##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 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, 2008
 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
 ü  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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, 2007
and March 31, 2008 (unaudited)
    
    
    3Interim Unaudited Consolidated Statements of Operations for the Three and Nine
Months Ended March 31, 2008 and 2007
    
    
    4Interim Consolidated Statements of Stockholders Equity as of
June 30, 2007 and March 31, 2008 (unaudited)
    
    
    5Interim Unaudited Consolidated Statements of Cash Flows for the Nine Months
Ended March 31, 2007 and 2007
    
    
    6Notes to Interim Unaudited Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    24Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4.
    
    Controls and Procedures
    
    
    41PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    41Item 1A.
    
    Risk Factors
    
    
    42Item 6.
    
    Exhibits
    
    
    43Signature
    
    
    
    
    44
 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
 Rule 13(a)-14(a)/15d-14a Certification of Senior Vice President of Finance and Corporate Controller
 Section 1350 Certification of Chief Executive Officer
 Section 1350 Certification of Chief Financial Officer
 Section 1350 Certification of Senior Vice President of Finance and Corporate Controller
 2




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##### 



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 31,2007
    
    
    2008(unaudited)ASSETSCash and cash equivalents
    
    $
    294,518
    
    
    $
    207,268Restricted cash
    
    
    1,014
    
    
    
    Loans receivable, net:Loans receivable
    
    
    90,552
    
    
    
    115,019Less: Allowance for loan losses
    
    
    (8,623
    )
    
    
    (13,097
    )Loans receivable, net
    
    
    81,929
    
    
    
    101,922Other consumer lending receivables
    
    
    1,056
    
    
    
    101Loans in default, net of an allowance of $18,045 and $21,231
    
    
    10,311
    
    
    
    11,267Other receivables
    
    
    10,337
    
    
    
    15,081Prepaid expenses
    
    
    12,146
    
    
    
    14,100Deferred tax asset, net of valuation allowance of $94,018 and $98,894
    
    
    4,545
    
    
    
    14,652Property and equipment, net of accumulated depreciation of $81,494 and $93,791
    
    
    55,031
    
    
    
    65,255Goodwill and other intangibles
    
    
    341,681
    
    
    
    469,459Debt issuance costs, net of accumulated amortization of $1,244 and $3,789
    
    
    17,747
    
    
    
    15,884Other
    
    
    3,304
    
    
    
    5,310$
    833,619
    
    
    $
    920,299LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable
    
    $
    39,808
    
    
    $
    49,856Income taxes payable
    
    
    11,293
    
    
    
    11,884Accrued expenses and other liabilities
    
    
    28,119
    
    
    
    37,995Fair value of derivatives
    
    
    18,793
    
    
    
    43,284Deferred tax liability
    
    
    12,713
    
    
    
    19,703Revolving credit facilities
    
    
    
    
    
    
    3,971Long-term debt
    
    
    576,910
    
    
    
    578,993Stockholders equity:Common stock, $.001 par value: 55,500,000 shares authorized;24,133,800 shares and 24,232,669 shares issued and outstanding at
June 30, 2007 and March 31, 2008, respectively
    
    
    24
    
    
    
    24Additional paid-in capital
    
    
    251,460
    
    
    
    254,453Accumulated deficit
    
    
    (147,123
    )
    
    
    (108,276
    )Accumulated other comprehensive income
    
    
    41,622
    
    
    
    28,412Total stockholders equity
    
    
    145,983
    
    
    
    174,613$
    833,619
    
    
    $
    920,299
  3




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##### 



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 31,2007
    
    
    2008
    
    
    2007
    
    
    2008Revenues:Check cashing
    
    $
    42,683
    
    
    $
    51,503
    
    
    $
    122,590
    
    
    $
    146,025Consumer lending:Fees from consumer lending
    
    
    60,195
    
    
    
    73,316
    
    
    
    165,819
    
    
    
    215,419Provision for loan losses and adjustment to
servicing income
    
    
    (12,542
    )
    
    
    (14,023
    )
    
    
    (32,646
    )
    
    
    (44,899
    )Consumer lending, net
    
    
    47,653
    
    
    
    59,293
    
    
    
    133,173
    
    
    
    170,520Money transfer fees
    
    
    5,128
    
    
    
    6,921
    
    
    
    15,232
    
    
    
    19,960Franchise fees and royalties
    
    
    1,582
    
    
    
    1,237
    
    
    
    5,606
    
    
    
    3,740Other
    
    
    10,016
    
    
    
    16,336
    
    
    
    24,272
    
    
    
    36,746Total revenues
    
    
    107,062
    
    
    
    135,290
    
    
    
    300,873
    
    
    
    376,991Store and regional expenses:Salaries and benefits
    
    
    33,661
    
    
    
    42,778
    
    
    
    94,756
    
    
    
    116,661Occupancy
    
    
    8,225
    
    
    
    11,359
    
    
    
    23,808
    
    
    
    30,790Depreciation
    
    
    2,571
    
    
    
    3,597
    
    
    
    6,782
    
    
    
    9,620Returned checks, net and cash shortages
    
    
    3,899
    
    
    
    4,973
    
    
    
    11,296
    
    
    
    14,226Telephone and communications
    
    
    1,717
    
    
    
    1,917
    
    
    
    4,734
    
    
    
    5,367Advertising
    
    
    2,088
    
    
    
    2,602
    
    
    
    7,546
    
    
    
    7,426Bank charges and armored carrier service
    
    
    2,833
    
    
    
    3,611
    
    
    
    7,670
    
    
    
    9,954Other
    
    
    10,153
    
    
    
    13,287
    
    
    
    30,806
    
    
    
    35,739Total store and regional expenses
    
    
    65,147
    
    
    
    84,124
    
    
    
    187,398
    
    
    
    229,783Store and regional margin
    
    
    41,915
    
    
    
    51,166
    
    
    
    113,475
    
    
    
    147,208Corporate and other (income) expenses:Corporate expenses
    
    
    13,840
    
    
    
    18,116
    
    
    
    40,077
    
    
    
    53,578Other depreciation and amortization
    
    
    855
    
    
    
    854
    
    
    
    2,531
    
    
    
    2,663Interest expense, net
    
    
    8,082
    
    
    
    9,771
    
    
    
    23,071
    
    
    
    26,837Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    31,784
    
    
    
    97Goodwill impairment and other charges
    
    
    
    
    
    
    
    
    
    
    24,464
    
    
    
    Mark to market  term loan
    
    
    
    
    
    
    
    
    
    
    6,619
    
    
    
    Proceeds from litigation settlements
    
    
    
    
    
    
    
    
    
    
    (3,256
    )
    
    
    Other, net
    
    
    228
    
    
    
    (206
    )
    
    
    407
    
    
    
    (1,008
    )Income (loss) before income taxes
    
    
    18,910
    
    
    
    22,631
    
    
    
    (12,222
    )
    
    
    65,041Income tax provision
    
    
    7,218
    
    
    
    8,802
    
    
    
    30,262
    
    
    
    26,194Net income (loss)
    
    $
    11,692
    
    
    $
    13,829
    
    
    $
    (42,484
    )
    
    $
    38,847Net income (loss) per share:Basic
    
    $
    0.49
    
    
    $
    0.57
    
    
    $
    (1.81
    )
    
    $
    1.61Diluted
    
    $
    0.48
    
    
    $
    0.56
    
    
    $
    (1.81
    )
    
    $
    1.57Weighted average shares outstandingBasic
    
    
    23,696,488
    
    
    
    24,120,797
    
    
    
    23,486,816
    
    
    
    24,087,467Diluted
    
    
    24,530,853
    
    
    
    24,710,850
    
    
    
    23,486,816
    
    
    
    24,763,251
  4




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##### 



DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands, except share data)
 Accumulated
    
    
    TotalCommon Stock
    
    
    Additional
    
    
    Accumulated
    
    
    Other
    
    
    StockholdersOutstanding
    
    
    Paid-in
    
    
    Income
    
    
    Comprehensive
    
    
    (Deficit)Shares
    
    
    Amount
    
    
    Capital
    
    
    (Deficit)
    
    
    Income
    
    
    EquityBalance, June 30, 2007
(audited)
    
    
    24,133,800
    
    
    $
    24
    
    
    $
    251,460
    
    
    $
    (147,123
    )
    
    $
    41,622
    
    
    $
    145,983Comprehensive income:Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    299
    
    
    
    299Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,509
    )
    
    
    (13,509
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,847
    
    
    
    
    
    
    
    38,847Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,637Restricted stock grants
    
    
    43,059Vested portion of granted
restricted stock and
restricted stock units
    
    
    
    
    
    
    
    
    
    
    769
    
    
    
    
    
    
    
    
    
    
    
    769Stock options exercised
    
    
    77,544
    
    
    
    
    
    
    
    1,027
    
    
    
    
    
    
    
    
    
    
    
    1,027Retirement of common stock
    
    
    (21,734
    )Other stock compensation
    
    
    
    
    
    
    
    
    
    
    1,197
    
    
    
    
    
    
    
    
    
    
    
    1,197Balance, March 31, 2008 (unaudited)
    
    
    24,232,669
    
    
    $
    24
    
    
    $
    254,453
    
    
    $
    (108,276
    )
    
    $
    28,412
    
    
    $
    174,613
  5




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##### 



DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Nine Months EndedMarch 31,2007
    
    
    2008Cash flows from operating activities:Net (loss) income
    
    $
    (42,484
    )
    
    $
    38,847Adjustments to reconcile net (loss) income to net cash provided by operating activities:Depreciation and amortization
    
    
    10,533
    
    
    
    14,822Loss on extinguishment of debt
    
    
    31,784
    
    
    
    97Provision for loan losses and adjustment to servicing income
    
    
    32,646
    
    
    
    44,899Non-cash stock compensation
    
    
    1,325
    
    
    
    1,966Losses on store closings
    
    
    539
    
    
    
    140Goodwill impairment
    
    
    28,482
    
    
    
    Foreign currency loss on revaluation of debt
    
    
    6,248
    
    
    
    Deferred tax provision
    
    
    274
    
    
    
    3,834Other, net
    
    
    (201
    )
    
    
    341Change in assets and liabilities (net of effect of acquisitions):Increase in loans and other receivables
    
    
    (45,082
    )
    
    
    (56,492
    )Decrease (increase) in prepaid expenses and other
    
    
    836
    
    
    
    (2,924
    )(Decrease) increase in accounts payable, accrued expenses and other liabilities
    
    
    (7,098
    )
    
    
    20,459Net cash provided by operating activities
    
    
    17,802
    
    
    
    65,989Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (149,052
    )
    
    
    (138,165
    )Additions to property and equipment
    
    
    (15,038
    )
    
    
    (19,363
    )Net cash used in investing activities
    
    
    (164,090
    )
    
    
    (157,528
    )Cash flows from financing activities:Decrease in restricted cash
    
    
    79,099
    
    
    
    1,014Proceeds from term loans
    
    
    375,000
    
    
    
    Proceeds from the exercise of stock options
    
    
    3,949
    
    
    
    1,027Other debt payments
    
    
    (2,146
    )
    
    
    (5,453
    )Prepayment of 9.75% Senior Notes due 2011
    
    
    (292,424
    )
    
    
    Net increase in revolving credit facilities
    
    
    8,912
    
    
    
    3,971Payment of debt issuance and other costs
    
    
    (10,871
    )
    
    
    (441
    )Net cash provided by financing activities
    
    
    161,519
    
    
    
    118Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,250
    )
    
    
    4,171Net increase (decrease) in cash and cash equivalents
    
    
    13,981
    
    
    
    (87,250
    )Cash and cash equivalents at beginning of period
    
    
    120,221
    
    
    
    294,518Cash and cash equivalents at end of period
    
    $
    134,202
    
    
    $
    207,268
  6




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##### 



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
  Earnings (Loss) per Share
  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 (continued)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2008
    
    
    2007
    
    
    2008Net income (loss)
    
    $
    11,692
    
    
    $
    13,829
    
    
    $
    (42,484
    )
    
    $
    38,847Reconciliation of denominator:Weighted average of common shares outstanding  basic 1
    
    
    23,697
    
    
    
    24,121
    
    
    
    23,487
    
    
    
    24,087Effect of dilutive stock options 2
    
    
    723
    
    
    
    402
    
    
    
    
    
    
    
    488Effect of unvested restricted stock and restricted stock unit grants
    
    
    111
    
    
    
    188
    
    
    
    
    
    
    
    188Weighted average of common shares outstanding  diluted
    
    
    24,531
    
    
    
    24,711
    
    
    
    23,487
    
    
    
    24,763
 
 (1)
    
    Excludes 111 and 75 shares of unvested restricted stock, which is included in
total outstanding common shares as of March 31, 2007 and March 31, 2008,
respectively.(2)
    
    The effect of dilutive stock options was determined under the treasury stock
method. Due to the net loss during the nine-months ended March 31, 2007, the
effect of the dilutive options and unvested shares of restricted stock were
considered to be anti-dilutive, and therefore were not included in the
calculation of diluted earnings per share. Stock Based Employee Compensation
   .
   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 31,2007
    
    2008
    
    2007
    
    2008Expected volatility
    
    
    N/A
    
    
    
    50.8
    %
    
    
    48.0
    %
    
    
    49.7
    %Expected life (years)
    
    
    N/A
    
    
    
    6.0
    
    
    
    6.0
    
    
    
    6.0Risk-free interest rate
    
    
    N/A
    
    
    
    3.09
    %
    
    
    4.71
    %
    
    
    3.60
    %Expected dividends
    
    
    N/A
    
    
    None
    
    None
    
    NoneWeighted average fair value
    
    
    N/A
    
    
    $
    11.23
    
    
    $
    11.02
    
    
    $
    13.44
  Weighted AverageWeighted
    
    Remaining
    
    Aggregate IntrinsicAverage
    
    Contractual Term
    
    Value ($ inOptions
    
    Exercise Price
    
    (years)
    
    millions)Options outstanding at June 30, 2007(1,020,716 shares exercisable)
    
    
    1,297,600
    
    
    $
    15.58
    
    
    
    8.1
    
    
    $
    16.8Granted
    
    
    60,030
    
    
    $
    26.11Exercised
    
    
    (77,544
    )
    
    $
    13.24Forfeited and expired
    
    
    (50,678
    )
    
    $
    17.33Options outstanding at March 31, 2008
    
    
    1,229,408
    
    
    $
    16.17
    
    
    
    7.5
    
    
    $
    8.9Exercisable at March 31, 2008
    
    
    994,863
    
    
    $
    14.60
    
    
    
    7.2
    
    
    $
    8.4
  9




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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)
   WeightedAverageRestricted
    
    
    Grant-DateStock Awards
    
    
    Fair-ValueOutstanding at June 30, 2007
    
    
    111,151
    
    
    $
    19.97Granted
    
    
    12,481
    
    
    
    29.42Vested
    
    
    (38,882
    )
    
    
    19.71Forfeited
    
    
    (9,690
    )
    
    
    18.36Outstanding at March 31, 2008
    
    
    75,060
    
    
    $
    21.88
   WeightedRestricted
    
    
    AverageStock Unit
    
    
    Grant-DateAwards
    
    
    Fair-ValueOutstanding at June 30, 2007
    
    
    124,438
    
    
    $
    28.53Granted
    
    
    31,595
    
    
    $
    25.91Vested
    
    
    (29,769
    )
    
    $
    28.53Forfeited
    
    
    (12,944
    )
    
    $
    28.53Outstanding at March 31, 2008
    
    
    113,320
    
    
    $
    28.55
  10




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes Accounting for Income
Taxes
 Fair Value
Measurements
 The 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
 Business
Combinations (a revision of Statement No. 141
 11




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Recent Accounting Pronouncements (continued)
 Disclosures
about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133
 Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
 2. ACQUISITIONS
    12




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 2. ACQUISITIONS (continued)
     Balance at June 30, 2007
    
    $
    293.5Acquisitions:APL  U.S.
    
    
    22.1CCS  U.S.
    
    
    89.2Cash Your Cheque  U.K.
    
    
    3.6Unicash  Canada
    
    
    1.2Other
    
    
    4.2Purchase adjustments:82 Store Canadian Acquisition
    
    
    (0.1
    )Money Corner
    
    
    1.0Foreign currency adjustment
    
    
    3.8Balance at March 31, 2008
    
    $
    418.5
  Three months ended
    
    Nine months endedMarch 31,
    
    March 31,2007
    
    2008
    
    2007
    
    2008(Unaudited in thousands
    
    (Unaudited in thousandsexcept per share amounts)
    
    except per share amounts)Revenue
    
    $
    122,280
    
    
    $
    135,423
    
    
    $
    346,526
    
    
    $
    401,422Net income (loss)
    
    $
    14,891
    
    
    $
    13,837
    
    
    $
    (32,858
    )
    
    $
    42,470Net income (loss) per common share  basic
    
    $
    0.63
    
    
    $
    0.57
    
    
    $
    (1.40
    )
    
    $
    1.76Net income (loss) per common share  diluted
    
    $
    0.61
    
    
    $
    0.56
    
    
    $
    (1.40
    )
    
    $
    1.72
 13




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 3. GOODWILL AND OTHER INTANGIBLES
  United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalBalance at June 30, 2006
    
    $
    97,860
    
    
    $
    61,092
    
    
    $
    59,614
    
    
    $
    218,566Amortization of identifiable intangibles
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    (58
    )Acquisition
    
    
    25,126
    
    
    
    109,406
    
    
    
    2,779
    
    
    
    137,311Impairment loss
    
    
    (28,469
    )
    
    
    
    
    
    
    
    
    
    
    (28,469
    )Foreign currency translation adjustments
    
    
    
    
    
    
    9,167
    
    
    
    5,164
    
    
    
    14,331Balance at June 30, 2007
    
    $
    94,459
    
    
    $
    179,665
    
    
    $
    67,557
    
    
    $
    341,681Acquisition
    
    
    112,224
    
    
    
    1,859
    
    
    
    8,405
    
    
    
    122,488Foreign currency translation adjustments
    
    
    
    
    
    
    6,197
    
    
    
    (907
    )
    
    
    5,290Balance at March 31, 2008
    
    $
    206,683
    
    
    $
    187,721
    
    
    $
    75,055
    
    
    $
    469,459
  June 30,
    
    
    March 31,2007
    
    
    2008Gross Carrying
    
    
    Gross CarryingAmount(1)
    
    
    AmountNon-amortized intangible assets:Goodwill
    
    $
    293,462
    
    
    $
    418,514Reacquired franchise rights
    
    
    48,219
    
    
    
    50,945$
    341,681
    
    
    $
    469,459
 
 (1)
    
    The Company reclassified accumulated amortization to goodwill and no
longer carries accumulated amortization on its balance sheet. The
Company currently has no amortizing intangible assets under SFAS 142. Goodwill and Other Intangible Assets
     14




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 3. GOODWILL AND OTHER INTANGIBLES (continued)
  4. CONTINGENT LIABILITIES
  Canadian Legal Proceedings
  Mortillaro Smith
  Day Young Young
 Parsons
 15




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. CONTINGENT LIABILITIES (continued)
 Canadian Legal Proceedings (continued)
      California Legal Proceedings
 (Woods) (Castillo) (Chin) (Williams). Chin Chin
 Woods Castillo Williams
 Bufil Chin Bufil Chin Bufil
 16




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. CONTINGENT LIABILITIES (continued)
 California Legal Proceedings (continued)
  We The People Legal Proceedings
      17




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. CONTINGENT LIABILITIES (continued)
 We The People Legal Proceedings (continued)
       18




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. CONTINGENT LIABILITIES (continued)
 We The People Legal Proceedings (continued)
      19




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 5. GEOGRAPHIC SEGMENT INFORMATION
  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




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 5. GEOGRAPHIC SEGMENT INFORMATION (continued)
 United
    
    
    
    
    
    UnitedStates
    
    Canada
    
    Kingdom
    
    TotalAs of and for the three months ended March 31,
2008Total assets
    
    $
    279,742
    
    
    $
    462,433
    
    
    $
    178,124
    
    
    $
    920,299Goodwill and other intangibles, net
    
    
    206,683
    
    
    
    187,721
    
    
    
    75,055
    
    
    
    469,459Sales to unaffiliated customers:Check cashing
    
    
    18,826
    
    
    
    18,945
    
    
    
    13,732
    
    
    
    51,503Consumer lending:Fees from consumer lending
    
    
    22,045
    
    
    
    34,839
    
    
    
    16,432
    
    
    
    73,316Provision for loan losses and
adjustments to servicing
revenue
    
    
    (5,874
    )
    
    
    (6,406
    )
    
    
    (1,743
    )
    
    
    (14,023
    )Consumer lending, net
    
    
    16,171
    
    
    
    28,433
    
    
    
    14,689
    
    
    
    59,293Money transfer fees
    
    
    1,733
    
    
    
    3,840
    
    
    
    1,348
    
    
    
    6,921Franchise fees and royalties
    
    
    685
    
    
    
    552
    
    
    
    
    
    
    
    1,237Other
    
    
    2,722
    
    
    
    10,762
    
    
    
    2,852
    
    
    
    16,336Total sales to unaffiliated customers
    
    
    40,137
    
    
    
    62,532
    
    
    
    32,621
    
    
    
    135,290Interest expense, net
    
    
    2,786
    
    
    
    5,116
    
    
    
    1,869
    
    
    
    9,771Depreciation and amortization
    
    
    1,462
    
    
    
    1,718
    
    
    
    1,271
    
    
    
    4,451Income before income taxes
    
    
    3,716
    
    
    
    14,170
    
    
    
    4,745
    
    
    
    22,631Income tax provision
    
    
    2,417
    
    
    
    4,935
    
    
    
    1,450
    
    
    
    8,802For the nine months ended March 31, 2008Sales to unaffiliated customers:Check cashing
    
    $
    42,025
    
    
    $
    60,979
    
    
    $
    43,021
    
    
    $
    146,025Consumer lending:Fees from consumer lending
    
    
    57,757
    
    
    
    111,265
    
    
    
    46,397
    
    
    
    215,419Provision for loan losses and
adjustments to servicing
revenue
    
    
    (18,562
    )
    
    
    (20,968
    )
    
    
    (5,369
    )
    
    
    (44,899
    )Consumer lending, net
    
    
    39,195
    
    
    
    90,297
    
    
    
    41,028
    
    
    
    170,520Money transfer fees
    
    
    4,055
    
    
    
    11,716
    
    
    
    4,189
    
    
    
    19,960Franchise fees and royalties
    
    
    1,990
    
    
    
    1,750
    
    
    
    
    
    
    
    3,740Other
    
    
    5,546
    
    
    
    23,573
    
    
    
    7,627
    
    
    
    36,746Total sales to unaffiliated customers
    
    
    92,811
    
    
    
    188,315
    
    
    
    95,865
    
    
    
    376,991Interest expense, net
    
    
    5,122
    
    
    
    15,986
    
    
    
    5,729
    
    
    
    26,837Depreciation and amortization
    
    
    3,718
    
    
    
    4,828
    
    
    
    3,737
    
    
    
    12,283(Loss) income before income taxes
    
    
    (3,542
    )
    
    
    51,906
    
    
    
    16,677
    
    
    
    65,041Income tax provision
    
    
    1,997
    
    
    
    19,171
    
    
    
    5,026
    
    
    
    26,194
 21




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 Put Options
  Cross-Currency Interest Rate Swaps
    22




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 7. COMPREHENSIVE INCOME (LOSS)
  Three months ended
    
    
    Nine months endedMarch 31,
    
    
    March 31,2007
    
    
    2008
    
    
    2007
    
    
    2008Net income (loss)
    
    $
    11,692
    
    
    $
    13,829
    
    
    $
    (42,484
    )
    
    $
    38,847Foreign currency translation adjustment
    
    
    2,302
    
    
    
    12
    
    
    
    4,556
    
    
    
    299Fair value adjustments for cash flow hedges,
net(1)(2)
    
    
    (2,255
    )
    
    
    (7,387
    )
    
    
    (1,032
    )
    
    
    (13,509
    )Total comprehensive income (loss)
    
    $
    11,739
    
    
    $
    6,454
    
    
    $
    (38,960
    )
    
    $
    25,637
 
 (1)
    
    Net of $0.4 million and $4.1 million of tax for the three
months ended March 31, 2007 and 2008, respectively. For
the nine months ended March 31, 2007 and 2008, the fair
value adjustments for cash flow hedges were net of $0.3
million and $6.8 million of tax, respectively, which were
reclassified into earnings.(2)
    
    Net of $0.2 million and $0.2 million for the three months
ended March 31, 2007 and 2008, respectively, which was
reclassified into earnings. For the nine months ended
March 31, 2007 and 2008, the fair value adjustments for
cash flow hedges were net of $0.6 million and $0.8 million,
respectively, which were reclassified into earnings.
        .  8. ADOPTION OF FASB INTERPRETATION NO. 48
    23




---



##### 



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, 2008 and 2007. 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
  ® ® ®
      24




---



##### 



Discussion of Critical Accounting Policies
   Revenue Recognition
   25




---



##### 



® ® ®
 Company-Funded Consumer Loan Loss Reserves Policy
   Check Cashing Returned Item Policy
  Goodwill and Other Intangibles
 Goodwill and Other Intangible Assets
   26




---



##### 



Income Taxes
  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)2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008Check cashing
    
    $
    42,683
    
    
    $
    51,503
    
    
    
    39.9
    %
    
    
    38.1
    %
    
    $
    122,590
    
    
    $
    146,025
    
    
    
    40.7
    %
    
    
    38.7
    %Consumer lending,
net
    
    
    47,653
    
    
    
    59,293
    
    
    
    44.5
    %
    
    
    43.8
    %
    
    
    133,173
    
    
    
    170,520
    
    
    
    44.3
    %
    
    
    45.2
    %Money transfer fees
    
    
    5,128
    
    
    
    6,921
    
    
    
    4.8
    %
    
    
    5.1
    %
    
    
    15,232
    
    
    
    19,960
    
    
    
    5.1
    %
    
    
    5.3
    %Franchise fees
and royalties
    
    
    1,582
    
    
    
    1,237
    
    
    
    1.5
    %
    
    
    0.9
    %
    
    
    5,606
    
    
    
    3,740
    
    
    
    1.9
    %
    
    
    1.0
    %Other revenue
    
    
    10,016
    
    
    
    16,336
    
    
    
    9.3
    %
    
    
    12.1
    %
    
    
    24,272
    
    
    
    36,746
    
    
    
    8.0
    %
    
    
    9.8
    %Total revenue
    
    $
    107,062
    
    
    $
    135,290
    
    
    
    100
    %
    
    
    100
    %
    
    $
    300,873
    
    
    $
    376,991
    
    
    
    100
    %
    
    
    100
    %
 The Three Months Ended March 31, 2008 compared to the Three Months Ended March 31, 2007
  ® ®
 27




---



##### 



The Nine Months Ended March 31, 2008 compared to the Nine Months Ended March 31, 2007
  ® ®
  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)2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008Salaries and benefits
    
    $
    33,661
    
    
    $
    42,778
    
    
    
    31.4
    %
    
    
    31.6
    %
    
    $
    94,756
    
    
    $
    116,661
    
    
    
    31.5
    %
    
    
    30.9
    %Occupancy
    
    
    8,225
    
    
    
    11,359
    
    
    
    7.7
    %
    
    
    8.4
    %
    
    
    23,808
    
    
    
    30,790
    
    
    
    7.9
    %
    
    
    8.2
    %Depreciation
    
    
    2,571
    
    
    
    3,597
    
    
    
    2.4
    %
    
    
    2.7
    %
    
    
    6,782
    
    
    
    9,620
    
    
    
    2.3
    %
    
    
    2.6
    %Returned checks, net
and cash shortages
    
    
    3,899
    
    
    
    4,973
    
    
    
    3.6
    %
    
    
    3.7
    %
    
    
    11,296
    
    
    
    14,226
    
    
    
    3.8
    %
    
    
    3.8
    %Telephone and
communications
    
    
    1,717
    
    
    
    1,917
    
    
    
    1.6
    %
    
    
    1.4
    %
    
    
    4,734
    
    
    
    5,367
    
    
    
    1.6
    %
    
    
    1.4
    %Advertising
    
    
    2,088
    
    
    
    2,602
    
    
    
    2.0
    %
    
    
    1.9
    %
    
    
    7,546
    
    
    
    7,426
    
    
    
    2.5
    %
    
    
    2.0
    %Bank Charges and
armored
carrier expenses
    
    
    2,833
    
    
    
    3,611
    
    
    
    2.6
    %
    
    
    2.7
    %
    
    
    7,670
    
    
    
    9,954
    
    
    
    2.5
    %
    
    
    2.6
    %Other
    
    
    10,153
    
    
    
    13,287
    
    
    
    9.5
    %
    
    
    9.8
    %
    
    
    30,806
    
    
    
    35,739
    
    
    
    10.2
    %
    
    
    9.5
    %Total store and
regional expenses
    
    $
    65,147
    
    
    $
    84,124
    
    
    
    60.8
    %
    
    
    62.2
    %
    
    $
    187,398
    
    
    $
    229,783
    
    
    
    62.3
    %
    
    
    61.0
    %
 The Three Months Ended March 31, 2008 compared to the Three Months Ended March 31, 2007
  28




---



##### 



The Nine Months Ended March 31, 2008 compared to the Nine Months Ended March 31, 2007
  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)2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008Corporate expenses
    
    $
    13,840
    
    
    $
    18,116
    
    
    
    12.9
    %
    
    
    13.4
    %
    
    $
    40,077
    
    
    $
    53,578
    
    
    
    13.3
    %
    
    
    14.2
    %Other depreciation
and amortization
    
    
    855
    
    
    
    854
    
    
    
    0.8
    %
    
    
    0.6
    %
    
    
    2,531
    
    
    
    2,663
    
    
    
    0.8
    %
    
    
    0.7
    %Interest expense, net
    
    
    8,082
    
    
    
    9,771
    
    
    
    7.5
    %
    
    
    7.2
    %
    
    
    23,071
    
    
    
    26,837
    
    
    
    7.7
    %
    
    
    7.1
    %Loss on
extinguishment of
debt
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    31,784
    
    
    
    97
    
    
    
    10.6
    %
    
    
    0.0
    %Goodwill impairment
and other charges
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    24,464
    
    
    
    
    
    
    
    8.1
    %
    
    
    0.0
    %Mark to market 
term loans
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    6,619
    
    
    
    
    
    
    
    2.2
    %
    
    
    0.0
    %Proceeds from
litigation
settlements
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    (3,256
    )
    
    
    
    
    
    
    (1.1
    )%
    
    
    0.0
    %Other, net
    
    
    228
    
    
    
    (206
    )
    
    
    0.2
    %
    
    
    (0.2
    )%
    
    
    407
    
    
    
    (1,008
    )
    
    
    0.1
    %
    
    
    (0.3
    )%Income tax provision
    
    
    7,218
    
    
    
    8,802
    
    
    
    6.7
    %
    
    
    6.5
    %
    
    
    30,262
    
    
    
    26,194
    
    
    
    10.1
    %
    
    
    6.9
    %
 The Three Months Ended March 31, 2008 compared to the Three Months Ended March 31, 2007
 Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
  29




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##### 



Income Tax Provision
   DTA
    
    
    VA
    
    
    Net DTABalance at December 31, 2007
    
    $
    107.8
    
    
    $
    96.1
    
    
    $
    11.7Increase in US DTA/VA
    
    
    2.8
    
    
    
    2.8
    
    
    
    Increase in Foreign DTA/VA
    
    
    2.9
    
    
    
    
    
    
    
    2.9Balance at March 31, 2008
    
    $
    113.5
    
    
    $
    98.9
    
    
    $
    14.6
    30




---



##### 



The Nine Months Ended March 31, 2008 compared to the Nine Months Ended March 31, 2007
 Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
  31




---



##### 



Loss on Extinguishment of Debt
   Nine Months EndedMarch 31, 2007
    
    
    March 31, 2008Call premium
    
    $
    6.8
    
    
    $
    0.1Tender premium
    
    
    17.6
    
    
    
    Write-off of previously capitalized deferred issuance costs, net
    
    
    8.8
    
    
    
    Write-off of original issue premium
    
    
    (1.4
    )
    
    
    Total
    
    $
    31.8
    
    
    $
    0.1
 Proceeds from Legal Settlement
   Goodwill Impairment and Other Charges
   Mark to Market Term Loans
   Income Tax Provision
  32




---



##### 



Changes in Financial Condition
  Liquidity and Capital Resources
   33




---



##### 



New Credit Facilities.
  Revolving Credit Facilities.
 United States Revolving Credit Facility.
 Canadian Revolving Credit Facility.
 34




---



##### 



United Kingdom Overdraft Facility
 Long-Term Debt.
 Operating Leases.
  Less than
    
    
    1  3
    
    
    4  5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsLong-term debt:Term loans due 2012
    
    
    378,993
    
    
    
    3,750
    
    
    
    7,500
    
    
    
    7,500
    
    
    
    360,2432.875% Senior Convertible Notes
due 2027
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000Operating lease obligations
    
    
    153,965
    
    
    
    37,015
    
    
    
    56,223
    
    
    
    31,004
    
    
    
    29,723Total contractual cash obligations
    
    $
    732,958
    
    
    $
    40,765
    
    
    $
    63,723
    
    
    $
    38,504
    
    
    $
    589,966
  Balance Sheet Variations
 March 31, 2008 compared to June 30, 2007 .
     35




---



##### 



Seasonality and Quarterly Fluctuations
  Impact of Recent Accounting Pronouncement
  36




---



##### 



Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995
   37




---



##### 



DOLLAR FINANCIAL CORP.
 SUPPLEMENTAL STATISTICAL DATA
 March 31,2007
    
    2008Company Operating Data:Stores in operation:Company-owned
    
    
    890
    
    
    
    1,111Franchised stores and check cashing merchants
    
    
    385
    
    
    
    343Total
    
    
    1,275
    
    
    
    1,454
 Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2007
    
    2008
    
    2007
    
    2008Check Cashing Data:Face amount of checks cashed (in millions)
    
    $
    1,099
    
    
    $
    1,395
    
    
    $
    3,203
    
    
    $
    3,860Face amount of average check
    
    $
    485
    
    
    $
    541
    
    
    $
    477
    
    
    $
    535Average fee per check
    
    $
    18.82
    
    
    $
    19.96
    
    
    $
    18.28
    
    
    $
    20.24Number of checks cashed (in thousands)
    
    
    2,267
    
    
    
    2,580
    
    
    
    6,708
    
    
    
    7,215
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2008
    
    
    2007
    
    
    2008Check Cashing Collections Data (in thousands):Face amount of returned checks
    
    $
    11,959
    
    
    $
    15,516
    
    
    $
    34,691
    
    
    $
    44,527Collections
    
    
    (8,844
    )
    
    
    (11,736
    )
    
    
    (25,243
    )
    
    
    (32,919
    )Net write-offs
    
    $
    3,115
    
    
    $
    3,780
    
    
    $
    9,448
    
    
    $
    11,608Collections as a percentage of returned checks
    
    
    74.0
    %
    
    
    75.6
    %
    
    
    72.8
    %
    
    
    73.9
    %Net write-offs as a percentage of check
cashing revenues
    
    
    7.3
    %
    
    
    7.3
    %
    
    
    7.7
    %
    
    
    7.9
    %Net write-offs as a percentage of the face
amount of checks cashed
    
    
    0.28
    %
    
    
    0.27
    %
    
    
    0.30
    %
    
    
    0.30
    %
 38




---



##### 



Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2007
    
    2008
    
    2007
    
    2008U.S. company-funded consumer loan originations (1)
    
    $
    69,835
    
    
    $
    152,725
    
    
    $
    203,635
    
    
    $
    377,974Canadian company-funded consumer loan originations (2)
    
    
    204,887
    
    
    
    226,111
    
    
    
    547,194
    
    
    
    723,003U.K. company-funded consumer loan originations (2)
    
    
    70,295
    
    
    
    102,588
    
    
    
    190,641
    
    
    
    279,752Total company-funded consumer loan originations
    
    $
    345,017
    
    
    $
    481,424
    
    
    $
    941,470
    
    
    $
    1,380,729U.S. Servicing revenues
    
    $
    7,768
    
    
    $
    574
    
    
    $
    24,857
    
    
    $
    2,003U.S. company-funded consumer loan revenues
    
    
    10,903
    
    
    
    21,471
    
    
    
    32,205
    
    
    
    55,754Canadian company-funded consumer loan revenues
    
    
    29,827
    
    
    
    34,839
    
    
    
    77,107
    
    
    
    111,265U.K. company-funded consumer loan revenues
    
    
    11,697
    
    
    
    16,432
    
    
    
    31,650
    
    
    
    46,397Provision for loan losses and adjustments to servicing
revenues
    
    
    (12,542
    )
    
    
    (14,023
    )
    
    
    (32,646
    )
    
    
    (44,899
    )Total consumer lending revenues, net
    
    $
    47,653
    
    
    $
    59,293
    
    
    $
    133,173
    
    
    $
    170,520Gross charge-offs of company-funded consumer loans
    
    $
    44,632
    
    
    $
    55,297
    
    
    $
    112,719
    
    
    $
    161,235Recoveries of company-funded consumer loans
    
    
    (36,829
    )
    
    
    (42,504
    )
    
    
    (94,884
    )
    
    
    (124,813
    )Net charge-offs on company-funded consumer loans
    
    $
    7,803
    
    
    $
    12,793
    
    
    $
    17,835
    
    
    $
    36,422Gross charge-offs of company-funded consumer loans as a
percentage of total company-funded consumer loan originations
    
    
    12.9
    %
    
    
    11.5
    %
    
    
    12.0
    %
    
    
    11.7
    %Recoveries of company-funded consumer loans as a percentage
of total company-funded consumer loan originations
    
    
    10.6
    %
    
    
    8.8
    %
    
    
    10.1
    %
    
    
    9.1
    %Net charge-offs on company-funded consumer loans as a
percentage of total company-funded consumer loan originations
    
    
    2.3
    %
    
    
    2.7
    %
    
    
    1.9
    %
    
    
    2.6
    %
 
 (1)
    
    Our company operated stores in the United States originated bank-funded installment consumer loans during the three and nine months ended March 31, 2007,
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, 2008. In Texas, the Company 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. 39




---



##### 



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Generally
  
    
    interest rates on revolving credit facilities; and
    
    foreign exchange rates generating translation gains and losses.
  Interest Rate Risk
  Foreign Currency Exchange Rate Risk
 Put Options
    40




---



##### 



Cross-Currency Interest Rate Swaps
     
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  41




---



##### 



Item 1A. Risk Factors
   Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
  
 42




---



##### 



Item 6. Exhibits
 Exhibit No.
    
    Description of Document10.1
    
    Form of Restricted Stock Grant Document for Canadian Directors for the 2005 and 2007 Stock
Incentive Plans31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer31.3
    
    Rule 13a-14(a)/15d-14(a) Certification of Senior Vice President of Finance and Corporate Controller32.1
    
    Section 1350 Certification of Chief Executive Officer32.2
    
    Section 1350 Certification of Chief Financial Officer32.3
    
    Section 1350 Certification of Senior Vice President of Finance and Corporate Controller
 43




---



##### 



SIGNATURE
  DOLLAR FINANCIAL CORP.Date: May 8, 2008
    *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. 44