##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
 For the quarterly period ended December 31, 2005
 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 000-50866
 DOLLAR FINANCIAL CORP.
  DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
    
    23-2636866
(I.R.S. Employer Identification No.)
 1436 LANCASTER AVENUE,
BERWYN, PENNSYLVANIA 19312
 610-296-3400
 None
 Ö þ o
  o o þ
 o þ




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##### 



DOLLAR FINANCIAL CORP.
 INDEX
 Page No.PART I.     FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsInterim Consolidated Balance Sheets as of June 30, 2005
and December 31, 2005 (unaudited)
    
    
    3Interim Unaudited Consolidated Statements of Operations for the Three and Six
Months Ended December 31, 2004 and 2005
    
    
    4Interim Consolidated Statements of Shareholders Equity as of June 30, 2005
and December 31, 2005 (unaudited)
    
    
    5Interim Unaudited Consolidated Statements of Cash Flows for the Six Months
Ended December 31, 2004 and 2005
    
    
    6Notes to Interim Unaudited Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    28Item 3.
    
    Quantitative and Qualitative Disclosures
About Market Risk
    
    
    38Item 4.
    
    Controls and Procedures
    
    
    39PART II.     OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    39Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    41Item 6.
    
    Exhibits
    
    
    41Signature
    
    
    42Rule 13a-14(a)/15d-14(a) Certification of Chief Executive OfficerRule 13a-14(a)/15d-14(a) Certification of PresidentRule 13a-14(a)/15d-14(a) Certification of Chief Financial OfficerSection 1350 Certification of Chief Executive OfficerSection 1350 Certification of PresidentSection 1350 Certification of Chief Financial Officer
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 DOLLAR FINANCIAL CORP.
 
 INTERIM CONSOLIDATED BALANCE SHEETS
 (In thousands except share and per share amounts)
 June 30,
    
    
    December 31,2005
    
    
    2005(unaudited)ASSETSCash and cash equivalents
    
    $
    92,504
    
    
    $
    100,102Loans receivableLoans receivable
    
    
    41,353
    
    
    
    56,539Less: Allowance for loan losses
    
    
    (2,707
    )
    
    
    (4,096
    )Loans receivable, net
    
    
    38,646
    
    
    
    52,443Other consumer lending receivables, net
    
    
    7,996
    
    
    
    3,976Other receivables
    
    
    4,399
    
    
    
    7,432Income taxes receivable
    
    
    1,053
    
    
    
    2,085Prepaid expenses
    
    
    6,858
    
    
    
    5,917Deferred tax asset, net of valuation allowance of $37,460 and $41,474
    
    
    71
    
    
    
    90Property and equipment, net of accumulated
depreciation of $62,555 and $67,319
    
    
    35,611
    
    
    
    36,103Goodwill and other intangibles, net of accumulated
amortization of $23,079 and $20,825
    
    
    186,190
    
    
    
    194,598Debt issuance costs, net of accumulated
amortization of $2,633 and $3,628
    
    
    10,558
    
    
    
    10,374Other
    
    
    3,970
    
    
    
    3,014$
    387,856
    
    
    $
    416,134LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    19,256
    
    
    $
    23,016Foreign income taxes payable
    
    
    4,648
    
    
    
    4,912Accrued expenses and other liabilities
    
    
    26,909
    
    
    
    22,581Accrued interest payable
    
    
    3,291
    
    
    
    3,314Deferred tax liability
    
    
    2,352
    
    
    
    3,194Revolving credit facilities
    
    
    
    
    
    
    20,5009.75% Senior Notes due 2011
    
    
    271,764
    
    
    
    271,626Other long-term debt
    
    
    
    
    
    
    733Shareholders equity:Common stock, $0.001 par value: 55,500,000 shares authorized;
18,080,652 shares and 18,102,727 shares issued and outstanding at
June 30, 2005 and December 31, 2005, respectively
    
    
    18
    
    
    
    18Additional paid-in capital
    
    
    160,997
    
    
    
    161,195Accumulated deficit
    
    
    (121,885
    )
    
    
    (116,568
    )Accumulated other comprehensive income
    
    
    20,506
    
    
    
    21,613Total shareholders equity
    
    
    59,636
    
    
    
    66,258$
    387,856
    
    
    $
    416,134
  3




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands except share and per share amounts)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2004
    
    
    2005Revenues:Check Cashing
    
    $
    32,733
    
    
    $
    35,224
    
    
    $
    63,095
    
    
    $
    69,571Consumer lending:Fees from consumer lending
    
    
    39,538
    
    
    
    41,094
    
    
    
    76,745
    
    
    
    77,332Provision for loan losses and adjustment to
servicing income
    
    
    (8,772
    )
    
    
    (7,748
    )
    
    
    (18,209
    )
    
    
    (16,521
    )Consumer lending, net
    
    
    30,766
    
    
    
    33,346
    
    
    
    58,536
    
    
    
    60,811Money transfer fees
    
    
    3,685
    
    
    
    4,262
    
    
    
    7,193
    
    
    
    8,220Franchise fees and royalties
    
    
    1,375
    
    
    
    2,487
    
    
    
    2,214
    
    
    
    5,403Other
    
    
    3,847
    
    
    
    5,348
    
    
    
    7,501
    
    
    
    11,127Total revenues
    
    
    72,406
    
    
    
    80,667
    
    
    
    138,539
    
    
    
    155,132Store and regional expenses:Salaries and benefits
    
    
    22,456
    
    
    
    26,004
    
    
    
    43,343
    
    
    
    51,195Occupancy
    
    
    5,612
    
    
    
    6,752
    
    
    
    11,006
    
    
    
    13,470Depreciation
    
    
    1,821
    
    
    
    1,835
    
    
    
    3,575
    
    
    
    3,667Returned checks, net and cash shortages
    
    
    2,738
    
    
    
    3,128
    
    
    
    5,222
    
    
    
    6,387Telephone and communications
    
    
    1,477
    
    
    
    1,445
    
    
    
    2,950
    
    
    
    2,866Advertising
    
    
    2,289
    
    
    
    2,633
    
    
    
    5,121
    
    
    
    4,822Bank charges
    
    
    977
    
    
    
    1,135
    
    
    
    1,913
    
    
    
    2,244Armored carrier expenses
    
    
    890
    
    
    
    1,036
    
    
    
    1,714
    
    
    
    2,022Other
    
    
    7,179
    
    
    
    8,690
    
    
    
    14,271
    
    
    
    15,999Total store and regional expenses
    
    
    45,439
    
    
    
    52,658
    
    
    
    89,115
    
    
    
    102,672Store and regional margin
    
    
    26,967
    
    
    
    28,009
    
    
    
    49,424
    
    
    
    52,460Corporate and other expenses:Corporate expenses
    
    
    9,519
    
    
    
    10,410
    
    
    
    17,750
    
    
    
    19,582Management fee
    
    
    251
    
    
    
    
    
    
    
    528
    
    
    
    Other depreciation and amortization
    
    
    1,150
    
    
    
    886
    
    
    
    2,081
    
    
    
    1,811Interest expense, net of interest income
    
    
    9,802
    
    
    
    7,438
    
    
    
    19,471
    
    
    
    14,679Other
    
    
    (142
    )
    
    
    142
    
    
    
    (56
    )
    
    
    418Income before income taxes
    
    
    6,387
    
    
    
    9,133
    
    
    
    9,650
    
    
    
    15,970Income tax provision
    
    
    5,254
    
    
    
    6,115
    
    
    
    8,608
    
    
    
    10,653Net income
    
    $
    1,133
    
    
    $
    3,018
    
    
    $
    1,042
    
    
    $
    5,317Net income per share:Basic
    
    $
    0.10
    
    
    $
    0.17
    
    
    $
    0.10
    
    
    $
    0.29Diluted
    
    $
    0.10
    
    
    $
    0.16
    
    
    $
    0.09
    
    
    $
    0.29Weighted average shares outstanding:Basic
    
    
    10,965,779
    
    
    
    18,102,727
    
    
    
    10,965,779
    
    
    
    18,095,881Diluted
    
    
    11,367,575
    
    
    
    18,358,187
    
    
    
    11,367,575
    
    
    
    18,392,674
  4




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DOLLAR FINANCIAL CORP.
 
 INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (In thousands, except share data)
 Accumulated
    
    
    
    
    
    
    
    
    
    
    TotalAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Management
    
    
    ShareholdersCommon Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury
    
    
    Equity
    
    
    (Deficit)Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    (Loss) Income
    
    
    Stock
    
    
    Loan
    
    
    EquityBalance, June 30, 2004
    
    
    10,965,779
    
    
    $
    11
    
    
    $
    61,470
    
    
    $
    (120,916
    )
    
    $
    13,813
    
    
    $
    (956
    )
    
    $
    (4,309
    )
    
    $
    (50,887
    )Comprehensive incomeForeign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,729
    
    
    
    
    
    
    
    
    
    
    
    6,729Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36
    )
    
    
    
    
    
    
    
    
    
    
    (36
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (357
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (357
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,336Initial public stock offering
    
    
    7,378,125
    
    
    
    7
    
    
    
    106,932
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,939Repayment of notes receivable from officer
    
    
    (416,287
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,661
    )
    
    
    4,309
    
    
    
    (2,352
    )Accrued interest on notes receivable from officers
    
    
    
    
    
    
    
    
    
    
    (2,464
    )

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,464
    )We The People acquisition
    
    
    141,935
    
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000Retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    (7,005
    )
    
    
    (612
    )
    
    
    
    
    
    
    7,617
    
    
    
    
    
    
    
    Share options excercised
    
    
    11,100
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64Balance, June 30, 2005
    
    
    18,080,652
    
    
    
    18
    
    
    
    160,997
    
    
    
    (121,885
    )
    
    
    20,506
    
    
    
    
    
    
    
    
    
    
    
    59,636Comprehensive incomeForeign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,155
    
    
    
    
    
    
    
    
    
    
    
    1,155Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    (48
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,317
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,317Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,424Share options excercised
    
    
    22,075
    
    
    
    
    
    
    
    144
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Balance, December 31, 2005 (unaudited)
    
    
    18,102,727
    
    
    $
    18
    
    
    $
    161,195
    
    
    $
    (116,568
    )
    
    $
    21,613
    
    
    $
    
    
    
    $
    
    
    
    $
    66,258
  5




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DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Six Months EndedDecember 31,2004
    
    
    2005Cash flows from operating activities:Net income
    
    $
    1,042
    
    
    $
    5,317Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    6,288
    
    
    
    6,347Non-cash stock compensation
    
    
    
    
    
    
    54(Gains) losses on store closings
    
    
    (56
    )
    
    
    524Foreign currency loss on revaluation of
subordinated borrowings
    
    
    181
    
    
    
    8Deferred tax (benefit) provision
    
    
    (164
    )
    
    
    799Change in assets and liabilities (net of effect of acquisitions):Increase in loans and other receivables
    
    
    (5,820
    )
    
    
    (12,670
    )Decrease (increase) in income taxes receivable
    
    
    536
    
    
    
    (1,032
    )(Increase) decrease in prepaid expenses and other
    
    
    (455
    )
    
    
    1,642Increase (decrease) in accounts payable, income taxes payable,
accrued expenses and other liabilities and accrued interest payable
    
    
    8,673
    
    
    
    (765
    )Net cash provided by operating activities
    
    
    10,225
    
    
    
    224Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (658
    )
    
    
    (6,141
    )Additions to property and equipment
    
    
    (5,589
    )
    
    
    (7,702
    )Net cash used in investing activities
    
    
    (6,247
    )
    
    
    (13,843
    )Cash flows from financing activities:Proceeds from the exercise of stock options
    
    
    
    
    
    
    144Other debt payments (borrowings)
    
    
    (51
    )
    
    
    733Net increase in revolving credit facilities
    
    
    11,000
    
    
    
    20,500Payment of initial public stock offering costs
    
    
    (397
    )
    
    
    Payment of debt issuance costs
    
    
    (103
    )
    
    
    (1,218
    )Net cash provided by financing activities
    
    
    10,449
    
    
    
    20,159Effect of exchange rate changes on cash and cash equivalents
    
    
    4,419
    
    
    
    1,058Net increase in cash and cash equivalents
    
    
    18,846
    
    
    
    7,598Cash and cash equivalents at beginning of period
    
    
    69,270
    
    
    
    92,504Cash and cash equivalents at end of period
    
    $
    88,116
    
    
    $
    100,102
  6




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  ® ® ® ®
 Use of Estimates
  Principles of Consolidation
  Reclassification
  Revenue Recognition
   7




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\

DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2004
    
    
    2005Net income
    
    $
    1,133
    
    
    $
    3,018
    
    
    $
    1,042
    
    
    $
    5,317Reconciliation of denominator:Weighted average of common shares outstanding  basic
    
    
    10,966
    
    
    
    18,103
    
    
    
    10,966
    
    
    
    18,096Effect of dilutive stock options
    
    
    402
    
    
    
    255
    
    
    
    402
    
    
    
    297Weighted average number of common shares outstanding  diluted
    
    
    11,368
    
    
    
    18,358
    
    
    
    11,368
    
    
    
    18,393
 Stock Based Employee Compensation
 Share-Based Payment , Accounting for
Stock-Based Compensation ,
Accounting for Stock Issued to Employees
  8




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Stock Based Employee Compensation (continued)
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2004
    
    
    2005Net income  as reported
    
    $
    1,133
    
    
    $
    3,018
    
    
    $
    1,042
    
    
    $
    5,317Add: Stock-based employee compensation expense included in reported net income, net of related tax effects
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    35Deduct: Total stock-option exepnse determined under the fair value based method, net of related tax benefits
    
    
    (75
    )
    
    
    (18
    )
    
    
    (151
    )
    
    
    (35
    )Net income  pro forma
    
    $
    1,058
    
    
    $
    3,018
    
    
    $
    891
    
    
    $
    5,317Net income per common share  basic  as reported
    
    
    0.10
    
    
    
    0.17
    
    
    
    0.10
    
    
    
    0.29Net income per common share  basic  pro forma
    
    
    0.10
    
    
    
    0.17
    
    
    
    0.08
    
    
    
    0.29Net income per common share  diluted  as reported
    
    
    0.10
    
    
    
    0.16
    
    
    
    0.09
    
    
    
    0.29Net income per common share  diluted  pro forma
    
    
    0.09
    
    
    
    0.16
    
    
    
    0.08
    
    
    
    0.29
  December 31,2005Expected volatility
    
    
    43.6
    %Expected life (years)
    
    
    6.0Risk-free interest rate
    
    
    4.11
    %Expected dividends
    
    NoneWeighted average fair value
    
    $
    5.38
 2. DEBT
  9




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 2. DEBT (continued)
    3. SUBSIDIARY GUARANTOR UNAUDITED 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 OPCO, including indebtedness under OPCOs senior secured 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.
  10




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 CONSOLIDATING BALANCE SHEETS
December 31, 2005
(In thousands)
 Dollar FinancialDollar
    
    
    Group, Inc.
    
    
    SubsidiaryFinancial
    
    
    and Subsidiary
    
    
    Non-Corp.
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    200
    
    
    $
    38,557
    
    
    $
    61,345
    
    
    $
    
    
    
    $
    100,102Loans receivableLoans receivable
    
    
    
    
    
    
    11,011
    
    
    
    45,528
    
    
    
    
    
    
    
    56,539Less: Allowance for loan losses
    
    
    
    
    
    
    (919
    )
    
    
    (3,177
    )
    
    
    
    
    
    
    (4,096
    )Loans receivable, net
    
    
    
    
    
    
    10,092
    
    
    
    42,351
    
    
    
    
    
    
    
    52,443Other consumer lending receivables, net
    
    
    
    
    
    
    3,976
    
    
    
    
    
    
    
    
    
    
    
    3,976Other receivables
    
    
    276
    
    
    
    2,298
    
    
    
    5,222
    
    
    
    (364
    )
    
    
    7,432Income taxes receivable
    
    
    
    
    
    
    2,085
    
    
    
    
    
    
    
    
    
    
    
    2,085Prepaid expenses
    
    
    
    
    
    
    2,198
    
    
    
    3,719
    
    
    
    
    
    
    
    5,917Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    90Due from affiliates
    
    
    
    
    
    
    43,109
    
    
    
    
    
    
    
    (43,109
    )
    
    
    Due from parent
    
    
    
    
    
    
    2,396
    
    
    
    
    
    
    
    (2,396
    )
    
    
    Property and equipment, net
    
    
    
    
    
    
    12,026
    
    
    
    24,077
    
    
    
    
    
    
    
    36,103Goodwill and other intangibles, net
    
    
    
    
    
    
    95,788
    
    
    
    98,810
    
    
    
    
    
    
    
    194,598Debt issuance costs, net
    
    
    
    
    
    
    10,374
    
    
    
    
    
    
    
    
    
    
    
    10,374Investment in subsidiaries
    
    
    66,183
    
    
    
    326,064
    
    
    
    
    
    
    
    (392,247
    )
    
    
    Other
    
    
    
    
    
    
    738
    
    
    
    2,276
    
    
    
    
    
    
    
    3,014$
    66,659
    
    
    $
    549,701
    
    
    $
    237,890
    
    
    $
    (438,116
    )
    
    $
    416,134LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    
    
    
    $
    11,009
    
    
    $
    12,007
    
    
    $
    
    
    
    $
    23,016Foreign income taxes payable
    
    
    
    
    
    
    
    
    
    
    4,912
    
    
    
    
    
    
    
    4,912Accrued expenses and other liabilities
    
    
    5
    
    
    
    12,650
    
    
    
    9,926
    
    
    
    
    
    
    
    22,581Accrued interest payable
    
    
    
    
    
    
    3,314
    
    
    
    364
    
    
    
    (364
    )
    
    
    3,314Deferred tax liability
    
    
    
    
    
    
    2,546
    
    
    
    648
    
    
    
    
    
    
    
    3,194Due to affiliate
    
    
    396
    
    
    
    
    
    
    
    45,109
    
    
    
    (45,505
    )
    
    
    Revolving credit facilities
    
    
    
    
    
    
    20,500
    
    
    
    
    
    
    
    
    
    
    
    20,5009.75% Senior Notes due 2011
    
    
    
    
    
    
    271,626
    
    
    
    
    
    
    
    
    
    
    
    271,626Other long-term debt
    
    
    
    
    
    
    733
    
    
    
    
    
    
    
    
    
    
    
    733401
    
    
    
    322,378
    
    
    
    72,966
    
    
    
    (45,869
    )
    
    
    349,876Shareholders equity:Common stock
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Additional paid in capital
    
    
    150,098
    
    
    
    95,125
    
    
    
    20,599
    
    
    
    (104,627
    )
    
    
    161,195(Accumulated deficit) retained earnings
    
    
    (105,471
    )
    
    
    108,579
    
    
    
    125,416
    
    
    
    (245,092
    )
    
    
    (116,568
    )Accumulated other comprehensive income
    
    
    21,613
    
    
    
    23,619
    
    
    
    18,909
    
    
    
    (42,528
    )
    
    
    21,613Total shareholders equity
    
    
    66,258
    
    
    
    227,323
    
    
    
    164,924
    
    
    
    (392,247
    )
    
    
    66,258$
    66,659
    
    
    $
    549,701
    
    
    $
    237,890
    
    
    $
    (438,116
    )
    
    $
    416,134
 11




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 CONSOLIDATING BALANCE SHEETS
June 30, 2005
(In thousands)
 Dollar FinancialDollar
    
    
    Group, Inc.
    
    
    SubsidiaryFinancial
    
    
    and Subsidiary
    
    
    Non-Corp.
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    4
    
    
    $
    30,049
    
    
    $
    62,451
    
    
    $
    
    
    
    $
    92,504Loans receivableLoans receivable
    
    
    
    
    
    
    6,243
    
    
    
    35,110
    
    
    
    
    
    
    
    41,353Less: Allowance for loan losses
    
    
    
    
    
    
    (470
    )
    
    
    (2,237
    )
    
    
    
    
    
    
    (2,707
    )Loans receivable, net
    
    
    
    
    
    
    5,773
    
    
    
    32,873
    
    
    
    
    
    
    
    38,646Other consumer lending receivables, net
    
    
    
    
    
    
    7,996
    
    
    
    
    
    
    
    
    
    
    
    7,996Other receivables
    
    
    276
    
    
    
    1,370
    
    
    
    2,969
    
    
    
    (216
    )
    
    
    4,399Income taxes receivable
    
    
    
    
    
    
    1,053
    
    
    
    
    
    
    
    
    
    
    
    1,053Prepaid expenses
    
    
    
    
    
    
    2,948
    
    
    
    3,910
    
    
    
    
    
    
    
    6,858Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    71Due from affiliates
    
    
    
    
    
    
    53,893
    
    
    
    
    
    
    
    (53,893
    )
    
    
    Due from parent
    
    
    
    
    
    
    2,398
    
    
    
    
    
    
    
    (2,398
    )
    
    
    Property and equipment, net
    
    
    
    
    
    
    12,456
    
    
    
    23,155
    
    
    
    
    
    
    
    35,611Goodwill and other intangibles, net
    
    
    
    
    
    
    87,535
    
    
    
    98,655
    
    
    
    
    
    
    
    186,190Debt issuance costs, net
    
    
    
    
    
    
    10,558
    
    
    
    
    
    
    
    
    
    
    
    10,558Investment in subsidiaries
    
    
    59,759
    
    
    
    317,853
    
    
    
    9,660
    
    
    
    (387,272
    )
    
    
    Other
    
    
    
    
    
    
    527
    
    
    
    3,443
    
    
    
    
    
    
    
    3,970$
    60,039
    
    
    $
    534,409
    
    
    $
    237,187
    
    
    $
    (443,779
    )
    
    $
    387,856LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    
    
    
    $
    7,298
    
    
    $
    11,958
    
    
    $
    
    
    
    $
    19,256Foreign income taxes payable
    
    
    
    
    
    
    
    
    
    
    4,648
    
    
    
    
    
    
    
    4,648Accrued expenses and other liabilities
    
    
    5
    
    
    
    14,833
    
    
    
    12,071
    
    
    
    
    
    
    
    26,909Accrued interest payable
    
    
    
    
    
    
    3,291
    
    
    
    216
    
    
    
    (216
    )
    
    
    3,291Deferred tax liability
    
    
    
    
    
    
    1,757
    
    
    
    595
    
    
    
    
    
    
    
    2,352Due to affiliate
    
    
    398
    
    
    
    
    
    
    
    55,893
    
    
    
    (56,291
    )
    
    
    9.75% Senior Notes due 2011
    
    
    
    
    
    
    271,764
    
    
    
    
    
    
    
    
    
    
    
    271,764403
    
    
    
    298,943
    
    
    
    85,381
    
    
    
    (56,507
    )
    
    
    328,220Shareholders equityCommon stock
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Additional paid in capital
    
    
    149,900
    
    
    
    104,926
    
    
    
    30,259
    
    
    
    (124,088
    )
    
    
    160,997(Accumulated deficit) retained earnings
    
    
    (110,788
    )
    
    
    105,740
    
    
    
    106,410
    
    
    
    (223,247
    )
    
    
    (121,885
    )Accumulated other comprehensive income
    
    
    20,506
    
    
    
    24,800
    
    
    
    15,137
    
    
    
    (39,937
    )
    
    
    20,506Total shareholders equity
    
    
    59,636
    
    
    
    235,466
    
    
    
    151,806
    
    
    
    (387,272
    )
    
    
    59,636$
    60,039
    
    
    $
    534,409
    
    
    $
    237,187
    
    
    $
    (443,779
    )
    
    $
    387,856
 12




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATING STATEMENTS OF OPERATIONS
Six Months Ended December 31, 2005
(In thousands)
 Dollar FinancialDollar
    
    
    Group, Inc.
    
    
    SubsidiaryFinancial
    
    
    and Subsidiary
    
    
    Non-Corp.
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Check cashing
    
    $
    
    
    
    $
    23,015
    
    
    $
    46,556
    
    
    $
    
    
    
    $
    69,571Consumer lending:Fees from consumer lending
    
    
    
    
    
    
    29,760
    
    
    
    47,572
    
    
    
    
    
    
    
    77,332Provision for loan losses and adjustment to servicing income
    
    
    
    
    
    
    (7,882
    )
    
    
    (8,639
    )
    
    
    
    
    
    
    (16,521
    )Consumer lending, net
    
    
    
    
    
    
    21,878
    
    
    
    38,933
    
    
    
    
    
    
    
    60,811Money transfer fees
    
    
    
    
    
    
    2,044
    
    
    
    6,176
    
    
    
    
    
    
    
    8,220Franchise fees and royalties
    
    
    
    
    
    
    2,927
    
    
    
    2,476
    
    
    
    
    
    
    
    5,403Other
    
    
    
    
    
    
    3,935
    
    
    
    7,192
    
    
    
    
    
    
    
    11,127Total revenues
    
    
    
    
    
    
    53,799
    
    
    
    101,333
    
    
    
    
    
    
    
    155,132Store and regional expenses:Salaries and benefits
    
    
    
    
    
    
    25,522
    
    
    
    25,673
    
    
    
    
    
    
    
    51,195Occupancy
    
    
    
    
    
    
    6,960
    
    
    
    6,510
    
    
    
    
    
    
    
    13,470Depreciation
    
    
    
    
    
    
    1,707
    
    
    
    1,960
    
    
    
    
    
    
    
    3,667Returned checks, net and cash shortages
    
    
    
    
    
    
    2,805
    
    
    
    3,582
    
    
    
    
    
    
    
    6,387Telephone and telecommunication
    
    
    
    
    
    
    1,716
    
    
    
    1,150
    
    
    
    
    
    
    
    2,866Advertising
    
    
    
    
    
    
    1,819
    
    
    
    3,003
    
    
    
    
    
    
    
    4,822Bank charges
    
    
    
    
    
    
    980
    
    
    
    1,264
    
    
    
    
    
    
    
    2,244Armored carrier services
    
    
    
    
    
    
    804
    
    
    
    1,218
    
    
    
    
    
    
    
    2,022Other
    
    
    
    
    
    
    7,768
    
    
    
    8,231
    
    
    
    
    
    
    
    15,999Total store and regional expenses
    
    
    
    
    
    
    50,081
    
    
    
    52,591
    
    
    
    
    
    
    
    102,672Store and regional margin
    
    
    
    
    
    
    3,718
    
    
    
    48,742
    
    
    
    
    
    
    
    52,460Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    10,198
    
    
    
    9,384
    
    
    
    
    
    
    
    19,582Management fee
    
    
    
    
    
    
    (7,515
    )
    
    
    7,515
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    
    
    
    
    900
    
    
    
    911
    
    
    
    
    
    
    
    1,811Interest expense, net
    
    
    
    
    
    
    13,787
    
    
    
    892
    
    
    
    
    
    
    
    14,679Other
    
    
    
    
    
    
    416
    
    
    
    2
    
    
    
    
    
    
    
    418Equity in subsidiary
    
    
    (5,317
    )
    
    
    
    
    
    
    
    
    
    
    5,317
    
    
    
    Income (loss) before income taxes
    
    
    5,317
    
    
    
    (14,068
    )
    
    
    30,038
    
    
    
    (5,317
    )
    
    
    15,970Income tax (benefit) provision
    
    
    
    
    
    
    (377
    )
    
    
    11,030
    
    
    
    
    
    
    
    10,653Net income (loss)
    
    $
    5,317
    
    
    $
    (13,691
    )
    
    $
    19,008
    
    
    $
    (5,317
    )
    
    $
    5,317
 13




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 CONSOLIDATING STATEMENTS OF OPERATIONS
Six Months Ended December 31, 2004
(In thousands)
 Dollar FinancialDollar
    
    
    Group, Inc.
    
    
    SubsidiaryFinancial
    
    
    and Subsidiary
    
    
    Non-Corp.
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Check cashing
    
    $
    
    
    
    $
    21,765
    
    
    $
    41,330
    
    
    $
    
    
    
    $
    63,095Consumer lending:Fees from consumer lending
    
    
    
    
    
    
    40,367
    
    
    
    36,378
    
    
    
    
    
    
    
    76,745Provision
for loan losses and adjustment to servicing income
    
    
    
    
    
    
    (11,283
    )
    
    
    (6,926
    )
    
    
    
    
    
    
    (18,209
    )Consumer lending, net
    
    
    
    
    
    
    29,084
    
    
    
    29,452
    
    
    
    
    
    
    
    58,536Money transfer fees
    
    
    
    
    
    
    2,076
    
    
    
    5,117
    
    
    
    
    
    
    
    7,193Franchise fees and royalties
    
    
    
    
    
    
    116
    
    
    
    2,098
    
    
    
    
    
    
    
    2,214Other
    
    
    
    
    
    
    1,419
    
    
    
    6,082
    
    
    
    
    
    
    
    7,501Total revenues
    
    
    
    
    
    
    54,460
    
    
    
    84,079
    
    
    
    
    
    
    
    138,539Store and regional expenses:Salaries and benefits
    
    
    
    
    
    
    21,902
    
    
    
    21,441
    
    
    
    
    
    
    
    43,343Occupancy
    
    
    
    
    
    
    5,627
    
    
    
    5,379
    
    
    
    
    
    
    
    11,006Depreciation
    
    
    
    
    
    
    1,936
    
    
    
    1,639
    
    
    
    
    
    
    
    3,575Returned checks, net and cash shortages
    
    
    
    
    
    
    2,352
    
    
    
    2,870
    
    
    
    
    
    
    
    5,222Telephone and telecommunication
    
    
    
    
    
    
    1,867
    
    
    
    1,083
    
    
    
    
    
    
    
    2,950Advertising
    
    
    
    
    
    
    2,320
    
    
    
    2,801
    
    
    
    
    
    
    
    5,121Bank charges
    
    
    
    
    
    
    981
    
    
    
    932
    
    
    
    
    
    
    
    1,913Armored carrier services
    
    
    
    
    
    
    715
    
    
    
    999
    
    
    
    
    
    
    
    1,714Other
    
    
    
    
    
    
    6,666
    
    
    
    7,605
    
    
    
    
    
    
    
    14,271Total store and regional expenses
    
    
    
    
    
    
    44,366
    
    
    
    44,749
    
    
    
    
    
    
    
    89,115Store and regional margin
    
    
    
    
    
    
    10,094
    
    
    
    39,330
    
    
    
    
    
    
    
    49,424Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    8,931
    
    
    
    8,819
    
    
    
    
    
    
    
    17,750Management fee
    
    
    528
    
    
    
    (252
    )
    
    
    252
    
    
    
    
    
    
    
    528Other depreciation and amortization
    
    
    
    
    
    
    1,159
    
    
    
    922
    
    
    
    
    
    
    
    2,081Interest expense, net
    
    
    6,495
    
    
    
    10,900
    
    
    
    2,076
    
    
    
    
    
    
    
    19,471Other
    
    
    
    
    
    
    (175
    )
    
    
    119
    
    
    
    
    
    
    
    (56
    )Equity in subsidiary
    
    
    (8,065
    )
    
    
    
    
    
    
    
    
    
    
    8,065
    
    
    
    Income (loss) before income taxes
    
    
    1,042
    
    
    
    (10,469
    )
    
    
    27,142
    
    
    
    (8,065
    )
    
    
    9,650Income tax (benefit) provision
    
    
    
    
    
    
    (829
    )
    
    
    9,437
    
    
    
    
    
    
    
    8,608Net income (loss)
    
    $
    1,042
    
    
    $
    (9,640
    )
    
    $
    17,705
    
    
    $
    (8,065
    )
    
    $
    1,042
 14




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 CONSOLIDATING STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 2005
(In thousands)
 Dollar FinancialDollar
    
    
    Group, Inc.
    
    
    SubsidiaryFinancial
    
    
    and Subsidiary
    
    
    Non-Corp.
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    5,317
    
    
    $
    (13,691
    )
    
    $
    19,008
    
    
    $
    (5,317
    )
    
    $
    5,317Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating activities:Undistributed income of subsidiary
    
    
    (5,317
    )
    
    
    
    
    
    
    
    
    
    
    5,317
    
    
    
    Depreciation and amortization
    
    
    
    
    
    
    3,475
    
    
    
    2,872
    
    
    
    
    
    
    
    6,347Non-cash stock compensation
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Losses on store closings and sales
    
    
    
    
    
    
    521
    
    
    
    3
    
    
    
    
    
    
    
    524Foreign currency loss on revaluation of
subordinated borrowings
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    8Deferred tax provision
    
    
    
    
    
    
    789
    
    
    
    10
    
    
    
    
    
    
    
    799Change in assets and liabilities (net of effect of acquisitions):Increase in loans and other receivables
    
    
    
    
    
    
    (1,157
    )
    
    
    (11,877
    )
    
    
    364
    
    
    
    (12,670
    )Increase in income taxes receivable
    
    
    
    
    
    
    (5,686
    )
    
    
    
    
    
    
    4,654
    
    
    
    (1,032
    )Decrease in prepaid expenses and other
    
    
    
    
    
    
    539
    
    
    
    1,103
    
    
    
    
    
    
    
    1,642Increase
(decrease) in accounts payable, income taxes, payable, accrued expenses and other liabilities and accrued interest payable
    
    
    
    4,808
    
    
    
    (555
    )
    
    
    (5,018
    )
    
    
    (765
    )Net cash provided by (used in) operating activities
    
    
    54
    
    
    
    (10,394
    )
    
    
    10,564
    
    
    
    
    
    
    
    224Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    
    
    
    
    (5,836
    )
    
    
    (305
    )
    
    
    
    
    
    
    (6,141
    )Additions to property and equipment
    
    
    
    
    
    
    (3,390
    )
    
    
    (4,312
    )
    
    
    
    
    
    
    (7,702
    )Net decrease in due from affiliates
    
    
    
    
    
    
    10,994
    
    
    
    
    
    
    
    (10,994
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    
    
    
    
    1,768
    
    
    
    (4,617
    )
    
    
    (10,994
    )
    
    
    (13,843
    )Cash flows from financing activities:Proceeds from the exercise of stock options
    
    
    144
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144Other debt borrowings
    
    
    
    
    
    
    733
    
    
    
    
    
    
    
    
    
    
    
    733Net increase in revolving credit facilities
    
    
    
    
    
    
    20,500
    
    
    
    
    
    
    
    
    
    
    
    20,500Payment of debt issuance costs
    
    
    
    
    
    
    (1,218
    )
    
    
    
    
    
    
    
    
    
    
    (1,218
    )Net decrease in due to affiliates and due from parent
    
    
    (2
    )
    
    
    (2,881
    )
    
    
    (8,111
    )
    
    
    10,994
    
    
    
    Net cash provided by (used in) financing activities
    
    
    142
    
    
    
    17,134
    
    
    
    (8,111
    )
    
    
    10,994
    
    
    
    20,159Effect of
exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    1,058
    
    
    
    
    
    
    
    1,058Net increase (decrease) in cash and cash equivalents
    
    
    196
    
    
    
    8,508
    
    
    
    (1,106
    )
    
    
    
    
    
    
    7,598Cash and cash equivalents at beginning of period
    
    
    4
    
    
    
    30,049
    
    
    
    62,451
    
    
    
    
    
    
    
    92,504Cash and cash equivalents at end of period
    
    $
    200
    
    
    $
    38,557
    
    
    $
    61,345
    
    
    $
    
    
    
    $
    100,102
 15




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 CONSOLIDATING STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 2004
(In thousands)
 Dollar FinancialDollar
    
    
    Group, Inc.
    
    
    SubsidiaryFinancial
    
    
    and Subsidiary
    
    
    Non-Corp.
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    1,042
    
    
    $
    (9,640
    )
    
    $
    17,705
    
    
    $
    (8,065
    )
    
    $
    1,042Adjustments
to reconcile net (loss) income to net cash provided by (used in) operating activities:Undistributed income of subsidiary
    
    
    (8,065
    )
    
    
    
    
    
    
    
    
    
    
    8,065
    
    
    
    Depreciation and amortization
    
    
    17
    
    
    
    3,844
    
    
    
    2,427
    
    
    
    
    
    
    
    6,288(Gain) losses on store closings and sales
    
    
    
    
    
    
    (175
    )
    
    
    119
    
    
    
    
    
    
    
    (56
    )Foreign
currency loss on revaluation of subordinated borrowings
    
    
    
    
    
    
    181
    
    
    
    
    
    
    
    
    
    
    
    181Deferred tax benefit
    
    
    
    
    
    
    
    
    
    
    (164
    )
    
    
    
    
    
    
    (164
    )Change in assets and liabilities (net of effect of acquisitions):Increase in loans and other receivables
    
    
    (129
    )
    
    
    (730
    )
    
    
    (5,212
    )
    
    
    251
    
    
    
    (5,820
    )(Increase) decrease in income taxes receivable
    
    
    
    
    
    
    (2,523
    )
    
    
    1,512
    
    
    
    1,547
    
    
    
    536(Increase) decrease in prepaid expenses and other
    
    
    
    
    
    
    (548
    )
    
    
    93
    
    
    
    
    
    
    
    (455
    )Increase
(decrease) in accounts payable, income taxes payable, accrued
expenses and other liabilities and accrued interest payable
    
    
    7,191
    
    
    
    4,299
    
    
    
    (1,019
    )
    
    
    (1,798
    )
    
    
    8,673Net cash provided by (used in) operating activities
    
    
    56
    
    
    
    (5,292
    )
    
    
    15,461
    
    
    
    
    
    
    
    10,225Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (658
    )
    
    
    
    
    
    
    (658
    )Additions to property and equipment
    
    
    
    
    
    
    (1,564
    )
    
    
    (4,025
    )
    
    
    
    
    
    
    (5,589
    )Net decrease in due from affiliates
    
    
    
    
    
    
    3,180
    
    
    
    
    
    
    
    (3,180
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    
    
    
    
    1,616
    
    
    
    (4,683
    )
    
    
    (3,180
    )
    
    
    (6,247
    )Cash flows from financing activities:Other debt payments
    
    
    
    
    
    
    (44
    )
    
    
    (7
    )
    
    
    
    
    
    
    (51
    )Net increase in revolving credit facilities
    
    
    
    
    
    
    11,000
    
    
    
    
    
    
    
    
    
    
    
    11,000Payment of initial public stock offering costs
    
    
    (397
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (397
    )Payment of debt issuance costs
    
    
    (3
    )
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    (103
    )Net increase (decrease) in due to affiliates and due from parent
    
    
    344
    
    
    
    2,276
    
    
    
    (5,800
    )
    
    
    3,180
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (56
    )
    
    
    13,132
    
    
    
    (5,807
    )
    
    
    3,180
    
    
    
    10,449Effect of
exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    4,419
    
    
    
    
    
    
    
    4,419Net increase in cash and cash equivalents
    
    
    
    
    
    
    9,456
    
    
    
    9,390
    
    
    
    
    
    
    
    18,846Cash and cash equivalents at beginning of period
    
    
    4
    
    
    
    27,124
    
    
    
    42,142
    
    
    
    
    
    
    
    69,270Cash and cash equivalents at end of period
    
    $
    4
    
    
    $
    36,580
    
    
    $
    51,532
    
    
    $
    
    
    
    $
    88,116
 16




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. GOODWILL AND OTHER INTANGIBLES
  Fiscal Year Ending
    

    AmountJune 30,
    

    (in thousands)2006
    
    
    $102.92007
    
    
    79.92008
    
    
    79.92009
    
    
    79.92010
    
    
    79.9Thereafter
    
    
    265.9$688.4
  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
    
    
    (51
    )
    
    
    
    
    
    
    
    
    
    
    (51
    )Acquisitions
    
    
    8,304
    
    
    
    280
    
    
    
    25
    
    
    
    8,609Foreign currency translation adjustments
    
    
    
    
    
    
    2,178
    
    
    
    (2,328
    )
    
    
    (150
    )Balance at December 31, 2005
    
    $
    95,788
    
    
    $
    44,917
    
    
    $
    53,893
    
    
    $
    194,598
 17




---



##### Table of Contents



June 30, 2005
    
    
    December 31, 2005Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationNon-amortized intangible assets:Cost in excess of net assets acquired
    
    $
    205,572
    
    
    $
    20,532
    
    
    $
    214,466
    
    
    $
    20,737Territory rights
    
    
    
    
    
    
    
    
    
    
    181
    
    
    
    $
    205,572
    
    
    $
    20,532
    
    
    $
    214,647
    
    
    $
    20,737Amortized intangible assets:Covenants not to compete
    
    $
    2,510
    
    
    $
    2,510
    
    
    $
    
    
    
    $
    Franchise agreements
    
    
    1,187
    
    
    
    37
    
    
    
    776
    
    
    
    88$
    3,697
    
    
    $
    2,547
    
    
    $
    776
    
    
    $
    88
 5. COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2004
    
    
    2005Net income
    
    $
    1,133
    
    
    $
    3,018
    
    
    $
    1,042
    
    
    $
    5,317Foreign currency translation adjustment
    
    
    10,086
    
    
    
    (3,279
    )
    
    
    14,844
    
    
    
    1,155Fair value adjustments for cash flow hedges
    
    
    (30
    )
    
    
    (252
    )
    
    
    (320
    )
    
    
    (48
    )Total comprehensive income (loss)
    
    $
    11,189
    
    
    $
    (513
    )
    
    $
    15,566
    
    
    $
    6,424
 18




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 6. GEOGRAPHIC SEGMENT INFORMATION
  United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalAs of and
for the three months ended December 31, 2004Identifiable assets
    
    $
    137,490
    
    
    $
    108,784
    
    
    $
    109,914
    
    
    $
    356,188Goodwill and other intangibles, net
    
    
    56,498
    
    
    
    43,234
    
    
    
    57,435
    
    
    
    157,167Sales to unaffiliated customers:Check cashing
    
    
    11,044
    
    
    
    11,746
    
    
    
    9,943
    
    
    
    32,733Consumer lending:Fees from consumer lending
    
    
    20,677
    
    
    
    12,538
    
    
    
    6,323
    
    
    
    39,538Provision
for loan losses and adjustments 
to servicing revenue
    
    
    (5,553
    )
    
    
    (1,951
    )
    
    
    (1,268
    )
    
    
    (8,772
    )Consumer lending, net
    
    
    15,124
    
    
    
    10,587
    
    
    
    5,055
    
    
    
    30,766Money transfer fees
    
    
    1,018
    
    
    
    1,736
    
    
    
    931
    
    
    
    3,685Franchise fees and royalties
    
    
    116
    
    
    
    1,259
    
    
    
    
    
    
    
    1,375Other
    
    
    791
    
    
    
    2,274
    
    
    
    782
    
    
    
    3,847Total sales to unaffiliated customers
    
    
    28,093
    
    
    
    27,602
    
    
    
    16,711
    
    
    
    72,406Interest expense, net
    
    
    8,788
    
    
    
    268
    
    
    
    746
    
    
    
    9,802Depreciation and amortization
    
    
    1,568
    
    
    
    800
    
    
    
    603
    
    
    
    2,971(Loss) income before income taxes
    
    
    (9,101
    )
    
    
    10,775
    
    
    
    4,713
    
    
    
    6,387Income tax provision
    
    
    53
    
    
    
    3,848
    
    
    
    1,353
    
    
    
    5,254For the
six months ended December 31, 2004Sales to unaffiliated customers:Check cashing
    
    $
    21,765
    
    
    $
    22,145
    
    
    $
    19,185
    
    
    $
    63,095Consumer lending:Fees from consumer lending
    
    
    40,367
    
    
    
    24,019
    
    
    
    12,359
    
    
    
    76,745Provision for loan losses and adjustments

to servicing revenue
    
    
    (11,283
    )
    
    
    (3,869
    )
    
    
    (3,057
    )
    
    
    (18,209
    )Consumer lending, net
    
    
    29,084
    
    
    
    20,150
    
    
    
    9,302
    
    
    
    58,536Money transfer fees
    
    
    2,076
    
    
    
    3,356
    
    
    
    1,761
    
    
    
    7,193Franchise fees and royalties
    
    
    116
    
    
    
    2,098
    
    
    
    
    
    
    
    2,214Other
    
    
    1,419
    
    
    
    4,552
    
    
    
    1,530
    
    
    
    7,501Total sales to unaffiliated customers
    
    
    54,460
    
    
    
    52,301
    
    
    
    31,778
    
    
    
    138,539Interest expense, net
    
    
    17,395
    
    
    
    592
    
    
    
    1,484
    
    
    
    19,471Depreciation and amortization
    
    
    3,095
    
    
    
    1,490
    
    
    
    1,071
    
    
    
    5,656(Loss) income before income taxes
    
    
    (17,492
    )
    
    
    19,239
    
    
    
    7,903
    
    
    
    9,650Income tax provision
    
    
    (829
    )
    
    
    7,089
    
    
    
    2,348
    
    
    
    8,608
 19




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 6. GEOGRAPHIC SEGMENT INFORMATION (continued)
 United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalAs of and for the three months
ended December 31, 2005Identifiable assets
    
    $
    178,244
    
    
    $
    124,556
    
    
    $
    113,334
    
    
    $
    416,134Goodwill and other intangibles, net
    
    
    95,788
    
    
    
    44,917
    
    
    
    53,893
    
    
    
    194,598Sales to unaffiliated customers:Check cashing
    
    
    11,662
    
    
    
    12,891
    
    
    
    10,671
    
    
    
    35,224Consumer lending:Fees from consumer lending
    
    
    15,968
    
    
    
    17,419
    
    
    
    7,707
    
    
    
    41,094Provision for loan losses and adjustments

to servicing revenue
    
    
    (3,398
    )
    
    
    (2,736
    )
    
    
    (1,614
    )
    
    
    (7,748
    )Consumer lending, net
    
    
    12,570
    
    
    
    14,683
    
    
    
    6,093
    
    
    
    33,346Money transfer fees
    
    
    1,019
    
    
    
    2,119
    
    
    
    1,124
    
    
    
    4,262Franchise fees and royalties
    
    
    1,306
    
    
    
    1,181
    
    
    
    
    
    
    
    2,487Other
    
    
    1,702
    
    
    
    2,688
    
    
    
    958
    
    
    
    5,348Total sales to unaffiliated customers
    
    
    28,259
    
    
    
    33,562
    
    
    
    18,846
    
    
    
    80,667Interest expense, net
    
    
    7,120
    
    
    
    (386
    )
    
    
    704
    
    
    
    7,438Depreciation and amortization
    
    
    1,222
    
    
    
    893
    
    
    
    606
    
    
    
    2,721(Loss) income before income taxes
    
    
    (3,388
    )
    
    
    11,505
    
    
    
    1,016
    
    
    
    9,133Income tax provision
    
    
    1,471
    
    
    
    4,385
    
    
    
    259
    
    
    
    6,115For the six months
ended December 31, 2005Sales to unaffiliated customers:Check cashing
    
    $
    23,015
    
    
    $
    25,091
    
    
    $
    21,465
    
    
    $
    69,571Consumer lending:Fees from consumer lending
    
    
    29,760
    
    
    
    32,476
    
    
    
    15,096
    
    
    
    77,332Provision for loan losses and adjustments

to servicing revenue
    
    
    (7,882
    )
    
    
    (5,462
    )
    
    
    (3,177
    )
    
    
    (16,521
    )Consumer lending, net
    
    
    21,878
    
    
    
    27,014
    
    
    
    11,919
    
    
    
    60,811Money transfer fees
    
    
    2,044
    
    
    
    4,033
    
    
    
    2,143
    
    
    
    8,220Franchise fees and royalties
    
    
    2,927
    
    
    
    2,476
    
    
    
    
    
    
    
    5,403Other
    
    
    3,935
    
    
    
    5,306
    
    
    
    1,886
    
    
    
    11,127Total sales to unaffiliated customers
    
    
    53,799
    
    
    
    63,920
    
    
    
    37,413
    
    
    
    155,132Interest expense (income), net
    
    
    13,787
    
    
    
    (531
    )
    
    
    1,423
    
    
    
    14,679Depreciation and amortization
    
    
    2,607
    
    
    
    1,647
    
    
    
    1,224
    
    
    
    5,478(Loss) income before income taxes
    
    
    (14,068
    )
    
    
    24,255
    
    
    
    5,783
    
    
    
    15,970Income tax provision
    
    
    (378
    )
    
    
    9,383
    
    
    
    1,648
    
    
    
    10,653
 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
  20




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (continued)
   8. CONTINGENT LIABILITIES
  Canadian Legal Proceedings
     21




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 8. CONTINGENT LIABILITIES (continued)
    California Legal Proceedings
 (Woods) (Castillo) (Chin) (Williams) Woods Williams Chin Castillo Woods
  We The People Legal Proceedings
   22




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 8. CONTINGENT LIABILITIES (continued)
      ex parte
    23




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 9. ACQUISITIONS
      WTPPurchase price
    
    $
    14.0Net assets acquired:Purchased franchise agreements
    
    
    (1.2
    )Refundable deposits
    
    
    7.6Other (assets) and liabilities
    
    
    1.1Goodwill
    
    $
    21.5
   24




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 SUPPLEMENTAL STATISTICAL DATA
 December 31,2004
    
    
    2005Company Operating Data:Stores in operation:Company-owned
    
    
    656
    
    
    
    747Franchised stores and check cashing merchants
    
    
    474
    
    
    
    582Total
    
    
    1,130
    
    
    
    1,329
 Three Months Ended
    
    Six Months EndedDecember 31,
    
    December 31,2004
    
    2005
    
    2004
    
    2005Check Cashing Data:Face amount of checks cashed (in millions)
    
    $
    883
    
    
    $
    941
    
    
    $
    1,699
    
    
    $
    1,858Face amount of average check
    
$
    418
    
    
    $
    441
    
    
$
    411
    
    
$
    440Face amount of average check (excluding Canada
and the United Kingdom)
    
$
    368
    
    
$
    393
    
    
$
    368
    
    
$
    391Average fee per check
    
$
    15.49
    
    
$
    16.50
    
    
$
    15.26
    
    
$
    16.47Number of checks cashed (in thousands)
    
    
    2,113
    
    
    
    2,135
    
    
    
    4,135
    
    
    
    4,223
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2004
    
    
    2005Check Cashing Collections Data:Face amount of returned checks (in thousands)
    
    $
    7,895
    
    
    $
    9,639
    
    
    $
    15,496
    
    
    $
    19,906Collections (in thousands)
    
    
    (5,481
    )
    
    
    (6,993
    )
    
    
    (10,856
    )
    
    
    (14,291
    )Net write-offs (in thousands)
    
    $
    2,414
    
    
    $
    2,646
    
    
    $
    4,640
    
    
    $
    5,615Collections as a percentage of returned checks
    
    
    69.4
    %
    
    
    72.5
    %
    
    
    70.1
    %
    
    
    71.8
    %Net write-offs as a percentage of check cashing
revenues
    
    
    7.4
    %
    
    
    7.5
    %
    
    
    7.4
    %
    
    
    8.1
    %Net write-offs as a percentage of the face amount
of checks cashed
    
    
    0.27
    %
    
    
    0.28
    %
    
    
    0.27
    %
    
    
    0.30
    %
 25




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2004
    
    
    2005
    
    
    2004
    
    
    2005U.S. company funded consumer loan originations (1) (3)
    
    $
    18,507
    
    
    $
    61,960
    
    
    $
    37,069
    
    
    $
    129,596Canadian company funded consumer loan originations (2)
    
    
    118,027
    
    
    
    143,981
    
    
    
    225,168
    
    
    
    273,073U.K. company funded consumer loan originations (2)
    
    
    42,780
    
    
    
    46,740
    
    
    
    85,478
    
    
    
    94,478Total company funded consumer loan originations
    
    $
    179,314
    
    
    $
    252,681
    
    
    $
    347,715
    
    
    $
    497,147Servicing revenues, net (3)
    
    $
    13,868
    
    
    $
    3,933
    
    
    $
    26,018
    
    
    $
    5,341U.S. company funded consumer loan revenues (3)
    
    
    2,711
    
    
    
    10,415
    
    
    
    5,485
    
    
    
    20,254Canadian company funded consumer loan revenues
    
    
    12,538
    
    
    
    17,419
    
    
    
    24,018
    
    
    
    32,476U.K. company funded consumer loan revenues
    
    
    6,323
    
    
    
    7,708
    
    
    
    12,359
    
    
    
    15,097Provision for loan losses on company funded loans
    
    
    (4,674
    )
    
    
    (6,129
    )
    
    
    (9,344
    )
    
    
    (12,357
    )Total consumer lending revenues, net
    
    $
    30,766
    
    
    $
    33,346
    
    
    $
    58,536
    
    
    $
    60,811Gross charge-offs of company funded consumer loans (3)
    
    $
    16,476
    
    
    $
    26,753
    
    
    $
    32,554
    
    
    $
    51,520Recoveries of company funded consumer loans (3)
    
    
    (11,912
    )
    
    
    (20,670
    )
    
    
    (23,380
    )
    
    
    (40,401
    )Net charge-offs on company funded consumer loans
    
    $
    4,564
    
    
    $
    6,083
    
    
    $
    9,174
    
    
    $
    11,119Gross charge-offs of company funded consumer loans
as a percentage of total company funded consumer loan
originations
    
    
    9.2
    %
    
    
    10.6
    %
    
    
    9.4
    %
    
    
    10.4
    %Recoveries of company funded consumer loans as a
percentage of total company funded consumer loan
originations
    
    
    6.6
    %
    
    
    8.2
    %
    
    
    6.7
    %
    
    
    8.1
    %Net charge-offs on company funded consumer loans
as a percentage of total company funded consumer loan
originations
    
    
    2.5
    %
    
    
    2.4
    %
    
    
    2.6
    %
    
    
    2.2
    %
 
 (1)
    
    Our company operated stores in the United States originate company-funded and
bank-funded short-term consumer loans.(2)
    
    All consumer loans originated in Canada and the United Kingdom are company funded.(3)
    
    The variance between the two periods is primarily related to our transition in the
United States for short-term consumer loans from the bank-funded to the company-funded
model. 26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following is a discussion and analysis of the financial condition and results of operations for
Dollar Financial Corp. for the three and six months ended December 31, 2005 and 2004. References
in this section to we, our, ours, or us are to Dollar Financial Corp. and its wholly owned
subsidiaries, except as the context otherwise requires. References toOPCO are to our wholly owned
operating subsidiary, Dollar Financial Group, Inc. For a separate discussion and analysis of the
financial condition and results of operations of OPCO, see Managements Discussion and Analysis of
Financial Condition and Results of Operations included in OPCOs quarterly report on Form 10-Q
(File No. 333-18221) for the period ended December 31, 2005.
 Executive Summary
      Impact of Hurricanes Katrina and Rita on our Operations
   27




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##### Table of Contents



Discussion of Critical Accounting Policies
   Revenue Recognition
          28




---



##### Table of Contents



Company-Funded Consumer Loan Loss Reserves Policy
   Check Cashing Returned Item Policy
  Goodwill
  Income Taxes
  29




---



##### Table of Contents



Results of Operations
 Revenue Analysis
 Three Months Ended December 31,
    
    
    Six Months Ended December 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    
    revenue)
    
    
    ($ in thousands)
    
    
    revenue)2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005Check cashing
    
    $
    32,733
    
    
    $
    35,224
    
    
    
    45.2
    %
    
    
    43.7
    %
    
    $
    63,095
    
    
    $
    69,571
    
    
    
    45.5
    %
    
    
    44.8
    %Consumer lending revenue, net
    
    
    30,766
    
    
    
    33,346
    
    
    
    42.5
    %
    
    
    41.3
    %
    
    
    58,536
    
    
    
    60,811
    
    
    
    42.3
    %
    
    
    39.2
    %Money transfer fees
    
    
    3,685
    
    
    
    4,262
    
    
    
    5.1
    %
    
    
    5.3
    %
    
    
    7,193
    
    
    
    8,220
    
    
    
    5.2
    %
    
    
    5.3
    %Franchise fees and royalties
    
    
    1,375
    
    
    
    2,487
    
    
    
    1.9
    %
    
    
    3.1
    %
    
    
    2,214
    
    
    
    5,403
    
    
    
    1.6
    %
    
    
    3.5
    %Other revenue
    
    
    3,847
    
    
    
    5,348
    
    
    
    5.3
    %
    
    
    6.6
    %
    
    
    7,501
    
    
    
    11,127
    
    
    
    5.4
    %
    
    
    7.2
    %Total revenue
    
    $
    72,406
    
    
    $
    80,667
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    138,539
    
    
    $
    155,132
    
    
    
    100.0
    %
    
    
    100.0
    %
 The Three Months Ended December 31, 2005 compared to the Three Months Ended December 31, 2004
   The Six Months Ended December 31, 2005 compared to the Six Months Ended December 31, 2004
   30




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##### Table of Contents



Store and Regional Expense Analysis
 Three Months Ended December 31,
    
    
    Six Months Ended December 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    
    revenue)
    
    
    ($ in thousands)
    
    
    revenue)2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005Salaries and benefits
    
    $
    22,456
    
    
    $
    26,004
    
    
    
    31.0
    %
    
    
    32.2
    %
    
    $
    43,343
    
    
    $
    51,195
    
    
    
    31.3
    %
    
    
    33.0
    %Occupancy
    
    
    5,612
    
    
    
    6,752
    
    
    
    7.8
    %
    
    
    8.4
    %
    
    
    11,006
    
    
    
    13,470
    
    
    
    7.9
    %
    
    
    8.7
    %Depreciation
    
    
    1,821
    
    
    
    1,835
    
    
    
    2.5
    %
    
    
    2.3
    %
    
    
    3,575
    
    
    
    3,667
    
    
    
    2.6
    %
    
    
    2.4
    %Returned checks, net and cash shortages
    
    
    2,738
    
    
    
    3,128
    
    
    
    3.8
    %
    
    
    3.9
    %
    
    
    5,222
    
    
    
    6,387
    
    
    
    3.8
    %
    
    
    4.1
    %Telephone and communications
    
    
    1,477
    
    
    
    1,445
    
    
    
    2.0
    %
    
    
    1.8
    %
    
    
    2,950
    
    
    
    2,866
    
    
    
    2.1
    %
    
    
    1.8
    %Advertising
    
    
    2,289
    
    
    
    2,633
    
    
    
    3.2
    %
    
    
    3.3
    %
    
    
    5,121
    
    
    
    4,822
    
    
    
    3.7
    %
    
    
    3.1
    %Bank Charges
    
    
    977
    
    
    
    1,135
    
    
    
    1.3
    %
    
    
    1.4
    %
    
    
    1,913
    
    
    
    2,244
    
    
    
    1.4
    %
    
    
    1.4
    %Armored carrier expenses
    
    
    890
    
    
    
    1,036
    
    
    
    1.2
    %
    
    
    1.3
    %
    
    
    1,714
    
    
    
    2,022
    
    
    
    1.2
    %
    
    
    1.3
    %Other
    
    
    7,179
    
    
    
    8,690
    
    
    
    9.9
    %
    
    
    10.7
    %
    
    
    14,271
    
    
    
    15,999
    
    
    
    10.3
    %
    
    
    10.4
    %Total store and regional expenses
    
    $
    45,439
    
    
    $
    52,658
    
    
    
    62.7
    %
    
    
    65.3
    %
    
    $
    89,115
    
    
    $
    102,672
    
    
    
    64.3
    %
    
    
    66.2
    %
 The Three Months Ended December 31, 2005 compared to the Three Months Ended December 31, 2004
  The Six Months Ended December 31, 2005 compared to the Six Months Ended December 31, 2004
  31




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##### Table of Contents



Corporate and Other Expense Analysis
 Three Months Ended December 31,
    
    Six Months Ended December 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    revenue)
    
    ($ in thousands)
    
    revenue)2004
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005Corporate expenses
    
    $
    9,519
    
    
    $
    10,410
    
    
    
    13.1
    %
    
    
    12.9
    %
    
    $
    17,750
    
    
    $
    19,582
    
    
    
    12.8
    %
    
    
    12.6
    %Management fee
    
    
    251
    
    
    
    
    
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    528
    
    
    
    
    
    
    
    0.4
    %
    
    
    0.0
    %Other depreciation and amortization
    
    
    1,150
    
    
    
    886
    
    
    
    1.6
    %
    
    
    1.1
    %
    
    
    2,081
    
    
    
    1,811
    
    
    
    1.5
    %
    
    
    1.2
    %Interest expense
    
    
    9,802
    
    
    
    7,438
    
    
    
    13.5
    %
    
    
    9.2
    %
    
    
    19,471
    
    
    
    14,679
    
    
    
    14.1
    %
    
    
    9.5
    %Other
    
    
    (142
    )
    
    
    142
    
    
    
    (0.2
    %)
    
    
    0.2
    %
    
    
    (56
    )
    
    
    418
    
    
    
    0.0
    %
    
    
    0.3
    %Income tax provision
    
    
    5,254
    
    
    
    6,115
    
    
    
    7.3
    %
    
    
    7.6
    %
    
    
    8,608
    
    
    
    10,653
    
    
    
    6.2
    %
    
    
    6.9
    %
 The Three Months Ended December 31, 2005 compared to the Three Months Ended December 31, 2004
 Corporate Expenses
  Management Fees
  Other Depreciation and Amortization
  Interest Expense
  Income Tax Provision
  32




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##### Table of Contents



The Six Months Ended December 31, 2005 compared to the Six Months Ended December 31, 2004
 Corporate Expenses
  Management Fees
  Other Depreciation and Amortization
  Interest Expense
  Income Tax Provision
  Changes in Financial Condition
  33




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##### Table of Contents



Liquidity and Capital Resources
     Revolving Credit Facilities.
 Domestic Revolving Credit Facility.
 Canadian Overdraft Facility.
 Long-Term Debt
 Operating Leases.
 34




---



##### Table of Contents



Payments Due by Period (in thousands)Less than
    
    
    1  3
    
    
    4  5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsRevolving credit facilities
    
    $
    20,500
    
    
    $
    20,500
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-term debt:9.75% Senior Notes due 2011(1)
    
    
    271,626
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271,626Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    78,103
    
    
    
    20,612
    
    
    
    32,286
    
    
    
    17,225
    
    
    
    7,980Purchase obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities reflected on
the registrants balance sheet under
GAAP
    
    
    733
    
    
    
    366
    
    
    
    367
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    370,962
    
    
    $
    41,478
    
    
    $
    32,653
    
    
    $
    17,225
    
    
    $
    279,606
 
 (1)
    
    $1,626 is the unamortized premium on the 9.75% Senior Notes due 2011.  Balance Sheet Variations
 December 31, 2005 compared to June 30, 2005
        35




---



##### Table of Contents



Seasonality and Quarterly Fluctuations
  Sarbanes-Oxley Act of 2002: Section 404 Compliance
  Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
    36




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Generally
  
    
    interest rates on debt; and
    
    foreign exchange rates generating translation gains and losses.
  Interest Rates
  Foreign Exchange Rates
    37




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Control and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  Canadian Legal Proceedings
       38




---



##### Table of Contents



California Legal Proceedings
 (Woods) (Castillo) (Chin) (Williams) Woods Williams Chin Castillo Woods
  We The People Legal Proceedings
       39




---



##### Table of Contents



ex parte
   
 Item 4. Submission of Matters to a Vote of Security Holders.
  Votes For:
    
    Votes Withheld:Jeffrey A. Weiss
    
    
    12,940,630
    
    
    
    1,816,533Donald Gayhardt
    
    
    12,940,630
    
    
    
    1,816,533
  Votes For:
    
    
    14,594,013Votes Against:
    
    
    162,850Abstentions:
    
    
    300
 
 Item 6. Exhibits
 Exhibit No.
    
    Description of Document31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of President31.3
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certification of Chief Executive Officer32.2
    
    Section 1350 Certification of President32.3
    
    Section 1350 Certification of Chief Financial Officer
 40




---



##### Table of Contents



SIGNATURE
  DOLLAR FINANCIAL CORP.Date: February 13, 2006
    
    
    
    *By:
    
    /s/ Randy UnderwoodName:
    
    Randy UnderwoodTitle:
    
    Executive Vice President and
Chief Financial Officer
(principal financial and
chief accounting officer)
 
 *
    
    The signatory hereto is the principal financial and chief accounting officer and has been
duly authorized to sign on behalf of the registrant. 41