-payment lending;
    
    interest rates and usury;
    
    loan amount and fee limitations;
    
    currency reporting;
    
    privacy of personal consumer information; and
    
    prompt remittance of proceeds for the sale of money orders.
  22




---



##### Table of Contents



Our results of operations and financial condition may be negatively impacted by future
guidance issued by the Federal Deposit Insurance Corporation.
   23




---



##### Table of Contents



Public perception and press coverage of single-payment consumer loans as being predatory or abusive
could negatively affect our revenues and results of operations.
  If our estimates of loan losses are not adequate to absorb losses, our results of operations
and financial condition may be adversely affected.
  24




---



##### Table of Contents



Legal proceedings may have a material adverse impact on our results of operations or cash
flows in future periods.
  Competition in the financial services industry could cause us to lose market share and
revenues.
  Unexpected changes in foreign tax rates and political and economic conditions could negatively
impact our operating results.
  The international scope of our operations may contribute to increased costs and negatively
impact our operations.
 25




---



##### Table of Contents



Foreign currency fluctuations may adversely affect our results of operations.
  Demand for our products and services is sensitive to the level of transactions effected by our
customers, and accordingly, our revenues could be affected negatively by a general economic
slowdown.
  Our business model for our legal document preparation services business is being challenged in the
courts, as well as by state legislatures, which could result in our discontinuation of these
services in any one or more jurisdictions.
   26




---



##### Table of Contents



Changes in local rules and regulations such as local zoning ordinances could negatively impact our
business, results of operations and financial condition.
  Our business and results of operations may be adversely affected if we are unable to manage our
growth effectively.
  Our check cashing services may become obsolete because of technological advances.
  Our business is seasonal in nature, which causes our revenues and earnings to fluctuate.
  27




---



##### Table of Contents



Because we maintain a significant supply of cash in our stores, we may be subject to cash shortages
due to robbery, employee error and theft.
  If we lose key management or are unable to attract and retain the talent required for our business,
our operating results could suffer.
  A catastrophic event at our corporate or international headquarters or our centralized
call-center facility in the United States could significantly disrupt our operations and adversely
affect our business, results of operations and financial condition.
  28




---



##### Table of Contents



Item 2. PROPERTIES
  Period Ending
    
    Number ofJune 30,
    
    Leases Expiring2007
    
    
    1522008 - 2010
    
    
    4002011 - 2015
    
    
    1762016 - 2020
    
    
    32760
  2004
    
    2005
    
    2006Number of stores at beginning of period
    
    
    1,084
    
    
    
    1,110
    
    
    
    1,335New stores opened
    
    
    14
    
    
    
    42
    
    
    
    34Stores acquired
    
    
    3
    
    
    
    51
    
    
    
    47Stores closed
    
    
    (3
    )
    
    
    (15
    )
    
    
    (32
    )Net change in franchise stores
    
    
    12
    
    
    
    147
    
    
    
    (134
    )Number of stores at end of period
    
    
    1,110
    
    
    
    1,335
    
    
    
    1,250
 29




---



##### Table of Contents



Item 3. LEGAL PROCEEDINGS
  Canadian Legal Proceedings
  Mortillaro Smith
      California Legal Proceedings
 (Woods) (Castillo)
 30




---



##### Table of Contents



(Chin) (Williams) Chin Woods Castillo Williams Woods Castillo Williams Woods Castillo Woods Castillo Woods,
Castillo Williams
 Chin
 We The People Legal Proceedings
       31




---



##### Table of Contents



ex parte
      32




---



##### Table of Contents



Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  33




---



##### Table of Contents



PART II
 
 Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
  Period
    
    High
    
    LowJanuary 28, 2005 until March 31, 2005
    
    $
    17.06
    
    
    $
    10.57April 1, 2005 until June 30, 2005
    
    $
    13.00
    
    
    $
    8.50July 1, 2005 until September 30, 2005
    
    $
    15.40
    
    
    $
    10.64October 1, 2005 until December 31, 2005
    
    $
    12.90
    
    
    $
    10.27January 1, 2006 until March 31, 2006
    
    $
    18.05
    
    
    $
    10.70April 1, 2006 until June 30, 2006
    
    $
    19.74
    
    
    $
    16.62
 Holders
  Debt Securities
  Dividends
  34




---



##### Table of Contents



Item 6. SELECTED FINANCIAL DATA
  Year ended June 30,2002
    
    
    2003
    
    
    2004
    
    
    2005(5)
    
    
    2006(6)Statement of Operations Data:Revenues:Check Cashing
    
    $
    104,792
    
    
    $
    108,435
    
    
    $
    117,397
    
    
    $
    128,748
    
    
    $
    142,470Consumer Lending:Fees from consumer lending
    
    
    98,538
    
    
    
    107,580
    
    
    
    122,461
    
    
    
    153,004
    
    
    
    162,588Provision for loan losses and
adjustment to servicing income
    
    
    (27,913
    )
    
    
    (24,995
    )
    
    
    (24,489
    )
    
    
    (29,425
    )
    
    
    (30,367
    )Consumer lending, net
    
    
    70,625
    
    
    
    82,585
    
    
    
    97,972
    
    
    
    123,579
    
    
    
    132,221Money transfer fees
    
    
    10,098
    
    
    
    11,652
    
    
    
    13,032
    
    
    
    14,771
    
    
    
    17,205Other
    
    
    16,461
    
    
    
    16,716
    
    
    
    17,706
    
    
    
    24,468
    
    
    
    36,625Total Revenues
    
    
    201,976
    
    
    
    219,388
    
    
    
    246,107
    
    
    
    291,566
    
    
    
    328,521Store and regional expenses:Salaries and benefits
    
    
    67,733
    
    
    
    73,698
    
    
    
    80,291
    
    
    
    91,982
    
    
    
    106,823Occupancy
    
    
    18,140
    
    
    
    18,896
    
    
    
    19,828
    
    
    
    22,899
    
    
    
    27,914Depreciation
    
    
    6,562
    
    
    
    5,908
    
    
    
    6,588
    
    
    
    7,226
    
    
    
    7,834Other
    
    
    47,265
    
    
    
    49,029
    
    
    
    54,066
    
    
    
    62,371
    
    
    
    69,024Total store and regional expenses
    
    
    139,700
    
    
    
    147,531
    
    
    
    160,773
    
    
    
    184,478
    
    
    
    211,595Store and regional margin
    
    
    62,276
    
    
    
    71,857
    
    
    
    85,334
    
    
    
    107,088
    
    
    
    116,926Corporate and other expenses:Establishment of reserves for new consumer
lending arrangements (3)
    
    
    2,244
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate expenses
    
    
    20,998
    
    
    
    26,039
    
    
    
    27,439
    
    
    
    38,276
    
    
    
    41,784Other depreciation and amortization
    
    
    2,669
    
    
    
    3,271
    
    
    
    3,244
    
    
    
    3,776
    
    
    
    3,655Interest expense, net of interest income
    
    
    18,694
    
    
    
    20,168
    
    
    
    25,303
    
    
    
    26,237
    
    
    
    29,702Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    7,486
    
    
    
    
    
    
    
    Litigation settlement costs
    
    
    
    
    
    
    2,750
    
    
    
    
    
    
    
    
    
    
    
    Reserve for litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,800Other
    
    
    1,435
    
    
    
    3,987
    
    
    
    361
    
    
    
    154
    
    
    
    1,506Income before income taxes
    
    
    16,236
    
    
    
    15,642
    
    
    
    21,501
    
    
    
    38,645
    
    
    
    34,479Income tax provision (1)
    
    
    10,199
    
    
    
    13,511
    
    
    
    16,589
    (2)
    
    
    19,986
    
    
    
    27,514Net income
    
    $
    6,037
    
    
    $
    2,131
    
    
    $
    4,912
    
    
    $
    18,659
    
    
    $
    6,965Operating and Other Data:Net cash provided by (used in):Operating activities
    
    $
    14,453
    
    
    $
    3,832
    
    
    $
    20,372
    
    
    $
    35,879
    
    
    $
    21,954Investing activities
    
    $
    (10,108
    )
    
    $
    (10,679
    )
    
    $
    (8,619
    )
    
    $
    (44,807
    )
    
    $
    (39,415
    )Financing activities
    
    $
    9,409
    
    
    $
    (10,897
    )
    
    $
    (16,468
    )
    
    $
    29,591
    
    
    $
    39,714Stores in operation at end of period:Company-owned
    
    
    641
    
    
    
    624
    
    
    
    638
    
    
    
    716
    
    
    
    765Franchised stores and check cashing
merchants
    
    
    377
    
    
    
    460
    
    
    
    472
    
    
    
    619
    
    
    
    485Total
    
    
    1,018
    
    
    
    1,084
    
    
    
    1,110
    
    
    
    1,335
    
    
    
    1,250Balance Sheet Data (at end of period):Cash
    
    $
    86,633
    
    
    $
    71,805
    
    
    $
    69,266
    
    
    $
    92,500
    
    
    $
    200,501Total assets
    
    $
    292,480
    
    
    $
    298,289
    
    
    $
    321,924
    
    
    $
    387,974
    
    
    $
    550,827Total debt
    
    $
    208,191
    
    
    $
    198,970
    
    
    $
    241,281
    
    
    $
    271,764
    
    
    $
    311,037Shareholders equity
    
    $
    53,515
    
    
    $
    67,688
    
    
    $
    38,017
    
    
    $
    59,759
    
    
    $
    80,474
 35




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##### Table of Contents



(1)
    
    As a result of our refinancing in November 2003, we no longer accrue United States taxes
on our foreign earnings. The amount of such tax was as follows: Year ended June 30,2002
    
    2003
    
    2004
    
    2005
    
    2006(dollars in thousands)$2,370
    
    $5,162
    
    $2,349
    
    $
    
    $
 
 (2)
    
    Due to the refinancing of our debt in November 2003, significant deferred tax assets
have been generated. Because the ability to realize the benefits of the asset is not
certain, we provided a full valuation allowance against the deferred taxes at June 30, 2006
which amounted to $47.5 million. Because realization is not assured, we have not recorded
the benefit of the deferred tax assets. The United States federal and state net
operating loss carry forwards will begin to expire in 2023, if not utilized. We believe
that Corp.s ability to utilize the net operating losses in a given year will be limited under
Section 382 of the Code because of changes of ownership resulting from the June 15, 2006
offering of our common stock. In addition, any future debt or equity transactions may
reduce our net operating losses or further limit Corp.s ability to utilize the net operating
losses under Section 382 of the Code.(3)
    
    During fiscal 2002, Eagle National Bank discontinued the offering of single-payment
consumer loans through our stores pursuant to a December 18, 2001 consent order entered
into with the United States Comptroller of the Currency. In June 2002, we entered into a
new servicing relationship with County Bank of Rehoboth Beach, Delaware to provide
single-payment consumer loans to our customers. The change in our servicing relationship
required corresponding changes to our banking systems, procedures and daily operations.
County Bank elected not to fund loans in California and, therefore, we increased the number
and amount of company-funded loans we originated. State regulations also prevented the
refinancing of company-funded loans in California on their stated maturity date. We
believed these factors increased the likelihood of loan losses on our company-funded
consumer loan portfolio and the bank-funded consumer loan portfolio. Accordingly, we
increased our estimated loss rates for both of these portfolios and established an
aggregate reserve of $2.2 million. In June 2005, we terminated our relationship with County
Bank.(4)
    
    On January 4, 2005 we acquired substantially all of the outstanding shares of
International Paper Converters Limited, d/b/a Cheque Changer Limited. The aggregate
purchase price for this acquisition was $2.7 million and was funded through excess internal
cash. The excess of the purchase price over the fair value of identifiable assets acquired
was $2.5 million. On January 31, 2005, we acquired substantially all of the assets of
Alexandria Financial Service, LLC and certain of its affiliates. The aggregate purchase
price for this acquisition was $11.9 million in cash, which includes a revenue earn-out of
$2.0 million payable January 31, 2006. Our revolving credit facility was used to fund the
purchase. The excess of the purchase price over the fair value of identifiable assets
acquired was $11.1 million. On March 7, 2005, we entered into an agreement to acquire
substantially all of the assets of We The People Forms and Service Centers USA, Inc.
(Former WTP) relating to the Former WTPs retail-based legal document preparation
services business. The aggregate purchase price for this acquisition was $14.0 million,
consisting of $10.5 million in cash paid at closing, $2.0 million in unregistered shares of
our common stock and $1.5 million paid at closing to an escrow account to secure certain
indemnification liabilities of the Former WTP. In May 2005, $250,000 of the escrow amount
was distributed to the seller and 25% of the remaining escrow amount was scheduled to be
distributed on each of December 31, 2005, March 31, 2006, June 30, 2006 and September 30,
2006, assuming no indemnification claims at such times. In addition, we assumed $750,000 in
liabilities and assumed approximately $7.6 million in refundable deposits related to
certain franchise agreements. We allocated a portion of the purchase price to purchased
franchise agreements for $1.2 million and other assets for $1.1 million, with the remainder
allocated to goodwill. The agreement also includes a maximum revenue-based earn out of up
to $3.0 million which is payable over a two-year period. Our revolving credit facility and
unregistered shares of our common stock were used to fund the purchase. The excess of the
purchase price over the fair value of net identifiable assets acquired was $21.5 million.
 On May 16, 2005, we acquired substantially all of the assets
of Tenant Financial Enterprises, Inc., consisting of five financial services stores in
Arizona. The aggregate purchase price for this acquisition was $1.7 million in cash. The
excess of the purchase price over the fair value of identifiable assets
acquired was $1.7 million. During fiscal 2005, we completed various other acquisitions
resulting in an aggregate increase in goodwill of $2.1 million.(5)
    
    In July 2005, we purchased 26 We The People franchisee-owned stores, converting them to
company-owned and -operated stores, and related franchise territory for future development.
The aggregate purchase price for these acquisitions was $5.0 million and was funded through
excess internal cash. We allocated a portion of the purchase price to territory rights
for $4.3 million and $800,000 to other assets. In October 2005, we purchased three We
The People franchisee-owned stores, converting them to company-owned and -operated stores,
and related franchise territories for future development. In addition, we acquired three
undeveloped territories from franchisees for future development. The aggregate purchase
price for these acquisitions was $1.6 million, consisting of $833,000 in cash paid at
closing and a $733,000 note payable. We allocated $181,000 of the purchase price to
territory rights. The excess of the purchase price over the fair value of identifiable
assets acquired was $1.1 million. On March 9, 2006, we entered into an agreement to
purchase substantially all of the assets of thirteen franchised stores in western Canada in
a series of transactions. Eleven stores were acquired in March 2006 and two stores will be
acquired contingent upon the successful attainment of required loan licenses. The acquired
stores were controlled by a franchisee of our Canadian subsidiary, and we also had a
minority ownership interest in seven of these stores. The total aggregate purchase price
for the eleven stores was approximately $14.7 million cash. An additional $3.6 million is
being held in escrow for the remaining two stores. We allocated a portion of the purchase
price to reacquired franchise rights for $1.4 million and 36




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##### Table of Contents



other assets for $1.4 million.
Our revolving credit facility was used to fund the purchase. The excess of the purchase
price over the preliminary fair value of identifiable assets acquired was $11.9 million. 
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Executive Summary
  ® ® ®
  ®
    37




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##### Table of Contents



Impact of Hurricanes Katrina and Rita on our Operations
   Discussion of Critical Accounting Policies
   Revenue
Recognition
    38




---



##### Table of Contents



® TM
 Company-funded consumer loan loss reserves policy
  39




---



##### Table of Contents



Check cashing returned item policy
  Goodwill
  Income taxes
  40




---



##### Table of Contents



Results of Operations
  Year ended June 30,2004
    
    2005
    
    2006Statement of Operations Data:Total revenues:Check cashing
    
    
    47.6
    %
    
    
    44.2
    %
    
    
    43.4
    %Consumer lending, net
    
    
    39.8
    %
    
    
    42.4
    %
    
    
    40.2
    %Money transfers
    
    
    5.3
    %
    
    
    5.1
    %
    
    
    5.2
    %Other
    
    
    7.3
    %
    
    
    8.3
    %
    
    
    11.2
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %U.S. revenues:Check cashing
    
    
    19.4
    %
    
    
    16.0
    %
    
    
    14.7
    %Consumer lending, net
    
    
    21.9
    %
    
    
    20.8
    %
    
    
    14.0
    %Money transfers
    
    
    1.8
    %
    
    
    1.5
    %
    
    
    1.4
    %Other
    
    
    1.4
    %
    
    
    2.2
    %
    
    
    4.0
    %Total U.S. revenues
    
    
    44.5
    %
    
    
    40.5
    %
    
    
    34.1
    %Canadian revenues:Check cashing
    
    
    15.6
    %
    
    
    15.0
    %
    
    
    15.9
    %Consumer lending, net
    
    
    11.6
    %
    
    
    14.7
    %
    
    
    18.5
    %Money transfers
    
    
    2.4
    %
    
    
    2.3
    %
    
    
    2.5
    %Other
    
    
    4.9
    %
    
    
    5.1
    %
    
    
    6.0
    %Total Canadian revenues
    
    
    34.5
    %
    
    
    37.1
    %
    
    
    42.9
    %United Kingdom revenuesCheck cashing
    
    
    12.6
    %
    
    
    13.2
    %
    
    
    12.8
    %Consumer lending, net
    
    
    6.3
    %
    
    
    6.9
    %
    
    
    7.7
    %Money transfers
    
    
    1.1
    %
    
    
    1.3
    %
    
    
    1.3
    %Other
    
    
    1.0
    %
    
    
    1.0
    %
    
    
    1.2
    %Total United Kingdom revenues
    
    
    21.0
    %
    
    
    22.4
    %
    
    
    23.0
    %Store and regional expenses:Salaries and benefits
    
    
    32.7
    %
    
    
    31.5
    %
    
    
    32.5
    %Occupancy
    
    
    8.1
    %
    
    
    7.9
    %
    
    
    8.5
    %Depreciation
    
    
    2.7
    %
    
    
    2.5
    %
    
    
    2.4
    %Other
    
    
    21.9
    %
    
    
    21.4
    %
    
    
    21.0
    %Total store and regional expenses
    
    
    65.4
    %
    
    
    63.3
    %
    
    
    64.4
    %Store and regional expense margin
    
    
    34.6
    %
    
    
    36.7
    %
    
    
    35.6
    %Corporate expenses
    
    
    11.0
    %
    
    
    13.1
    %
    
    
    12.7
    %Other depreciation and amortization
    
    
    1.3
    %
    
    
    1.3
    %
    
    
    1.1
    %Interest expense, net of interest income
    
    
    10.3
    %
    
    
    9.0
    %
    
    
    9.0
    %Loss on extinguishment of debt
    
    
    3.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Litigation settlement costs
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    1.8
    %Other
    
    
    0.1
    %
    
    
    0.0
    %
    
    
    0.5
    %Income before income taxes
    
    
    8.7
    %
    
    
    13.3
    %
    
    
    10.5
    %Income tax provision
    
    
    6.7
    %
    
    
    6.9
    %
    
    
    8.4
    %Net income
    
    
    2.0
    %
    
    
    6.4
    %
    
    
    2.1
    %
 41




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##### Table of Contents



Year Ended June 30, 2006 Compared to the Year Ended June 30, 2005
 Revenues.
  Store and regional expenses.
 Corporate expenses.
 Other depreciation and amortization.
 42




---



##### Table of Contents



Interest
expense.
 Income tax provision.
 Year Ended June 30, 2005 Compared to the Year Ended June 30, 2004
 Revenues
 43




---



##### Table of Contents



Store and regional expenses
 Corporate expenses
 Other depreciation and amortization
 Loss
on Extinguishment of Debt.
  2004
    
    2005Call premiumDollar Financial Group, Inc. 10.875% Senior Notes
    
    $
    1.98
    
    
    $
    Dollar
Financial Group, Inc. 10.875% Senior Subordinated Notes
    
    
    0.73
    
    
    
    Write-off of previously capitalized deferred issuance costs, net
    
    
    4.50
    
    
    
    Prepayment
penalty on the extinguishment of collateralized borrowings
    
    
    0.28
    
    
    
    Loss on extinguishment of debt
    
    $
    7.49
    
    
    $
    
 44




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##### Table of Contents



Interest Expense.
 Income Tax Provision.
 Seasonality
  45




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##### Table of Contents



Balance Sheet Variations
 June 30, 2006 Compared to June 30, 2005
             46




---



##### Table of Contents



Liquidity and Capital Resources
     Revolving credit facilities.
 Domestic
revolving credit facility
 47




---



##### Table of Contents



Canadian overdraft facility
 Long-term debt
 Operating leases
  Payments Due by Period (in thousands)Less than
    
    1-3
    
    4-5
    
    More thanTotal
    
    1 Year
    
    Years
    
    Years
    
    5 YearsRevolving credit facilities:
    
    $
    39,000
    
    
    $
    39,000
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt obligations:9.75% Senior Notes due 2011(1)
    
    
    271,487
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271,487Operating lease obligations
    
    
    84,968
    
    
    
    21,448
    
    
    
    33,315
    
    
    
    16,638
    
    
    
    13,567Other long-term liabilities reflected on the
registrants balance sheet under GAAP
    
    
    550
    
    
    
    367
    
    
    
    183
    
    
    
    
    
    
    
    Total
    
    $
    396,005
    
    
    $
    60,815
    
    
    $
    33,498
    
    
    $
    16,638
    
    
    $
    285,054
 
 (1)
    
    $1,487 is the unamortized premium on the 9.75% Senior Notes due 2011.
  Impact of Inflation
  48




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##### Table of Contents



Impact of Recent Accounting Pronouncement
 Accounting for Uncertainty in Income Taxes, Accounting for Income
Taxes
 49




---



##### Table of Contents



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Generally
  
    
    interest rates on borrowings under the domestic revolving credit agreement; and
    
    foreign exchange rates generating translation gains and losses.
  Interest rate risk
  Foreign currency exchange rate risk
    50




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 The Board of Directors and Shareholders
Dollar Financial Corp.
     
 51




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)
 June 30,2005
    
    
    2006ASSETSCash and cash equivalents
    
    $
    92,500
    
    
    $
    119,751Restricted cash
    
    
    
    
    
    
    80,750Loans receivableLoans receivable
    
    
    40,226
    
    
    
    58,997Less: Allowance for loan losses
    
    
    (2,747
    )
    
    
    (5,365
    )Loans receivable, net
    
    
    37,479
    
    
    
    53,632Other consumer lending receivables
    
    
    9,163
    
    
    
    7,545Other receivables
    
    
    4,123
    
    
    
    7,872Income taxes receivable
    
    
    1,053
    
    
    
    515Prepaid expenses
    
    
    6,858
    
    
    
    10,166Deferred income taxes, net of valuation allowance of
$12,035 and $22,091
    
    
    71
    
    
    
    185Due from parent
    
    
    398
    
    
    
    Property and equipment, net of accumulated depreciation of
$62,555 and $73,714
    
    
    35,611
    
    
    
    40,625Goodwill and other intangibles, net of accumulated
amortization of $23,079 and $21,306
    
    
    186,190
    
    
    
    218,566Debt issuance costs, net of accumulated amortization
of $2,633 and $4,630
    
    
    10,558
    
    
    
    9,437Other
    
    
    3,970
    
    
    
    2,018$
    387,974
    
    
    $
    551,062LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    19,256
    
    
    $
    23,067Foreign income tax payable
    
    
    4,648
    
    
    
    10,963Accrued expenses and other liabilities
    
    
    26,904
    
    
    
    36,304Accrued interest payable
    
    
    3,291
    
    
    
    3,312Due to parent
    
    
    
    
    
    
    81,366Deferred tax liability
    
    
    2,352
    
    
    
    4,539Revolving credit facilities
    
    
    
    
    
    
    39,000Other long term debt9.75% Senior Notes due 2011
    
    
    271,764
    
    
    
    271,487Other long
term debt
    
    
    
    
    
    
    550Shareholders equity:Common stock, $1 par value; 20,000 shares authorized; 100
shares issued and outstanding at June 30, 2005 and
June 30, 2006
    
    
    
    
    
    
    Additional paid-in capital
    
    
    21,617
    
    
    
    21,617Retained earnings
    
    
    17,636
    
    
    
    24,601Accumulated other comprehensive income
    
    
    20,506
    
    
    
    34,256Total shareholders equity
    
    
    59,759
    
    
    
    80,474$
    387,974
    
    
    $
    551,062
 52




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
 Year Ended June 30,2004
    
    
    2005
    
    
    2006Revenues:Check cashing
    
    $
    117,397
    
    
    $
    128,748
    
    
    $
    142,470Consumer lending:Fees from consumer lending
    
    
    122,461
    
    
    
    153,004
    
    
    
    162,588Provision for loan losses and
adjustment to servicing income
    
    
    (24,489
    )
    
    
    (29,425
    )
    
    
    (30,367
    )Consumer lending, net
    
    
    97,972
    
    
    
    123,579
    
    
    
    132,221Money transfer fees
    
    
    13,032
    
    
    
    14,771
    
    
    
    17,205Franchise fees and royalties
    
    
    3,255
    
    
    
    7,149
    
    
    
    10,957Other
    
    
    14,451
    
    
    
    17,319
    
    
    
    25,668Total revenues
    
    
    246,107
    
    
    
    291,566
    
    
    
    328,521Store and regional expenses:Salaries and benefits
    
    
    80,291
    
    
    
    91,982
    
    
    
    106,823Occupancy
    
    
    19,828
    
    
    
    22,899
    
    
    
    27,914Depreciation
    
    
    6,588
    
    
    
    7,226
    
    
    
    7,834Returned checks, net and cash shortages
    
    
    9,140
    
    
    
    10,571
    
    
    
    11,883Telephone and communications
    
    
    5,810
    
    
    
    5,998
    
    
    
    5,800Advertising
    
    
    6,989
    
    
    
    8,461
    
    
    
    8,197Bank charges
    
    
    3,748
    
    
    
    3,961
    
    
    
    4,680Armored carrier expenses
    
    
    3,051
    
    
    
    3,660
    
    
    
    4,164Other
    
    
    25,328
    
    
    
    29,720
    
    
    
    34,300Total store and regional expenses
    
    
    160,773
    
    
    
    184,478
    
    
    
    211,595Store and regional margin
    
    
    85,334
    
    
    
    107,088
    
    
    
    116,926Corporate and other expenses:Corporate expenses
    
    
    27,439
    
    
    
    38,276
    
    
    
    41,784Other depreciation and amortization
    
    
    3,244
    
    
    
    3,776
    
    
    
    3,655Interest expense, net of interest
income of $179, $114, and $210
    
    
    25,303
    
    
    
    26,237
    
    
    
    29,702Loss on extinguishment of debt
    
    
    7,486
    
    
    
    
    
    
    
    Reserve for litigation settlement
    
    
    
    
    
    
    
    
    
    
    5,800Other
    
    
    361
    
    
    
    154
    
    
    
    1,506Income before income taxes
    
    
    21,501
    
    
    
    38,645
    
    
    
    34,479Income tax provision
    
    
    16,589
    
    
    
    19,986
    
    
    
    27,514Net income
    
    $
    4,912
    
    
    $
    18,659
    
    
    $
    6,965
 53




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In thousands, except share data)
 AccumulatedCommon Stock
    
    Additional
    
    
    
    
    
    Other
    
    TotalOutstanding
    
    Paid-in
    
    Retained
    
    Comprehensive
    
    ShareholdersShares
    
    Amount
    
    Capital
    
    Earnings
    
    (Loss) Income
    
    (Deficit) EquityBalance, June 30, 2003
    
    
    100
    
    
    
    
    
    
    
    50,957
    
    
    
    9,034
    
    
    
    7,697
    
    
    
    67,688Comprehensive income:Foreign currency
translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,116
    
    
    
    6,116Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,912
    
    
    
    
    
    
    
    4,912Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,028Dividends paid to parent
    
    
    
    
    
    
    
    
    
    
    (29,340
    )
    
    
    (11,359
    )
    
    
    
    
    
    
    (40,699
    )Balance, June 30, 2004
    
    
    100
    
    
    
    
    
    
    
    21,617
    
    
    
    2,587
    
    
    
    13,813
    
    
    
    38,017Comprehensive income:Foreign currency
translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,729
    
    
    
    6,729Other cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36
    )
    
    
    (36
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,659
    
    
    
    
    
    
    
    18,659Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,352Dividends paid to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,610
    )
    
    
    
    
    
    
    (3,610
    )Balance, June 30, 2005
    
    
    100
    
    
    
    
    
    
    
    21,617
    
    
    
    17,636
    
    
    
    20,506
    
    
    
    59,759Comprehensive income:Foreign currency
translation, net of taxes of $1,229
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,088
    
    
    
    14,088Other cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (338
    )
    
    
    (338
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,965
    
    
    
    
    
    
    
    6,965Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,715Balance, June 30, 2006
    
    
    100
    
    
    $
    
    
    
    $
    21,617
    
    
    $
    24,601
    
    
    $
    34,256
    
    
    
    $ 80,474
  54




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year Ended June 30,2004
    
    
    2005
    
    
    2006Cash flows from operating activities:Net income
    
    $
    4,912
    
    
    $
    18,659
    
    
    $
    6,965Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    11,570
    
    
    
    12,504
    
    
    
    13,231Establishment of reserve for legal mater
    
    
    7,486
    
    
    
    
    
    
    
    5,800Losses on store closings
    
    
    187
    
    
    
    66
    
    
    
    985Foreign currency (gain) loss on revaluation of
subordinated borrowings
    
    
    (838
    )
    
    
    180
    
    
    
    Deferred tax provision
    
    
    (838
    )
    
    
    2,352
    
    
    
    2,005Change in assets and liabilities (net of effect of
acquisitions):Increase in loans and other receivables
    
    
    (8,987
    )
    
    
    (3,555
    )
    
    
    (15,508
    )(Increase) decrease in income taxes receivable
    
    
    (1,801
    )
    
    
    5,072
    
    
    
    773Decrease (increase) in prepaid expenses and other
    
    
    (760
    )
    
    
    (4,039
    )
    
    
    (971
    )(Decrease) increase in accounts payable, income taxes
payable, accrued expenses and other liabilities
and accrued
interest payable
    
    
    9,441
    
    
    
    4,640
    
    
    
    8,674Net cash provided by operating activities
    
    
    20,372
    
    
    
    35,879
    
    
    
    21,954Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (550
    )
    
    
    (29,950
    )
    
    
    (23,477
    )Gross proceeds from sale of fixed assets
    
    
    81
    
    
    
    
    
    
    
    Additions to property and equipment
    
    
    (8,150
    )
    
    
    (14,857
    )
    
    
    (15,938
    )Net cash used in investing activities
    
    
    (8,619
    )
    
    
    (44,807
    )
    
    
    (39,415
    )Cash flows from financing activities:Increase in restricted cash
    
    
    
    
    
    
    
    
    
    
    (80,750
    )Redemption of 10.85% senior subordinated notes due 2006
    
    
    (20,734
    )
    
    
    
    
    
    
    Redemption of collaterized borrowings
    
    
    (8,277
    )
    
    
    
    
    
    
    Other debt (payments) borrowing
    
    
    (72
    )
    
    
    (106
    )
    
    
    550Issuance of 9.75% Senior Notes due 2011
    
    
    241,176
    
    
    
    30,750
    
    
    
    Redemption of 10.875% Senior Notes due 2006
    
    
    (111,170
    )
    
    
    
    
    
    
    Net (decrease) increase in revolving credit facilities
    
    
    (61,699
    )
    
    
    
    
    
    
    39,000Payment of debt issuance costs
    
    
    (10,929
    )
    
    
    (727
    )
    
    
    (850
    )Net (increase) decrease in due from parent
    
    
    (4,064
    )
    
    
    3,284
    
    
    
    81,764Dividend paid to parent
    
    
    (40,699
    )
    
    
    (3,610
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (16,468
    )
    
    
    29,591
    
    
    
    39,714Effect of exchange rate changes on cash and cash
equivalents
    
    
    2,176
    
    
    
    2,571
    
    
    
    4,998Net (decrease) increase in cash and cash equivalents
    
    
    (2,539
    )
    
    
    23,234
    
    
    
    27,251Cash and cash equivalents at beginning of period
    
    
    71,805
    
    
    
    69,266
    
    
    
    92,500Cash and cash equivalents at end of period
    
    $
    69,266
    
    
    $
    92,500
    
    
    $
    119,751Supplemental disclosure of cash flow information:Interest paid
    
    $
    21,485
    
    
    $
    24,489
    
    
    $
    28,170Income taxes
paid, net
    
    $
    13,858
    
    
    $
    15,820
    
    
    $
    19,817
  55




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2006
 1. Organization and Business
  ® ® ® ®
  2. Significant Accounting Policies
 Use of Estimates
  Principles of Consolidation
  Reclassification
  Revenue Recognition
  56




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2. Significant Accounting Policies (continued)
 Revenue Recognition (continued)
       57




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2. Significant Accounting Policies (continued)
 Revenue Recognition (continued)
  TM TM
 Cash and Cash Equivalents
  Loans Receivable, Net
  Property and Equipment
  Intangible Assets
  58




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2. Significant Accounting Policies (continued)
 Debt Issuance Costs
  Store and Regional Expenses
  Company-Funded Consumer Loan Loss Reserves Policy
   Check Cashing Returned Item Policy
  Income Taxes
   59




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2. Significant Accounting Policies (continued)
 Employees Retirement Plan
     Advertising Costs
  Fair Value of Financial Instruments
  Derivatives
  60




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2. Significant Accounting Policies (continued)
  Foreign Currency Translation and Transactions
  Stock Based Compensation Plan
 Share-Based Payment , Accounting for Stock-Based
Compensation , Accounting for
Stock Issued to Employees
  61




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2. Significant Accounting Policies (continued)
  Year Ended June 30,2004
    
    
    2005
    
    
    2006Net (loss) income   as reported
    
    $
    4,912
    
    
    $
    18,659
    
    
    $
    6,965Add: Stock-based employee compensation expense included in
reported net income, net of related tax effects
    
    
    
    
    
    
    
    
    
    
    81Deduct: Total stock-option expense determined under the fair value
based method, net of related tax benefits
    
    
    (330
    )
    
    
    (4,264
    )
    
    
    (81
    )Net (loss) income   pro forma
    
    $
    4,582
    
    
    $
    14,395
    
    
    $
    6,965
 Recent Accounting Pronouncement
 Accounting for
Uncertainty in Income Taxes, Accounting for Income Taxes
 3. Supplementary Cash Flow Information
 Non-cash transactions
  62




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 4. Stock Based Compensation Plan
      63




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 4. Stock Based Compensation Plan (continued)
  Year Ended June 30,2004
    
    2005
    
    2006Expected volatility
    
    
    46.0
    %
    
    
    41.8
    %
    
    
    46.9
    %Expected life (years)
    
    
    6.0
    
    
    
    6.0
    
    
    
    6.2Risk-free interest rate
    
    
    4.35
    %
    
    
    4.25
    %
    
    
    4.61
    %Expected dividends
    
    None
    
    None
    
    NoneWeighted average fair value
    
    $
    5.05
    
    
    $
    4.94
    
    
    $
    7.62
  WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicExercise
    
    
    Term
    
    
    Value ($ inPrice
    
    
    (years)
    
    
    millions)Options outstanding at June 30, 2003(435,137 shares exercisable)
    
    
    539,460
    
    
    $
    6.59Granted
    
    
    301,920
    
    
    $
    10.09Exercised
    
    
    
    
    
    $
    Forfeited and expired
    
    
    (59,940
    )
    
    $
    8.77Options outstanding at June 30, 2004(466,200 shares exercisable)
    
    
    781,440
    
    
    $
    7.77Granted
    
    
    1,073,566
    
    
    $
    13.83Exercised
    
    
    (11,100
    )
    
    $
    5.81Forfeited and expired
    
    
    
    
    
    $
    Options outstanding at June 30, 2005(1,838,906 shares exercisable)
    
    
    1,843,906
    
    
    $
    11.31Granted
    
    
    92,500
    
    
    $
    14.58Exercised
    
    
    (210,614
    )
    
    $
    6.47Forfeited and expired
    
    
    (10,650
    )
    
    $
    13.07Options outstanding at June 30, 2006
    
    
    1,715,142
    
    
    $
    12.07
    
    
    
    7.6
    
    
    $
    10.2Exercisable at June 30, 2006
    
    
    1,622,642
    
    
    $
    11.93
    
    
    
    7.5
    
    
    $
    9.9
  64




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 4. Stock Based Compensation Plan (continued)
   WeightedRestricted
    
    AverageStock Awards
    
    GrantOutstanding at June 30, 2005
    
    
    
    
    
    
    Granted
    
    
    107,841
    
    
    $
    18.36Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at June 30, 2006
    
    
    107,841
    
    
    $
    18.36
 5. Restricted cash
  65




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DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 6. Property and Equipment
  June 30,2005
    
    
    2006Land
    
    $
    170
    
    
    $
    175Leasehold improvements
    
    
    33,531
    
    
    
    39,574Equipment and furniture
    
    
    64,465
    
    
    
    74,59098,166
    
    
    
    114,339Less: accumulated depreciation
    
    
    (62,555
    )
    
    
    (73,714
    )Property and equipment, net
    
    $
    35,611
    
    
    $
    40,625
  7. Debt
  June 30,2005
    
    
    2006Revolving credit facility
    
    $
    
    
    
    $
    39,0009.75% Senior Notes due November 13, 2011; interest
payable semi-annually on May 15 and November 15
    
    
    271,764
    
    
    
    271,487Other
    
    
    
    
    
    
    550$
    271,764
    
    
    $
    331,037
   66




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##### Table of Contents



DOLLAR FINANCIAL GROUP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 7. Debt (continued)
     Year
    
    Percentage2007
    
    
    104.875
    %2008
    
    
    102.438
    %2009 and thereafter
    
    
    100.000
    %
    67




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##### Table of Contents



DOLLAR FINANCIAL GROUP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 7. Debt (continued)
    8. Income Taxes
   Year Ended June 30,2004
    
    2005
    
    2006Federal:Current
    
    $
    2,196
    
    
    $
    (1,810
    )
    
    $
    107Deferred
    
    
    (968
    )
    
    
    1,758
    
    
    
    1,5771,228
    
    
    
    (52
    )
    
    
    1,684Foreign taxes:Current
    
    
    15,232
    
    
    
    19,444
    
    
    
    25,317Deferred
    
    
    
    
    
    
    594
    
    
    
    52915,232
    
    
    
    20,038
    
    
    
    25,846State:Current
    
    
    
    
    
    
    
    
    
    
    (16
    )Deferred
    
    
    129
    
    
    
    
    
    
    
    129
    
    
    
    
    
    
    
    (16
    )$
    16,589
    
    
    $
    19,986
    
    
    $
    27,514
 68




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 8. Income Taxes (continued)
  June 30,2005
    
    2006Deferred tax assets:Loss reserves
    
    $
    788
    
    $
    2,875Depreciation
    
    
    2,340
    
    
    3,086Accrued compensation
    
    
    216
    
    
    738Reserve for store closing
    
    
    
    
    
    Other accrued expenses
    
    
    221
    
    
    300Net operating loss carry forwards
    
    
    8,464
    
    
    14,960Other
    
    
    77
    
    
    317Gross deferred tax assets
    
    
    12,106
    
    
    22,276Valuation allowance
    
    
    (12,035
    )
    
    (22,091
    )Deferred tax liabilities:Amortization and other temporary differences
    
    
    (2,352
    )
    
    (4,539
    )Net deferred tax asset (liability)
    
    $
    (2,281
    )
    
    (4,354
    )
   Year Ended June 30,2004
    
    2005
    
    2006Tax provision at federal statutory state
    
    $
    7,523
    
    
    $
    13,525
    
    
    12,068Add (deduct):Federal and State tax provision
    
    
    
    
    
    
    (746
    )
    
    (43
    )Canadian withholding
    
    
    
    
    
    
    (1,130
    )
    
    117Foreign taxes
    
    
    1,122
    
    
    
    452
    
    
    1,942US tax on foreign earnings
    
    
    2,349
    
    
    
    
    
    
    Canadian restructuring
    
    
    5,143
    
    
    
    
    
    
    Other permanent differences
    
    
    452
    
    
    
    (204
    )
    
    3,373Valuation allowance
    
    
    
    
    
    
    8,089
    
    
    10,057Tax provision at effective tax rate
    
    $
    16,589
    
    
    $
    19,986
    
    $
    27,514
 69




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 8. Income Taxes (continued)
    9.       Loss on Extinguishment of Debt
   2004
    
    2005
    
    2006Call PremiumDollar Financial Group, Inc. 10.875% Senior Notes
    
    $
    1,980
    
    
    $
    
    
    
    $
    Dollar Financial Group, Inc. 10.875% Senior Subordinated Notes
    
    
    733
    
    
    
    
    
    
    
    Write-off of original issue discount, netPrepayment penalty on the extinguishment of collateralized borrowings
    
    
    277
    
    
    
    Write-off of previously capitalized deferred issuance costs, net
    
    
    4,496
    
    
    
    $
    7,486
    
    
    $
    
    
    
    $
    
 10. Commitments
   Year
    
    Amount2007
    
    $
    21,4482008
    
    
    18,4932009
    
    
    14,8822010
    
    
    10,3292011
    
    
    6,308Thereafter
    
    
    13,568$
    84,968
 70




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 11. Acquisitions
       71




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 11. Acquisitions (continued)
       72




---



##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 11. Acquisitions (continued)
  Fiscal year endedJune 30,2005
    
    
    2006(Unaudited - in thousands)Revenues
    
    $
    309,789
    
    
    $
    332,676Net income (loss)
    
    $
    25,622
    
    
    $
    7,297
 12. Goodwill and Other Intangibles
  Fiscal Year Ending June 30,
    
    Amount(In thousands)2007
    
    $
    81.92008
    
    
    81.92009
    
    
    81.92010
    
    
    81.92011
    
    
    81.9Thereafter
    
    
    345.5$
    755.0
 73




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 12. Goodwill and Other Intangibles (continued)
  June 30, 2005
    
    June 30, 2006Gross Carrying
    
    Accumulated
    
    Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Amount
    
    AmortizationNon-amortized intangible assets:Cost in excess of net assets acquired
    
    $
    205,572
    
    
    $
    20,532
    
    
    $
    232,279
    
    
    $
    21,191Territory rights
    
    
    
    
    
    
    
    
    
    
    5,361
    
    
    
    Reacquired franchise rights
    
    
    
    
    
    
    
    
    
    
    1,478
    
    
    
    $
    205,572
    
    
    $
    20,532
    
    
    $
    239,118
    
    
    $
    21,191Amortized intangible assets:Covenants not to compete
    
    $
    2,510
    
    
    $
    2,510
    
    
    $
    
    
    
    $
    Franchise agreements
    
    
    1,187
    
    
    
    37
    
    
    
    755
    
    
    
    116$
    3,697
    
    
    $
    2,547
    
    
    $
    755
    
    
    $
    116
  United
    
    
    
    
    
    UnitedStates
    
    Canada
    
    Kingdom
    
    TotalBalance at June 30, 2004
    
    $
    56,514
    
    
    $
    38,821
    
    
    $
    53,783
    
    
    $
    149,118Amortization of other intangibles
    
    
    (56
    )
    
    
    
    
    
    
    
    
    
    
    (56
    )Acquisitions
    
    
    31,077
    
    
    
    
    
    
    
    3,223
    
    
    
    34,300Foreign currency translation adjustments
    
    
    
    
    
    
    3,638
    
    
    
    (810
    )
    
    
    2,828Balance at June 30, 2005
    
    
    87,535
    
    
    
    42,459
    
    
    
    56,196
    
    
    
    186,190Amortization of other intangibles
    
    
    (93
    )
    
    
    
    
    
    
    
    
    
    
    (93
    )Acquisitions
    
    
    10,418
    
    
    
    13,896
    
    
    
    1,618
    
    
    
    25,932Foreign currency translation adjustments
    
    
    
    
    
    
    4,737
    
    
    
    1,800
    
    
    
    6,537Balance at June 30, 2006
    
    $
    97,860
    
    
    $
    61,092
    
    
    $
    59,614
    
    
    $
    218,566
 74




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 13. Contingent Liabilities
   Canadian Legal Proceedings
  Mortillaro Smith
      75




---



##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 13. Contingent Liabilities (continued)
 California Legal Proceedings
 (Woods) (Castillo) (Chin) (Williams) Chin Woods Castillo Williams Woods Castillo Williams Woods Castillo Woods Castillo Woods, Castillo Williams
 Chin
 We The People Legal Proceedings
      76




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 13. Contingent Liabilities (continued)
 We The People Legal Proceedings (continued)
     ex parte
  77




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 13. Contingent Liabilities (continued)
 We The People Legal Proceedings (continued)
       14. Credit Risk
   78




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##### Table of Contents



DOLLAR
FINANCIAL GROUP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 14. Credit Risk (continued)
   ®
   79




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##### Table of Contents



DOLLAR FINANCIAL GROUP
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 14. Credit Risk (continued)
     Balance at
    
    
    Provision
    
    
    Foreign
    
    
    Transfer tobeginning of
    
    
    charged to
    
    
    currency
    
    
    other
    
    
    Net charge-
    
    
    Balance atDescription
    
    period
    
    
    loan revenues
    
    
    translation
    
    
    accounts
    
    
    offs
    
    
    end of periodJune 30, 2006Loan loss allowance
    
    $
    2,747
    
    
    $
    16,651
    
    
    $
    158
    
    
    $
    (13,479
    )
    
    $
    (712
    )
    
    $
    5,365Defaulted loan allowance
    
    
    
    
    
    
    7,249
    
    
    
    273
    
    
    
    13,479
    
    
    
    (9,307
    )
    
    
    11,694June 30, 2005Loan loss allowance
    
    
    2,315
    
    
    
    14,793
    
    
    
    (28
    )
    
    
    
    
    
    
    (14,333
    )
    
    
    2,747June 30, 2004Loan loss allowance
    
    $
    1,344
    
    
    $
    9,928
    
    
    $
    15
    
    
    $
    
    
    
    $
    (8,972
    )
    
    $
    2,315
 80




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 15. Geographic Segment Information
  United
    
    
    
    
    
    UnitedStates
    
    Canada
    
    Kingdom
    
    Total2004Identifiable assets
    
    $
    130,266
    
    
    $
    92,835
    
    
    $
    98,823
    
    
    $
    321,924Goodwill and other intangibles, net
    
    
    56,514
    
    
    
    38,821
    
    
    
    53,783
    
    
    
    149,118Sales to unaffiliated customers:Check cashing
    
    
    47,716
    
    
    
    38,483
    
    
    
    31,198
    
    
    
    117,397Consumer lending:Fees from consumer lending
    
    
    71,577
    
    
    
    31,479
    
    
    
    19,405
    
    
    
    122,461Provision for loan losses and adjustment
to servicing revenue
    
    
    (17,504
    )
    
    
    (3,001
    )
    
    
    (3,984
    )
    
    
    (24,489
    )Consumer lending, net
    
    
    54,073
    
    
    
    28,478
    
    
    
    15,421
    
    
    
    97,972Money transfers
    
    
    4,525
    
    
    
    5,775
    
    
    
    2,732
    
    
    
    13,032Franchise fees and royalities
    
    
    
    
    
    
    3,255
    
    
    
    
    
    
    
    3,255Other
    
    
    3,546
    
    
    
    8,475
    
    
    
    2,430
    
    
    
    14,451Total sales to unaffiliated customers
    
    
    109,860
    
    
    
    84,466
    
    
    
    51,781
    
    
    
    246,107Interest expense, net
    
    
    18,427
    
    
    
    2,492
    
    
    
    4,384
    
    
    
    25,303Depreciation and amortization
    
    
    5,220
    
    
    
    2,476
    
    
    
    2,136
    
    
    
    9,832(Loss) income before income taxes
    
    
    (17,801
    )
    
    
    27,418
    
    
    
    11,884
    
    
    
    21,501Income tax provision
    
    
    3,534
    
    
    
    10,111
    
    
    
    2,944
    
    
    
    16,5892005Identifiable assets
    
    $
    160,447
    
    
    $
    117,987
    
    
    $
    109,540
    
    
    $
    387,974Goodwill and other intangibles, net
    
    
    87,535
    
    
    
    42,459
    
    
    
    56,196
    
    
    
    186,190Sales to unaffiliated customers:Check cashing
    
    
    46,596
    
    
    
    43,686
    
    
    
    38,466
    
    
    
    128,748Consumer lending:Fees from consumer lending
    
    
    78,495
    
    
    
    48,680
    
    
    
    25,829
    
    
    
    153,004Provision for loan losses and adjustment
to servicing revenue
    
    
    (17,827
    )
    
    
    (5,819
    )
    
    
    (5,779
    )
    
    
    (29,425
    )Consumer lending, net
    
    
    60,668
    
    
    
    42,861
    
    
    
    20,050
    
    
    
    123,579Money transfers
    
    
    4,239
    
    
    
    6,845
    
    
    
    3,687
    
    
    
    14,771Franchise fees and royalties
    
    
    2,982
    
    
    
    4,167
    
    
    
    
    
    
    
    7,149Other
    
    
    3,643
    
    
    
    10,665
    
    
    
    3,011
    
    
    
    17,319Total sales to unaffiliated customers
    
    
    118,128
    
    
    
    108,224
    
    
    
    65,214
    
    
    
    291,566Interest expense, net
    
    
    22,585
    
    
    
    650
    
    
    
    3,002
    
    
    
    26,237Depreciation and amortization
    
    
    5,739
    
    
    
    3,240
    
    
    
    2,023
    
    
    
    11,002(Loss) income before income taxes
    
    
    (16,036
    )
    
    
    38,251
    
    
    
    16,430
    
    
    
    38,645Income tax provision
    
    
    (52
    )
    
    
    15,172
    
    
    
    4,866
    
    
    
    19,986
 81




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 15. Geographic Segment Information (continued)
 United
    
    
    
    
    
    United2006
    
    States
    
    Canada
    
    Kingdom
    
    TotalIdentifiable assets
    
    $
    256,892
    
    
    $
    162,603
    
    
    $
    131,567
    
    
    $
    551,062Goodwill and other intangibles, net
    
    
    97,860
    
    
    
    61,091
    
    
    
    59,615
    
    
    
    218,566Sales to unaffiliated customers:Check cashing
    
    
    48,186
    
    
    
    52,096
    
    
    
    42,188
    
    
    
    142,470Consumer lending:Fees from consumer lending
    
    
    60,487
    
    
    
    69,999
    
    
    
    32,102
    
    
    
    162,588Provision for loan losses and adjustment
to servicing revenue
    
    
    (14,372
    )
    
    
    (9,070
    )
    
    
    (6,925
    )
    
    
    (30,367
    )Consumer lending, net
    
    
    46,115
    
    
    
    60,929
    
    
    
    25,177
    
    
    
    132,221Money transfers
    
    
    4,624
    
    
    
    8,334
    
    
    
    4,247
    
    
    
    17,205Franchise fees and royalties
    
    
    5,655
    
    
    
    5,302
    
    
    
    
    
    
    
    10,957Other
    
    
    7,620
    
    
    
    14,001
    
    
    
    4,047
    
    
    
    25,668Total sales to unaffiliated customers
    
    
    112,200
    
    
    
    140,662
    
    
    
    75,659
    
    
    
    328,521Interest expense, net
    
    
    27,835
    
    
    
    (994
    )
    
    
    2,861
    
    
    
    29,702Depreciation and amortization
    
    
    4,906
    
    
    
    3,923
    
    
    
    2,660
    
    
    
    11,489(Loss) income before income taxes
    
    
    (33,304
    )
    
    
    55,262
    
    
    
    12,521
    
    
    
    34,479Income tax provision
    
    
    1,847
    
    
    
    21,307
    
    
    
    4,360
    
    
    
    27,514
 16. Related Party Transactions
     82




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Subsidiary Guarantor Financial Information
   
    
    rank equal in right of payment with all existing and future unsubordinated indebtedness of the
Guarantors;
    
    rank senior in right of payment to all existing and future subordinated indebtedness of the
Guarantors; and
    
    are effectively junior to any indebtedness of the Company, including indebtedness under the
Companys senior secured reducing revolving credit facility, that is either (1) secured by a lien
on the Collateral that is senior or prior to the second priority liens securing the Guarantees of
the notes or (2) secured by assets that are not part of the Collateral to the extent of the value of
the assets securing such indebtedness.
  83




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 Dollar
    
    
    
    
    
    SubsidiaryFinancial
    
    Subsidiary
    
    Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    5,952
    
    
    $
    33,388
    
    
    $
    80,411
    
    
    $
    
    
    
    $
    119,751Restricted cash
    
    
    80,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,750Loans receivableLoans receivable
    
    
    
    
    
    
    9,686
    
    
    
    49,311
    
    
    
    
    
    
    
    58,997Less: Allowance for loan losses
    
    
    
    
    
    
    (1,054
    )
    
    
    (4,311
    )
    
    
    
    
    
    
    (5,365
    )Loans receivable, net
    
    
    
    
    
    
    8,632
    
    
    
    45,000
    
    
    
    
    
    
    
    53,632Other consumer lending receivables
    
    
    2,647
    
    
    
    91
    
    
    
    4,807
    
    
    
    
    
    
    
    7,545Other receivables
    
    
    214
    
    
    
    2,540
    
    
    
    5,538
    
    
    
    (420
    )
    
    
    7,872Income taxes receivable
    
    
    9,012
    
    
    
    
    
    
    
    
    
    
    
    (8,497
    )
    
    
    515Prepaid expenses
    
    
    2,427
    
    
    
    593
    
    
    
    7,146
    
    
    
    
    
    
    
    10,166Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    
    
    
    
    185Due from affiliates
    
    
    28,064
    
    
    
    33,879
    
    
    
    
    
    
    
    (61,943
    )
    
    
    Property and equipment, net
    
    
    2,190
    
    
    
    9,429
    
    
    
    29,006
    
    
    
    
    
    
    
    40,625Goodwill and other intangibles, net
    
    
    
    
    
    
    97,860
    
    
    
    120,706
    
    
    
    
    
    
    
    218,566Debt issuance costs, net
    
    
    9,437
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,437Investment in subsidiaries
    
    
    341,742
    
    
    
    
    
    
    
    
    
    
    
    (341,742
    )
    
    
    Other
    
    
    45
    
    
    
    602
    
    
    
    1,371
    
    
    
    
    
    
    
    2,018$
    482,480
    
    
    $
    187,014
    
    
    $
    294,170
    
    
    $
    (412,602
    )
    
    
    551,062LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    2,337
    
    
    $
    7,559
    
    
    $
    13,171
    
    
    $
    
    
    
    $
    23,067Income taxes payable
    
    
    
    
    
    
    8,497
    
    
    
    
    
    
    
    (8,497
    )
    
    
    Foreign income taxes payable
    
    
    
    
    
    
    
    
    
    
    10,963
    
    
    
    
    
    
    
    10,963Accrued expenses and other liabilities
    
    
    5,488
    
    
    
    15,340
    
    
    
    15,476
    
    
    
    
    
    
    
    36,304Accrued interest payable
    
    
    3,300
    
    
    
    432
    
    
    
    
    
    
    
    (420
    )
    
    
    3,312Deferred tax liability
    
    
    1,028
    
    
    
    2,306
    
    
    
    1,205
    
    
    
    
    
    
    
    4,539Due to parent
    
    
    79,366
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    81,366Due to affiliates
    
    
    
    
    
    
    
    
    
    
    61,943
    
    
    
    (61,943
    )
    
    
    Revolving credit facilities
    
    
    39,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,000Long term debt:9.75% Senior Notes due 2011
    
    
    271,487
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271,487Other long term debt
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    
    
    
    
    550402,006
    
    
    
    36,684
    
    
    
    102,758
    
    
    
    (70,860
    )
    
    
    470,588Shareholders equityAdditional paid in capital
    
    
    21,617
    
    
    
    78,507
    
    
    
    15,599
    
    
    
    (94,106
    )
    
    
    21,617Retained earnings
    
    
    24,601
    
    
    
    65,361
    
    
    
    148,529
    
    
    
    (213,890
    )
    
    
    24,601Accumulated other comprehensive income
    
    
    34,256
    
    
    
    6,462
    
    
    
    27,284
    
    
    
    (33,746
    )
    
    
    34,256Total shreholders equity
    
    
    80,474
    
    
    
    150,330
    
    
    
    191,412
    
    
    
    (341,742
    )
    
    
    80,474$
    482,480
    
    
    $
    187,014
    
    
    $
    294,170
    
    
    $
    (412,602
    )
    
    $
    551,062
 84




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 Dollar
    
    
    
    
    
    SubsidiaryFinancial
    
    Subsidiary
    
    Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedRevenues:Check cashing
    
    $
    
    
    
    $
    48,186
    
    
    $
    94,284
    
    
    $
    
    
    
    $
    142,470Consumer lending, net:Fees from consumer lending
    
    
    
    
    
    
    60,487
    
    
    
    102,101
    
    
    
    
    
    
    
    162,588Provision for loan losses and adjustment
to servicing income
    
    
    
    
    
    
    (14,372
    )
    
    
    (15,995
    )
    
    
    
    
    
    
    (30,367
    )Consumer lending, net
    
    
    
    
    
    
    46,115
    
    
    
    86,106
    
    
    
    
    
    
    
    132,221Money transfer fees
    
    
    
    
    
    
    4,624
    
    
    
    12,581
    
    
    
    
    
    
    
    17,205Franchise fees and royalties
    
    
    
    
    
    
    5,655
    
    
    
    5,302
    
    
    
    
    
    
    
    10,957Other
    
    
    
    
    
    
    7,620
    
    
    
    18,048
    
    
    
    
    
    
    
    25,668Total revenues
    
    
    
    
    
    
    112,200
    
    
    
    216,321
    
    
    
    
    
    
    
    328,521Store and regional expenses:Salaries and benefits
    
    
    
    
    
    
    51,232
    
    
    
    55,591
    
    
    
    
    
    
    
    106,823Occupancy
    
    
    
    
    
    
    14,132
    
    
    
    13,782
    
    
    
    
    
    
    
    27,914Depreciation
    
    
    
    
    
    
    3,292
    
    
    
    4,542
    
    
    
    
    
    
    
    7,834Returned checks, net and cash shortages
    
    
    
    
    
    
    5,030
    
    
    
    6,853
    
    
    
    
    
    
    
    11,883Telephone and communications
    
    
    
    
    
    
    3,426
    
    
    
    2,374
    
    
    
    
    
    
    
    5,800Advertising
    
    
    
    
    
    
    3,294
    
    
    
    4,903
    
    
    
    
    
    
    
    8,197Bank charges
    
    
    
    
    
    
    1,896
    
    
    
    2,784
    
    
    
    
    
    
    
    4,680Armored carrier expenses
    
    
    
    
    
    
    1,575
    
    
    
    2,589
    
    
    
    
    
    
    
    4,164Other
    
    
    
    
    
    
    15,850
    
    
    
    18,450
    
    
    
    
    
    
    
    34,300Total store and regional expenses
    
    
    
    
    
    
    99,727
    
    
    
    111,868
    
    
    
    
    
    
    
    211,595Store and regional margin
    
    
    
    
    
    
    12,473
    
    
    
    104,453
    
    
    
    
    
    
    
    116,926Corporate and other expenses:Corporate expenses
    
    
    19,762
    
    
    
    110
    
    
    
    21,912
    
    
    
    
    
    
    
    41,784Management fee
    
    
    (23,632
    )
    
    
    12,850
    
    
    
    10,782
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    1,521
    
    
    
    93
    
    
    
    2,041
    
    
    
    
    
    
    
    3,655Interest expense, net
    
    
    27,108
    
    
    
    727
    
    
    
    1,867
    
    
    
    
    
    
    
    29,702Reserve for litigation settlement
    
    
    
    
    
    
    5,800
    
    
    
    
    
    
    
    
    
    
    
    5,800Other
    
    
    468
    
    
    
    970
    
    
    
    68
    
    
    
    
    
    
    
    1,506(Loss) income before income taxes
    
    
    (25,227
    )
    
    
    (8,077
    )
    
    
    67,783
    
    
    
    
    
    
    
    34,479Income tax (benefit) provision
    
    
    (12,817
    )
    
    
    14,664
    
    
    
    25,667
    
    
    
    
    
    
    
    27,514(Loss) income before equity in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    of subsidiaries
    
    
    (12,410
    )
    
    
    (22,741
    )
    
    
    42,116
    
    
    
    
    
    
    
    6,965Equity in net income of subsidiariesDomestic subsidiary guarantors
    
    
    (22,741
    )
    
    
    
    
    
    
    
    
    
    
    22,741
    
    
    
    Foreign subsidiary non-guarantors
    
    
    42,116
    
    
    
    
    
    
    
    
    
    
    
    (42,116
    )
    
    
    Net income
    
    $
    6,965
    
    
    $
    (22,741
    )
    
    $
    42,116
    
    
    $
    (19,375
    )
    
    $
    6,965
 85




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 DollarFinancial
    
    Subsidiary
    
    Subsidiary Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    6,965
    
    
    $
    (22,741
    )
    
    $
    42,116
    
    
    $
    (19,375
    )
    
    $
    6,965Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activitiesUndistributed income of subsidiaries
    
    
    (19,375
    )
    
    
    
    
    
    
    
    
    
    
    19,375
    
    
    
    Depreciation and amortization
    
    
    3,243
    
    
    
    3,395
    
    
    
    6,593
    
    
    
    
    
    
    
    13,231Establishment of reserve for legal matter
    
    
    
    
    
    
    5,800
    
    
    
    
    
    
    
    
    
    
    
    5,800(Gain) loss on store closings and sales
    
    
    24
    
    
    
    907
    
    
    
    54
    
    
    
    
    
    
    
    985Deferred tax provision
    
    
    
    
    
    
    1,577
    
    
    
    428
    
    
    
    
    
    
    
    2,005Change in assets and liabilities (net of effect of acquisitions):Decrease (increase) in loans and other
receivables
    
    
    6,394
    
    
    
    (5,309
    )
    
    
    (17,013
    )
    
    
    420
    
    
    
    (15,508
    )Decrease in income taxes receivable
    
    
    (6,980
    )
    
    
    
    
    
    
    
    
    
    
    7,753
    
    
    
    773Increase in prepaid expenses and other
    
    
    (189
    )
    
    
    (4
    )
    
    
    (778
    )
    
    
    
    
    
    
    (971
    )Increase (decrease) in accounts payable,
income taxes
payable, accrued expenses and other
liabilities and
accrued interest payable
    
    
    (286
    )
    
    
    9,138
    
    
    
    7,995
    
    
    
    (8,173
    )
    
    
    8,674Net cash provided by (used in) operating
activities
    
    
    (10,204
    )
    
    
    (7,237
    )
    
    
    39,395
    
    
    
    
    
    
    
    21,954Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    
    
    
    
    (7,938
    )
    
    
    (15,539
    )
    
    
    
    
    
    
    (23,477
    )Additions to property and equipment
    
    
    (605
    )
    
    
    (4,992
    )
    
    
    (10,341
    )
    
    
    
    
    
    
    (15,938
    )Net decrease in due from affiliates
    
    
    
    
    
    
    24,727
    
    
    
    
    
    
    
    (24,727
    )
    
    
    Net cash (used in) provided by investing
activities
    
    
    (605
    )
    
    
    11,797
    
    
    
    (25,880
    )
    
    
    (24,727
    )
    
    
    (39,415
    )Cash flows from financing activities:Increase in restricted cash
    
    
    (80,750
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80,750
    )Other debt payments
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    
    
    
    
    550Net increase in revolving credit facilities
    
    
    39,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,000Payment of debt issuance costs
    
    
    (850
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (850
    )Net decrease due from parent
    
    
    81,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,764Net decrease in due to affiliates
    
    
    (24,174
    )
    
    
    
    
    
    
    (553
    )
    
    
    24,727
    
    
    
    Net cash used in financing activities
    
    
    14,990
    
    
    
    550
    
    
    
    (553
    )
    
    
    24,727
    
    
    
    39,714Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    4,998
    
    
    
    
    
    
    
    4,998Net (decrease) increase in cash and cash
equivalents
    
    
    4,181
    
    
    
    5,110
    
    
    
    17,960
    
    
    
    
    
    
    
    27,251Cash and cash equivalents at beginning of period
    
    $
    1,771
    
    
    $
    28,278
    
    
    $
    62,451
    
    
    $
    
    
    
    $
    92,500Cash and cash equivalents at end of period
    
    $
    5,952
    
    
    $
    33,388
    
    
    $
    80,411
    
    
    $
    
    
    
    $
    119,751
 86




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 Dollar
    
    
    
    
    
    SubsidiaryFinancial
    
    Subsidiary
    
    Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    1,771
    
    
    $
    28,278
    
    
    $
    62,451
    
    
    $
    
    
    
    $
    92,500Loans receivableLoans receivable
    
    
    
    
    
    
    5,076
    
    
    
    35,150
    
    
    
    
    
    
    
    40,226Less: Allowance for loan losses
    
    
    
    
    
    
    (470
    )
    
    
    (2,277
    )
    
    
    
    
    
    
    (2,747
    )Loans receivable, net
    
    
    
    
    
    
    4,606
    
    
    
    32,873
    
    
    
    
    
    
    
    37,479Other consumer lending receivables
    
    
    9,163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,163Other receivables
    
    
    92
    
    
    
    1,278
    
    
    
    2,969
    
    
    
    (216
    )
    
    
    4,123Income taxes receivable
    
    
    1,797
    
    
    
    
    
    
    
    
    
    
    
    (744
    )
    
    
    1,053Prepaid expenses
    
    
    2,258
    
    
    
    690
    
    
    
    3,910
    
    
    
    
    
    
    
    6,858Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    71Due from affiliates
    
    
    4,455
    
    
    
    49,438
    
    
    
    
    
    
    
    (53,893
    )
    
    
    Due from parent
    
    
    2,398
    
    
    
    
    
    
    
    
    
    
    
    (2,000
    )
    
    
    398Property and equipment, net
    
    
    3,625
    
    
    
    8,831
    
    
    
    23,155
    
    
    
    
    
    
    
    35,611Goodwill and other intangibles, net
    
    
    
    
    
    
    87,535
    
    
    
    98,655
    
    
    
    
    
    
    
    186,190Debt issuance costs, net
    
    
    10,558
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,558Investment in subsidiaries
    
    
    308,052
    
    
    
    9,801
    
    
    
    9,660
    
    
    
    (327,513
    )
    
    
    Other
    
    
    26
    
    
    
    501
    
    
    
    3,443
    
    
    
    
    
    
    
    3,970$
    344,195
    
    
    $
    190,958
    
    
    $
    237,187
    
    
    $
    (384,366
    )
    
    $
    387,974LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    2,199
    
    
    $
    5,099
    
    
    $
    11,958
    
    
    $
    
    
    
    $
    19,256Income taxes payable
    
    
    
    
    
    
    744
    
    
    
    
    
    
    
    (744
    )
    
    
    Foreign income taxes payable
    
    
    
    
    
    
    
    
    
    
    4,648
    
    
    
    
    
    
    
    4,648Accrued expenses and other liabilities
    
    
    6,154
    
    
    
    8,679
    
    
    
    12,071
    
    
    
    
    
    
    
    26,904Accrued interest payable
    
    
    3,291
    
    
    
    
    
    
    
    216
    
    
    
    (216
    )
    
    
    3,291Deferred tax liability
    
    
    1,028
    
    
    
    729
    
    
    
    595
    
    
    
    
    
    
    
    2,352Due to affiliates
    
    
    
    
    
    
    
    
    
    
    55,893
    
    
    
    (55,893
    )
    
    
    9.75% Senior Notes due 2011
    
    
    271,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271,764284,436
    
    
    
    15,251
    
    
    
    85,381
    
    
    
    (56,853
    )
    
    
    328,215Shareholders equityCommon stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid in capital
    
    
    21,617
    
    
    
    83,309
    
    
    
    30,259
    
    
    
    (113,568
    )
    
    
    21,617Retained earnings
    
    
    17,636
    
    
    
    88,104
    
    
    
    106,410
    
    
    
    (194,514
    )
    
    
    17,636Accumulated other comprehensive income
    
    
    20,506
    
    
    
    4,294
    
    
    
    15,137
    
    
    
    (19,431
    )
    
    
    20,506Total shareholders equity
    
    
    59,759
    
    
    
    175,707
    
    
    
    151,806
    
    
    
    (327,513
    )
    
    
    59,759$
    344,195
    
    
    $
    190,958
    
    
    $
    237,187
    
    
    $
    (384,366
    )
    
    $
    387,974
 87




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 Dollar
    
    
    
    
    
    SubsidiaryFinancial
    
    Subsidiary
    
    Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedRevenues:Check cashing
    
    $
    
    
    
    $
    46,596
    
    
    $
    82,152
    
    
    $
    
    
    
    $
    128,748Consumer lending, net:Fees from consumer lending
    
    
    
    
    
    
    78,495
    
    
    
    74,509
    
    
    
    
    
    
    
    153,004Provision for loan losses and adjustment
to servicing income
    
    
    
    
    
    
    (17,827
    )
    
    
    (11,598
    )
    
    
    
    
    
    
    (29,425
    )Consumer lending, net
    
    
    
    
    
    
    60,668
    
    
    
    62,911
    
    
    
    
    
    
    
    123,579Money transfer fees
    
    
    
    
    
    
    4,239
    
    
    
    10,532
    
    
    
    
    
    
    
    14,771Franchise fees and royalties
    
    
    
    
    
    
    2,982
    
    
    
    4,167
    
    
    
    
    
    
    
    7,149Other
    
    
    
    
    
    
    3,643
    
    
    
    13,676
    
    
    
    
    
    
    
    17,319Total revenues
    
    
    
    
    
    
    118,128
    
    
    
    173,438
    
    
    
    
    
    
    
    291,566Store and regional expenses:Salaries and benefits
    
    
    
    
    
    
    46,138
    
    
    
    45,844
    
    
    
    
    
    
    
    91,982Occupancy
    
    
    
    
    
    
    11,493
    
    
    
    11,406
    
    
    
    
    
    
    
    22,899Depreciation
    
    
    
    
    
    
    3,609
    
    
    
    3,617
    
    
    
    
    
    
    
    7,226Returned checks, net and cash shortages
    
    
    
    
    
    
    4,612
    
    
    
    5,959
    
    
    
    
    
    
    
    10,571Telephone and communications
    
    
    
    
    
    
    3,750
    
    
    
    2,248
    
    
    
    
    
    
    
    5,998Advertising
    
    
    
    
    
    
    3,793
    
    
    
    4,668
    
    
    
    
    
    
    
    8,461Bank charges
    
    
    
    
    
    
    1,939
    
    
    
    2,022
    
    
    
    
    
    
    
    3,961Armored carrier expenses
    
    
    
    
    
    
    1,499
    
    
    
    2,161
    
    
    
    
    
    
    
    3,660Other
    
    
    
    
    
    
    14,669
    
    
    
    15,051
    
    
    
    
    
    
    
    29,720Total store and regional expenses
    
    
    
    
    
    
    91,502
    
    
    
    92,976
    
    
    
    
    
    
    
    184,478Store and regional margin
    
    
    
    
    
    
    26,626
    
    
    
    80,462
    
    
    
    
    
    
    
    107,088Corporate and other expenses:Corporate expenses
    
    
    19,594
    
    
    
    180
    
    
    
    18,502
    
    
    
    
    
    
    
    38,276Management fee
    
    
    (11,892
    )
    
    
    10,125
    
    
    
    1,767
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    2,070
    
    
    
    60
    
    
    
    1,646
    
    
    
    
    
    
    
    3,776Interest expense, net
    
    
    23,182
    
    
    
    (597
    )
    
    
    3,652
    
    
    
    
    
    
    
    26,237Other
    
    
    (81
    )
    
    
    21
    
    
    
    214
    
    
    
    
    
    
    
    154(Loss) income before income taxes
    
    
    (32,873
    )
    
    
    16,837
    
    
    
    54,681
    
    
    
    
    
    
    
    38,645Income tax (benefit) provision
    
    
    (9,566
    )
    
    
    9,514
    
    
    
    20,038
    
    
    
    
    
    
    
    19,986(Loss) income before equity in net income
of subsidiaries
    
    
    (23,307
    )
    
    
    7,323
    
    
    
    34,643
    
    
    
    
    
    
    
    18,659Equity in net income of subsidiariesDomestic subsidiary guarantors
    
    
    7,323
    
    
    
    
    
    
    
    
    
    
    
    (7,323
    )
    
    
    Foreign subsidiary non-guarantors
    
    
    34,643
    
    
    
    
    
    
    
    
    
    
    
    (34,643
    )
    
    
    Net income
    
    $
    18,659
    
    
    $
    7,323
    
    
    $
    34,643
    
    
    $
    (41,966
    )
    
    $
    18,659
 88




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 Dollar
    
    
    
    
    
    SubsidiaryFinancial
    
    Subsidiary
    
    Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    18,659
    
    
    $
    7,323
    
    
    $
    34,643
    
    
    $
    (41,966
    )
    
    $
    18,659Adjustments to reconcile net income to net
cash provided by (used in) operating activitiesUndistributed income of subsidiaries
    
    
    (41,966
    )
    
    
    
    
    
    
    
    
    
    
    41,966
    
    
    
    Depreciation and amortization
    
    
    3,613
    
    
    
    3,626
    
    
    
    5,265
    
    
    
    
    
    
    
    12,504(Gain) loss on store closings and sales
    
    
    
    
    
    
    (155
    )
    
    
    221
    
    
    
    
    
    
    
    66Foreign currency loss on revaluation
subordinated (borrowings)
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    180Deferred tax provision
    
    
    1,028
    
    
    
    729
    
    
    
    595
    
    
    
    
    
    
    
    2,352Change in assets and liabilities (net of effect of acquisistions):Decrease (increase) in loans and other
receivables
    
    
    3,696
    
    
    
    (920
    )
    
    
    (6,263
    )
    
    
    (68
    )
    
    
    (3,555
    )Decrease in income taxes receivable
    
    
    39,061
    
    
    
    
    
    
    
    6,117
    
    
    
    (40,106
    )
    
    
    5,072(Increase) in prepaid expenses and other
    
    
    (1,214
    )
    
    
    (264
    )
    
    
    (2,561
    )
    
    
    
    
    
    
    (4,039
    )Increase (decrease) in accounts payable, income
taxes
payable, accrued expenses and other
liabilities and
accrued interest payable
    
    
    4,112
    
    
    
    (40,273
    )
    
    
    627
    
    
    
    40,174
    
    
    
    4,640Net cash (used in) provided by operating
activities
    
    
    26,989
    
    
    
    (29,754
    )
    
    
    38,644
    
    
    
    
    
    
    
    35,879Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    
    
    
    
    (25,881
    )
    
    
    (4,069
    )
    
    
    
    
    
    
    (29,950
    )Additions to property and equipment
    
    
    (852
    )
    
    
    (5,532
    )
    
    
    (8,473
    )
    
    
    
    
    
    
    (14,857
    )Net decrease in due from affiliates
    
    
    
    
    
    
    67,263
    
    
    
    
    
    
    
    (67,263
    )
    
    
    Net cash (used in) provided by investing
activities
    
    
    (852
    )
    
    
    35,850
    
    
    
    (12,542
    )
    
    
    (67,263
    )
    
    
    (44,807
    )Cash flows from financing activities:Other debt payments
    
    
    (93
    )
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    (106
    )Issurance of 9 3/4% Senior Notes due 2011
    
    
    30,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,750Payment of debt issuance costs
    
    
    (727
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (727
    )Net decrease due from parent
    
    
    3,284
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,284Net increase (decrease) in due to affiliates
    
    
    (58,912
    )
    
    
    
    
    
    
    (8,351
    )
    
    
    67,263
    
    
    
    Dividend paid to parent
    
    
    (3,610
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,610
    )Net cash (used in) financing activities
    
    
    (29,308
    )
    
    
    
    
    
    
    (8,364
    )
    
    
    67,263
    
    
    
    29,591Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    2,571
    
    
    
    
    
    
    
    2,571Net (decrease) increase in cash and cash
equivalents
    
    
    (3,171
    )
    
    
    6,096
    
    
    
    20,309
    
    
    
    
    
    
    
    23,234Cash and cash equivalents at beginning of period
    
    
    4,942
    
    
    
    22,182
    
    
    
    42,142
    
    
    
    
    
    
    
    69,266Cash and cash equivalents at end of period
    
    $
    1,771
    
    
    $
    28,278
    
    
    $
    62,451
    
    
    $
    
    
    
    $
    92,500
 89




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 Dollar
    
    
    
    
    
    SubsidiaryFinancial
    
    Subsidiary
    
    Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedRevenues:Check cashing
    
    $
    
    
    
    $
    47,717
    
    
    $
    69,680
    
    
    $
    
    
    
    $
    117,397Consumer lending, net:Fees from consumer lending
    
    
    
    
    
    
    71,577
    
    
    
    50,884
    
    
    
    
    
    
    
    122,461Provision for loan losses
and adjustment
to servicing income
    
    
    
    
    
    
    (17,505
    )
    
    
    (6,984
    )
    
    
    
    
    
    
    (24,489
    )Consumer lending, net
    
    
    
    
    
    
    54,072
    
    
    
    43,900
    
    
    
    
    
    
    
    97,972Money transfer fees
    
    
    
    
    
    
    4,525
    
    
    
    8,507
    
    
    
    
    
    
    
    13,032Franchise fees and royalties
    
    
    
    
    
    
    
    
    
    
    3,255
    
    
    
    
    
    
    
    3,255Other
    
    
    
    
    
    
    3,546
    
    
    
    10,905
    
    
    
    
    
    
    
    14,451Total revenues
    
    
    
    
    
    
    109,860
    
    
    
    136,247
    
    
    
    
    
    
    
    246,107Store and regional expenses:Salaries and benefits
    
    
    
    
    
    
    42,764
    
    
    
    37,527
    
    
    
    
    
    
    
    80,291Occupancy
    
    
    
    
    
    
    11,014
    
    
    
    8,814
    
    
    
    
    
    
    
    19,828Depreciation
    
    
    
    
    
    
    3,500
    
    
    
    3,088
    
    
    
    
    
    
    
    6,588Returned checks, net and cash
shortages
    
    
    
    
    
    
    4,271
    
    
    
    4,869
    
    
    
    
    
    
    
    9,140Telephone and communications
    
    
    
    
    
    
    3,793
    
    
    
    2,017
    
    
    
    
    
    
    
    5,810Advertising
    
    
    
    
    
    
    3,786
    
    
    
    3,203
    
    
    
    
    
    
    
    6,989Bank charges
    
    
    
    
    
    
    2,140
    
    
    
    1,608
    
    
    
    
    
    
    
    3,748Armored carrier expenses
    
    
    
    
    
    
    1,381
    
    
    
    1,670
    
    
    
    
    
    
    
    3,051Other
    
    
    
    
    
    
    12,901
    
    
    
    12,427
    
    
    
    
    
    
    
    25,328Total store and regional expenses
    
    
    
    
    
    
    85,550
    
    
    
    75,223
    
    
    
    
    
    
    
    160,773Store and regional margin
    
    
    
    
    
    
    24,310
    
    
    
    61,024
    
    
    
    
    
    
    
    85,334Corporate and other expenses:Corporate expenses
    
    
    15,142
    
    
    
    (2
    )
    
    
    12,299
    
    
    
    
    
    
    
    27,439Management fee
    
    
    (709
    )
    
    
    
    
    
    
    709
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    1,681
    
    
    
    39
    
    
    
    1,524
    
    
    
    
    
    
    
    3,244Interest expense, net
    
    
    20,311
    
    
    
    (1,883
    )
    
    
    6,875
    
    
    
    
    
    
    
    25,303Loss on extinguishment of debt
    
    
    7,209
    
    
    
    
    
    
    
    277
    
    
    
    
    
    
    
    7,486Other
    
    
    296
    
    
    
    29
    
    
    
    36
    
    
    
    
    
    
    
    361(Loss) income before income taxes
    
    
    (43,930
    )
    
    
    26,127
    
    
    
    39,304
    
    
    
    
    
    
    
    21,501Income tax provision
    
    
    (17,279
    )
    
    
    20,814
    
    
    
    13,054
    
    
    
    
    
    
    
    16,589(Loss) income before equity in net
income
of subsidiaries
    
    
    (26,651
    )
    
    
    5,313
    
    
    
    26,250
    
    
    
    
    
    
    
    4,912Equity in net income of subsidiariesDomestic subsidiary guarantors
    
    
    5,313
    
    
    
    
    
    
    
    
    
    
    
    (5,313
    )
    
    
    Foreign subsidiary non-guarantors
    
    
    26,250
    
    
    
    
    
    
    
    
    
    
    
    (26,250
    )
    
    
    Net Income
    
    $
    4,912
    
    
    $
    5,313
    
    
    $
    26,250
    
    
    $
    (31,563
    )
    
    $
    4,912
 90




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. Consolidating Financial Statements (continued)
 In thousands)
 Dollar
    
    
    
    
    
    SubsidiaryFinancial
    
    Subsidiary
    
    Non-Group, Inc.
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    4,912
    
    
    $
    5,313
    
    
    $
    26,250
    
    
    $
    (31,563
    )
    
    $
    4,912Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:Undistributed income of subsidiary
    
    
    (31,563
    )
    
    
    
    
    
    
    
    
    
    
    31,563
    
    
    
    Depreciation and amortization
    
    
    3,272
    
    
    
    3,502
    
    
    
    4,796
    
    
    
    
    
    
    
    11,570Loss on extinguishment od debt
    
    
    7,209
    
    
    
    
    
    
    
    277
    
    
    
    
    
    
    
    7,486Losses on store closings and sales
    
    
    120
    
    
    
    30
    
    
    
    37
    
    
    
    
    
    
    
    187Foreign currency gain on revaluation of
subordinated notes payable
    
    
    
    
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    (838
    )Deferred tax provision
    
    
    1,064
    
    
    
    (1,902
    )
    
    
    
    
    
    
    
    
    
    
    (838
    )Change in assets and liabilities (net of
effect of acquisition):Decrease (increase) in loans and other
receivables
    
    
    977
    
    
    
    (1,942
    )
    
    
    (7,982
    )
    
    
    (40
    )
    
    
    (8,987
    )Increase in income taxes receivable
    
    
    (18,486
    )
    
    
    
    
    
    
    (5,836
    )
    
    
    22,521
    
    
    
    (1,801
    )(Increase) decrease in prepaid
expenses and other
    
    
    (205
    )
    
    
    557
    
    
    
    (1,112
    )
    
    
    
    
    
    
    (760
    )Increase (decrease) in accounts payable,
income taxes
payable, accrued expenses and other
liabilities and
accrued interest payable
    
    
    736
    
    
    
    21,792
    
    
    
    9,394
    
    
    
    (22,481
    )
    
    
    9,441Net cash (used in) provided by operating
activities
    
    
    (31,964
    )
    
    
    27,350
    
    
    
    24,986
    
    
    
    
    
    
    
    20,372Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (550
    )
    
    
    
    
    
    
    (550
    )Gross proceeds from sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    81Additions to property and equipment
    
    
    (481
    )
    
    
    (1,490
    )
    
    
    (6,179
    )
    
    
    
    
    
    
    (8,150
    )Net decrease in due from affiliates
    
    
    
    
    
    
    (29,891
    )
    
    
    
    
    
    
    29,891
    
    
    
    Net cash used in investing activities
    
    
    (481
    )
    
    
    (31,381
    )
    
    
    (6,648
    )
    
    
    29,891
    
    
    
    (8,619
    )Cash flows from financing activities:Redemption of subordinated notes
    
    
    (20,734
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,734
    )Redemption of collateralized borrowings
    
    
    
    
    
    
    
    
    
    
    (8,277
    )
    
    
    
    
    
    
    (8,277
    )Other debt borrowings (payments)
    
    
    93
    
    
    
    
    
    
    
    (165
    )
    
    
    
    
    
    
    (72
    )Issuance of 9.75% Senior Notes due 2011
    
    
    241,176
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241,176Redemption of 10.875% Senior Notes due 2006
    
    
    (111,170
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111,170
    )Net decrease in revolving credit facilities
    
    
    (60,764
    )
    
    
    
    
    
    
    (935
    )
    
    
    
    
    
    
    (61,699
    )Payment of debt issuance costs
    
    
    (10,929
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,929
    )Net decrease in due from parent
    
    
    (4,064
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,064
    )Net increase (decrease) in due to affiliates
    
    
    36,497
    
    
    
    
    
    
    
    (6,606
    )
    
    
    (29,891
    )
    
    
    Dividend paid to parent
    
    
    (40,699
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,699
    )Net cash provided by (used in) financing
activities
    
    
    29,406
    
    
    
    
    
    
    
    (15,983
    )
    
    
    (29,891
    )
    
    
    (16,468
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    
    
    
    
    2,176
    
    
    
    
    
    
    
    2,176Net (decrease) increase in cash and cash
equivalents
    
    
    (3,039
    )
    
    
    (4,031
    )
    
    
    4,531
    
    
    
    
    
    
    
    (2,539
    )Cash and cash equivalents at beginning of period
    
    
    7,981
    
    
    
    26,213
    
    
    
    37,611
    
    
    
    
    
    
    
    71,805Cash and cash equivalents at beginning of period
    
    $
    4,942
    
    
    $
    22,182
    
    
    $
    42,142
    
    
    $
    
    
    
    $
    69,266
 91




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##### Table of Contents



DOLLAR FINANCIAL GROUP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 18. Subsequent Events
   19. Unaudited Quarterly Operating Results
  Three months ended
    
    
    
    
    
    Year EndedSeptember 30
    
    December 31
    
    March 31
    
    June 30
    
    June 30,(Unaudited)(In thousands except per share data)Fiscal 2006:Revenues
    
    $
    74,465
    
    
    $
    80,667
    
    
    $
    86,459
    
    
    $
    86,930
    
    
    $
    328,521Income before income taxes
    
    $
    6,837
    
    
    $
    9,133
    
    
    $
    7,516
    
    
    $
    10,993
    
    
    $
    34,479Net income (loss)
    
    $
    2,299
    
    
    $
    3,018
    
    
    $
    (291
    )
    
    $
    1,939
    
    
    $
    6,965Fiscal 2005:Revenues
    
    $
    66,133
    
    
    $
    72,406
    
    
    $
    76,453
    
    
    $
    76,574
    
    
    $
    291,566Income before income taxes
    
    $
    6,725
    
    
    $
    9,948
    
    
    $
    12,951
    
    
    $
    9,021
    
    
    $
    38,645Net income
    
    $
    3,371
    
    
    $
    4,694
    
    
    $
    7,514
    
    
    $
    3,080
    
    
    $
    18,659
 92




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##### Table of Contents



Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 Item 9B. OTHER INFORMATION
  93




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##### Table of Contents



PART III
 
 Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 Directors and Officers
 ,
   
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  94




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    Documents Filed as Part of this Report.
   (3)
    
    Exhibits.
 (a)(3) ExhibitsExhibit No.
    
    Description of Document2.1
    
    
    Asset Purchase Agreement, dated March 7, 2005 by and among We the People Forms and Service Centers USA, Inc., Ira Distenfield and Linda
Distenfield, and WTP Acquisition Corp., and solely for the purposes of Section 13.3, Dollar Financial Group as Guarantor(11)3.1
    (a)
    
    Certificate of Incorporation of Dollar Financial Group, Inc.(1)3.1
    (b)
    
    Certificate of Amendment of the Certificate of Incorporation of Dollar Financial Group, Inc.(1)3.2
    
    
    Amended and Restated Bylaws of Dollar Financial Group, Inc.(6)3.3
    (a)
    
    Amended and Restated Certificate of Incorporation of Dollar Financial Corp.(6)3.3
    (b)
    
    Certificate of Change of Dollar Financial Corp, Inc., filed 7/28/05(17)3.4
    
    
    Bylaws of Dollar Financial Corp.(6)
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##### Table of Contents



4.1
    (a)
    
    Indenture, dated as of November 13, 2003, among the Company, the Guarantors (as defined therein), and U.S. Bank National Association, as Trustee (6)4.1
    (b)
    
    Supplemental Indenture, dated as of December 21, 2004 between DFG Canada, Inc., a direct subsidiary of Dollar Financial Group, Inc. and U.S. Bank
National Association, as trustee under the indenture(17)4.1
    (c)
    
    Supplemental Indenture, dated as of February 22, 2005, between WTP Acquisition Corp., a direct subsidiary of Dollar Financial Group, Inc., and U.S.
Bank National Association, as trustee under the indenture(17)4.2
    
    
    Form of 9.75% Senior Notes due 2011 with Guarantees endorsed thereon (included in Exhibit 4.1)4.3
    
    
    Registration Rights Agreement, dated as of May 6, 2004, by and among the Company, the Guarantors (as defined therein), and the Initial Purchaser
(as defined therein)(18)10.1
    
    
    Dollar Financial Corp. 1999 Stock Incentive Plan(2)10.2
    
    
    Third Amended and Restated Credit Agreement by and among Dollar Financial Group, Inc., and Dollar Financial Corp., Wells Fargo Bank, National
Association, as Sole Lead Arranger and Administrative Agent, U.S. Bank National Association, as Syndication Agent, Manufacturers and Traders Trust
Company, as Documentation Agent and The Lenders from time to time party hereto, dated as of July 8, 2005(15)
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(a)(3) ExhibitsExhibit No.
    
    Description of Document10.3
    
    
    Form of Pledge and Security Agreement, dated as of November 13, 2003, by and between the Guarantor (as defined therein) and Wells Fargo Bank,
National Association, as administrative agent for itself and the lenders under the Second Amended and Restated Credit Agreement(6)10.4
    
    
    Pledge and Security Agreement, dated as of November 13, 2003, by and between Dollar Financial Group, Inc, and Wells Fargo Bank, National
Association, as administrative agent for itself and the lenders under the Second Amended and Restated Credit Agreement(6)10.5
    
    
    Form of Guarantor Subordination Agreement, dated as of November 13, 2003 by and among Dollar Financial Group, Inc., Wells Fargo Bank, National
Association, as administrative agent for the Lenders under the Second Amended and Restated Credit Agreement, and the Creditor (as defined
therein)(6)10.6
    
    
    Form of Foreign Subsidiary Subordination Agreement, dated as of November 13, 2003 by and among Dollar Financial Group, Inc., Wells Fargo Bank,
National Association, as administrative agent for the Lenders under the Second Amended and Restated Credit Agreement, and the Creditor (as defined
therein)(6)10.7
    
    
    Foreign Subsidiary Subordination Agreement, dated as of November 13, 2003 by and among Dollar Financial Group, Inc., Wells Fargo Bank, National
Association, as administrative agent for the Lenders under the Second Amended and Restated Credit Agreement, and National Money Mart Company(6)10.8
    
    
    Foreign Subsidiary Subordination Agreement, dated as of November 13, 2003 by and among Dollar Financial Group, Inc., Wells Fargo Bank, National
Association, as administrative agent for the Lenders under the Second Amended and Restated Credit Agreement, and Dollar Financial UK Limited(6)10.9
    
    
    Supplemental Security Agreement (Trademarks), dated November 13, 2003 by and between Dollar Financial Group, Inc and Wells Fargo Bank, National
Association, as administrative agent for itself and the lenders under the Second Amended and Restated Credit Agreement(6)10.10
    
    
    Supplemental Security Agreement (Copyrights), dated November 13, 2003 by and between Dollar Financial Group, Inc and Wells Fargo Bank, National
Association, as administrative agent for itself and the lenders under the Second Amended and Restated Credit Agreement(6)10.11
    
    
    Supplemental Security Agreement (Patents), dated November 13, 2003 by and between Dollar Financial Group, Inc and Wells Fargo Bank, National
Association, as administrative agent for itself and the lenders under the Second Amended and Restated Credit Agreement(6)10.18
    (b)
    
    First Amendment to Intercreditor Agreement, dated as of April 12, 2004, by and between Wells Fargo Bank, National Association, as administrative
agent, and U.S. Bank National Association, a national banking association, as trustee for the holders of the Notes (as defined therein) under the
Indenture (as defined therein)(8)Reaffirmation of Intercreditor Agreement, dated as of July 8, 2005, by and between Wells Fargo Bank, National Association, a national banking
association, as administrative agent for the Lenders under the Credit Facility Documents, and U.S. Bank National Association, a national banking
association, as trustee for the holders of the Notes under the Noteholder Documents(17)
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(a)(3) ExhibitsExhibit No.
    
    Description of Document10.24
    
    
    Second Amended and Restated Stockholders Agreement, dated as of November 13, 2003, by and among Green Equity Investors II, L.P., Stone Street Fund
1998, L.P. Bridge Street Fund 1998, L.P., GS Mezzanine Partners, L.P., GS Mezzanine Partners Offshore, L.P., Ares Leveraged Investment Fund, L.P.,
a Delaware limited partnership, Ares Leveraged Investment Fund II, L.P., a Delaware limited partnership, C.L. Jeffrey, Sheila Jeffrey, certain
stockholders signatories thereto and Dollar Financial Corp.(6)10.24
    
    
    Amendment No. 1 to Second Amended and Restated Stockholders Agreement, dated as of March 11,
2004, by and among Dollar Financial Corp., Green Equity Investors 11, L.P., GS Mezzanine
Partners, L.P., GS Mezzanine Partners Offshore, L.P., Stone Street Fund 1998, L.P., Bridge
Street Fund 1998, L.P., Ares Leveraged Investment Fund, L.P., Ares Leveraged Investment Fund
II, L.P. and Jeffrey Weiss(7)10.25
    
    
    Amendment No. 2 to Second Amended and Restated Stockholders Agreement, dated as of April 14,
2004, by and among Dollar Financial Corp., Green Equity Investors 11, L.P., GS Mezzanine
Partners, L.P., GS Mezzanine Partners Offshore, L.P., Stone Street Fund 1998, L.P., Bridge
Street Fund 1998, L.P., Ares Leveraged Investment Fund, L.P., Ares Leveraged Investment Fund
II, L.P. and Jeffrey Weiss(8)10.26
    
    
    Amendment No. 3 to Second Amended and Restated Stockholders Agreement, dated as of July 6,
2004, by and among Dollar Financial Corp., Green Equity Investors II, L.P., GS Mezzanine
Partners, L.P., GS Mezzanine Partners Offshore, L.P., Stone Street Fund 1998, L.P., Bridge
Street Fund 1998, L.P., Ares Leveraged Investment Fund, L.P., Ares Leveraged Investment Fund
II, L.P., and Jeffrey Weiss(8)10.27
    
    
    Employment Agreement, dated as of December 19, 2003, by and among Dollar Financial Group,
Inc., Dollar Financial Corp. and Jeffrey Weiss(8)10.28
    
    
    Employment Agreement, dated as of December 19, 2003, by and among Dollar Financial Group,
Inc., Dollar Financial Corp. and Donald Gayhardt(8)10.31
    
    
    Employment Letter, dated June 30, 2004, by and between Dollar Financial Corp. and Randall
Underwood(18)10.32
    
    
    Secured Note, dated December 18, 1998, made by Jeffrey Weiss in favor of Dollar Financial
Group, Inc.(3)10.33
    
    
    Pledge Agreement, dated December 18, 1998, between Dollar Financial Group, Inc. and Jeffrey
Weiss(3)10.34
    (a)
    
    Amended and Restated Nonexclusive Servicing and Indemnification Agreement, dated June 14,
2002, between County Bank and Dollar Financial Group, Inc.(5)10.34
    (b)
    
    Termination of Amended and Restated Nonexclusive Servicing and Indemnification Agreement
Dated June 14, 2002, dated June 15, 2005(17)10.35
    (a)
    
    Marketing and Servicing Agreement, dated October 18, 2002, between First Bank of Delaware and
Dollar Financial Group, Inc.(4)10.35
    (b)
    
    Amendment of Marketing and Servicing Agreement, dated June 14, 2005(17)10.36
    
    
    Acknowledgment, dated as of November 13, 2003, to the Exchange and Registration Rights
Agreement by and among Dollar Financial Corp. GS Mezzanine Partners, L.P., GS Mezzanine
Partners Offshore,
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(a)(3) ExhibitsExhibit No.
    
    Description of DocumentL.P., Stone Street Fund 1998, L.P., Bridge Street Fund 1998, L.P., Ares
Leveraged Investment Fund, L.P. and Ares Leveraged Investment Fund 11, LT with respect to
Dollar Financial Cop.s 16% Senior Notes due 2012(6)10.37
    
    
    Acknowledgment, dated as of November 13, 2003, to the Exchange and Registration Rights
Agreement by and among Dollar Financial Corp. GS Mezzanine Partners, L.P., GS Mezzanine
Partners Offshore, L.P., Stone Street Fund 1998, L.P., Bridge Street Fund 1998, L.P., Ares
Leveraged Investment Fund, L.P. and Ares Leveraged Investment Fund II, LT with respect to
Dollar Financial Cop.s 13.95% Senior Subordinated Notes due 2012(6)10.38
    
    
    Amendment, dated as of November 13, 2003, to the Exchange Agreement by and among Dollar
Financial Corp. GS Mezzanine Partners, L.P. Ares Leveraged Investment Fund, L.P. and Ares
Leveraged Investment Fund II, L.P., with respect to Dollar Financial Cop.s 16% Senior Notes
due 2012(6)10.39
    
    
    Amendment, dated as of November 13, 2003, to the Exchange Agreement by and among Dollar
Financial Corp. GS Mezzanine Partners, L.P., GS Mezzanine Partners Offshore, L.P., Stone
Street Fund 1998, L.P., Bridge Street Fund 1998, L.P., Ares Leveraged Investment Fund, L.P.
and Ares Leveraged Investment Fund II, L.P., with respect to Dollar Financial Cop.s 13.95%
Senior Subordinated Notes due 2012(6)10.40
    
    
    Form of Director Indemnification Agreement(8)10.41
    
    
    Registration Rights Agreement, dated June 23, 2005, for $30,000,000 Dollar Financial Group,
Inc. 9.75% Senior Notes Due 2011(13)10.42
    
    
    Letter Agreement with Donald Gayhardt for the Acceleration of Options, dated June 30, 2005(14)10.43
    
    
    Letter Agreement with Jeff Weiss for the Acceleration of Options, dated June 30, 2005(14)10.44
    
    
    Employment Agreement, dated as of March 7, 2005, by and among Dollar Financial Corp., WTP
Acquisition Corp. and Ira Distenfield(17).10.45
    
    
    Form of Guaranty(17)10.46
    
    
    Master Reaffirmation Agreement, dated as of July 8, 2005, by and among each of the
undersigned Existing Guarantors and Existing Foreign Subsidiaries, Dollar Financial Group,
Inc., and Wells Fargo Bank, National Association, as Administrative Agent to the Lenders from
time to time party to the Credit Agreement(12).10.47
    
    
    Service Agreement dated April 4, 2005, by and between Dollar Financial UK Ltd. And Paul
Mildenstein (20).10.48
    
    
    Dollar Financial Corp. amended and restated Deferred Compensation Plan effective as of
December 31, 2004 (19).10.49
    
    
    Employment agreement dated September 11, 2006, by and between Dollar Financial Group, Inc. and Roy Hibberd12.1
    
    
    Computation of Ratio of Earnings to Fixed Charges(17)21.1
    
    
    Subsidiaries of the Registrant(17)23.1
    
    
    Consent of Ernst & Young LLP (20)31.1
    
    
    Certification of Chief Executive Officer Pursuant to Title 17, Code of Federal Regulations,
Section 240.13a  14(a) or Section 240.15d  14(a). (20)31.2
    
    
    Certification of President Pursuant to Title 17, Code of Federal Regulations, Section 240.13a
 14(a) or Section 240.15d  14(a). (20)31.3
    
    
    Certification of Chief Financial Officer Pursuant to Title 17, Code of Federal Regulations,
Section 240.13a  14(a) or Section 240.15d  14(a). (20)32.1
    
    
    Certification of Chief Executive Officer Pursuant to Title 18, United States Code, Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (20)32.2
    
    
    Certification of President Pursuant to Title 18, United States Code, Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (20)32.3
    
    
    Certification of Chief Financial Officer Pursuant to Title 18, United States Code, Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (20)(1
    )
    
    Incorporated by reference to the Registration Statement on Form S-4 filed by Dollar Financial
Group, Inc. on December 19, 1996 (File No. 333-18221).(2
    )
    
    Incorporated by reference to the Annual Report on Form 10-K filed by Dollar Financial Group,
Inc. on September 29, 1997 (File No. 333-18221).(3
    )
    
    Incorporated by reference to the Quarterly Report on Form 10-Q filed by Dollar Financial
Group, Inc. on February 16, 1999 (File No. 333-18221).(4
    )
    
    Incorporated by reference to the Annual Report on Form 10-K filed by Dollar Financial Group,
Inc. on October 1, 2002 (File No. 333-18221).(5
    )
    
    Incorporated by reference to the Quarterly Report on Form 10-Q filed by Dollar Financial
Group, Inc. on February 14, 2003 (File No. 333-18221).(6
    )
    
    Incorporated by reference to Amendment No. 1 to the Registration Statement on Form S-4 filed
by Dollar Financial Group, Inc. on January 14, 2004 (File No. 333-111473).
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(a)(3) ExhibitsExhibit No.
    
    Description of Document(7
    )
    
    Incorporated by reference to the Quarterly Report on Form 10-Q filed by Dollar Financial
Corp. on April 23, 2004 (File No. 333-111473-02).(8
    )
    
    Incorporated by reference to Amendment No. 6 to the Registration Statement on Form S-1 filed
by Dollar Financial Corp. on July 26, 2004 (File No. 333-113570).(9
    )
    
    Incorporated by reference to the Current Report on Form 8-K filed by Dollar Financial Corp.
on February 9, 2005 (File No. 333-18221).(10
    )
    
    Incorporated by reference to the Quarterly Report on Form 10-Q filed by Dollar Financial
Corp. on February 11, 2005 (File No. 000-50866).(11
    )
    
    Incorporated by reference to the First Amendment on Current Report on Form 8-K filed by
Dollar Financial Corp. on March 11, 2005 (File No. 000-50866).(12
    )
    
    Incorporated by reference to the Registration Statement on Form S-8 filed by Dollar Financial
Corp. on March 15, 2005 (File No. 333-123320).(13
    )
    
    Incorporated by reference to the Current Report on Form 8-K filed by Dollar Financial Corp.
on June 24, 2005 (File No. 000-50866).(14
    )
    
    Incorporated by reference to the Current Report on Form 8-K filed by Dollar Financial Corp.
on July 7, 2005 (File No. 000-50866).(15
    )
    
    Incorporated by reference to the Current Report on Form 8-K filed by Dollar Financial Corp.
on July 14, 2005 (File No. 000-50866)(16
    )
    
    Incorporated by reference to the Current Report on Form 8-K/A filed by Dollar Financial Corp.
on July 26, 2005 (File No. 000-50866)(17
    )
    
    Incorporated by reference to the Amendment No. 1 to the Registration Statement on Form S-4
filed by Dollar Financial Corp. on August 11, 2005 (File No. 333-126951-17)(18
    )
    
    Previously filed.(19
    )
    
    Incorporated by Reference to the Current Report on Form 8-K filed by Dollar Financial Corp. on November 17, 2005.(20
    )
    
    Filed herewith.
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SIGNATURES
  DOLLAR FINANCIAL GROUP, INC.By:
    /s/ DONALD GAYHARDTDonald GayhardtPresident DOLLAR FINANCIAL GROUP, INC.
 Signature
    
    
    
    Title
    
    
    
    Date/s/ JEFFREY A. WEISS
    
    
    
    Chairman of the Board of Directors
    
    
    
    September 15, 2006Jeffrey A. Weiss
    
    
    
    and Chief Executive Officer(principal executive officer)/s/ DONALD GAYHARDT
    
    
    
    President and Director
    
    
    
    September 15, 2006Donald Gayhardt/s/ RANDY UNDERWOOD
    
    
    
    Executive Vice President and Chief
    
    
    
    September 15, 2006Randy Underwood
    
    
    
    Financial Officer (principal financialand accounting officer)
  101