UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 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
 þ þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
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DOLLAR FINANCIAL CORP.
INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsInterim Consolidated Balance Sheets as of June 30, 2010 and September 30, 2010 (unaudited)
    
    
    3Interim Unaudited Consolidated Statements of Operations for the Three Months Ended
September 30, 2009 and 2010
    
    
    4Interim Consolidated Statements of Stockholders Equity as of June 30, 2010 and September
30, 2010 (unaudited)
    
    
    5Interim Unaudited Consolidated Statements of Cash Flows for the Three Months Ended
September 30, 2009 and 2010
    
    
    6Notes to Interim Unaudited Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    37Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    52Item 4. Controls and Procedures
    
    
    54PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    54Item 1A.
Risk Factors
    
    
    54Item 6. Exhibits
    
    
    55Signature
    
    
    56Rule 13a-14(a)/15d-14(a) Certification of Chief Executive OfficerRule 13(a)-14(a)/15d-14a Certification of Executive Vice President and Chief Financial OfficerRule 13a-14(a)/15d-14(a) Certification of Senior Vice President of Finance and Corporate ControllerSection 1350 Certification of Chief Executive OfficerSection 1350 Certification of Executive Vice President and Chief Financial OfficerSection 1350 Certification of Senior Vice President of Finance and Corporate Controller
 2




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##### 



PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
 DOLLAR FINANCIAL CORP.
INTERIM CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share amounts)
 June 30,
    
    
    September 30,2010
    
    
    2010(unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    291.3
    
    
    $
    286.3Loans receivable, net:Loans receivable
    
    
    156.5
    
    
    
    172.0Less: Allowance for loan losses
    
    
    (18.2
    )
    
    
    (20.9
    )Loans receivable, net
    
    
    138.3
    
    
    
    151.1Loans in default, net of an allowance of $14.4 and $16.9
    
    
    7.3
    
    
    
    8.5Other receivables
    
    
    17.2
    
    
    
    17.4Prepaid expenses and other current assets
    
    
    25.8
    
    
    
    31.6Current deferred tax asset, net of valuation allowance of $4.9 and $4.9
    
    
    1.0
    
    
    
    1.0Total current assets
    
    
    480.9
    
    
    
    495.9Deferred tax asset, net of valuation allowance of $80.2 and $80.9
    
    
    22.6
    
    
    
    22.6Property and equipment, net of accumulated depreciation of $117.2 and $123.8
    
    
    67.5
    
    
    
    73.7Goodwill and other intangibles
    
    
    609.0
    
    
    
    619.6Debt issuance costs, net of accumulated amortization of $3.5 and $4.5
    
    
    18.7
    
    
    
    18.3Other
    
    
    15.9
    
    
    
    17.8Total Assets
    
    $
    1,214.6
    
    
    $
    1,247.9LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    44.8
    
    
    $
    34.3Income taxes payable
    
    
    6.2
    
    
    
    3.8Accrued expenses and other liabilities
    
    
    92.6
    
    
    
    96.2Debt due within one year
    
    
    3.3
    
    
    
    18.0Current deferred tax liability
    
    
    0.3
    
    
    
    0.4Total current liabilities
    
    
    147.2
    
    
    
    152.7Fair value of derivatives
    
    
    47.4
    
    
    
    58.4Long-term deferred tax liability
    
    
    24.0
    
    
    
    25.9Long-term debt
    
    
    725.3
    
    
    
    727.4Other non-current liabilities
    
    
    52.4
    
    
    
    42.8Stockholders equity:Common stock, $.001 par value: 55,500,000 shares authorized;
24,359,459 shares and 24,404,088 shares issued and outstanding at
June 30, 2010 and September 30, 2010, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    331.1
    
    
    
    332.5Accumulated deficit
    
    
    (115.5
    )
    
    
    (103.3
    )Accumulated other comprehensive income
    
    
    2.7
    
    
    
    11.6Total Dollar Financial Corp. stockholders equity
    
    
    218.3
    
    
    
    240.8Non-controlling interest
    
    
    
    
    
    
    (0.1
    )Total stockholders equity
    
    
    218.3
    
    
    
    240.7Total Liabilities and Stockholders Equity
    
    $
    1,214.6
    
    
    $
    1,247.9
  3




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##### 



DOLLAR FINANCIAL CORP.
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)
 Three Months EndedSeptember 30,2009
    
    
    2010Revenues:Check cashing
    
    $
    37.8
    
    
    $
    35.3Fees from consumer lending
    
    
    77.4
    
    
    
    92.0Money transfer fees
    
    
    6.8
    
    
    
    7.2Pawn service fees and sales
    
    
    3.8
    
    
    
    6.3Other
    
    
    19.7
    
    
    
    33.4Total revenues
    
    
    145.5
    
    
    
    174.2Operating expenses:Salaries and benefits
    
    
    36.7
    
    
    
    40.7Provision for loan losses
    
    
    11.7
    
    
    
    14.0Occupancy
    
    
    10.8
    
    
    
    11.6Depreciation
    
    
    3.4
    
    
    
    3.6Returned checks, net and cash shortages
    
    
    2.3
    
    
    
    1.9Maintenance and repairs
    
    
    2.8
    
    
    
    3.3Advertising
    
    
    3.4
    
    
    
    5.8Bank charges and armored carrier service
    
    
    3.5
    
    
    
    3.8Other
    
    
    15.0
    
    
    
    21.2Total operating expenses
    
    
    89.6
    
    
    
    105.9Operating margin
    
    
    55.9
    
    
    
    68.3Corporate and other expenses:Corporate expenses
    
    
    20.4
    
    
    
    25.4Other depreciation and amortization
    
    
    1.1
    
    
    
    2.7Interest expense, net
    
    
    11.6
    
    
    
    21.6Unrealized foreign exchange loss (gain)
    
    
    7.8
    
    
    
    (14.6
    )Loss on derivatives not designated as hedges
    
    
    
    
    
    
    13.8Provision for litigation settlements
    
    
    1.3
    
    
    
    0.2Loss on store closings
    
    
    0.3
    
    
    
    0.2Other expense, net
    
    
    
    
    
    
    0.8Income before income taxes
    
    
    13.4
    
    
    
    18.2Income tax provision
    
    
    8.0
    
    
    
    6.1Net income
    
    
    5.4
    
    
    
    12.1Less: Net income (loss) attributable to non-controlling interests
    
    
    0.1
    
    
    
    (0.1
    )Net income attributable to Dollar Financial Corp.
    
    $
    5.3
    
    
    $
    12.2Net income per share attributable to Dollar Financial Corp:Basic
    
    $
    0.22
    
    
    $
    0.50Diluted
    
    $
    0.22
    
    
    $
    0.49Weighted average shares outstanding:Basic
    
    
    23,998,357
    
    
    
    24,266,967Diluted
    
    
    24,480,544
    
    
    
    24,853,047
  4




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##### 



DOLLAR FINANCIAL CORP.
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In millions, except share data)
 AccumulatedCommon Stock
    
    
    Additional
    
    
    Accumulated
    
    
    
    
    
    
    Other
    
    
    TotalOutstanding
    
    
    Paid-in
    
    
    Income
    
    
    Non-Controlling
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    (Deficit)
    
    
    Interest
    
    
    Income
    
    
    EquityBalance, June 30, 2010
(audited)
    
    
    24,359,459
    
    
    $
    
    
    
    $
    331.1
    
    
    $
    (115.5
    )
    
    $
    
    
    
    $
    2.7
    
    
    $
    218.3Comprehensive income:Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.7
    
    
    
    7.7Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    1.2Net income attributable to
Dollar Financial Corp.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.2
    
    
    
    
    
    
    
    
    
    
    
    12.2Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.1Restricted stock grants
    
    
    43,556Stock options exercised
    
    
    17,114
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Vested portion of granted
restricted stock and
restricted stock units
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Retirement of common stock
    
    
    (16,041
    )Other stock compensation
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8Net loss attributable to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Balance, September 30, 2010
    
    
    24,404,088
    
    
    $
    
    
    
    $
    332.5
    
    
    $
    (103.3
    )
    
    $
    (0.1
    )
    
    $
    11.6
    
    
    $
    240.7(unaudited)
  5




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##### 



DOLLAR FINANCIAL CORP.
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 Three Months EndedSeptember 30,2009
    
    
    2010Cash flows from operating activities:Net income
    
    $
    5.4
    
    
    $
    12.1Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    5.4
    
    
    
    7.2Change in fair value of derivatives not designated as hedges
    
    
    
    
    
    
    9.5Provision for loan losses
    
    
    11.7
    
    
    
    14.0Non-cash stock compensation
    
    
    1.4
    
    
    
    1.2Loss on disposal of fixed assets
    
    
    0.2
    
    
    
    0.3Unrealized
foreign exchange loss (gain)
    
    
    7.8
    
    
    
    (14.6
    )Deferred tax provision
    
    
    3.9
    
    
    
    2.1Accretion of debt discount and deferred issuance costs
    
    
    2.4
    
    
    
    3.6Change in assets and liabilities (net of effect of acquisitions):(Increase) decrease in loans and other receivables
    
    
    (14.7
    )
    
    
    (21.1
    )(Increase) decrease in prepaid expenses and other
    
    
    0.6
    
    
    
    (6.8
    )Increase (decrease) in accounts payable, accrued expenses and other liabilities
    
    
    (5.3
    )
    
    
    (25.9
    )Net cash provided by (used in) operating activities
    
    
    18.8
    
    
    
    (18.4
    )Cash flows from investing activities:Acquisition
adjustments
    
    
    
    
    
    
    (0.4
    )Additions to property and equipment
    
    
    (5.5
    )
    
    
    (9.4
    )Net cash used in investing activities
    
    
    (5.5
    )
    
    
    (9.8
    )Cash flows from financing activities:Proceeds from the exercise of stock options
    
    
    
    
    
    
    0.2Other debt payments
    
    
    (8.0
    )
    
    
    Net increase in revolving credit facilities
    
    
    
    
    
    
    14.3Payment of debt issuance and other costs
    
    
    (0.1
    )
    
    
    (0.1
    )Net cash (used in) provided by financing activities
    
    
    (8.1
    )
    
    
    14.4Effect of exchange rate changes on cash and cash equivalents
    
    
    11.9
    
    
    
    8.8Net increase (decrease) in cash and cash equivalents
    
    
    17.1
    
    
    
    (5.0
    )Cash and cash equivalents at beginning of period
    
    
    209.6
    
    
    
    291.3Cash and cash equivalents at end of period
    
    $
    226.7
    
    
    $
    286.3
  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
  Reclassifications
  Fair Value of Financial Instruments
  7




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Earnings per Share
  Three Months EndedSeptember 30,2009
    
    
    2010Net income attributable to Dollar Financial Corp
    
    $
    5.3
    
    
    $
    12.2Reconciliation of denominator:Weighted average of common shares outstanding  basic (1)
    
    
    24.0
    
    
    
    24.3Effect of dilutive stock options  (2)
    
    
    0.2
    
    
    
    0.4Effect of unvested restricted stock and restricted stock unit grants (2)
    
    
    0.3
    
    
    
    0.2Weighted average of common shares outstanding  diluted
    
    
    24.5
    
    
    
    24.9
 
 (1)
    
    Excludes 0.1 and 0.1 shares of unvested restricted stock which are included in total
outstanding shares of common stock as of September 30, 2009 and 2010, respectively. The
dilutive effect of restricted stock is included in the calculation of diluted earnings
per share using the treasury stock method.(2)
    
    The effect of dilutive stock options was determined under the treasury stock method. Stock Based Employee Compensation
    8




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Three Months EndedSeptember 30,2009
    
    2010Expected volatility
    
    
    55.0
    %
    
    
    52.9
    %Expected life (years)
    
    
    6.0
    
    
    
    5.8Risk-free interest rate
    
    
    3.30
    %
    
    
    2.03
    %Expected dividends
    
    None
    
    
    NoneWeighted average fair value
    
    $
    8.72
    
    
    $
    9.89
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    Intrinsic ValueOptions
    
    
    Price
    
    
    Term (years)
    
    
    ($ in millions)Options outstanding at June 30,
2010 (1,199,015 shares exercisable)
    
    
    1,938,723
    
    
    $
    15.33
    
    
    
    7.5
    
    
    $
    9.9Granted
    
    
    4,159
    
    
    $
    19.62Exercised
    
    
    (17,114
    )
    
    $
    10.10Forfeited and expired
    
    
    (30,768
    )
    
    $
    12.78Options outstanding at September 30, 2010
    
    
    1,895,000
    
    
    $
    15.43
    
    
    
    7.2
    
    
    $
    11.3Exercisable at September 30, 2010
    
    
    1,242,081
    
    
    $
    15.57
    
    
    
    6.4
    
    
    $
    7.3
   9




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##### 



DOLLAR FINANCIAL CORP.
 NOTES
TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  WeightedAverageRestricted
    
    
    Grant-DateStock Awards
    
    
    Fair-ValueOutstanding at June 30, 2010
    
    
    100,562
    
    
    $
    14.49Granted
    
    
    
    
    
    $
    Vested
    
    
    
    
    
    $
    Forfeited
    
    
    
    
    
    $
    Outstanding at September 30, 2010
    
    
    100,562
    
    
    $
    14.49
   WeightedRestricted
    
    
    AverageStock Unit
    
    
    Grant-DateAwards
    
    
    Fair-ValueOutstanding at June 30, 2010
    
    
    605,978
    
    
    $
    14.97Granted
    
    
    4,869
    
    
    $
    19.43Vested
    
    
    (44,231
    )
    
    $
    17.33Forfeited
    
    
    (18,696
    )
    
    $
    15.97Outstanding at September 30, 2010
    
    
    547,920
    
    
    $
    14.78
  Recent Accounting Pronouncements
 Business Combinations
 Accounting for Convertible
Debt Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
 10




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##### 



DOLLAR FINANCIAL CORP.
 NOTES
TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Accounting Standards
Codification tm
 Improving Disclosures about Fair Value
Measurements. Fair Value Measurements and Disclosures
 2. Acquisitions
       11




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Balance at June 30, 2010
    
    $
    496.8Purchase accounting adjustments:Military Financial Services, LLC
    
    
    0.1Foreign currency translation adjustment
    
    
    10.0Balance at September 30, 2010
    
    $
    506.9
  Pro Forma ResultsThree months endedSeptember 30, 2009(Unaudited in millionsexcept per share amounts)Revenue
    
    $
    154.5Net income attributable to Dollar Financial Corp
    
    $
    8.5Net income per common share  basic
    
    $
    0.36Net income per common share  diluted
    
    $
    0.35
 3. Goodwill and Other Intangibles
  United States
    
    
    Dealers Financial
    
    
    
    
    
    
    UnitedRetail
    
    
    Services
    
    
    Canada
    
    
    Kingdom
    
    
    Other
    
    
    TotalBalance at June 30, 2010
    
    $
    205.7
    
    
    $
    53.5
    
    
    $
    136.4
    
    
    $
    94.6
    
    
    $
    6.6
    
    
    $
    496.8Acquisitions and purchase
accounting adjustments
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    4.1
    
    
    
    5.0
    
    
    
    0.9
    
    
    
    10.0Balance at September 30, 2010
    
    $
    205.7
    
    
    $
    53.6
    
    
    $
    140.5
    
    
    $
    99.6
    
    
    $
    7.5
    
    
    $
    506.9
 12




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DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Gross Carrying AmountJune 30,
    
    
    September 30,2010
    
    
    2010Non-amortizing intangible assets:Goodwill
    
    $
    496.8
    
    
    $
    506.9Reacquired franchise rights
    
    
    51.3
    
    
    
    53.3DFS MILES Program
    
    
    35.4
    
    
    
    35.4$
    583.5
    
    
    $
    595.6Amortizable intangible assets:Various contracts
    
    $
    28.7
    
    
    $
    28.7Accumulated Amortization:Various contracts
    
    
    (3.2
    )
    
    
    (4.7
    )Total intangible assets
    
    $
    609.0
    
    
    $
    619.6
       Fiscal Year EndedJune 30,
    
    Amount2011
    
    $
    6.02012
    
    
    5.92013
    
    
    5.62014
    
    
    5.42015
    
    
    2.6$
    25.5
 13




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 4. Debt
  SeptemberJune 30,
    
    
    30,2010
    
    
    2010Revolving credit facility
    
    $
    
    
    
    $
    14.3National Money Mart Company 10.375% Senior Notes due December 15, 2016
    
    
    600.0
    
    
    
    600.0Issuance discount on 10.375% Senior Notes due 2016
    
    
    (3.3
    )
    
    
    (3.3
    )Dollar Financial Corp. 2.875% Senior Convertible Notes due 2027
    
    
    38.3
    
    
    
    38.9Dollar Financial Corp. 3.000% Senior Convertible Notes due 2028
    
    
    84.9
    
    
    
    86.3Other
    
    
    8.7
    
    
    
    9.2Total debt
    
    
    728.6
    
    
    
    745.4Less: current portion of debt
    
    
    (3.3
    )
    
    
    (18.0
    )Long-term debt
    
    $
    725.3
    
    
    $
    727.4
 Senior Notes
  Convertible Notes
 Senior Convertible Notes due 2027
    14




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   
    
    during any calendar quarter commencing after September 30, 2007, if the closing sale
price of Dollar Financial Corp.s common stock is greater than or equal to 130% of the
applicable conversion price for at least 20 trading days in the period of 30 consecutive
trading days ending on the last day of the preceding calendar quarter;
    
    during the five day period following any five consecutive trading day period in which the
trading price of the 2027 Notes for each day of such period was less than 98.0% of the
product of the closing sale price per share of Dollar Financial Corp.s common stock on such
day and the conversion rate in effect for the 2027 Notes on each such day;
    
    if the 2027 Notes are called for redemption; or
    
    upon the occurrence of specified corporate transactions as described in the 2027
Indenture.
     Senior Convertible Notes due 2028
   15




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##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
    
    during any calendar quarter commencing after December 31, 2009, if the closing sale price
of Dollar Financial Corp.s common stock is greater than or equal to 130% of the applicable
conversion price for at least 20 trading days in the period of 30 consecutive trading days
ending on the last day of the preceding calendar quarter;
    
    during the five day period following any five consecutive trading day period in which the
trading price of the 2028 Notes for each day of such period was less than 98.0% of the
product of the closing sale price per share of Dollar Financial Corp.s common stock on such
day and the conversion rate in effect for the 2028 Notes on each such day;
    
    if the 2028 Notes are called for redemption; and at any time on or after December 31,
2026; or
    
    upon the occurrence of specified corporate transactions as described in the 2028
Indenture.
     Treatment of Convertible Notes
  Debt
 16




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  1.
    
    cash equal to the lesser of the aggregate principal amount of the Convertible Notes to be
converted ($1,000 per note) or the total conversion value; and shares of Dollar Financial
Corp.s common stock in respect of the remainder, if any, of the conversion value over the
principal amount of the Convertible Notes; or2.
    
    shares of Dollar Financial Corp.s common stock to the holders, calculated at the initial
conversion price which is subject to any of the conversion price adjustments discussed
above.
 Earnings Per Share
 Credit Facility
        17




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     5. Fair Value Measurements
   18




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2010
( in millions)
 Quoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance atAssets and Liabilities (Level 1)
    
    
    Inputs (Level 2)
    
    
    Inputs (Level 3)
    
    
    September 30, 2010AssetsDerivative financial instruments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    LiabilitiesDerivative financial instruments
    
    $
    
    
    
    $
    58.4
    
    
    $
    
    
    
    $
    58.4
  6. Derivative Instruments and Hedging Activities
 Risk Management Objective of Using Derivatives
   Cash Flow Hedges of Foreign Exchange Risk
   Cash Flow Hedges of Multiple Risks
  19




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Receive Floating
    
    Receive FloatingForeign Currency Derivatives
    
    Pay Fixed Notional
    
    Pay Fixed Strike Rate
    
    Notional
    
    IndexUSD-CAD Cross Currency Swap
    
    CAD182,132,438
    
    
    8.75
    %
    
    $
    158,400,000
    
    
    3 mo. LIBOR + 2.75% per annumUSD-CAD Cross Currency Swap
    
    CAD60,979,248
    
    
    7.47
    %
    
    $
    52,800,000
    
    
    3 mo. LIBOR + 2.75% per annumUSD-CAD Cross Currency Swap
    
    CAD83,188,800
    
    
    7.41
    %
    
    $
    72,000,000
    
    
    3 mo. LIBOR + 2.75% per annum
 Non-designated Hedges of Commodity Risk
  20




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Tabular Disclosure of Fair Values of Derivative Instruments
 Asset Derivatives
    
    
    Liability DerivativesAs of September 30, 2010
    
    
    As of September 30, 2010Balance Sheet Location
    
    
    Fair Value
    
    
    Balance Sheet Location
    
    
    Fair ValueDerivatives
not designated as
hedging
instruments:Cross Currency Swaps
    
    Derivatives
    
    $
    
    
    
    Derivatives
    
    $
    58.4Total derivatives
not designated as
hedging instruments
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    58.4Asset Derivatives
    
    
    Liability DerivativesAs of June 30, 2010
    
    
    As of June 30, 2010Balance Sheet Location
    
    
    Fair Value
    
    
    Balance Sheet Location
    
    
    Fair ValueDerivatives
not designated as
hedging
instruments:Cross Currency Swaps
    
    Derivatives
    
    $
    
    
    
    Derivatives
    
    $
    47.4Total derivatives
not designated as
hedging instruments
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    47.4
 21




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statement of Operations for the Three Months Ending September 30, 2010Location of Gain or
    
    
    Amount of Gain or(Loss) Recognized in
    
    
    (Loss) Recognized inAmount of Gain or
    
    
    Location of Gain or
    
    
    Amount of Gain or
    
    
    Income on Derivative
    
    
    Income on Derivative(Loss) Recognized in
    
    
    (Loss) Reclassified
    
    
    (Loss) Reclassified
    
    
    (Ineffective Portion
    
    
    (Ineffective PortionOCI on Derivative
    
    
    from Accumulated
    
    
    from Accumulated
    
    
    and Amount Excluded
    
    
    and Amount ExcludedDerivatives in Cash Flow
    
    (Effective Portion),
    
    
    OCI into Income
    
    
    OCI into Income
    
    
    from Effectiveness
    
    
    from EffectivenessHedging Relationships
    
    net of tax
    
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    Testing)
    
    
    Testing)Cross Currency Swaps
    
    $
    
    
    
    Interest Expense
    
    $
    (1.6
    )
    
    Other income / (expense)
    
    $
    (13.8
    )Corporate Expenses
    
    
    0.4Total
    
    $
    
    
    
    
    
    
    
    $
    (1.2
    )
    
    
    
    
    
    $
    (13.8
    )
 Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statement of Operations for the Three Months Ending September 30, 2009Location of Gain or
    
    
    Amount of Gain or(Loss) Recognized in
    
    
    (Loss) Recognized inAmount of Gain or
    
    
    Location of Gain or
    
    
    Amount of Gain or
    
    
    Income on Derivative
    
    
    Income on Derivative(Loss) Recognized in
    
    
    (Loss) Reclassified
    
    
    (Loss) Reclassified
    
    
    (Ineffective Portion
    
    
    (Ineffective PortionOCI on Derivative
    
    
    from Accumulated
    
    
    from Accumulated
    
    
    and Amount Excluded
    
    
    and Amount ExcludedDerivatives in Cash Flow
    
    (Effective Portion),
    
    
    OCI into Income
    
    
    OCI into Income
    
    
    from Effectiveness
    
    
    from EffectivenessHedging Relationships
    
    net of tax
    
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    Testing)
    
    
    Testing)Foreign Exchange Contracts
    
    $
    
    
    
    Foreign currency  gain / (loss)
    
    $
    
    
    
    Other income / (expense)
    
    $
    Cross Currency Swaps
    
    
    0.6
    
    
    Interest Expense
    
    
    (0.4
    )
    
    Other income / (expense)
    
    
    Corporate Expenses
    
    
    0.1Total
    
    $
    0.6
    
    
    
    
    
    
    $
    (0.3
    )
    
    
    
    
    
    $
    
 Credit-risk-related Contingent Features
    22




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 7. Comprehensive Income
  Three months endedSeptember 30,2009
    
    
    2010Net income
    
    $
    5.4
    
    
    $
    12.1Foreign currency translation adjustment(1)
    
    
    4.3
    
    
    
    7.7Fair value adjustments for derivatives, net(2)
    
    
    (0.5
    )
    
    
    Amortization of accumulated other comprehensive income related to ineffective cash flow hedges(3)
    
    
    0.3
    
    
    
    1.2Comprehensive income
    
    
    9.5
    
    
    
    21.0Net income (loss) applicable to non-controlling interests
    
    
    0.1
    
    
    
    (0.1
    )Comprehensive income attributable to Dollar Financial Corp.
    
    $
    9.4
    
    
    $
    21.1
 
 (1)
    
    The ending balance of the foreign
currency translation adjustments included in
accumulated other comprehensive income on
the balance sheet were gains of $24.1
million and $21.3 million as of September
30, 2009 and 2010, respectively.(2)
    
    Net of $0.3 million of
tax for the three months ended September 30,
2009.(3)
    
    Net of $0.1 million and $0.3 million of tax for the
three months ended September 30, 2009 and
2010, respectively.  8. Income Taxes
 Income Tax Provision
  23




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NetDeferred
    
    
    Valuation
    
    
    DeferredTax Asset
    
    
    Allowance
    
    
    Tax AssetBalance at June 30, 2010
    
    $
    122.8
    
    
    $
    85.0
    
    
    $
    37.8Foreign increase/(decrease)
    
    
    0.1
    
    
    
    0.8
    
    
    
    (0.7
    )Balance at September 30, 2010
    
    $
    122.9
    
    
    $
    85.8
    
    
    $
    37.1
      9. Contingent Liabilities
  24




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Ontario Class Action
  British Columbia Class Action
  New Brunswick, Newfoundland and Nova Scotia Class Actions
  Purported Alberta Class Actions
    Purported Manitoba Class Action
  25




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Provisions for Settlement of Canadian Actions
  Other Canadian Litigation
   California Legal Proceedings
  We The People Legal Proceedings
  26




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Customer Litigation
   Franchisee Litigation
  27




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Greene
  10. Segment Information
  28




---



##### 



DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)  (In millions)
 DealersUnited States
    
    
    Financial
    
    
    
    
    
    
    UnitedRetail
    
    
    Services
    
    
    Canada
    
    
    Kingdom
    
    
    Other
    
    
    TotalAs of and for the three months
ended September 30, 2009Total assets
    
    $
    237.7
    
    
    $
    
    
    
    $
    503.5
    
    
    $
    176.1
    
    
    $
    39.0
    
    
    $
    956.3Goodwill and other intangibles, net
    
    
    206.0
    
    
    
    
    
    
    
    180.2
    
    
    
    75.7
    
    
    
    5.4
    
    
    
    467.3Sales to unaffiliated customers:Check cashing
    
    
    10.9
    
    
    
    
    
    
    
    17.3
    
    
    
    9.6
    
    
    
    
    
    
    
    37.8Fees from consumer lending
    
    
    17.9
    
    
    
    
    
    
    
    35.2
    
    
    
    23.0
    
    
    
    1.3
    
    
    
    77.4Money transfer fees
    
    
    1.3
    
    
    
    
    
    
    
    4.0
    
    
    
    1.5
    
    
    
    
    
    
    
    6.8Pawn service fees and sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.8
    
    
    
    
    
    
    
    3.8Other
    
    
    2.6
    
    
    
    
    
    
    
    7.6
    
    
    
    9.3
    
    
    
    0.2
    
    
    
    19.7Total sales to unaffiliated customers
    
    
    32.7
    
    
    
    
    
    
    
    64.1
    
    
    
    47.2
    
    
    
    1.5
    
    
    
    145.5Provision for loan losses
    
    
    3.7
    
    
    
    
    
    
    
    3.8
    
    
    
    3.7
    
    
    
    0.5
    
    
    
    11.7Interest expense, net
    
    
    
    
    
    
    
    
    
    
    5.3
    
    
    
    1.6
    
    
    
    4.7
    
    
    
    11.6Depreciation and amortization
    
    
    0.9
    
    
    
    
    
    
    
    1.6
    
    
    
    1.6
    
    
    
    0.4
    
    
    
    4.5Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    7.9
    
    
    
    
    
    
    
    7.8Provision for litigation settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    1.3Loss on store closings
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.3Income (loss) before income taxes
    
    
    4.3
    
    
    
    
    
    
    
    18.4
    
    
    
    2.5
    
    
    
    (11.8
    )
    
    
    13.4Income tax provision (benefit)
    
    
    5.4
    
    
    
    
    
    
    
    5.8
    
    
    
    0.9
    
    
    
    (4.1
    )
    
    
    8.0As of and for the three months
ended September 30, 2010Total assets
    
    $
    261.3
    
    
    $
    121.4
    
    
    $
    524.3
    
    
    $
    292.0
    
    
    $
    48.9
    
    
    $
    1,247.9Goodwill and other intangibles, net
    
    
    206.0
    
    
    
    113.0
    
    
    
    187.6
    
    
    
    105.5
    
    
    
    7.5
    
    
    
    619.6Sales to unaffiliated customers:Check cashing
    
    
    9.8
    
    
    
    
    
    
    
    17.7
    
    
    
    7.8
    
    
    
    
    
    
    
    35.3Fees from consumer lending
    
    
    15.7
    
    
    
    
    
    
    
    41.4
    
    
    
    32.9
    
    
    
    2.0
    
    
    
    92.0Money transfer fees
    
    
    1.1
    
    
    
    
    
    
    
    4.4
    
    
    
    1.7
    
    
    
    
    
    
    
    7.2Pawn service fees and sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.3
    
    
    
    
    
    
    
    6.3Other
    
    
    3.4
    
    
    
    6.5
    
    
    
    10.4
    
    
    
    13.1
    
    
    
    
    
    
    
    33.4Total sales to unaffiliated customers
    
    
    30.0
    
    
    
    6.5
    
    
    
    73.9
    
    
    
    61.8
    
    
    
    2.0
    
    
    
    174.2Provision for loan losses
    
    
    2.0
    
    
    
    
    
    
    
    4.3
    
    
    
    7.2
    
    
    
    0.5
    
    
    
    14.0Interest expense, net
    
    
    
    
    
    
    
    
    
    
    17.6
    
    
    
    0.1
    
    
    
    3.9
    
    
    
    21.6Depreciation and amortization
    
    
    0.7
    
    
    
    1.6
    
    
    
    1.7
    
    
    
    1.8
    
    
    
    0.5
    
    
    
    6.3Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    
    
    
    
    (15.2
    )
    
    
    (0.1
    )
    
    
    0.7
    
    
    
    (14.6
    )Loss on derivatives not designated as hedges
    
    
    
    
    
    
    
    
    
    
    13.8
    
    
    
    
    
    
    
    
    
    
    
    13.8Provision for litigation settlements
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    0.2Loss on store closings
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.2Other expense (income), net
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    0.1
    
    
    
    1.2
    
    
    
    0.8Income (loss) before income taxes
    
    
    6.1
    
    
    
    2.5
    
    
    
    8.1
    
    
    
    12.6
    
    
    
    (11.1
    )
    
    
    18.2Income tax provision (benefit)
    
    
    3.7
    
    
    
    
    
    
    
    1.5
    
    
    
    3.9
    
    
    
    (3.0
    )
    
    
    6.1
 29




---



##### 



DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11 Subsidiary Guarantor Financial Information
   -
    
    be senior unsecured obligations of the applicable Guarantor;-
    
    rank equal in right or payment with existing and future unsubordinated indebtedness of the applicable Guarantor;-
    
    rank senior in right of payment to all existing and future subordinated indebtedness
of the applicable Guarantor; and-
    
    be effectively junior to an indebtedness of such Guarantor, including indebtedness
under the Companys Amended and Restated Credit Facility, which is secured by assets of such
Guarantor to the extent of the value of the assets securing such Indebtedness.
  30




---



##### 



DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Balance Sheets
September 30, 2010
(In millions)
 Dollar
    
    
    National
    
    
    DFG, Inc.Financial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCurrent AssetsCash and cash equivalents
    
    $
    1.1
    
    
    $
    215.9
    
    
    $
    22.5
    
    
    $
    46.8
    
    
    $
    
    
    
    $
    286.3Loans receivable, net
    
    
    
    
    
    
    29.9
    
    
    
    23.1
    
    
    
    98.1
    
    
    
    
    
    
    
    151.1Loans in default, net
    
    
    
    
    
    
    7.9
    
    
    
    0.5
    
    
    
    0.1
    
    
    
    
    
    
    
    8.5Other receivables
    
    
    0.3
    
    
    
    11.5
    
    
    
    2.1
    
    
    
    8.1
    
    
    
    (4.6
    )
    
    
    17.4Prepaid expenses and other current assets
    
    
    
    
    
    
    8.5
    
    
    
    4.5
    
    
    
    19.6
    
    
    
    
    
    
    
    32.6Total current assets
    
    
    1.4
    
    
    
    273.7
    
    
    
    52.7
    
    
    
    172.7
    
    
    
    (4.6
    )
    
    
    495.9Deferred tax asset, net of valuation allowance
    
    
    
    
    
    
    22.5
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    22.6Intercompany receivables
    
    
    258.9
    
    
    
    40.1
    
    
    
    
    
    
    
    
    
    
    
    (299.0
    )
    
    
    Property and equipment, net
    
    
    
    
    
    
    28.3
    
    
    
    14.0
    
    
    
    31.4
    
    
    
    
    
    
    
    73.7Goodwill and other intangibles
    
    
    
    
    
    
    187.6
    
    
    
    206.6
    
    
    
    225.4
    
    
    
    
    
    
    
    619.6Debt issuance costs, net
    
    
    1.4
    
    
    
    14.6
    
    
    
    2.2
    
    
    
    0.1
    
    
    
    
    
    
    
    18.3Investment in subsidiaries
    
    
    106.8
    
    
    
    289.9
    
    
    
    127.1
    
    
    
    
    
    
    
    (523.8
    )
    
    
    Other
    
    
    
    
    
    
    0.6
    
    
    
    14.2
    
    
    
    3.0
    
    
    
    
    
    
    
    17.8Total Assets
    
    $
    368.5
    
    
    $
    857.3
    
    
    $
    416.8
    
    
    $
    432.7
    
    
    $
    (827.4
    )
    
    $
    1,247.9Current LiabilitiesAccounts payable
    
    $
    0.4
    
    
    $
    11.0
    
    
    $
    12.3
    
    
    $
    10.6
    
    
    $
    
    
    
    $
    34.3Income taxes payable
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    7.9
    
    
    
    (4.6
    )
    
    
    3.8Accrued expenses and other liabilities
    
    
    2.1
    
    
    
    57.9
    
    
    
    18.4
    
    
    
    16.7
    
    
    
    1.1
    
    
    
    96.2Debt due within one year
    
    
    
    
    
    
    
    
    
    
    14.3
    
    
    
    3.7
    
    
    
    
    
    
    
    18.0Current deferred tax liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    0.4Total current liabilities
    
    
    2.5
    
    
    
    68.9
    
    
    
    45.5
    
    
    
    39.3
    
    
    
    (3.5
    )
    
    
    152.7Fair value of derivatives
    
    
    
    
    
    
    58.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58.4Long-term deferred tax liability
    
    
    
    
    
    
    6.8
    
    
    
    18.7
    
    
    
    0.4
    
    
    
    
    
    
    
    25.9Long-term debt
    
    
    125.2
    
    
    
    596.7
    
    
    
    
    
    
    
    5.5
    
    
    
    
    
    
    
    727.4Intercompany payables
    
    
    
    
    
    
    
    
    
    
    233.5
    
    
    
    65.5
    
    
    
    (299.0
    )
    
    
    Other non-current liabilities
    
    
    
    
    
    
    30.0
    
    
    
    11.1
    
    
    
    1.7
    
    
    
    
    
    
    
    42.8Total liabilities
    
    
    127.7
    
    
    
    760.8
    
    
    
    308.8
    
    
    
    112.4
    
    
    
    (302.5
    )
    
    
    1,007.2Total Dollar Financial Corp. stockholders equity
    
    
    240.8
    
    
    
    96.5
    
    
    
    108.0
    
    
    
    320.4
    
    
    
    (524.9
    )
    
    
    240.8Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Total stockholders equity
    
    
    240.8
    
    
    
    96.5
    
    
    
    108.0
    
    
    
    320.3
    
    
    
    (524.9
    )
    
    
    240.7Total Liabilities and Stockholders Equity
    
    $
    368.5
    
    
    $
    857.3
    
    
    $
    416.8
    
    
    $
    432.7
    
    
    $
    (827.4
    )
    
    $
    1,247.9
 31




---



##### 



DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Operations
Three Months ended September 30, 2010
(In millions)
 Dollar
    
    
    National
    
    
    DFG, Inc.Financial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Check cashing
    
    $
    
    
    
    $
    17.7
    
    
    $
    9.8
    
    
    $
    7.8
    
    
    $
    
    
    
    $
    35.3Fees from consumer lending
    
    
    
    
    
    
    41.4
    
    
    
    15.7
    
    
    
    34.9
    
    
    
    
    
    
    
    92.0Other
    
    
    
    
    
    
    14.8
    
    
    
    4.5
    
    
    
    27.6
    
    
    
    
    
    
    
    46.9Total revenues
    
    
    
    
    
    
    73.9
    
    
    
    30.0
    
    
    
    70.3
    
    
    
    
    
    
    
    174.2Operating expenses:Salaries and benefits
    
    
    
    
    
    
    15.1
    
    
    
    11.3
    
    
    
    14.3
    
    
    
    
    
    
    
    40.7Provision for loan losses
    
    
    
    
    
    
    4.3
    
    
    
    2.0
    
    
    
    7.7
    
    
    
    
    
    
    
    14.0Occupancy
    
    
    
    
    
    
    4.4
    
    
    
    3.2
    
    
    
    4.0
    
    
    
    
    
    
    
    11.6Depreciation
    
    
    
    
    
    
    1.4
    
    
    
    0.7
    
    
    
    1.5
    
    
    
    
    
    
    
    3.6Other
    
    
    
    
    
    
    11.8
    
    
    
    5.7
    
    
    
    18.5
    
    
    
    
    
    
    
    36.0Total operating expenses
    
    
    
    
    
    
    37.0
    
    
    
    22.9
    
    
    
    46.0
    
    
    
    
    
    
    
    105.9Operating margin
    
    
    
    
    
    
    36.9
    
    
    
    7.1
    
    
    
    24.3
    
    
    
    
    
    
    
    68.3Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    5.9
    
    
    
    15.0
    
    
    
    4.5
    
    
    
    
    
    
    
    25.4Intercompany charges
    
    
    
    
    
    
    6.5
    
    
    
    (9.8
    )
    
    
    3.3
    
    
    
    
    
    
    
    (0.0
    )Other depreciation and amortization
    
    
    
    
    
    
    0.3
    
    
    
    0.5
    
    
    
    1.9
    
    
    
    
    
    
    
    2.7Interest expense, net
    
    
    3.3
    
    
    
    17.7
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    
    
    
    
    21.6Unrealized foreign exchange loss (gain)
    
    
    
    
    
    
    (15.2
    )
    
    
    0.7
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (14.6
    )Loss on derivatives not designated as hedges
    
    
    
    
    
    
    13.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.8Provision for litigation settlements
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.2Loss on store closings
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Other expense (income), net
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    0.1
    
    
    
    
    
    
    
    0.8(Loss) income before income taxes
    
    
    (3.3
    )
    
    
    7.8
    
    
    
    (0.6
    )
    
    
    14.3
    
    
    
    
    
    
    
    18.2Income tax provision
    
    
    
    
    
    
    1.5
    
    
    
    0.6
    
    
    
    4.0
    
    
    
    
    
    
    
    6.1Net (loss) income
    
    
    (3.3
    )
    
    
    6.3
    
    
    
    (1.2
    )
    
    
    10.3
    
    
    
    
    
    
    
    12.1Less: Net loss attributable to non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Equity in net income (loss) of subsidiaries:National Money Mart Company
    
    
    6.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.3
    )
    
    
    Guarantors
    
    
    (1.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    Non-guarantors
    
    
    10.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.4
    )
    
    
    Net income (loss) attributable to Dollar Financial Corp.
    
    $
    12.2
    
    
    $
    6.3
    
    
    $
    (1.2
    )
    
    $
    10.4
    
    
    $
    (15.5
    )
    
    $
    12.2
 32




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Cash Flows
 Three Months Ended September 30, 2010
 (In millions)
 Dollar
    
    
    National
    
    
    DFG, Inc.Financial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    12.2
    
    
    $
    6.3
    
    
    $
    (1.2
    )
    
    $
    10.3
    
    
    $
    (15.5
    )
    
    $
    12.1Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Undistributed income of subsidiaries
    
    
    (15.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.5
    
    
    
    Depreciation and amortization
    
    
    0.1
    
    
    
    2.3
    
    
    
    1.4
    
    
    
    3.4
    
    
    
    
    
    
    
    7.2Change in fair value of derivative not
designated as a hedge
    
    
    
    
    
    
    9.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.5Provision for loan losses
    
    
    
    
    
    
    4.3
    
    
    
    2.0
    
    
    
    7.7
    
    
    
    
    
    
    
    14.0Non-cash stock compensation
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2Losses on disposal of fixed assets
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    (15.2
    )
    
    
    0.7
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (14.6
    )Deferred tax provision (benefit)
    
    
    
    
    
    
    0.4
    
    
    
    1.3
    
    
    
    0.4
    
    
    
    
    
    
    
    2.1Accretion of debt discount and
deferred issuance costs
    
    
    2.0
    
    
    
    1.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.6Change in assets and liabilities (net of effect of acquisitions):(Increase) decrease in loans and
other receivables
    
    
    
    
    
    
    (6.5
    )
    
    
    (4.4
    )
    
    
    (13.1
    )
    
    
    2.9
    
    
    
    (21.1
    )(Increase) decrease in prepaid
expenses and other
    
    
    
    
    
    
    (0.8
    )
    
    
    (2.8
    )
    
    
    (0.3
    )
    
    
    (2.9
    )
    
    
    (6.8
    )(Decrease) increase in accounts
payable, accrued expenses and other
liabilities
    
    
    1.3
    
    
    
    (10.2
    )
    
    
    (7.5
    )
    
    
    (9.5
    )
    
    
    
    
    
    
    (25.9
    )Net cash provided by (used in) operating
activities
    
    
    1.3
    
    
    
    (8.3
    )
    
    
    (10.2
    )
    
    
    (1.2
    )
    
    
    
    
    
    
    (18.4
    )Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (0.4
    )Additions to property and equipment
    
    
    
    
    
    
    (1.9
    )
    
    
    (1.2
    )
    
    
    (6.3
    )
    
    
    
    
    
    
    (9.4
    )Net (increase) decrease in due from
affiliates
    
    
    (5.8
    )
    
    
    1.2
    
    
    
    1.3
    
    
    
    3.3
    
    
    
    
    
    
    
    Net cash provided by (used in) investing
activities
    
    
    (5.8
    )
    
    
    (0.7
    )
    
    
    0.1
    
    
    
    (3.4
    )
    
    
    
    
    
    
    (9.8
    )Cash flows from financing activities:Proceeds from the exercise of stock options
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Net increase in revolving credit facilities
    
    
    
    
    
    
    
    
    
    
    14.3
    
    
    
    
    
    
    
    
    
    
    
    14.3Payment of debt issuance and other costs
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Net cash provided by (used in) financing
activities
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    14.3
    
    
    
    
    
    
    
    
    
    
    
    14.4Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    6.4
    
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    8.8Net increase (decrease) in cash and cash
equivalents
    
    
    (4.3
    )
    
    
    (2.7
    )
    
    
    4.2
    
    
    
    (2.2
    )
    
    
    
    
    
    
    (5.0
    )Cash and cash equivalents balance-beginning
of period
    
    
    5.4
    
    
    
    218.6
    
    
    
    18.3
    
    
    
    49.0
    
    
    
    
    
    
    
    291.3Cash and cash equivalents balance-end of
period
    
    $
    1.1
    
    
    $
    215.9
    
    
    $
    22.5
    
    
    $
    46.8
    
    
    $
    
    
    
    $
    286.3
 33




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Balance Sheets  June 30, 2010  (In millions)
 Dollar
    
    
    National
    
    
    DFG, Inc.Financial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCurrent AssetsCash and cash equivalents
    
    $
    5.4
    
    
    $
    218.6
    
    
    $
    18.3
    
    
    $
    49.0
    
    
    $
    
    
    
    $
    291.3Loans receivable, net
    
    
    
    
    
    
    29.8
    
    
    
    20.9
    
    
    
    87.6
    
    
    
    
    
    
    
    138.3Loans in default, net
    
    
    
    
    
    
    6.1
    
    
    
    0.6
    
    
    
    0.6
    
    
    
    
    
    
    
    7.3Other receivables
    
    
    0.4
    
    
    
    9.8
    
    
    
    1.8
    
    
    
    6.9
    
    
    
    (1.7
    )
    
    
    17.2Prepaid expenses and other current
assets
    
    
    
    
    
    
    7.5
    
    
    
    3.6
    
    
    
    18.6
    
    
    
    (2.9
    )
    
    
    26.8Total current assets
    
    
    5.8
    
    
    
    271.8
    
    
    
    45.2
    
    
    
    162.7
    
    
    
    (4.6
    )
    
    
    480.9Deferred tax asset, net of valuation
allowance
    
    
    
    
    
    
    22.5
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    22.6Intercompany receivables
    
    
    253.0
    
    
    
    41.6
    
    
    
    
    
    
    
    
    
    
    
    (294.6
    )
    
    
    Property and equipment, net
    
    
    
    
    
    
    27.5
    
    
    
    14.4
    
    
    
    25.6
    
    
    
    
    
    
    
    67.5Goodwill and other intangibles
    
    
    
    
    
    
    182.1
    
    
    
    206.6
    
    
    
    220.3
    
    
    
    
    
    
    
    609.0Debt issuance costs, net
    
    
    1.5
    
    
    
    14.7
    
    
    
    2.4
    
    
    
    0.1
    
    
    
    
    
    
    
    18.7Investment in subsidiaries
    
    
    82.4
    
    
    
    285.9
    
    
    
    103.1
    
    
    
    
    
    
    
    (471.4
    )
    
    
    Other
    
    
    
    
    
    
    0.7
    
    
    
    12.2
    
    
    
    3.0
    
    
    
    
    
    
    
    15.9Total Assets
    
    $
    342.7
    
    
    $
    846.8
    
    
    $
    383.9
    
    
    $
    411.8
    
    
    $
    (770.6
    )
    
    $
    1,214.6Current LiabilitiesAccounts payable
    
    $
    0.3
    
    
    $
    14.2
    
    
    $
    11.8
    
    
    $
    18.5
    
    
    $
    
    
    
    $
    44.8Income taxes payable
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    6.9
    
    
    
    (1.7
    )
    
    
    6.2Accrued expenses and other liabilities
    
    
    0.9
    
    
    
    50.3
    
    
    
    27.8
    
    
    
    15.4
    
    
    
    (1.8
    )
    
    
    92.6Debt due within one year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    3.3Current deferred tax liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    0.3Total current liabilities
    
    
    1.2
    
    
    
    64.5
    
    
    
    40.6
    
    
    
    44.4
    
    
    
    (3.5
    )
    
    
    147.2Fair value of derivatives
    
    
    
    
    
    
    47.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47.4Long-term deferred tax liability
    
    
    
    
    
    
    6.7
    
    
    
    17.3
    
    
    
    
    
    
    
    
    
    
    
    24.0Long-term debt
    
    
    123.2
    
    
    
    596.7
    
    
    
    
    
    
    
    5.4
    
    
    
    
    
    
    
    725.3Intercompany payables
    
    
    
    
    
    
    
    
    
    
    232.5
    
    
    
    62.2
    
    
    
    (294.7
    )
    
    
    Other non-current liabilities
    
    
    
    
    
    
    40.6
    
    
    
    10.0
    
    
    
    1.8
    
    
    
    
    
    
    
    52.4Total liabilities
    
    
    124.4
    
    
    
    755.9
    
    
    
    300.4
    
    
    
    113.8
    
    
    
    (298.2
    )
    
    
    996.3Total Dollar Financial Corp.
stockholders equity
    
    
    218.3
    
    
    
    90.9
    
    
    
    83.5
    
    
    
    298.0
    
    
    
    (472.4
    )
    
    
    218.3Total stockholders equity
    
    
    218.3
    
    
    
    90.9
    
    
    
    83.5
    
    
    
    298.0
    
    
    
    (472.4
    )
    
    
    218.3Total Liabilities and Stockholders
Equity
    
    $
    342.7
    
    
    $
    846.8
    
    
    $
    383.9
    
    
    $
    411.8
    
    
    $
    (770.6
    )
    
    $
    1,214.6
 34




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Operations  Three Months ended September 30, 2009  (In millions)
 Dollar
    
    
    National
    
    
    DFG, Inc.Financial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Check cashing
    
    $
    
    
    
    $
    17.3
    
    
    $
    10.9
    
    
    $
    9.6
    
    
    $
    
    
    
    $
    37.8Fees from consumer lending
    
    
    
    
    
    
    35.2
    
    
    
    17.9
    
    
    
    24.3
    
    
    
    
    
    
    
    77.4Other
    
    
    
    
    
    
    11.6
    
    
    
    3.9
    
    
    
    14.8
    
    
    
    
    
    
    
    30.3Total revenues
    
    
    
    
    
    
    64.1
    
    
    
    32.7
    
    
    
    48.7
    
    
    
    
    
    
    
    145.5Operating expenses:Salaries and benefits
    
    
    
    
    
    
    13.5
    
    
    
    13.4
    
    
    
    9.8
    
    
    
    
    
    
    
    36.7Provision for loan losses
    
    
    
    
    
    
    3.8
    
    
    
    3.7
    
    
    
    4.2
    
    
    
    
    
    
    
    11.7Occupancy
    
    
    
    
    
    
    3.9
    
    
    
    3.7
    
    
    
    3.2
    
    
    
    
    
    
    
    10.8Depreciation
    
    
    
    
    
    
    1.3
    
    
    
    0.9
    
    
    
    1.2
    
    
    
    
    
    
    
    3.4Other
    
    
    
    
    
    
    8.8
    
    
    
    5.7
    
    
    
    12.5
    
    
    
    
    
    
    
    27.0Total operating expenses
    
    
    
    
    
    
    31.3
    
    
    
    27.4
    
    
    
    30.9
    
    
    
    
    
    
    
    89.6Operating margin
    
    
    
    
    
    
    32.8
    
    
    
    5.3
    
    
    
    17.8
    
    
    
    
    
    
    
    55.9Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    4.4
    
    
    
    12.2
    
    
    
    3.8
    
    
    
    
    
    
    
    20.4Intercompany charges
    
    
    
    
    
    
    4.5
    
    
    
    (6.5
    )
    
    
    2.0
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    
    
    
    
    0.3
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    
    
    
    
    1.1Interest expense, net
    
    
    4.0
    
    
    
    5.4
    
    
    
    0.5
    
    
    
    1.7
    
    
    
    
    
    
    
    11.6Unrealized foreign exchange (gain)
loss
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    7.9
    
    
    
    
    
    
    
    7.8Provision for litigation settlements
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    1.3Loss on store closings
    
    
    
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.3Other expense (income), net
    
    
    
    
    
    
    0.3
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.0
    )(Loss) income before income taxes
    
    
    (4.0
    )
    
    
    17.8
    
    
    
    (2.7
    )
    
    
    2.3
    
    
    
    
    
    
    
    13.4Income tax (benefit)provision
    
    
    (0.3
    )
    
    
    5.8
    
    
    
    1.4
    
    
    
    1.1
    
    
    
    
    
    
    
    8.0Net (loss) income
    
    
    (3.7
    )
    
    
    12.0
    
    
    
    (4.1
    )
    
    
    1.2
    
    
    
    
    
    
    
    5.4Less: Net income attributable to
non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Equity in net income (loss) of subsidiaries:National Money Mart Company
    
    
    12.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12.0
    )
    
    
    Guarantors
    
    
    (4.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.1
    
    
    
    Non-guarantors
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.1
    )
    
    
    Net (loss) income attributable to
Dollar Financial Corp.
    
    $
    5.3
    
    
    $
    12.0
    
    
    $
    (4.1
    )
    
    $
    1.1
    
    
    $
    (9.0
    )
    
    $
    5.3
 35




---



##### 



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Cash Flows  Three Months Ended September 30, 2009
(In millions)
 Dollar
    
    
    National
    
    
    DFG, Inc.Financial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    5.4
    
    
    $
    12.0
    
    
    $
    (4.1
    )
    
    $
    1.2
    
    
    $
    (9.1
    )
    
    $
    5.4Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:Undistributed income of subsidiaries
    
    
    (9.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.1
    
    
    
    Depreciation and amortization
    
    
    0.3
    
    
    
    1.9
    
    
    
    1.3
    
    
    
    1.9
    
    
    
    
    
    
    
    5.4Provision for loan losses
    
    
    
    
    
    
    3.8
    
    
    
    3.7
    
    
    
    4.2
    
    
    
    
    
    
    
    11.7Non-cash stock compensation
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4Losses on disposal of fixed assets
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.2Unrealized foreign exchange (gain)
loss
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    7.9
    
    
    
    
    
    
    
    7.8Deferred tax provision (benefit)
    
    
    
    
    
    
    (0.4
    )
    
    
    1.1
    
    
    
    3.2
    
    
    
    
    
    
    
    3.9Accretion of debt discount and
deferred issuance costs
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.4Change in assets and liabilities
(net of effect of acquisitions):(Increase) decrease in loans and
other receivables
    
    
    
    
    
    
    (0.3
    )
    
    
    (5.6
    )
    
    
    (8.9
    )
    
    
    0.1
    
    
    
    (14.7
    )(Increase) decrease in prepaid
expenses and other
    
    
    
    
    
    
    3.5
    
    
    
    (0.5
    )
    
    
    2.5
    
    
    
    (4.9
    )
    
    
    0.6Increase (decrease) in accounts
payable, accrued expenses and other
liabilities
    
    
    
    
    
    
    6.7
    
    
    
    (4.5
    )
    
    
    (12.3
    )
    
    
    4.8
    
    
    
    (5.3
    )Net cash provided by (used in) operating
activities
    
    
    0.4
    
    
    
    27.2
    
    
    
    (8.5
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    18.8Cash flows from investing activities:Additions to property and equipment
    
    
    
    
    
    
    (1.7
    )
    
    
    (0.5
    )
    
    
    (3.3
    )
    
    
    
    
    
    
    (5.5
    )Net (increase) decrease in due from
affiliates
    
    
    (0.5
    )
    
    
    (9.5
    )
    
    
    3.5
    
    
    
    6.5
    
    
    
    
    
    
    
    Net cash provided by (used in) investing
activities
    
    
    (0.5
    )
    
    
    (11.2
    )
    
    
    3.0
    
    
    
    3.2
    
    
    
    
    
    
    
    (5.5
    )Cash flows from financing activities:Other debt payments
    
    
    
    
    
    
    (0.8
    )
    
    
    
    
    
    
    (7.2
    )
    
    
    
    
    
    
    (8.0
    )Payment of debt issuance and other costs
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Net cash provided by (used in) financing
activities
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.1
    )
    
    
    (7.2
    )
    
    
    
    
    
    
    (8.1
    )Effect of exchange rate changes on cash
and cash equivalents
    
    
    
    
    
    
    12.9
    
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    11.9Net increase (decrease) in cash and cash
equivalents
    
    
    (0.1
    )
    
    
    28.1
    
    
    
    (5.6
    )
    
    
    (5.3
    )
    
    
    
    
    
    
    17.1Cash and cash equivalents
balance-beginning of period
    
    
    0.1
    
    
    
    138.4
    
    
    
    30.3
    
    
    
    40.8
    
    
    
    
    
    
    
    209.6Cash and cash equivalents balance-end of
period
    
    $
    
    
    
    $
    166.5
    
    
    $
    24.7
    
    
    $
    35.5
    
    
    $
    
    
    
    $
    226.7
 12. Pending Acquisition
  36




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 This Quarterly Report on Form 10-Q and the documents incorporated herein contain
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements are
therefore entitled to the protection of the safe harbor provisions of these laws. These
forward-looking statements, which are usually accompanied by words such as may, might, will,
should, could, intends, estimates, predicts, potential, continue, believes,
anticipates, plans, expects and similar expressions, involve risks and uncertainties, and
relate to, without limitation, statements about our market opportunities, anticipated improvements
in operations, our plans, earnings, cash flow and expense estimates, strategies and prospects, both
business and financial. There are important factors that could cause our actual results, level of
activity, performance or achievements to differ materially from those expressed or forecasted in,
or implied by, such forward-looking statements, particularly those factors discussed in Item 1A -
Risk Factors in our Annual Report on Form 10-K our fiscal year ended June 30, 2010.
 Although we believe that the expectations reflected in these forward-looking statements
are based upon reasonable assumptions, no assurance can be given that such expectations will be
attained or that any deviations will not be material. In light of these risks, uncertainties and
assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on
Form 10-Q may not occur and our actual results could differ materially and adversely from those
anticipated or implied in the forward-looking statements. These forward-looking statements speak
only as of the date on which they are made, and, except as otherwise required by law, we disclaim
any obligation or undertaking to disseminate any update or revision to any forward-looking
statement contained herein to reflect any change in our expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is based. If we do update
or modify one or more forward-looking statements, you should not conclude that we will make
additional updates or modifications with respect thereto or with respect to other forward-looking
statements, except as required by law.
 Unless the context otherwise requires, as used in this Quarterly Report on Form 10-Q , (i)
the terms fiscal year and fiscal refer to (i) the twelve-month period ended on June 30 of the
specified year, (ii) references to $, dollars, United States dollars or U.S. dollars refer
to the lawful currency of the United States of America, (iii) references to CAD refer to the
lawful currency of Canada, and (iv) references to GBP refer to the British Pound Sterling, the
lawful currency of the United Kingdom of Great Britain and Northern Ireland.
 Executive Summary
 Overview
 ® ® ® ® ® ® ®
   37




---



##### 



Recent Events
  Discussion of Critical Accounting Policies
   38




---



##### 



Results of Operations
  Three Months Ended September 30,2009
    
    
    2010(Dollars in thousands)Total revenues:Check cashing
    
    $
    37,802
    
    
    
    26.0
    %
    
    $
    35,264
    
    
    
    20.2
    %Fees from consumer lending
    
    
    77,442
    
    
    
    53.2
    %
    
    
    91,997
    
    
    
    52.8
    %Money transfer fees
    
    
    6,823
    
    
    
    4.7
    %
    
    
    7,246
    
    
    
    4.2
    %Pawn service fees and sales
    
    
    3,833
    
    
    
    2.6
    %
    
    
    6,262
    
    
    
    3.6
    %Other
    
    
    19,629
    
    
    
    13.5
    %
    
    
    33,447
    
    
    
    19.2
    %Total consolidated revenues
    
    
    145,529
    
    
    
    100.0
    %
    
    
    174,216
    
    
    
    100.0
    %Operating expenses:Salaries and benefits
    
    
    36,736
    
    
    
    25.2
    %
    
    
    40,650
    
    
    
    23.3
    %Provision for loan losses
    
    
    11,696
    
    
    
    8.0
    %
    
    
    13,967
    
    
    
    8.0
    %Occupancy
    
    
    10,847
    
    
    
    7.5
    %
    
    
    11,567
    
    
    
    6.6
    %Depreciation
    
    
    3,374
    
    
    
    2.3
    %
    
    
    3,601
    
    
    
    2.1
    %Other
    
    
    26,980
    
    
    
    18.6
    %
    
    
    36,106
    
    
    
    20.8
    %Total operating expenses
    
    
    89,633
    
    
    
    61.6
    %
    
    
    105,891
    
    
    
    60.8
    %Operating margin
    
    
    55,896
    
    
    
    38.4
    %
    
    
    68,325
    
    
    
    39.2
    %Corporate expenses
    
    
    20,351
    
    
    
    14.0
    %
    
    
    25,426
    
    
    
    14.6
    %Other depreciation and amortization
    
    
    1,052
    
    
    
    0.7
    %
    
    
    2,699
    
    
    
    1.5
    %Interest expense, net
    
    
    11,624
    
    
    
    8.0
    %
    
    
    21,574
    
    
    
    12.4
    %Unrealized foreign exchange (gain) loss
    
    
    7,827
    
    
    
    5.4
    %
    
    
    (14,612
    )
    
    
    (8.4)
    %Loss (gain) on derivatives not designated as hedges
    
    
    (9
    )
    
    
    (0.0)
    %
    
    
    13,821
    
    
    
    7.9
    %Provision for litigation settlements
    
    
    1,267
    
    
    
    0.9
    %
    
    
    197
    
    
    
    0.1
    %Loss on store closings
    
    
    318
    
    
    
    0.2
    %
    
    
    170
    
    
    
    0.1
    %Other (income) expense, net
    
    
    169
    
    
    
    
    %
    
    
    878
    
    
    
    0.6
    %Income before income taxes
    
    
    13,297
    
    
    
    9.2
    %
    
    
    18,172
    
    
    
    10.4
    %Income tax provision
    
    
    7,966
    
    
    
    5.5
    %
    
    
    6,105
    
    
    
    3.5
    %Net income
    
    
    5,331
    
    
    
    3.7
    %
    
    
    12,067
    
    
    
    6.9
    %Less: Net loss (income) attributable to non-controlling
interests
    
    
    58
    
    
    
    
    %
    
    
    (157
    )
    
    
    (0.1)
    %Net income attributable to Dollar Financial Corp.
    
    $
    5,273
    
    
    
    3.6
    %
    
    $
    12,224
    
    
    
    7.0
    %Net income per share attributable to Dollar Financial Corp.:Basic
    
    $
    0.22
    
    
    
    
    
    
    $
    0.50Diluted
    
    $
    0.22
    
    
    
    
    
    
    $
    0.49
 Constant Currency Analysis
  39




---



##### 



Three Months Ended September 30, 2010 compared to Three Months Ended September 30, 2009
 Revenues
      40




---



##### 



Operating Expenses
    Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
   41




---



##### 



Unrealized Foreign Exchange Gain/Loss
  Loss on derivatives not designated as hedges
  Provision for Litigation Settlements
  Loss on Store Closings
  Income Tax Provision
   NetDeferred
    
    
    Valuation
    
    
    DeferredTax Asset
    
    
    Allowance
    
    
    Tax AssetBalance at June 30, 2010
    
    $
    122.8
    
    
    $
    85.0
    
    
    $
    37.8Foreign increase/(decrease)
    
    
    0.1
    
    
    
    0.8
    
    
    
    (0.7
    )Balance at September 30, 2010
    
    $
    122.9
    
    
    $
    85.8
    
    
    $
    37.1
 42




---



##### 



43




---



##### 



Review of Reportable Segments
  (Dollars in thousands)
    
    
    %Three Months Ended
    
    
    Inc/Dec -September 30,
    
    
    Margin2009
    
    
    2010
    
    
    ChangeUnited States Retail revenues:Check Cashing
    
    $
    10,906
    
    
    $
    9,760
    
    
    
    -10.5
    %Fees from consumer lending
    
    
    17,858
    
    
    
    15,686
    
    
    
    -12.2
    %Money transfer fees
    
    
    1,276
    
    
    
    1,130
    
    
    
    -11.4
    %Other
    
    
    2,613
    
    
    
    3,385
    
    
    
    29.5
    %Total United States Retail revenues
    
    $
    32,653
    
    
    $
    29,961
    
    
    
    -8.2
    %Operating margin
    
    
    15.9
    %
    
    
    23.4
    %
    
    7.5 pts.Total DFS revenues (Included in Other)
    
    $
    
    
    
    $
    6,504
    
    
    
    100.0
    %Operating margin
    
    
    
    
    
    
    61.9
    %
    
    61.9 pts.Canada revenues:Check Cashing
    
    $
    17,338
    
    
    $
    17,754
    
    
    
    2.4
    %Fees from consumer lending
    
    
    35,216
    
    
    
    41,429
    
    
    
    17.6
    %Money transfer fees
    
    
    4,048
    
    
    
    4,429
    
    
    
    9.4
    %Pawn service fees and sales
    
    
    
    
    
    
    2
    
    
    
    100.0
    %Other
    
    
    7,520
    
    
    
    10,313
    
    
    
    37.1
    %Total Canada revenues
    
    $
    64,122
    
    
    $
    73,927
    
    
    
    15.3
    %Operating margin
    
    
    51.2
    %
    
    
    49.9
    %
    
    (1.3 pts.)United Kingdom revenues:Check Cashing
    
    $
    9,557
    
    
    $
    7,750
    
    
    
    -18.9
    %Fees from consumer lending
    
    
    23,070
    
    
    
    32,878
    
    
    
    42.5
    %Money transfer fees
    
    
    1,499
    
    
    
    1,687
    
    
    
    12.5
    %Pawn service fees and sales
    
    
    3,833
    
    
    
    6,259
    
    
    
    63.3
    %Other
    
    
    9,253
    
    
    
    13,211
    
    
    
    42.8
    %Total United Kingdom revenues
    
    $
    47,212
    
    
    $
    61,785
    
    
    
    30.9
    %Operating margin
    
    
    38.5
    %
    
    
    33.8
    %
    
    (4.7 pts.)Other revenues:Fees from consumer lending
    
    $
    1,297
    
    
    $
    2,004
    
    
    
    54.5
    %Other
    
    
    245
    
    
    
    35
    
    
    
    -85.7
    %Total Other revenues
    
    $
    1,542
    
    
    $
    2,039
    
    
    
    32.2
    %Operating margin
    
    
    -22.0
    %
    
    
    -22.5
    %
    
    (0.5 pts.)Total revenue
    
    $
    145,529
    
    
    $
    174,216
    
    
    
    19.7
    %Operating margin
    
    $
    55,896
    
    
    $
    68,325
    
    
    
    22.2
    %Operating margin %
    
    
    38.4
    %
    
    
    39.2
    %
    
    0.8 pts.
 44




---



##### 



Revenue
    
    
    Pre-Tax IncomeThree Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2010
    
    
    2009
    
    
    2010United States Retail
    
    
    22.4
    %
    
    
    17.2
    %
    
    
    22.0
    %
    
    
    39.2
    %DFS
    
    
    
    
    
    
    3.7
    %
    
    
    
    
    
    
    14.3
    %Canada
    
    
    44.1
    %
    
    
    42.4
    %
    
    
    81.1
    %(1)
    
    
    39.1
    %(3)United Kingdom
    
    
    32.4
    %
    
    
    35.5
    %
    
    
    46.6
    %(2)
    
    
    71.1
    %(4)Other
    
    
    1.1
    %
    
    
    1.2
    %
    
    
    (49.7
    )%
    
    
    (63.7
    )%100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1)
    
    Excludes $0.1 million of unrealized foreign exchange gain.(2)
    
    Excludes $7.9 million of unrealized foreign exchange loss.(3)
    
    Excludes $15.2 million of unrealized foreign exchange gain and $13.8 million of loss on
derivatives.(4)
    
    Excludes $0.1 million of unrealized foreign exchange gain. United States Retail
     Dealers Financial Services (DFS)
  45




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##### 



Canada
    United Kingdom
   46




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##### 



Changes in Financial Condition
   
    
    Continued improvements in U.S. collections and our actions, taken in an effort to decrease
our risk exposure by reducing the amount that we are willing to loan to certain customer
segments. The historical loss rates (expressed as a percentage of loan amounts originated for
the last twelve months applied against the principal balance of outstanding loans) have
continued to decline. The ratio of the allowance for loan losses related to U.S. short-term
consumer loans decreased from 4.1% at June 30, 2010 to 3.2% at September 30, 2010.
 
    
    In constant currency, the Canadian ratio of allowance for loan losses as a percentage of
loans outstanding has decreased from 2.7% at June 30, 2010 to 2.4% at September 30, 2010.
 
    
    In constant currency, the U.K.s allowance for loan losses remained relatively constant at
approximately 7.6% of outstanding principal at June 30, 2010 and September 30, 2010.
 
    
    The impact of a larger loan portfolio in Poland, which carries a higher loan loss reserve
percentage than our single payment CTP portfolio, continues to increase the overall loan loss
reserve as a percentage of gross loans receivable.
 Liquidity and Capital Resources
    47




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##### 



Senior Secured Credit Facility
     United Kingdom Overdraft Facility
  Long-Term Debt
   48




---



##### 



Future Obligations
   Less than
    
    
    1-3
    
    
    4-5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsRevolving credit facilities
    
    $
    17.2
    
    
    $
    17.2
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-term debt:10.375% Senior Notes due 2016
    
    
    600.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600.02.875% Senior Convertible Notes due 2027
    
    
    44.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44.83.0% Senior Convertible Notes due 2028
    
    
    120.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120.0Other Notes Payable
    
    
    6.3
    
    
    
    0.8
    
    
    
    5.5
    
    
    
    
    
    
    
    Obligations under Canadian Class Action
Settlement Agreements Payable in Cash
    
    
    16.7
    
    
    
    16.7
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    221.2
    
    
    
    59.5
    
    
    
    92.3
    
    
    
    36.4
    
    
    
    33.0Total contractual cash obligations
    
    $
    1,026.2
    
    
    $
    94.2
    
    
    $
    97.8
    
    
    $
    36.4
    
    
    $
    797.8
  Seasonality
  Impact of Inflation
  49




---



##### 



Impact of Recent Accounting Pronouncements
 Receivables  Disclosures about the Credit Quality of Financing Receivables and the Allowance for
Credit Losses
 50




---



##### 



DOLLAR FINACIAL CORP.
SUPPLEMENTAL SATISTICAL DATA
  Three Months EndedSeptember 30th,2009
    
    
    2010U.S. company-funded consumer loan originations
    
    $
    135.8
    
    
    $
    123.3Canadian company-funded consumer loan originations
    
    
    199.2
    
    
    
    212.3
    (1)U.K. company-funded consumer loan originations
    
    
    119.5
    
    
    
    152.0
    (2)Poland company-funded consumer loan originations.
    
    
    1.4
    
    
    
    3.8
    (3)Total company-funded consumer loan originations
    
    $
    455.9
    
    
    $
    491.4U.S. company-funded consumer loan revenues
    
    $
    17.9
    
    
    $
    15.7Canadian company-funded consumer loan revenues
    
    
    35.2
    
    
    
    41.4U.K. company-funded consumer loan revenues
    
    
    23.0
    
    
    
    32.9Poland company-funded consumer loan revenues
    
    
    1.3
    
    
    
    2.0Total consumer lending revenues, net
    
    $
    77.4
    
    
    $
    92.0Gross charge-offs of company-funded consumer loans
    
    $
    43.9
    
    
    $
    48.7Recoveries of company-funded consumer loans
    
    
    (33.8
    )
    
    
    (39.1
    )Net charge-offs on company-funded consumer loans
    
    $
    10.1
    
    
    $
    9.6Gross charge-offs of company-funded consumer loans as a
percentage of total company-funded consumer loan originations
    
    
    9.6
    %
    
    
    9.9
    %Recoveries of company-funded consumer loans as a percentage
of total company-funded consumer loan originations
    
    
    7.4
    %
    
    
    7.9
    %Net charge-offs on company-funded consumer loans as a
percentage of total company-funded consumer loan originations
    
    
    2.2
    %
    
    
    2.0
    %
 
 (1)
    
    Net of a $11.1 million decrease as a result of the impact of exchange rates for
the three months ended September 30, 2010.(2)
    
    Net of a $8.7 million increase as a result of the impact of exchange rates for
the three months September 30, 2010.(3)
    
    Net of a $0.1 million increase as a result of the impact of exchange rates for
the three months September 30, 2010. 51




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##### 



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
   52




---



##### 



Cross-Currency Interest Rate Swaps
       53




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##### 



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
  Item 1A. Risk Factors
  54




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##### 



Item 6.
Exhibits
 Exhibit No.
    
    Description of Document31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President and 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 Executive Vice President and Chief Financial Officer32.3
    
    Section 1350 Certification of Senior Vice President of Finance and Corporate Controller
 55




---



##### 



SIGNATURE
  DOLLAR FINANCIAL CORP.Date: November 8, 2010
    *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. 56