##### 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 March 31, 2007
 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
    
    23-2636866(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 1436 LANCASTER AVENUE,
BERWYN, PENNSYLVANIA 19312
 610-296-3400
 None
 Ö þ o
  o þ o
 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, 2006 and March 31, 2007 (unaudited)
    
    
    3Interim Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2006 and 2007
    
    
    4Interim Consolidated Statements of Shareholders Equity as of June 30, 2006 and March 31, 2007 (unaudited)
    
    
    5Interim Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2006 and 2007
    
    
    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
    
    
    41Item 4.
    
    Controls and Procedures
    
    
    42PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    43Item 1A.
    
    Risk Factors
    
    
    46Item 6.
    
    Exhibits
    
    
    46Signature
    
    
    47Rule 13a-14(a)/15d-14(a) Certification of Chief Executive OfficerRule 13(a)-14(a)/15d-14a 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,
    
    
    March 31,2006
    
    
    2007(unaudited)ASSETSCash and cash equivalents
    
    $
    120,221
    
    
    $
    134,202Restricted cash
    
    
    80,750
    
    
    
    1,651Loans receivable, net:Loans receivable
    
    
    58,997
    
    
    
    84,768Less: Allowance for loan losses
    
    
    (5,365
    )
    
    
    (9,870
    )Loans receivable, net
    
    
    53,632
    
    
    
    74,898Other consumer lending receivables, net of an allowance of $11,693 and $16,150
    
    
    7,545
    
    
    
    11,818Other receivables
    
    
    8,680
    
    
    
    10,855Prepaid expenses
    
    
    10,166
    
    
    
    9,555Deferred tax asset, net of valuation allowance of $47,516 and $87,890
    
    
    185
    
    
    
    1,190Property and equipment, net of accumulated
depreciation of $73,714 and $80,660
    
    
    40,625
    
    
    
    50,350Goodwill and other intangibles, net of accumulated
amortization of $21,307 and $21,135
    
    
    218,566
    
    
    
    324,622Debt issuance costs, net of accumulated
amortization of $4,630 and $716
    
    
    9,437
    
    
    
    10,168Other
    
    
    2,018
    
    
    
    3,148$
    551,825
    
    
    $
    632,457LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    23,438
    
    
    $
    34,814Income taxes payable
    
    
    10,963
    
    
    
    10,957Accrued expenses and other liabilities
    
    
    39,895
    
    
    
    27,506Deferred tax liability
    
    
    4,539
    
    
    
    5,765Revolving credit facilities
    
    
    39,000
    
    
    
    47,700Long-term debt
    
    
    272,037
    
    
    
    377,489Shareholders equity:Common stock, $0.001 par value: 55,500,000 shares authorized;
23,399,107 shares and 23,841,837 shares issued and outstanding at
June 30, 2006 and March 31, 2007, respectively
    
    
    23
    
    
    
    24Additional paid-in capital
    
    
    242,594
    
    
    
    247,826Accumulated deficit
    
    
    (114,920
    )
    
    
    (157,404
    )Accumulated other comprehensive income
    
    
    34,256
    
    
    
    37,780Total shareholders equity
    
    
    161,953
    
    
    
    128,226$
    551,825
    
    
    $
    632,457
  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
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2007
    
    
    2006
    
    
    2007Revenues:Check cashing
    
    $
    36,288
    
    
    $
    42,683
    
    
    $
    105,859
    
    
    $
    122,590Consumer lending:Fees from consumer lending
    
    
    41,343
    
    
    
    60,195
    
    
    
    118,675
    
    
    
    165,819Provision for loan losses and adjustment to
servicing income
    
    
    (6,352
    )
    
    
    (12,542
    )
    
    
    (22,873
    )
    
    
    (32,646
    )Consumer lending, net
    
    
    34,991
    
    
    
    47,653
    
    
    
    95,802
    
    
    
    133,173Money transfer fees
    
    
    4,460
    
    
    
    5,128
    
    
    
    12,680
    
    
    
    15,232Franchise fees and royalties
    
    
    2,728
    
    
    
    1,582
    
    
    
    8,131
    
    
    
    5,606Other
    
    
    7,992
    
    
    
    10,016
    
    
    
    19,119
    
    
    
    24,272Total revenues
    
    
    86,459
    
    
    
    107,062
    
    
    
    241,591
    
    
    
    300,873Store and regional expenses:Salaries and benefits
    
    
    27,095
    
    
    
    33,661
    
    
    
    78,290
    
    
    
    94,756Occupancy
    
    
    6,914
    
    
    
    8,225
    
    
    
    20,384
    
    
    
    23,808Depreciation
    
    
    1,843
    
    
    
    2,571
    
    
    
    5,510
    
    
    
    6,782Returned checks, net and cash shortages
    
    
    2,697
    
    
    
    3,899
    
    
    
    9,084
    
    
    
    11,296Telephone and communications
    
    
    1,405
    
    
    
    1,717
    
    
    
    4,271
    
    
    
    4,734Advertising
    
    
    1,943
    
    
    
    2,088
    
    
    
    6,765
    
    
    
    7,546Bank charges and armored carrier services
    
    
    2,348
    
    
    
    2,833
    
    
    
    6,614
    
    
    
    7,670Other
    
    
    8,701
    
    
    
    10,366
    
    
    
    24,700
    
    
    
    31,251Total store and regional expenses
    
    
    52,946
    
    
    
    65,360
    
    
    
    155,618
    
    
    
    187,843Store and regional margin
    
    
    33,513
    
    
    
    41,702
    
    
    
    85,973
    
    
    
    113,030Corporate and other expenses:Corporate expenses
    
    
    11,453
    
    
    
    13,627
    
    
    
    31,035
    
    
    
    39,632Other depreciation and amortization
    
    
    878
    
    
    
    855
    
    
    
    2,689
    
    
    
    2,531Interest expense, net
    
    
    7,566
    
    
    
    8,082
    
    
    
    22,245
    
    
    
    23,071Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,784Goodwill impairment and other charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,464Mark to market  Term Loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,619Reserve for (proceeds from) litigation settlements
    
    
    5,800
    
    
    
    
    
    
    
    5,800
    
    
    
    (3,256
    )Other, net
    
    
    300
    
    
    
    228
    
    
    
    718
    
    
    
    407Income (loss) before income taxes
    
    
    7,516
    
    
    
    18,910
    
    
    
    23,486
    
    
    
    (12,222
    )Income tax provision
    
    
    7,807
    
    
    
    7,218
    
    
    
    18,460
    
    
    
    30,262Net income (loss)
    
    $
    (291
    )
    
    $
    11,692
    
    
    $
    5,026
    
    
    $
    (42,484
    )Net income (loss) per share:Basic
    
    $
    (0.02
    )
    
    $
    0.49
    
    
    $
    0.28
    
    
    $
    (1.81
    )Diluted
    
    $
    (0.02
    )
    
    $
    0.48
    
    
    $
    0.27
    
    
    $
    (1.81
    )Weighted average shares outstanding:Basic
    
    
    18,119,199
    
    
    
    23,696,488
    
    
    
    18,103,530
    
    
    
    23,486,816Diluted
    
    
    18,119,199
    
    
    
    24,530,853
    
    
    
    18,437,187
    
    
    
    23,486,816
  4




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DOLLAR FINANCIAL CORP.
 
 INTERIM
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In thousands, except share data)
 AccumulatedAdditional
    
    
    Accumulated
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Income
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Capital
    
    
    (Deficit)
    
    
    Income
    
    
    EquityBalance,
June 30, 2006 (audited)
    
    
    23,399,107
    
    
    
    23
    
    
    
    242,594
    
    
    
    (114,920
    )
    
    
    34,256
    
    
    
    161,953Comprehensive income:Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,556
    
    
    
    4,556Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,032
    )
    
    
    (1,032
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,484
    )
    
    
    
    
    
    
    (42,484
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,960
    )Secondary public stock offering
    
    
    
    
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    (41
    )Restricted stock grants
    
    
    18,718
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock vested
    
    
    
    
    
    
    
    
    
    
    299
    
    
    
    
    
    
    
    
    
    
    
    299Stock options excercised
    
    
    424,012
    
    
    
    1
    
    
    
    3,948
    
    
    
    
    
    
    
    
    
    
    
    3,949Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    1,026
    
    
    
    
    
    
    
    
    
    
    
    1,026Balance, March 31, 2007
    
    
    23,841,837
    
    
    $
    24
    
    
    $
    247,826
    
    
    $
    (157,404
    )
    
    $
    37,780
    
    
    $
    128,226
  5




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Nine Months EndedMarch 31,2006
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    5,026
    
    
    $
    (42,484
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Depreciation and amortization
    
    
    9,501
    
    
    
    10,533Loss on extinguishment of debt
    
    
    
    
    
    
    31,784Provision for loan losses and adjustment to servicing revenue
    
    
    22,873
    
    
    
    32,646Reserve for litigation settlement
    
    
    5,800
    
    
    
    Non-cash stock compensation
    
    
    88
    
    
    
    1,325Losses on store closings and sales
    
    
    649
    
    
    
    539Goodwill impairment
    
    
    
    
    
    
    28,482Foreign currency loss on revaluation of debt
    
    
    5
    
    
    
    6,248Deferred tax provision
    
    
    1,801
    
    
    
    274Other, net
    
    
    
    
    
    
    (201
    )Change in assets and liabilities (net of effect of acquisitions):Increase in loans and other receivables
    
    
    (27,468
    )
    
    
    (45,082
    )Increase in income taxes receivable
    
    
    (550
    )
    
    
    Decrease in prepaid expenses and other
    
    
    1,238
    
    
    
    836Increase (decrease) in accounts payable, accrued expenses
and other liabilities
    
    
    3,269
    
    
    
    (7,098
    )Net cash provided by operating activities
    
    
    22,232
    
    
    
    17,802Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (19,970
    )
    
    
    (149,052
    )Additions to property and equipment
    
    
    (11,899
    )
    
    
    (15,038
    )Net cash used in investing activities
    
    
    (31,869
    )
    
    
    (164,090
    )Cash flows from financing activities:Decrease in restricted cash
    
    
    
    
    
    
    79,099Proceeds from term loans
    
    
    
    
    
    
    375,000Secondary offering costs
    
    
    
    
    
    
    (41
    )Proceeds from the exercise of stock options
    
    
    395
    
    
    
    3,949Other debt (payments) borrowings
    
    
    642
    
    
    
    (2,146
    )Partial prepayment of 9.75% Senior Notes due 2011
    
    
    
    
    
    
    (292,424
    )Net increase in revolving credit facilities
    
    
    27,500
    
    
    
    8,912Payment of debt issuance costs
    
    
    (1,218
    )
    
    
    (10,830
    )Net cash provided by financing activities
    
    
    27,319
    
    
    
    161,519Effect of exchange rate changes on cash and cash equivalents
    
    
    1,122
    
    
    
    (1,250
    )Net increase in cash and cash equivalents
    
    
    18,804
    
    
    
    13,981Cash and cash equivalents at beginning of period
    
    
    92,504
    
    
    
    120,221Cash and cash equivalents at end of period
    
    $
    111,308
    
    
    $
    134,202
  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
  7




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2007
    
    
    2006
    
    
    2007Net income (loss)
    
    $
    (291
    )
    
    $
    11,692
    
    
    $
    5,026
    
    
    $
    (42,484
    )Reconciliation of denominator:Weighted average of common shares outstanding  basic 1
    
    
    18,119
    
    
    
    23,697
    
    
    
    18,104
    
    
    
    23,487Effect of dilutive stock options and restricted stock 2
    
    
    
    
    
    
    834
    
    
    
    333
    
    
    
    Weighted average number of common shares outstanding  diluted
    
    
    18,119
    
    
    
    24,531
    
    
    
    18,437
    
    
    
    23,487
 
 1
    
    Excludes 42,309 and 111,294 shares of unvested restricted stock, which is included
in total outstanding common shares as of March 31, 2006 and 2007, respectively.2
    
    The effect of dilutive stock options and unvested restricted stock was determined
under the treasury stock method. Due to the net loss during the three month period ended March 31,
2006 and the nine-month period ended March 31, 2007, the effect of the dilutive options and
unvested shares of restricted stock was considered to be anti-dilutive, and therefore was not
included in the calculation of diluted earnings per share. Stock Based Employee Compensation
 Share-Based Payment , Accounting for Stock-Based Compensation , Accounting for Stock Issued to Employees
  8




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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
    
    Nine months EndedMarch 31,
    
    March 31,2006
    
    2007
    
    2006
    
    2007Expected volatility
    
    
    51.0
    %
    
    
    N/A
    
    
    
    45.6
    %
    
    
    48.0
    %Expected life (years)
    
    
    6.5
    
    
    
    N/A
    
    
    
    6.0
    
    
    
    6.0Risk-free interest rate
    
    
    4.58
    %
    
    
    N/A
    
    
    
    4.24
    %
    
    
    4.71
    %Expected dividends
    
    None
    
    
    N/A
    
    
    None
    
    NoneWeighted average fair value
    
    $
    8.37
    
    
    
    N/A
    
    
    $
    6.20
    
    
    $
    11.02
  WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    Intrinsic ValueOptions
    
    Price
    
    Term (years)
    
    ($ in millions)Options outstanding at June 30, 2006
(1,622,642 shares exercisable)
    
    
    1,715,142
    
    
    $
    12.07Granted
    
    
    245,375
    
    
    $
    21.16Exercised
    
    
    (424,012
    )
    
    $
    9.31Forfeited and expired
    
    
    (14,705
    )
    
    $
    19.20Options outstanding at March 31, 2007
    
    
    1,521,800
    
    
    $
    14.24
    
    
    
    8.0
    
    
    $
    16.8Exercisable at March 31, 2007
    
    
    1,258,522
    
    
    $
    13.16
    
    
    
    7.8
    
    
    $
    15.3
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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)
   WeightedAverageRestricted
    
    
    Grant-DateStock Awards
    
    
    Fair-ValueOutstanding at June 30, 2006
    
    
    107,841
    
    
    $
    18.36Granted
    
    
    26,924
    
    
    
    23.87Vested
    
    
    (15,265
    )
    
    
    19.54Forfeited
    
    
    (8,206
    )
    
    
    18.36Outstanding at March 31, 2007
    
    
    111,294
    
    
    $
    19.53
  Goodwill and Other Intangible Assets
 Goodwill
and Other Intangible Assets.
    10




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  Accounting for the Impairment or Disposal of Long-lived Assets.
  Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes Accounting for Income
Taxes
 Fair
Value Measurements
 Fair Value Option for Financial Assets
and Financial Liabilities  Including an Amendment of FASB
Statement No. 115 , Accounting for Certain Investments in Debt and Equity Securities
 11




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 2. SUPPLEMENTARY CASH FLOW INFORMATION
 Non-cash transactions
  3. WE THE PEOPLE RESTRUCTURING PLAN
   4. DEBT
    Refinancing of Existing Credit Facility
  12




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DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. DEBT (continued)
      5. LOSS ON EXTINGUISHMENT OF DEBT
  Three months Ended
    
    
    Nine months EndedMarch 31,
    
    
    March 31,2006
    
    
    2007
    
    
    2006
    
    
    2007Call Premium
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6.8Tender premium
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17.6Write-off of previously capitalized deferred issuance costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.8Write-off of original issue premium
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.4
    )$
    
    
    
    $
    
    
    
    $
    
    
    
    $
    31.8
 13




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 6. ACQUISITIONS
       Balance at June 30, 2005
    
    $
    205.6Acquisitions:October 2005 We The People
    
    
    1.1March 2006 Canadian acquisition
    
    
    11.9Other
    
    
    0.3Purchase adjustments:American earn-out
    
    
    2.0We The People  refundable deposits
    
    
    2.6Foreign currency adjustment
    
    
    7.2Balance at June 30, 2006
    
    
    230.7Acquisitions:82 Store Canadian Acquisition
    
    
    68.6Money Corner Acquisition
    
    
    24.8Other
    
    
    1.1Impairment loss
    
    
    (22.5
    )Foreign currency adjustment
    
    
    (1.3
    )Balance at March 31, 2007
    
    $
    301.3
 14




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 6. ACQUISITIONS (continued)
  Three months Ended
    
    Nine months EndedMarch 31,
    
    March 31,2006
    
    2007
    
    2006
    
    2007(in millions, except per share amounts)Revenues
    
    $
    98.6
    
    
    $
    107.1
    
    
    $
    280.7
    
    
    $
    318.7Net income (loss)
    
    $
    1.2
    
    
    $
    11.7
    
    
    $
    9.8
    
    
    $
    (40.7
    )Net income (loss) per common share  basic
    
    $
    0.06
    
    
    $
    0.49
    
    
    $
    0.54
    
    
    $
    (1.73
    )Net income (loss) per common share  diluted
    
    $
    0.06
    
    
    $
    0.48
    
    
    $
    0.53
    
    
    $
    (1.73
    )
 7. GOODWILL AND OTHER INTANGIBLES
  United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalBalance 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
    
    
    
    218,566Amortization of other intangibles
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    (58
    )Acquisitions
    
    
    25,101
    
    
    
    109,201
    
    
    
    1,552
    
    
    
    135,854Impairment loss
    
    
    (28,469
    )
    
    
    
    
    
    
    
    
    
    
    (28,469
    )Foreign currency translation adjustments
    
    
    
    
    
    
    (5,188
    )
    
    
    3,917
    
    
    
    (1,271
    )Balance at March 31, 2007
    
    $
    94,434
    
    
    $
    165,105
    
    
    $
    65,083
    
    
    $
    324,622
 15




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 7. GOODWILL AND OTHER INTANGIBLES (continued)
  June 30, 2006
    
    
    March 31, 2007Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationNon-amortized intangible assets:Cost in excess of net assets acquired
    
    $
    230,687
    
    
    $
    21,191
    
    
    $
    301,260
    
    
    $
    21,135Territory rights
    
    
    5,361
    
    
    
    
    
    
    
    
    
    
    
    Reacquired franchise rights
    
    
    3,070
    
    
    
    
    
    
    
    44,497
    
    
    
    $
    239,118
    
    
    $
    21,191
    
    
    $
    345,757
    
    
    $
    21,135Amortized intangible assets:Franchise agreements
    
    $
    755
    
    
    $
    116
    
    
    $
    
    
    
    $
    $
    755
    
    
    $
    116
    
    
    $
    
    
    
    $
    
 Goodwill and Other Intangible Assets.
     16




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 7. GOODWILL AND OTHER INTANGIBLES (continued)
    Accounting for the Impairment or Disposal of Long-lived Assets.
  17




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 8. COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2007
    
    
    2006
    
    
    2007Net income (loss)
    
    $
    (291
    )
    
    $
    11,692
    
    
    $
    5,026
    
    
    $
    (42,484
    )Foreign currency translation adjustment
    
    
    37
    
    
    
    2,302
    
    
    
    1,189
    
    
    
    4,556Fair value adjustments for cash flow hedges
    
    
    39
    
    
    
    (2,255
    )
    
    
    (9
    )
    
    
    (1,032
    )Total comprehensive income (loss)
    
    $
    (215
    )
    
    $
    11,739
    
    
    $
    6,206
    
    
    $
    (38,960
    )
 18




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 9. GEOGRAPHIC SEGMENT INFORMATION
 All operations for which geographic data is presented below are principally in one industry
(check cashing, consumer lending and ancillary services) (in thousands):
 
 United
    
    
    
    
    
    UnitedStates
    
    Canada
    
    Kingdom
    
    TotalAs of and for the three months
ended March 31, 2006Total assets
    
    $
    173,342
    
    
    $
    151,505
    
    
    $
    117,203
    
    
    $
    442,050Goodwill and other intangibles, net
    
    
    97,880
    
    
    
    58,097
    
    
    
    54,513
    
    
    
    210,490Sales to unaffiliated customers:Check cashing
    
    
    13,984
    
    
    
    12,633
    
    
    
    9,671
    
    
    
    36,288Consumer lending:Fees from consumer lending
    
    
    14,838
    
    
    
    17,909
    
    
    
    8,596
    
    
    
    41,343Provision for loan losses and adjustments
to servicing revenue
    
    
    (2,610
    )
    
    
    (1,312
    )
    
    
    (2,430
    )
    
    
    (6,352
    )Consumer lending, net
    
    
    12,228
    
    
    
    16,597
    
    
    
    6,166
    
    
    
    34,991Money transfer fees
    
    
    1,427
    
    
    
    2,013
    
    
    
    1,020
    
    
    
    4,460Franchise fees and royalties
    
    
    1,316
    
    
    
    1,412
    
    
    
    
    
    
    
    2,728Other
    
    
    2,157
    
    
    
    4,942
    
    
    
    893
    
    
    
    7,992Total sales to unaffiliated customers
    
    
    31,112
    
    
    
    37,597
    
    
    
    17,750
    
    
    
    86,459Interest expense (income), net
    
    
    7,101
    
    
    
    (243
    )
    
    
    708
    
    
    
    7,566Depreciation and amortization
    
    
    1,145
    
    
    
    896
    
    
    
    680
    
    
    
    2,721(Loss) income before income taxes
    
    
    (11,213
    )
    
    
    16,332
    
    
    
    2,397
    
    
    
    7,516Income tax provision
    
    
    487
    
    
    
    6,341
    
    
    
    979
    
    
    
    7,807For the nine months
ended March 31, 2006Sales to unaffiliated customers:Check cashing
    
    $
    36,999
    
    
    $
    37,724
    
    
    $
    31,136
    
    
    $
    105,859Consumer lending:Fees from consumer lending
    
    
    44,598
    
    
    
    50,385
    
    
    
    23,692
    
    
    
    118,675Provision for loan losses and adjustments
to servicing revenue
    
    
    (10,492
    )
    
    
    (6,776
    )
    
    
    (5,605
    )
    
    
    (22,873
    )Consumer lending, net
    
    
    34,106
    
    
    
    43,609
    
    
    
    18,087
    
    
    
    95,802Money transfer fees
    
    
    3,471
    
    
    
    6,046
    
    
    
    3,163
    
    
    
    12,680Franchise fees and royalties
    
    
    4,243
    
    
    
    3,888
    
    
    
    
    
    
    
    8,131Other
    
    
    6,092
    
    
    
    10,248
    
    
    
    2,779
    
    
    
    19,119Total sales to unaffiliated customers
    
    
    84,911
    
    
    
    101,515
    
    
    
    55,165
    
    
    
    241,591Interest expense (income), net
    
    
    20,888
    
    
    
    (774
    )
    
    
    2,131
    
    
    
    22,245Depreciation and amortization
    
    
    3,751
    
    
    
    2,544
    
    
    
    1,904
    
    
    
    8,199(Loss) income before income taxes
    
    
    (25,281
    )
    
    
    40,587
    
    
    
    8,180
    
    
    
    23,486Income tax provision
    
    
    109
    
    
    
    15,724
    
    
    
    2,627
    
    
    
    18,460
 19




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 9. GEOGRAPHIC SEGMENT INFORMATION (continued)
 United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalAs of and for the three months
ended March 31, 2007Total assets
    
    $
    101,305
    
    
    $
    384,083
    
    
    $
    147,069
    
    
    $
    632,457Goodwill and other intangibles, net
    
    
    94,434
    
    
    
    165,105
    
    
    
    65,083
    
    
    
    324,622Sales to unaffiliated customers:Check cashing
    
    
    14,140
    
    
    
    16,046
    
    
    
    12,497
    
    
    
    42,683Consumer lending:Fees from consumer lending
    
    
    18,671
    
    
    
    29,827
    
    
    
    11,697
    
    
    
    60,195Provision for loan losses and adjustments
to servicing revenue
    
    
    (5,478
    )
    
    
    (3,886
    )
    
    
    (3,178
    )
    
    
    (12,542
    )Consumer lending, net
    
    
    13,193
    
    
    
    25,941
    
    
    
    8,519
    
    
    
    47,653Money transfer fees
    
    
    1,128
    
    
    
    2,889
    
    
    
    1,111
    
    
    
    5,128Franchise fees and royalties
    
    
    1,179
    
    
    
    403
    
    
    
    
    
    
    
    1,582Other
    
    
    1,462
    
    
    
    6,946
    
    
    
    1,608
    
    
    
    10,016Total sales to unaffiliated customers
    
    
    31,102
    
    
    
    52,225
    
    
    
    23,735
    
    
    
    107,062Interest expense, net
    
    
    1,278
    
    
    
    5,082
    
    
    
    1,722
    
    
    
    8,082Depreciation and amortization
    
    
    1,103
    
    
    
    1,247
    
    
    
    1,076
    
    
    
    3,426(Loss) income before income taxes
    
    
    (761
    )
    
    
    16,297
    
    
    
    3,374
    
    
    
    18,910Income tax provision
    
    
    672
    
    
    
    5,607
    
    
    
    939
    
    
    
    7,218For the nine months
ended March 31, 2007Sales to unaffiliated customers:Check cashing
    
    $
    36,913
    
    
    $
    47,793
    
    
    $
    37,884
    
    
    $
    122,590Consumer lending:Fees from consumer lending
    
    
    57,062
    
    
    
    77,107
    
    
    
    31,650
    
    
    
    165,819Provision for loan losses and adjustments
to servicing revenue
    
    
    (17,135
    )
    
    
    (8,154
    )
    
    
    (7,357
    )
    
    
    (32,646
    )Consumer lending, net
    
    
    39,927
    
    
    
    68,953
    
    
    
    24,293
    
    
    
    133,173Money transfer fees
    
    
    3,311
    
    
    
    8,323
    
    
    
    3,598
    
    
    
    15,232Franchise fees and royalties
    
    
    3,090
    
    
    
    2,516
    
    
    
    
    
    
    
    5,606Other
    
    
    4,513
    
    
    
    15,006
    
    
    
    4,753
    
    
    
    24,272Total sales to unaffiliated customers
    
    
    87,754
    
    
    
    142,591
    
    
    
    70,528
    
    
    
    300,873Interest expense, net
    
    
    9,646
    
    
    
    9,498
    
    
    
    3,927
    
    
    
    23,071Depreciation and amortization
    
    
    3,247
    
    
    
    3,222
    
    
    
    2,844
    
    
    
    9,313(Loss) income before income taxes
    
    
    (64,923
    )
    
    
    40,773
    
    
    
    11,928
    
    
    
    (12,222
    )Income tax provision
    
    
    7,813
    
    
    
    18,931
    
    
    
    3,518
    
    
    
    30,262
 20




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 Put Options
  Cross-Currency Interest Rate Swaps
     21




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 11. CONTINGENT LIABILITIES
  Canadian Legal Proceedings
  Mortillaro Smith
    Day Smith
   22




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 11. CONTINGENT LIABILITIES (continued)
 United States Legal Proceedings
  (Woods) (Castillo) (Chin) (Williams). Chin
 Woods Castillo Williams
 Bufil Chin Bufil Bufil Chin Bufil
  We The People Legal Proceedings
    23




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 11. CONTINGENT LIABILITIES (continued)
 ex parte
       24




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 11. CONTINGENT LIABILITIES (continued)
      12. INCOME TAXES
  25




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 SUPPLEMENTAL STATISTICAL DATA
 March 31,2006
    
    
    2007Company Operating Data:Stores in operation:Company-owned
    
    
    758
    
    
    
    890Franchised stores and check cashing merchants
    
    
    511
    
    
    
    385Total
    
    
    1,269
    
    
    
    1,275
 Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2006
    
    2007
    
    2006
    
    2007Check Cashing Data:Face amount of checks cashed (in millions)
    
    $
    946
    
    
    $
    1,099
    
    
    $
    2,804
    
    
    $
    3,203Face amount of average check
    
    $
    461
    
    
    $
    485
    
    
    $
    447
    
    
    $
    477Average fee per check
    
    $
    17.69
    
    
    $
    18.82
    
    
    $
    16.87
    
    
    $
    18.28Number of checks cashed (in thousands)
    
    
    2,051
    
    
    
    2,267
    
    
    
    6,274
    
    
    
    6,708
 Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2006
    
    2007
    
    2006
    
    2007Check Cashing Collections Data:Face amount of returned checks (in thousands)
    
    $
    9,617
    
    
    $
    11,959
    
    
    $
    29,463
    
    
    $
    34,691Collections (in thousands)
    
    
    (7,576
    )
    
    
    (8,844
    )
    
    
    (21,802
    )
    
    
    (25,243
    )Net write-offs (in thousands)
    
    $
    2,041
    
    
    $
    3,115
    
    
    $
    7,661
    
    
    $
    9,448Collections as a percentage of returned checks
    
    
    78.8
    %
    
    
    74.0
    %
    
    
    74.0
    %
    
    
    72.8
    %Net write-offs as a percentage of check cashing
revenues
    
    
    5.6
    %
    
    
    7.3
    %
    
    
    7.2
    %
    
    
    7.7
    %Net write-offs as a percentage of the face amount
of checks cashed
    
    
    0.22
    %
    
    
    0.28
    %
    
    
    0.27
    %
    
    
    0.30
    %
 26




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##### Table of Contents



Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2006
    
    2007
    
    2006
    
    2007U.S. company-funded consumer loan originations (1)
    
    $
    51,120
    
    
    $
    69,835
    
    
    $
    180,716
    
    
    $
    203,635Canadian company-funded consumer loan originations (2)
    
    
    132,116
    
    
    
    218,471
    
    
    
    405,189
    
    
    
    584,162U.K. company-funded consumer loan originations (2)
    
    
    49,248
    
    
    
    70,936
    
    
    
    152,024
    
    
    
    191,282Total company-funded consumer loan originations
    
    $
    232,484
    
    
    $
    359,242
    
    
    $
    737,929
    
    
    $
    979,079U.S. Servicing revenues
    
    $
    6,349
    
    
    $
    7,768
    
    
    $
    15,855
    
    
    $
    24,857U.S. company-funded consumer loan revenues
    
    
    8,489
    
    
    
    10,903
    
    
    
    28,743
    
    
    
    32,205Canadian company-funded consumer loan revenues
    
    
    17,909
    
    
    
    29,827
    
    
    
    50,385
    
    
    
    77,107U.K. company-funded consumer loan revenues
    
    
    8,596
    
    
    
    11,697
    
    
    
    23,692
    
    
    
    31,650Provision for loan losses and adjustments to servicing revenues
    
    
    (6,352
    )
    
    
    (12,542
    )
    
    
    (22,873
    )
    
    
    (32,646
    )Total consumer lending revenues, net
    
    $
    34,991
    
    
    $
    47,653
    
    
    $
    95,802
    
    
    $
    133,173Gross charge-offs of company-funded consumer loans
    
    $
    26,231
    
    
    $
    44,632
    
    
    $
    78,795
    
    
    $
    112,719Recoveries of company-funded consumer loans
    
    
    (21,591
    )
    
    
    (34,700
    )
    
    
    (63,169
    )
    
    
    (90,424
    )Net charge-offs on company-funded consumer loans
    
    $
    4,640
    
    
    $
    9,932
    
    
    $
    15,626
    
    
    $
    22,295Gross charge-offs of company-funded consumer loans
as a percentage of total company-funded consumer loan
originations
    
    
    11.3
    %
    
    
    12.4
    %
    
    
    10.7
    %
    
    
    11.5
    %Recoveries of company-funded consumer loans as a
percentage of total company-funded consumer loan
originations
    
    
    9.3
    %
    
    
    9.6
    %
    
    
    8.6
    %
    
    
    9.2
    %Net charge-offs on company-funded consumer loans
as a percentage of total company-funded consumer loan
originations
    
    
    2.0
    %
    
    
    2.8
    %
    
    
    2.1
    %
    
    
    2.3
    %
 
 (1)
    
    The Company operated stores in the United States originated company-funded and bank-funded single-payment consumer loans during
the three and nine months ended March 31, 2006 and now offer only company-funded single-payment consumer loans in all markets,
with the exception of Texas, during the three and nine months ended March 31, 2007. In Texas, the Company now offers single-payment
consumer loans under a credit services organization model.(2)
    
    All consumer loans originated in Canada and the United Kingdom are company funded. 27




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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 nine months ended March 31, 2007 and 2006. 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.
 Executive Summary
  ® ® ®
       28




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##### Table of Contents



Discussion of Critical Accounting Policies
   Revenue Recognition
    ®
  29




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##### Table of Contents



®
 Company-Funded Consumer Loan Loss Reserves Policy
   Check Cashing Returned Item Policy
  Goodwill and Other Intangible Assets
 Goodwill and Other
Intangible Assets.
    30




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##### Table of Contents



Accounting for the Impairment or Disposal of Long-lived Assets.
  Income Taxes
  31




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##### Table of Contents



Results of Operations
 Revenue Analysis
 Three Months Ended March 31,
    
    
    Nine Months Ended March 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    
    revenue)
    
    
    ($ in thousands)
    
    
    revenue)2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007Check cashing
    
    $
    36,288
    
    
    $
    42,683
    
    
    
    42.0
    %
    
    
    39.9
    %
    
    $
    105,859
    
    
    $
    122,590
    
    
    
    43.8
    %
    
    
    40.7
    %Consumer lending revenue, net
    
    
    34,991
    
    
    
    47,653
    
    
    
    40.5
    %
    
    
    44.5
    %
    
    
    95,802
    
    
    
    133,173
    
    
    
    39.7
    %
    
    
    44.3
    %Money transfer fees
    
    
    4,460
    
    
    
    5,128
    
    
    
    5.2
    %
    
    
    4.8
    %
    
    
    12,680
    
    
    
    15,232
    
    
    
    5.2
    %
    
    
    5.0
    %Franchise fees and royalties
    
    
    2,728
    
    
    
    1,582
    
    
    
    3.1
    %
    
    
    1.5
    %
    
    
    8,131
    
    
    
    5,606
    
    
    
    3.4
    %
    
    
    1.9
    %Other revenue
    
    
    7,992
    
    
    
    10,016
    
    
    
    9.2
    %
    
    
    9.3
    %
    
    
    19,119
    
    
    
    24,272
    
    
    
    7.9
    %
    
    
    8.1
    %Total revenue
    
    $
    86,459
    
    
    $
    107,062
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    241,591
    
    
    $
    300,873
    
    
    
    100.0
    %
    
    
    100.0
    %
 The Three Months Ended March 31, 2007 compared to the Three Months Ended March 31, 2006
   The Nine Months Ended March 31, 2007 compared to the Nine Months Ended March 31, 2006
   32




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##### Table of Contents



Store and Regional Expense Analysis
 Three Months Ended March 31,
    
    Nine Months Ended March 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    revenue)
    
    ($ in thousands)
    
    revenue)2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007Salaries and benefits
    
    $
    27,095
    
    
    $
    33,661
    
    
    
    31.3
    %
    
    
    31.4
    %
    
    $
    78,290
    
    
    $
    94,756
    
    
    
    32.4
    %
    
    
    31.5
    %Occupancy
    
    
    6,914
    
    
    
    8,225
    
    
    
    8.0
    %
    
    
    7.7
    %
    
    
    20,384
    
    
    
    23,808
    
    
    
    8.4
    %
    
    
    7.9
    %Depreciation
    
    
    1,843
    
    
    
    2,571
    
    
    
    2.1
    %
    
    
    2.4
    %
    
    
    5,510
    
    
    
    6,782
    
    
    
    2.3
    %
    
    
    2.2
    %Returned checks, net and cash shortages
    
    
    2,697
    
    
    
    3,899
    
    
    
    3.1
    %
    
    
    3.6
    %
    
    
    9,084
    
    
    
    11,296
    
    
    
    3.8
    %
    
    
    3.8
    %Telephone and communications
    
    
    1,405
    
    
    
    1,717
    
    
    
    1.6
    %
    
    
    1.6
    %
    
    
    4,271
    
    
    
    4,734
    
    
    
    1.8
    %
    
    
    1.6
    %Advertising
    
    
    1,943
    
    
    
    2,088
    
    
    
    2.3
    %
    
    
    2.0
    %
    
    
    6,765
    
    
    
    7,546
    
    
    
    2.8
    %
    
    
    2.5
    %Bank Charges and armored carrier expenses
    
    
    2,348
    
    
    
    2,833
    
    
    
    2.7
    %
    
    
    2.6
    %
    
    
    6,614
    
    
    
    7,670
    
    
    
    2.7
    %
    
    
    2.5
    %Other
    
    
    8,701
    
    
    
    10,366
    
    
    
    10.1
    %
    
    
    9.7
    %
    
    
    24,700
    
    
    
    31,251
    
    
    
    10.2
    %
    
    
    10.4
    %Total store and regional expenses
    
    $
    52,946
    
    
    $
    65,360
    
    
    
    61.2
    %
    
    
    61.0
    %
    
    $
    155,618
    
    
    $
    187,843
    
    
    
    64.4
    %
    
    
    62.4
    %
 The Three Months Ended March 31, 2007 compared to the Three Months Ended March 31, 2006
   The Nine Months Ended March 31, 2007 compared to the Nine Months Ended March 31, 2006
   33




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##### Table of Contents



Corporate and Other Expense Analysis
 Three Months Ended March 31,
    
    Nine Months Ended March 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    revenue)
    
    ($ in thousands)
    
    revenue)2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007Corporate expenses
    
    $
    11,453
    
    
    $
    13,627
    
    
    
    13.2
    %
    
    
    12.7
    %
    
    $
    31,035
    
    
    $
    39,632
    
    
    
    12.8
    %
    
    
    13.2
    %Other depreciation and amortization
    
    
    878
    
    
    
    855
    
    
    
    1.0
    %
    
    
    0.8
    %
    
    
    2,689
    
    
    
    2,531
    
    
    
    1.1
    %
    
    
    0.8
    %Interest expense, net
    
    
    7,566
    
    
    
    8,082
    
    
    
    8.8
    %
    
    
    7.5
    %
    
    
    22,245
    
    
    
    23,071
    
    
    
    9.2
    %
    
    
    7.7
    %Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    
    
    
    
    31,784
    
    
    
    0.0
    %
    
    
    10.6
    %Proceeds from legal settlement
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    
    
    
    
    (3,256
    )
    
    
    0.0
    %
    
    
    -1.1
    %Goodwill impairment and other charges
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    
    
    
    
    24,464
    
    
    
    0.0
    %
    
    
    8.1
    %Mark to market  term loans
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    
    
    
    
    6,619
    
    
    
    0.0
    %
    
    
    2.2
    %Litigation settlement
    
    
    5,800
    
    
    
    
    
    
    
    6.7
    %
    
    
    0.0
    %
    
    
    5,800
    
    
    
    
    
    
    
    2.4
    %
    
    
    0.0
    %Other, net
    
    
    300
    
    
    
    228
    
    
    
    0.3
    %
    
    
    0.2
    %
    
    
    718
    
    
    
    407
    
    
    
    0.3
    %
    
    
    0.1
    %Income tax provision
    
    
    7,807
    
    
    
    7,218
    
    
    
    9.0
    %
    
    
    6.7
    %
    
    
    18,460
    
    
    
    30,262
    
    
    
    7.6
    %
    
    
    10.1
    %
 The Three Months Ended March 31, 2007 compared to the Three Months Ended March 31, 2006
 Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
  Income Tax Provision
  34




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##### Table of Contents



The Nine Months Ended March 31, 2007 compared to the Nine Months Ended March 31, 2006
 Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
  Loss on Extinguishment of Debt
   35




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##### Table of Contents



Nine
Months EndedMarch 31,2007Call Premium
    
    $
    6.8Tender premium
    
    
    17.6Write-off of previously capitalized deferred issuance costs, net
    
    
    8.8Write-off of original issue premium
    
    
    (1.4
    )Total
    
    $
    31.8
 Proceeds from Legal Settlement
   Goodwill Impairment and Other Charges
   Mark to Market Term Loans
  Income Tax Provision
  36




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##### Table of Contents



Changes in Financial Condition
  Liquidity and Capital Resources
     New Credit Facilities
 Revolving Credit Facilities.
 37




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##### Table of Contents



United States Revolving Credit Facility.OPCO has the U.S. Revolving Facility commitment
which has an interest rate of LIBOR plus 300 basis points, subject to reductions as we reduce
our leverage. Under this revolving commitment, up to $30 million may be used domestically in
connection with letters of credit. The term of this commitment is October 30, 2011. The
commitment may be subject to mandatory reduction and the revolving loans subject to mandatory
prepayment (after prepayment of the terms loans under the New Credit Agreement), principally
in an amount equal to 50% of excess cash flow (as defined in the New Credit Agreement).
OPCOs borrowing capacity under the domestic commitment is limited to the lesser of the total
commitment of $75 million or 85% of certain domestic liquid assets plus $25 million. At
March 31, 2007, the borrowing capacity was $57.4 million. At March 31, 2007 there was $23.2
million outstanding under the domestic facility and $0.8 million outstanding in letters of
credit issued by Wells Fargo Bank, which guarantee the performance of certain of our
contractual obligations.Canadian Revolving Credit Facility.National Money Mart Company which has the Canadian
Revolving Facility commitment which has an interest rate of LIBOR plus 300 basis points,
subject to reductions as we reduce our leverage. The term of this commitment is October
30, 2011. The commitment may be subject to mandatory reduction and the revolving loans
subject to mandatory prepayment (after prepayment of the term loans under the New Credit
Agreement), principally in an amount equal to 50% of excess cash flow (as defined in the New
Credit Agreement). OPCOs wholly owned Canadian subsidiary, National Money Mart Companys
borrowing capacity under the Canadian commitment is limited to the lesser of the total
commitment of $25 million or 85% of certain combined liquid assets of National Money Mart
Company and Dollar Financial U.K. Limited and their respective subsidiaries. At March 31,
2007, the borrowing capacity was $25.0 million. There was $24.5 million outstanding under
the Canadian facility at March 31, 2007.
 Long-Term Debt.
 Operating Leases.
 38




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##### Table of Contents



Payments Due by Period (in thousands)Less than
    
    
    1 - 3
    
    
    4 - 5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsRevolving credit facilities
    
    $
    47,700
    
    
    $
    47,700
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-term debt:9.75% Senior Notes due 2011
    
    
    1,985
    
    
    
    
    
    
    
    
    
    
    
    1,985
    
    
    
    Term loans due 2012
    
    
    375,229
    
    
    
    3,750
    
    
    
    11,250
    
    
    
    7,500
    
    
    
    352,729Operating lease obligations
    
    
    117,920
    
    
    
    27,912
    
    
    
    43,541
    
    
    
    22,022
    
    
    
    24,445Other long-term liabilities reflected on
the registrants balance sheet under
GAAP
    
    
    275
    
    
    
    275
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    543,109
    
    
    $
    79,637
    
    
    $
    54,791
    
    
    $
    31,507
    
    
    $
    377,174
  Balance Sheet Variations
 March 31, 2007 compared to June 30, 2006
        39




---



##### Table of Contents



Woods, Castillo Williams
  Seasonality and Quarterly Fluctuations
  Recent Accounting Pronouncements
  Fair Value Measurements
 Fair Value Option for Financial Assets
and Financial Liabilities  Including an Amendment of FASB Statement No. 115 , Accounting for Certain Investments in Debt and Equity Securities
 40




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##### Table of Contents



Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995
   
 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
  41




---



##### Table of Contents



Cross-Currency  Interest Rate Swaps
     
 Item 4. Controls and Procedures
 Evaluation of Disclosure Control and Procedures
  Changes in Internal Control Over Financial Reporting
  42




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  Canadian Legal Proceedings
  Mortillaro Smith
  Day Smith
  43




---



##### Table of Contents



United States Legal Proceedings
 (Woods) (Castillo) (Chin) (Williams). Chin
 Woods Castillo Williams
 Bufil Chin Bufil Bufil Chin Bufil
  We The People Legal Proceedings
   44




---



##### Table of Contents



ex parte
       45




---



##### Table of Contents



Item 1A. Risk Factors
 We may experience difficulties transitioning our U.S. installment-lending business to the Internet.
 ® ®
 
 Item 6. Exhibits
 Exhibit No.
    
    Description of Document10.1
    
    Offer Letter, dated March 21, 2007, by and between the Company and Norman Miller (1)10.2
    
    Underwriting Agreement, dated
February 22, 2007, by and among Dollar Financial Corp., Green Equity Investors II, L.P. and Wachovia Capital Markets, LLC (2)31.1
    
    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
 
 (1)
    
    Incorporated by reference to the Current Report on Form 8-K filed by Dollar Financial
Corp. on March 23, 2007.(2)
    
    Incorporated by reference to the Current Report on Form 8-K filed by Dollar Financial
Corp. on February 23, 2007. 46




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##### Table of Contents



SIGNATURE
  DOLLAR FINANCIAL CORP.Date: May 10, 2007
    
    *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. 47